<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
Form 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 11, 1999
WESTMINSTER CAPITAL, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-4923 95-2157201
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
9665 Wilshire Boulevard, Suite M-10
Beverly Hills, California 90212
(Address of Principal Executive Offices)
(310) 278-1930
(Registrant's Telephone Number)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
On January 11, 1999, Westminster Capital, Inc. (the "Registrant")
entered into a Membership Interest Purchase Agreement to acquire from One Source
Industries, Inc. ("Seller") an 80% interest in One Source Industries, LLC ("One
Source") for cash consideration of $4.8 million paid at closing, deferred
consideration of $196,000, plus up to an additional $2.15 million in deferred
contingent cash consideration that may be paid over the next four years based on
the performance of One Source during such period. After the close of business on
December 31, 1998, One Source Industries, Inc. reorganized its operations into
One Source, a new California limited liability company, with all assets being
assigned to such limited liability company and all the liabilities being assumed
by the new limited liability company, with the exception of current tax
obligations.
One Source, as successor in interest to Seller, provides turn-key
packaging and point-of-sale displays for a broad spectrum of consumer products
ranging from computer software to food products. The acquisition was financed
through the Registrant's existing cash reserves.
Reference is made to the press release of Registrant, issued on January
12, 1999, which is incorporated herein by this reference, relating to the
acquisition of the 80% interest in One Source by the Registrant. A copy of the
press release is attached to this Form 8-K as Exhibit 99.1. Certain matters
discussed in the above referenced press release include forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
forward-looking statements are necessarily speculative and readers are advised
not to place undue reliance on any such forward-looking statements which speak
only as of the date made. Actual results could vary materially from those
anticipated for a variety of reasons. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
statement herein or to reflect any change in the Company's expectations or any
change in events, conditions or circumstances on which any such statement is
based.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The financial statement information presented herein, including the pro forma
information, represents the financial information of Seller, the predecessor
company to One Source. The pro forma financial information records the
adjustments required to appropriately reflect the combination of the Registrant
and One Source.
(a) Financial Statements Pages 5 to 13
(b) Pro Forma Financial Information Pages 14 to 21
2
<PAGE>
Exhibits.
Exhibit 2.1 Membership Interest Purchase Agreement, dated
January 11, 1999. Pursuant to Item 601(b)(2), the
Registrant hereby agrees to furnish supplementally
to the Commission a copy of any exhibit or schedule
omitted from this filing upon request.*
Exhibit 2.2 Amended and Restated Operating Agreement of
One Source Industries, LLC.*
Exhibit 23.1 Consent of Auditors.
Exhibit 99.1 Press Release dated January 12, 1999.*
- --------------------------
*Previously filed as an exhibit to the Registrant's Current Report on
Form 8-K dated January 11, 1999.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
March 24, 1999 WESTMINSTER CAPITAL, INC.
By: /s/ Keenan Behrle
--------------------------
Keenan Behrle
Executive Vice President
4
<PAGE>
FETTA PIPER & ROSSI
CERTIFIED PUBLIC ACCOUNTANTS, LLP
INDEPENDENT AUDITOR'S REPORT
Board of Directors
One Source Industries, Inc.
We have audited the accompanying balance sheet of One Source Industries, Inc.
(an S Corporation) as of December 31, 1998 and the related statements of income,
retained earnings, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of One Source Industries, Inc. as
of December 31, 1998, and results of its operations, changes in retained
earnings, and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
The Company, with the consent of its shareholders, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of corporation income
taxes, the shareholders of an S corporation are taxed on their proportionate
share of the Company's taxable income. Therefore, no provision or liability for
federal income taxes has been included in these financial statements.
FETTA PIPER & ROSSI
Certified Public Accountants LLP
February 15, 1999
5
<PAGE>
ONE SOURCE INDUSTRIES, INC.
