SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 28, 1997
VSI HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Georgia 1-12942 22-2135522
(State or other jurisdic- (Commission File (I.R.S. Employer
tion of organization) Number) Identification No.)
4900 Highlands Parkway
Smyrna, Georgia 30082
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (770) 432-0636
-1-
Item 1. Changes in Control of Registrant.
None.
Item 2. Acquisition or Disposition of Assets.
The Board of Directors of VSI Holdings and Vispac, Inc.
approved the business combination of the respective
companies on June 29, 1997. VSI Holdings will issue
6,200,000 shares of its common stock in a tax-free
exchange for all the outstanding shares of Vispac. The
transaction, effective July 1, 1997, will be accounted
for on a "pooling of interest" basis. Vispac is
controlled by a related party, who is an officer and
director of the registrant, and will join Advanced
Animations, Inc. and BKNT Retail Stores, Inc. as a
wholly-owned subsidiary of VSI Holdings, Inc.
Subsequent to the transaction, total shares outstanding
of the registrant are 18,321,287 net of 1,091,122 shares
of treasury stock.
Vispac is a leading-edge fulfillment company. It offers
a portfolio of integrated logistics services to clients
in the automotive industry keyed to the "just-in-time"
process for materials delivery, consolidation, and
distribution. Vispac had revenues of $16,575,000 and
EBITD of $2,116,000 for the year ended September 30,
1996.
Advanced Animations is a manufacturer of animatronic
figures and BKNT Retail Stores operates a chain of
women's apparel stores under the name Dress Code.
Item 3. Bankruptcy or Receivership.
None.
Item 4. Changes in Registrant's Certifying Accountant.
8-K filed July 23, 1997 incorporate by reference.
Item 5. Other Events.
None.
-2-
Item 6. Resignations of Registrant's Directors.
None.
Item 7. Financial Statements and Exhibits.
Exhibit 7.1. Consent of Independent Public Accountants.
7.2. Vispac, Inc. Financial Report for Fiscal Years
Ended September 30, 1996 and September 30,
1995.
7.3 Pro Forma Financial Data.
The following pro forma financial statements
for the years ended September 30, 1996 and
September 30, 1995 indicate how the
transaction might have affected historical
financial statements if the transaction had
been consummated at an earlier time.
The pro forma financial statements have been
adjusted to reflect a provision for taxes and
the utilization of tax loss carryforwards
available to the combined entities. The
statements also include Advanced Animations,
Inc. acquired on February 1, 1997.
Item 8. Change in Fiscal Year.
None.
-3-
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 thereunto duly authorized.
VSI Holdings, Inc.
Registrant
July 28, 1997 /S/Thomas W. Marquis
Thomas W. Marquis,
Chief Accounting and
Financial Officer
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the inclusion of our review report dated December 3, 1996 on the
financial statements of VISPAC, Inc. in the form 10Q of VSI Holdings, Inc.
for the quarterly period ended June 30, 1997.
Ann Arbor, Michigan
July 23, 1997
-5-
VISPAC, INC.
FINANCIAL REPORT
WITH ADDITIONAL INFORMATION
SEPTEMBER 30, 1996
VISPAC, INC.
CONTENTS
REPORT LETTER 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Income 3
Statement of Changes in Stockholders? Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-11
REPORT LETTER 12
ADDITIONAL INFORMATION
Comparative Summary 13
Combining Divisional Detail of Balance Sheet 14
Divisional Detail of Statement of Income 15
-6-
To the Board of Directors and Stockholders
VISPAC, Inc.
We have reviewed the accompanying balance sheet of VISPAC, Inc. as of September
30, 1996 and 1995, and the related statements of income, changes in
stockholders? equity and cash flows for the years then ended, in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included
in these financial statements is the representation of the management of
VISPAC, Inc.
A review consists principally of inquiries of company personnel and
analytical procedures applied to financial data. It is substantially less in
scope than an audit in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to
be in conformity with generally accepted accounting principles.