Balance Sheet
December 31, 1998
Assets
<TABLE>
<S> <C>
Current Assets
Cash $ 116,853
Accounts receivable 929,334
Inventory 103,871
Officer loan receivable 34,097
----------
Total Current Assets 1,184,155
----------
Property, (net of accumulated depreciation of $27,094) 192,878
----------
Other Assets
Deposits 2,196
----------
Total Other Assets 2,196
----------
Total Assets $1,379,229
----------
----------
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 497,727
Notes payable - current portion 46,373
Accrued expenses 136,770
Accrued franchise tax 13,948
Deferred taxes - current portion 6,080
Other current liabilities 20,124
----------
Total Current Liabilities 721,022
----------
Long Term Liabilities
Notes payable - long term 119,237
Deferred taxes - long term 616
----------
Total Long Term Liabilities 119,853
----------
Contingent Liabilities -
Stockholders' Equity
Capital stock, 100,000 authorized; 2,500 issued; 2,500 outstanding 1,000
Retained earnings 537,354
----------
Total Stockholders' Equity 538,354
----------
Total Liabilities and Stockholders' Equity $1,379,229
----------
----------
</TABLE>
6
<PAGE>
ONE SOURCE INDUSTRIES, INC.
Statements of Income and Retained Earnings
For The Year Ended December 31, 1998
<TABLE>
<S> <C>
Sales, net of discounts of $32,786 $ 10,261,434
------------
Cost of Sales
Purchases 5,530,401
Outside services 832,382
Freight 510,010
Manufacturing overhead 152,937
------------
Total Cost of Sales 7,025,730
------------
Gross Margin 3,235,704
Operating Expenses
Sales Expense:
Officer's compensation & benefits 393,349
Staff compensation & benefits 274,629
Other sales expense 104,357
------------
Total Sales Expense 772,335
------------
General & Administrative:
Staff compensation & benefits 397,202
Office expense 137,822
Professional services 74,957
Other 66,677
------------
Total General & Administrative Expenses 676,658
------------
Total Operating Expense 1,448,993
------------
Pretax Operating Income Before Other Income (Expense) 1,786,711
Other Expense (9,665)
------------
Income Before Provision for Franchise Tax 1,777,046
Provision for Franchise Tax (28,847)
------------
Net Income 1,748,199
Retained Earnings, December 31, 1997 315,595
Dividends Paid (1,526,440)
------------
Retained Earnings, December 31, 1998 $ 537,354
------------
------------
</TABLE>
7
<PAGE>
ONE SOURCE INDUSTRIES, INC.
Statement of Cash Flows
For the Year Ended December 31, 1998
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,748,199
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation & amortization 24,855
Loss on donation of equipment 12,043
Changes in operating assets & liabilities:
Accounts receivable 172,562
Inventory (22,696)
Other assets (346)
Deferred taxes payable 6,696
Accounts payable (246,556)
Accrued payroll & other accrued expenses 87,985
Income taxes payable 13,948
Profit-sharing payable (39,454)
-----------
Net cash provided (used) by operating activities 1,757,236
-----------
CASH FLOWS FROM INVESTMENT ACTIVITIES
Purchases of property, plant & equipment (142,616)
-----------
Net cash used in investment activities (142,616)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under line of credit (40,000)
Proceeds from long-term debt 127,565
Payments of long-term debt (29,314)
Advances to stockholder (1,884)
Distributions to stockholder (1,526,440)
-----------
Net cash used in financing activities (1,470,073)
-----------
Net increase in cash 144,547
Cash at January 1, 1998 (27,694)
-----------
Cash at December 31, 1998 $ 116,853
-----------
-----------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 11,549
Income taxes $ 17,863
</TABLE>
8
<PAGE>
ONE SOURCE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES
One Source Industries, Inc. was incorporated in the state of California on March
13, 1985. The Company designs packaging for various customers. The Company
physically packages the customer's products and ships them to the retailer. In
addition, the Company designs and assembles corrugated floor and pallet
displays. These displays are then shipped with full packaged customer products.
This summary of the Company's significant accounting policies is presented to
assist in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management, who are
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles. Management uses estimates
and assumptions in preparing financial statements in accordance with generally
accepted accounting principles. Those estimates and assumptions affect the
amounts reported in the financial statements. Actual results could vary from the
estimates that were used.