December 3, 1996
-7-
VISPAC, INC.
BALANCE SHEET
ASSETS
SEPTEMBER 30
1996 1995
CURRENT ASSETS
Cash $6,950 $193,566
Accounts receivable (no allowance for
uncollectible accounts considered necessary):
Trade 6,972,500 5,497,623
Amounts due from affiliates (Note 2) 707,908 581,161
Note receivable (Note 3) 353,006 138,559
Paper and shipping supplies inventory 167,315 246,778
Accumulated costs of uncompleted programs 167,205 79,604
Prepaid expenses 518,026 442,561
Total current assets 8,892,910 7,179,852
PROPERTY, PLANT AND EQUIPMENT (Note 4) 2,408,461 2,198,430
RECEIVABLE - Stockholder 345,233 201,233
Total assets $11,646,604 $9,579,515
-8-
VISPAC, INC.
BALANCE SHEET (con't)
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30
1996 1995
CURRENT LIABILITIES
Current portion of mortgage payable(Note 5) $ 38,644 $ 38,644
Note payable - Other (Note 6) 3,480,000 2,843,000
Bank Overdraft 1,053,727 -
Accounts Payable 2,139,717 1,863,221
Customer Deposits 17,650 -
Accrued salaries, wages and bonuses 181,976 140,741
Accrued expenses 142,566 78,730
Declared distribution to stockholders - 250,000
Total current liabilities 7,077,773 5,242,426
MORTGAGE PAYABLE (Note 5) 479,014 517,676
STOCKHOLDERS' EQUITY
Common stock (Note 9) 11,770 11,770
Additional paid-in capital 797,236 797,236
Retained earnings:
Retained earnings prior to S Corporation election 1,792,785 1,792,785
Earnings undistributed to stockholders 1,488,026 1,217,622
Total stockholders? Equity 4,089,817 3,819,413
Total liabilities and stockholders? Equity $11,646,604 $9,579,515
-9-
VISPAC, INC.
STATEMENT OF INCOME
YEAR ENDED SEPTEMBER 30
1996 1995
NET SALES $ 16,574,969 $14,534,210
PROGRAM COSTS 3,828,940 3,108,402
NET REVENUE 12,746,029 11,425,808
EXPENSES
Salaries and wages 4,644,874 4,371,144
Temporary labor 2,119,318 1,913,481
Office and equipment rental 1,102,411 1,001,577
Payroll and other taxes 638,920 589,458
Employee benefits 398,290 312,666
Depreciation and amortization 428,819 369,396
Selling, general and administrative 1,945,921 1,894,743
Total expenses 11,278,553 10,452,465
OPERATING INCOME 1,467,476 973,343
OTHER INCOME (EXPENSE)
Gain (loss) on sale of property, plant and equipment 173,210 (2,100)
Interest income 46,385 12,946
Interest expense (296,666) (222,183)
NET INCOME $1,390,405 $ 762,006
-10-
VISPAC, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS? EQUITY
COMMON STOCK ADDITIONAL STOCK PRIOR TO S UNDISTRIBUTED TOTAL
PAID-IN SUBS. CORP. TO STKHLDRS
SHARES AMOUNT CAPITAL REC'BLE ELECTION STKHLDRS' EQUITY
BALANCE- October 1, 1994
58,850 $11,770 $797,236 (220,560) $2,192,785 $1,005,616 $3,786,847
Net Income
- - - - - 762,006 762,006
Distributions to stockholders
- - - - - (550,000) (550,000)
Redemption of stock (Note 9)
- - - - (400,000) - (400,000)
Receipts on stock subscriptions
- - - 220,560 - - 220,560
BALANCE- September 30, 1995
58,850 $11,770 $797,236 - $1,792,785 $1,217,622 $3,786,847
Net Income
- - - - - 1,390,405 1,390,405
Distributions to stockholders
- - - - - 1,120,001)(1,120.001)
BALANCE- September 30, 1996
58,850 $11,770 $797,236 - $1,792,785 $1,488,026 $4,089,817
-11-
VISPAC, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,390,405 $ 762,006
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization 428,819 369,396
(Gain) loss on sale of property, plant and equipment (173,210) 2,100
Changes in assets and liabilities:
Increase in accounts receivable (1,601,624) (97,525)
(Increase) decrease in paper and shipping supplies
inventory 79,463 (160,820)
(Increase) decrease in accumulated costs of
uncompleted programs (87,601) 39,996
Increase in prepaid expenses (188,979) (157,675)
Increase in accounts payable 276,496 443,267
Increase (decrease) in accrued liabilities 118,124 (129,866)
Net cash provided by operating activities 241,893 1,070,879
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to notes receivable (645,194) (11,428)
Payments on notes receivable 560,747 -
Purchase of property, plant and equipment (600,062) (416,771)
Proceeds from sale of property, plant and equipment 117,936 351
Receivable - Stockholder (144,000) (101,233)
Net cash used in investing activities (710,573) (529,081)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of short-term notes payable 637,000 1,182,000
Mortgage principal payments (38,662) (68,610)
Distributions to stockholders (1,370,001) (1,500,000)
Redemption of stock - (400,000)
Payments received on stock subscription - 220,560
Increased in bank overdraft 1,053,727 -
Net cash provided by (used in) financing activities 282,064 (566,050)
NET DECREASE IN CASH (186,616) (24,252)
CASH - Beginning of year 193,566 217,818
CASH - End of year $ 6,950 $ 193,566
-12-
VISPAC, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,1996 AND 1995
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
VISPAC, Inc. (the Company) provides administrative and promotional services,
warehousing and packaging operations, predominantly to North American
automobile manufacturers.
Paper and Shipping Supplies Inventory and Accumulated Costs of Uncompleted
Programs - Paper and shipping supplies inventory is stated at cost on a
first-in, first-out basis. Accumulated costs of uncompleted programs are
stated at cost, which is not in excess of the net realizable amount.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. These assets are depreciated or amortized by accelerated methods over
the estimated useful lives of the assets. Costs of maintenance and
repairs are charged to expense when incurred.
Revenue Recognition - Revenue is recognized as individual jobs are completed,
as all jobs are performed for a specified amount on the basis of a customer
request or purchase order. Program freight and transportation expenses
incurred by the Company are not included in sales or program costs but are
passed through directly to the customer.
Income Taxes - VISPAC, Inc. has elected S Corporation status effective
April 1, 1986, under which income will be taxed to its stockholders.
Accordingly, no provision for income taxes has been made for the years ended
September 30, 1996 and 1995, respectively.
Retirement Plan - The Company has a voluntary retirement savings plan designed
in accordance with Section 401(k) of the Internal Revenue Code that covers
all eligible employees. Employer contributions are discretionary and
determined annually by management. Employer contributions amounted to
approximately $53,000 and $49,000, respectively, for the years ended
September 30, 1996 and 1995.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE 2 - AFFILIATES AND RELATED PARTY TRANSACTIONS
The majority stockholder of the Company is the majority stockholder in two
other companies (see below) which have dealings with the Company.The Company
received revenue aggregating approximately $1,598,000 and $1,103,000 for the
years ended September 30, 1996 and 1995, respectively, for services performed
for the affiliated entities.
-13-
NOTE 2 - AFFILIATES AND RELATED PARTY TRANSACTIONS (Continued)
Amounts due from affiliated companies as of September 30 consist of the
following:
1996 1995
Trade accounts receivable under normal customer
terms from Visual Services, Inc. and subsidiaries $ 776,603 $ 594,073
Less trade accounts payable under normal vendor
terms to Visual Services, Inc. (68,695) (12,912)
Net amount due from affiliated companies $ 707,908 $ 581,161
Certain administrative and management support has been provided to the Company
by Visual Services, Inc. During each of the years ended September 30, 1996
and 1995, the Company was charged approximately $132,000 for these services.