These financial statements do not reflect the contribution of assets and
liabilities to "One Source Industries, LLC" as described in Note 11.
CASH AND CASH EQUIVALENTS
For purposes of the Statement of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less and
money market funds to be cash equivalents. The amount of cash equivalents
reported in the financial statements approximates fair value.
ACCOUNTS RECEIVABLE
Accounts receivable (less the allowance for doubtful accounts) are recorded at
net realizable value. The amount of accounts receivable reported in the
financial statements approximates fair value. Company management has estimated
that all accounts will be collected and therefore no allowance for doubtful
accounts is necessary. It is reasonably possible that the Company's estimate of
the collectibility of accounts receivable will change.
INVENTORIES
Inventories consist primarily of corrugated cardboard and plastic packaging
materials. There was no work in process or finished goods in inventory at
December 31, 1998. Inventories are valued at the lower of cost
(first-in-first-out) or market.
DEPRECIATION
Depreciation of property, plant and equipment is provided over the estimated
useful lives of the respective assets on the straight-line basis. The useful
lives are estimated to be five years on office equipment and seven years on
furniture and production equipment.
The Company's policy is to evaluate the remaining life and recoverability in
light of current conditions. It is reasonably possible that the Company's
estimate to recover the carrying amount of property, plant and equipment will
change.
9
<PAGE>
ONE SOURCE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
REVENUE RECOGNITION POLICY
The Company recognizes revenue on an accrual basis of accounting. Revenue is
recorded when all terms of the sale are substantially completed; this generally
occurs when the product ships.
ADVERTISING
The Company expenses advertising costs when incurred. Advertising expense
totaled $13,246 for the year ended December 31, 1998.
INCOME TAXES
Deferred income taxes are recorded for the temporary differences between the
Company's financial statements and tax returns in accordance with Statements of
Financial Accounting Standards No. 109 (FAS 109), Accounting for Income Taxes.
FAS 109 is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, FAS 109 generally considers all
expected future events other than enactment of changes in the tax law or rates.
Investment credits are recorded as a reduction of the provision for federal
income taxes using the flow-through method.
The Company is an S Corporation for federal and state income tax purposes. Under
the provisions of the Internal Revenue Code relating to S Corporations, federal
taxes based on income are the direct liability of the stockholders and,
therefore, no provision or related liability for federal taxes based on income
has been recorded. The Company is liable for state income taxes at a 1.5% tax
rate.
NOTE 2 - CASH AND CASH EQUIVALENTS
The cash balance is on deposit primarily at one bank. The balance at December
31, 1998 exceeds the maximum federally insured limits.
NOTE 3 - ACCOUNTS RECEIVABLE
A summary of accounts receivable follows:
<TABLE>
<S> <C>
Accounts receivable $929,334
Allowance for doubtful accounts -0-
--------
$929,334
--------
--------
</TABLE>
One customer owed the Company $484,872 (52% of the balance) which was
subsequently collected.
10
<PAGE>
ONE SOURCE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment at cost follows:
<TABLE>
<CAPTION>
Accum. Net Book
Cost Deprec. Value
---- ------- -----
<S> <C> <C> <C>
Machinery and equipment $153,917 $ 20,908 $133,009
Office furniture & equipment 66,055 6,186 59,869
-------- -------- --------
Total $219,972 $ 27,094 $192,878
-------- -------- --------
-------- -------- --------
</TABLE>
NOTE 5 - LONG -TERM DEBT
Long-term debt at December 31, 1998 consisted of the following:
<TABLE>
<S> <C>
Note payable to Concord Commercial, Division of HSBC Business Loans, Inc.,
payable in monthly installments of $3,162 including interest at 8.75%,
final payment due June 20, 2002, collateralized by equipment and
personally guaranteed by stockholder $ 51,608
Note payable to Concord Commercial, Division of HSBC Business Loans, Inc.,
payable in monthly installments of $1,777 including interest at 9.25%,
final payment due September 1, 2001, collateralized by equipment 114,002
--------
The notes payable balances reported in the financial statements represent their
fair value.
165,610
Less current portion (46,373)
--------
Long-term debt $119,237
--------
--------
</TABLE>
Maturities of long term debt are as follows:
<TABLE>
<S> <C>
1999 $ 46,372
2000 50,695
2001 50,047
2002 18,496
--------
Total $165,610
--------
--------
</TABLE>
NOTE 6 - RELATED PARTY TRANSACTION
The Company contracted with Paxall, LLC to package product. Paxall is 50% owned
by the sole stockholder, Drew Sherline. During 1998 Paxall, LLC was paid
$520,495; this amount is included in cost of sales. The amount owing Paxall, LLC
at December 31, 1998 was $12,173; this amount is included in accounts payable.
11
<PAGE>
ONE SOURCE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 7 - STATE TAXES BASED ON INCOME
The provision for state franchise taxes is comprised of the following:
<TABLE>
<S> <C>
Current $ 26,432
Deferred 2,415
--------
Total $ 28,847
--------
--------
</TABLE>
Significant components of the Company's state deferred tax liabilities are as
follows:
<TABLE>
<S> <C>
Accounts receivable $ 13,940
Inventory 1,558
Accelerated depreciation 583
Accounts payable & accrued exp. (9,509)
Other 124
--------
Total Deferred Tax Liability $ 6,696
--------
--------
</TABLE>
NOTE 8 - BUSINESS CONCENTRATION
The Company does a substantial amount of business with two customers
(approximately 58%). A loss of either customer would have a significant impact
on the Company's profitability.
NOTE 9 - PENSION PLANS
The Company sponsors a discretionary defined contribution plan (profit sharing
plan) covering substantially all employees. Defined contribution pension expense
for the Company was $-0- for 1998 since management has elected not to fund a
contribution in the pension plan for 1998.
NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES
The Company leases business facilities in southern California and Mississippi.
Total rent expense for 1998 was $108,500. Rent expense for the Mississippi
facility was $84,800 and was charged to cost of sales.
A summary of noncancellable long-term operating lease commitments is as follows:
<TABLE>
<S> <C>
1999 $26,828
2000 27,658
2001 11,670
-------
Total $66,156
-------
-------
</TABLE>
12
<PAGE>
ONE SOURCE INDUSTRIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 11 - SUBSEQUENT EVENTS
After the close of business on December 31, 1998, the Company reorganized this
corporation's operations into a new California limited liability company called
"One Source Industries, LLC" with all assets of this corporation being assigned
to such limited liability company and all the liabilities of this corporation,
with the exception of current tax obligations, being assumed by the new limited
liability company.
The Company became an owner of a 99% interest in the new Company and Drew
Sherline, the majority shareholder of the Company, became a 1% owner of the new
Company.
These financial statements do not reflect this transaction since it took place
after the Company's books were closed.
On January 11, 1999 the Company sold 80% of its membership interest in the new
Company to Westminster Capital, Inc.
NOTE 12 - YEAR 2000 ISSUE (UNAUDITED)
The Company replaced all of its computer hardware and software in 1998. This new
information technology is ready for the year 2000.
13
<PAGE>
(b) Pro Forma Financial Information:
On January 11, 1999, the Registrant entered into a Membership Interest
Purchase Agreement to acquire from One Source Industries, Inc. ("Seller"), an
80% interest in One Source Industries, LLC ("One Source") for cash consideration
of $4.8 million paid at closing, deferred consideration of $196,000, plus up to
an additional $2.15 million in deferred contingent cash consideration that may
be paid over the next four years based on the performance of One Source during
such period. One Source provides turn-key packaging and point-of-sale displays
for a broad spectrum of consumer products ranging from computer software to food
products. The purchase price was negotiated at arms length with the Seller, who
had no prior relationship with the Registrant. The acquisition was financed
using existing cash reserves.