The Company also rents one of its operating facilities from an affiliated entity
(Note 7).
NOTE 3 - NOTES RECEIVABLE
1996 1995
Note receivable from stockholder, payable upon
demand and bearing interest at bank prime rate
(8.25 percent and 8.75 percent at
September 30, 1996 and 1995, respectively) $ 223,006 $ 138,559
Land contract receivable, collateralized by
land, bearing interest at 11 percent per annum
with monthly interest only, payment of $1,192
through July 1997. The principal balance is due
in August 1997 130,000 -
Total $ 353,006 $ 138,559
Interest income amounted to $45,193 and $11,428 for the years ended September
30, 1996 and 1995, respectively.
-14-
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
1996 1995
Land $ 369,775 $ 444,500
Land improvements 40,800 40,800
Building 1,602,034 1,602,034
Equipment 4,505,066 3,841,755
Automobile and trucks 142,661 116,161
Furniture and fixtures 349,576 349,046
Leasehold improvements 602,637 579,903
Total 7,612,549 6,974,199
Less accumulated depreciation and
amortization (5,204,088) (4,775,769)
Net carrying amount $ 2,408,461 $2,198,430
NOTE 5 - MORTGAGE PAYABLE
The mortgage payable is collateralized by a first mortgage on the land and
building with a net book value of $961,866 at September 30, 1996. The loan
is payable in monthly principal installments of $3,222 plus interest, with a
final principal payment due on March 1, 2002. The mortgage bears interest at
prime(8.25 percent and 8.75 percent at September 30, 1996 and 1995,
respectively).
NOTE 6 - LINE OF CREDIT
VISPAC, Inc. has an available line of credit with a bank of $6,000,000. The
line of credit bears interest at prime (8.25 percent and 8.75 percent at
September 30, 1996 and 1995, respectively). The loan agreement contains
certain covenants that provide, among other things, that the Company
maintain certain levels of net worth and working capital and that the ratio
of total liabilities to net worth, debt service ratio and current ratio do
not exceed certain amounts.
-15-
NOTE 7 - LEASES AND LEASE COMMITMENTS
The Company rents its principal operating facility from a partnership in which
the majority stockholder of the Company is a 100 percent partner in the
partnership through direct and indirect ownership. The lease provides for
monthly rental payments of approximately $46,000, plus real estate taxes.
The term of the lease runs through November 30, 2001.
The Company also leases a warehouse facility under a long-term operating
lease agreement expiring August 31, 2000. The lease provides for monthly
rental payments of approximately $29,700, plus real estate taxes. The
Company also has an option to extend the lease through August 2005.
The minimum lease payments for the remaining years under the above leases are
as follows (excluding options):
YEARS ENDING RELATED
SEPTEMBER 30 PARTY OTHER TOTAL
1997 $551,000 $356,000 $907,000
1998 551,000 356,000 907,000
1999 551,000 356,000 907,000
2000 551,000 327,000 878,000
2001 551,000 - 551,000
2002 and
thereafter 92,000 - 92,000
Total $2,847,000 $1,395,000 $4,242,000
Total rent expense was approximately $978,000 for 1996 and $707,000 for 1995.
NOTE 8 - NET EARNINGS
The statement of income contains certain expenses which may not be deductible by
the stockholders of the Company in their individual federal income tax
returns due to statutory limitations imposed by the Internal Revenue Code.