The acquisition was accounted for using the purchase method of
accounting. The purchase price, including liabilities assumed, was allocated to
tangible assets and intangible assets. The excess of the aggregate purchase
price plus direct costs of acquisition over the estimated fair market values of
the net assets acquired was recognized as goodwill and is being amortized over
20 years.
Prior to January 1, 1999, the business of One Source was conducted by
the Seller. At the close of business on December 31, 1998, the Seller
reorganized its operations into One Source, a new California limited liability
company, with all assets being assigned to such limited liability company and
all liabilities being assumed by the new limited liability company, with the
exception of current tax obligations. The financial information of One Source
for periods beginning prior to January 1, 1999, reflect the financial condition
and results of operations of Seller, One Source's predecessor in interest.
The following unaudited pro forma consolidated statements of operations
give effect to the acquisition as if it had occurred at the beginning of the
period being presented, while the unaudited pro forma consolidated statements of
financial condition as of December 31, 1997 and September 30, 1998, both reflect
the combination of Registrant and One Source as if the transaction had occurred
as of each respective balance sheet date. Pro forma adjustments include only the
effects of events directly attributable to the transaction that are expected to
have a continuing impact and that are factually supportable. The notes to the
pro forma financial information describe the pro forma amounts and adjustments
presented below. The pro forma financial information does not necessarily
reflect the operating results that would have occurred had the acquisition been
consummated as of the above dates, nor is such information indicative of future
operating results.
The pro forma consolidated statements of financial condition as of
December 31, 1997 and September 30, 1998, both reflect the combination of the
Registrant and One Source as if the transaction had occurred as of each
respective balance sheet date. The pro forma consolidated statement of
operations for the year ended December 31, 1997 reflects the combination of the
Registrant's statement of operations for the year ended December 31, 1997 and
One Source's statement of operations for the year ended December 31, 1997. The
pro forma consolidated statements of operations for the nine months ended
September 30, 1998 and 1997 reflects the combination of the Registrant's
statements of operations for the nine months ended September 30, 1998 and 1997
and One Source's statements of operations for the nine months ended September
30, 1998 and 1997, respectively.
14
<PAGE>
WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AS OF
December 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
---------------------------------------------------------------
Westminster One
Capital, Source
Inc. Industries,
Consolidated Inc. Adjustments Reference PRO FORMA
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $1,738,000 (28,000) 6,000 (a) $1,716,000
Securities available-for-sale 18,405,000 (4,800,000) (a) 13,605,000
Investments in limited partnerships that 0
invest in securities 2,314,000 2,314,000
Loans receivable, net 7,081,000 7,081,000
Accounts receivable 1,002,000 1,102,000 2,104,000
Inventories 0 7,000 7,000
Accrued interest receivable 801,000 801,000
Real estate acquired through foreclosure 833,000 833,000
Telephone systems, net 834,000 834,000
Property and equipment, net 710,000 89,000 799,000
Goodwill, net 881,000 4,986,000 (a) (b) 5,867,000
Other assets 271,000 38,000 309,000
---------------------------------------------------------------
Total Assets $34,870,000 $1,208,000 $192,000 $36,270,000
---------------------------------------------------------------
---------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable $669,000 744,000 $1,413,000
Accrued expenses 1,915,000 44,000 246,000 (b) 2,205,000
Long term debt 655,000 107,000 196,000 (a) 958,000
Income taxes 5,366,000 5,366,000
Minority interests 297,000 63,000 (a) 360,000
---------------------------------------------------------------
Total Liabilities 8,902,000 895,000 505,000 10,302,000
---------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Common stock 7,835,000 1,000 (1,000) (a) $7,835,000