Accordingly, the federal income tax return does not show those items as
deductions but has shown them as separately distributable items. The
following is a reconciliation of net earnings per the statement of income to
ordinary income per the federal tax return for the years ended September 30:
-16-
NOTE 8 - NET EARNINGS (Continued)
1996 1995
Net income per statement of income $1,390,405 $762,006
Separately distributable items:
Charitable contributions 9,005 8,850
Interest income (46,385) (12,946)
Section 1231 gain (loss) (85,605) 2,100
Nondeductible business entertainment 9,075 10,140
Deferred gain under installment sale (85,605) -
Ordinary income per federal income
tax return $1,190,890 $770,150
NOTE 9 - STOCKHOLDERS? EQUITY
During the year ended September 30, 1995, a legal settlement of $400,000 was
paid to the estate of a former stockholder to fully resolve the value of stock
previously redeemed.
The Company had a total of 80,000 shares authorized at .20 par value. Of
these shares, 15,000 are Class A voting common stock and 65,000 are Class B
nonvoting common stock. Issued and outstanding shares at September 30, 1996
and 1995 are as follows:
Class A shares 5,885
Class B shares 52,965
Total 58,850
Par value $.20
Common stock balance $11,770
-17-
NOTE 10 - SELF-INSURANCE PLAN
In cooperation with affiliated companies, the Company is substantially
self-insured for employee medical and dental claims. The policy year of
the plan is October 1 to September 30. The Company has purchased stop-loss
insurance for individual claims that exceed $75,000 annually, up to a maximum
of $1,000,000. The approximate amounts of employer contributions paid or
accrued for the plan years ended September 30 were as follows:
1996 1995
Visual Services, Inc $1,085,000 $631,000
Vispac, Inc. 96,000 213,000
Advanced Animations 295,000 70,000
Total $1,476,000 $914,000
NOTE 11 - CASH FLOWS
The Company paid $296,666 and $222,183 in interest for the years ended
September 30, 1996 and 1995, respectively.
During the year ended September 30, 1996, the Company sold land in exchange
for a land contract receivable of $130,000.
There were no other significant noncash transactions during the years ended
September 30, 1996 and 1995.
NOTE 12 - CHANGE IN ACCOUNTING BASIS
During the year ended September 30, 1996, the Company changed its method of
accounting from the same basis of accounting used for income tax purposes to
the accrual basis under generally accepted accounting principles. The
Company believes that the accrual basis under generally accepted accounting
principles more accurately reflects financial position and results of
operations.
There were no significant differences between the method of accounting used
for income tax purposes and the accrual basis under generally accepted
accounting principles; accordingly, no adjustments were made to retained
earnings.
-18-
ADDITIONAL INFORMATION
To the Board of Directors
VISPAC, Inc.
We have reviewed the financial statements of VISPAC, Inc. for the years ended
September 30, 1996 and 1995. The accompanying information is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the inquiry and
analytical procedures applied in the reviews of the basic financial
statements, and we did not become aware of any material modifications that
should be made to such data.
December 3, 1996
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VISPAC, INC.
COMPARATIVE SUMMARY
(dollars in thousands)
YEAR ENDED SEPTEMBER 30
1996 1995
PERCENT PERCENT
OF OF
AMOUNT REVENUE AMOUNT REVENUE
REVENUE $16,795 100.0 $14,547 100.0
EXPENSES
Direct costs 13,047 77.7 11,667 80.2
Interest 297 1.8 222 1.5
Payroll taxes 381 2.3 385 2.7
Depreciation and
Amortization 428 2.5 369 2.5
Selling, general and
Administrative expenses 1,252 7.4 1,14 7.8
Total 15,405 91.7 13,785 94.7
NET INCOME $1,390 8.3 $ 762 5.3
-20-
VISPAC, INC.