Capital in excess of par value 55,943,000 55,943,000
Accumulated deficit (37,823,000) 312,000 (312,000) (a) (37,823,000)
Accumulated other comprehensive
income 13,000 13,000
---------------------------------------------------------------
Total Shareholders' Equity 25,968,000 313,000 (313,000) 25,968,000
---------------------------------------------------------------
Total Liabilities and Shareholders' Equity $34,870,000 $1,208,000 $192,000 $36,270,000
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
See notes to Pro Forma Statements
15
<PAGE>
WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AS OF
September 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
---------------------------------------------------------------
Westminster One
Capital, Source
Inc. Industries,
Consolidated Inc. Adjustments Reference PRO FORMA
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $403,000 279,000 6,000 (a) $688,000
Securities available-for-sale 27,234,000 (4,800,000) (a) 22,434,000
Investments in limited partnerships that 0
invest in securities 1,953,000 1,953,000
Loans receivable, net 9,525,000 9,525,000
Accounts receivable 857,000 1,037,000 1,894,000
Inventories 0 29,000 29,000
Accrued interest receivable 997,000 4,000 1,001,000
Real estate acquired through foreclosure 833,000 833,000
Telephone systems, net 434,000 434,000
Property and equipment, net 156,000 195,000 351,000
Goodwill, net 811,000 4,994,000 (a) (b) 5,805,000
Other assets 91,000 110,000 201,000
---------------------------------------------------------------
Total Assets $43,294,000 $1,654,000 $200,000 $45,148,000
---------------------------------------------------------------
---------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable $569,000 969,000 $1,538,000
Accrued expenses 2,102,000 206,000 246,000 (b) 2,554,000
Long term debt 0 177,000 196,000 (a) 373,000
Income taxes 8,564,000 8,564,000
Minority interests 168,000 60,000 (a) 228,000
---------------------------------------------------------------
Total Liabilities 11,403,000 1,352,000 502,000 13,257,000
---------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Common stock 7,835,000 1,000 (1,000) (a) $7,835,000
Capital in excess of par value 55,943,000 55,943,000
Accumulated deficit (32,036,000) 301,000 (301,000) (a) (32,036,000)
Accumulated other comprehensive
income 149,000 149,000
---------------------------------------------------------------
Total Shareholders' Equity 31,891,000 302,000 (302,000) 31,891,000
---------------------------------------------------------------
Total Liabilities and Shareholders' Equity $43,294,000 $1,654,000 $200,000 $45,148,000
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
See notes to Pro Forma Statements
16
<PAGE>
WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Year ended December 31, 1997
----------------------------------------------------------------
Westminster One
Capital, Source
Inc. Industries,
Consolidated Inc. Adjustments Reference PRO FORMA
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Interest on loans $1,094,000 $1,094,000
Loan fees 639,000 639,000
Interest on securities available-for-sale
and money market funds 932,000 (278,000) (b) 654,000
Unrealized gains on limited partnerships
that invest in securities 529,000 529,000
Gain on sale of securities
available-for-sale 332,000 332,000
Lawsuit settlement, net 950,000 950,000
Telephone system revenue 1,444,000 1,444,000
Sales to customers 2,711,000 6,389,000 9,100,000
Loss from equity investment (686,000) (686,000)
Other income 51,000 51,000
-------------------------------------- ------------
Total Revenues 7,996,000 6,389,000 (278,000) 14,107,000
-------------------------------------- ------------
EXPENSES:
Telephone time charges 733,000 733,000
Cost of sales 2,539,000 4,425,000 6,964,000
Other telephone system charges 605,000 605,000
General and administrative 1,790,000 1,255,000 240,000 (a) 3,285,000
-------------------------------------- ------------
Total Expenses 5,667,000 5,680,000 240,000 11,587,000
-------------------------------------- ------------
0
INCOME BEFORE INCOME TAXES 0
AND MINORITY INTEREST 2,329,000 709,000 (518,000) 2,520,000
0
INCOME TAX PROVISION (932,000) (12,000) (21,000) (c) (965,000)
0
0
MINORITY INTEREST SHARE OF INCOME (26,000) (139,000) (165,000)
0
-------------------------------------- ------------
NET INCOME $1,371,000 $558,000 ($539,000) $1,390,000
-------------------------------------- ------------
-------------------------------------- ------------
Net Income per common share
Primary $0.17 $0.07 ($0.07) $0.18
Fully Diluted 0.17 0.07 (0.07) 0.18
Weighted average shares outstanding
Primary 7,835,000 7,835,000 7,835,000 7,835,000
Fully Diluted 7,866,000 7,866,000 7,866,000 7,866,000
</TABLE>
See notes to Pro Forma Statements
17
<PAGE>
WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended September 30, 1998
---------------------------------------------------------------
Westminster One
Capital, Source
Inc. Industries,
Consolidated Inc. Adjustments Reference PRO FORMA
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Interest on loans $888,000 $888,000
Loan fees 49,000 49,000
Interest on securities available-for-sale
and money market funds 969,000 (208,000) (b) 761,000
Unrealized gains (losses) on limited
partnerships that invest in securities (342,000) (342,000)
Gain (loss) on sale of securities
available-for-sale (234,000) (234,000)
Telephone system revenue 1,181,000 1,181,000
Sales to customers 15,017,000 7,103,000 22,120,000
Loss from equity investment 5,887,000 5,887,000
Interest on Tax Refund 2,644,000 2,644,000
Other income 27,000 27,000
-------------------------------------- ------------
Total Revenues 26,086,000 7,103,000 (208,000) 32,981,000
-------------------------------------- ------------
EXPENSES:
Telephone time charges 489,000 489,000
Cost of sales 14,221,000 5,124,000 19,345,000
Other telephone system charges 439,000 439,000
General and administrative 3,086,000 1,024,000 180,000 (a) 4,290,000
-------------------------------------- ------------
Total Expenses 18,235,000 6,148,000 180,000 24,563,000
-------------------------------------- ------------
0
INCOME BEFORE INCOME TAXES 0
AND MINORITY INTEREST 7,851,000 955,000 (388,000) 8,418,000
0
INCOME TAX PROVISION (2,013,000) (11,000) (159,000) (c) (2,183,000)
0
0
MINORITY INTEREST SHARE OF INCOME (50,000) (189,000) (239,000)
0
-------------------------------------- ------------
NET INCOME $5,788,000 $755,000 ($547,000) $5,996,000
-------------------------------------- ------------
-------------------------------------- ------------
Net Income (loss) per common share
Primary $0.74 $0.10 ($0.07) $0.77
Fully Diluted 0.73 0.10 (0.07) 0.76
Weighted average shares outstanding
Primary 7,835,000 7,835,000 7,835,000 7,835,000
Fully Diluted 7,937,000 7,937,000 7,937,000 7,937,000
</TABLE>
See notes to Pro Forma Statements
18
<PAGE>
WESTMINSTER CAPITAL, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended September 30, 1997
----------------------------------------------------------------
Westminster One
Capital, Source
Inc. Industries,
Consolidated Inc. Adjustments Reference PRO FORMA
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Interest on loans $902,000 $902,000
Loan fees 200,000 200,000
Interest on securities available-for-sale
and money market funds 689,000 (208,000) (b) 481,000
Gain on sale of securities
available-for-sale 182,000 182,000
Lawsuit settlement, net 522,000 522,000
Telephone system revenue 1,107,000 1,107,000
Sales to customers 0 3,697,000 3,697,000
(Loss) from equity investment (129,000) (129,000)
Other income 151,000 151,000
-------------------------------------- ------------
Total Revenues 3,624,000 3,697,000 (208,000) 7,113,000
-------------------------------------- ------------
EXPENSES:
Telephone time charges 556,000 556,000
Cost of sales 0 3,004,000 3,004,000
Other telephone system charges 454,000 454,000
General and administrative 1,088,000 727,000 180,000 (a) 1,995,000
-------------------------------------- ------------
Total Expenses 2,098,000 3,731,000 180,000 6,009,000
-------------------------------------- ------------
0
INCOME (LOSS) BEFORE INCOME TAXES 0
AND MINORITY INTEREST 1,526,000 (34,000) (388,000) 1,104,000
0
INCOME TAX PROVISION (625,000) 0 174,000 (c) (451,000)
0
0
MINORITY INTEREST SHARE OF INCOME (24,000) 7,000 (17,000)
0
-------------------------------------- ------------
NET INCOME (LOSS) $877,000 ($27,000) ($214,000) $636,000
-------------------------------------- ------------
-------------------------------------- ------------
Net Income (loss) per common share
Primary $0.11 $0.00 ($0.03) $0.08
Fully Diluted 0.11 0.00 (0.03) 0.08
Weighted average shares outstanding
Primary 7,835,000 7,835,000 7,835,000 7,835,000
Fully Diluted 7,865,000 7,865,000 7,865,000 7,865,000
</TABLE>
See notes to Pro Forma Statements
19
<PAGE>
WESTMINSTER CAPITAL, INC.
NOTES TO PRO FORMA STATEMENTS
FORM 8-K/A
MARCH 1999
NOTES TO PRO FORMA STATEMENTS OF FINANCIAL CONDITION:
AS OF DECEMBER 31, 1997 AND SEPTEMBER 30, 1998
(a) Represents entry to record acquisition of an 80% interest in One Source
using the purchase method of accounting. This acquisition is represented by
net tangible assets at net book value as of each date (assumed fair value),
plus direct costs of acquisition. The excess of the established purchase
price plus direct costs of acquisition is recognized as goodwill, and will
be amortized over 20 years. Net tangible assets are comprised of tangible
assets less liabilities assumed.
This acquisition entry includes the elimination of retained earnings at the
date of acquisition and accounting for the minority interest of 20%.
The acquisition further includes the establishment of an amount certain
owing to the seller of $196,000, which amount is payable in April 2000.
Additional contingent purchase price payments may be made in each of the
next four years based on the performance of One Source. These payments (if
any) will be recorded when the liability for such payments is established.
(b) Record liabilities for professional fees and other direct costs of
acquisition. These liabilities comprise brokerage commissions of $196,000
and professional fees of $50,000.
NOTES TO PRO FORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(a) Represents goodwill amortization for the twelve months ended December 31,
1997.
(b) Represents estimated foregone interest from investments in marketable
securities arising from liquidation of these investments, in order to fund
the initial payment to the seller of $4,800,000. The interest rate used in
this calculation represents the approximate average rate earned on such
funds during the period.
(c) Represents the adjustment to the provision for income taxes on the change in
net income before taxes net of the minority share of such income, using the
Corporations estimated combined federal and state income tax rates of 40%.
NINE MONTHS ENDED SEPTEMBER 30, 1998
(a) Represents goodwill amortization for the nine months ended September 30,
1998.
(b) Represents estimated foregone interest from investments in marketable
securities arising from liquidation of these investments, in order to fund
the initial payment to the seller of $4,800,000. The interest rate used in
this calculation represents the approximate average rate earned on such
funds during the period.
(c) Represents the adjustment to the provision for income taxes on the change in
net income before taxes net of the minority share of such income, using the
Corporation's estimated combined federal and state income tax rates of 40%.
20
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1997
(a) Represents goodwill amortization for the nine months ended September 30,
1997.
(b) Represents estimated foregone interest from investments in marketable
securities arising from liquidation of these investments, in order to fund
the initial payment to the seller of $4,800,000. The interest rate used in
this calculation represents the approximate average rate earned on such
funds during the period.
(c) Represents the adjustment to the provision for income taxes on the change in
net income before taxes net of the minority share of such income, using the
Corporation's estimated combined federal and state income tax rates of 40%.
21
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page Number
- ------- -----------
<C> <S> <C>
23.1 Consent of Auditors. 23
</TABLE>
22
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS'
The Board of Directors
Westminster Capital, Inc.:
We consent to incorporation by reference in the registration statement No.
33-21177 on Form S-8 of Westminster Capital, Inc. of our report dated
February 15, 1999, with respect to the balance sheet of One Source Industries
Inc. as of December 31, 1998, and the related statements of income, retained
earnings, and cash flows for the year then ended, which report appears in the
Form 8-K/A of Westminster Capital, dated March 22, 1999.
Irvine, California
March 22, 1999
/s/ Fetta Piper & Rossi
- --------------------------------
Fetta Piper & Rossi
Certified Public Accountants LLP