COMBINING DIVISIONAL DETAIL OF BALANCE SHEET
SEPTEMBER 30, 1996
VISPAC, INC. CCI ELIMINATIONS TOTAL
ASSETS
CURRENT ASSETS
Cash $12,877 $300 $(6,227 $6,950
Accounts receivable:
Trade 6,839,162 34,272 99,066 6,972,500
Amounts due from
Affiliates 707,908 - - 707,908
Other - 130,721 (130,721) -
Note receivable 353,006 - - 353,006
Paper and shipping
supplies inventory 163,725 3,590 - 167,315
Accumulated costs of
uncompleted programs 165,691 1,514 - 167,205
Prepaid expenses 515,057 2,969 - 518,026
Total current assets 8,757,426 173,366 (37,882) 8,892,910
PROPERTY, PLANT AND
EQUIPMENT 2,395,700 12,761 - 2,408,461
RECEIVABLE - Stockholder 345,233 - - 345,233
Total assets $11,498,359 $186,127 $(37,882) $11,646,604
LIABILITIES AND STOCKHOLDERS? EQUITY
CURRENT LIABILITIES
Current portion of mortgage
Payable $38,664 $ - $ - $38,664
Note payable - Other 3,480,000 - - 3,480,000
Bank overdraft 1,053,727 - - 1,053,727
Accounts payable 2,156,359 21,240 (37,882) 2,139,717
Customer deposits 17,650 - - 17,650
Accrued salaries,
wages and bonuses 180,988 988 - 181,976
Accrued expenses 140,073 2,493 - 142,566
Accrued payroll taxes
And taxes withheld
from employees 23,473 - - 23,473
Total current
Liabilities 7,090,934 24,721 (37,882) 7,077,773
-21-
VISPAC, INC.
COMBINING DIVISIONAL DETAIL OF BALANCE SHEET
SEPTEMBER 30, 1996
VISPAC, INC. CCI ELIMINATIONS TOTAL
MORTGAGE PAYABLE 479,014 - - 479,014
STOCKHOLDERS? EQUITY
Common stock 11,770 - - 11,770
Additional paid-in
Capital 784,144 13,092 - 797,236
Retained earnings:
Retained earnings prior
to S Corporation
election 1,792,785 - - 1,792,785
Earnings undistributed to
Stockholders 1,339,712 148,314 - 1,488,026
Total stockholders?
Equity 3,928,411 161,406 - 4,089,817
Total liabilities and
stockholders? Equity $11,498,359 $186,127 $(37,882) $11,646,604
-22-
VISPAC, INC.
DIVISIONAL DETAIL OF STATEMENT OF INCOME
SEPTEMBER 30, 1996
VISPAC, INC. CCI ELIMINATIONS TOTAL
NET SALES $16,368,693 $251,636 $(45,360) $16,574,969
PROGRAM COSTS 3,828,940 - - 3,828,940
NET REVENUE 12,539,753 251,636 (45,360) 12,746,029
EXPENSES
Salaries and wages 4,477,219 167,655 - 4,644,874
Temporary labor 2,119,318 - - 2,119,318
Office and equipment
Rental 1,100,971 28,500 (27,060) 1,102,411
Payroll and other taxes 625,407 13,513 - 638,920
Employee benefits 394,235 4,055 - 398,290
Depreciation and
Amortization 417,330 11,489 - 428,819
Selling, general and
Administrative 1,912,565 51,656 (18,300) 1,945,921
Total expenses 11,047,045 276,868 (45,360) 11,278,553
OPERATING INCOME (LOSS) 1,492,708 (25,232) - 1,467,476
OTHER INCOME (EXPENSE)
Gain on sale of property,
plant and equipment 173,210 - - 173,210
Interest income 46,385 - - 46,385
Interest expense (296,666) - - (296,666)
NET INCOME (LOSS) $1,415,637 $(25,232) $ - $1,390,405
-23-
Pro forma Financial Statements Exhibit 7.3
VSI Holdings, Inc. and Vispac, Inc.
Year ended September 30, 1995
VSI Holding Vispac CONSOLIDATE
SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 SEPTEMBER 30, 1995
ASSETS
CURRENT ASSETS
Cash 28,000 194,000 222,000
Accounts and Notes Receivable 512,000 6,079,000 6,591,000
less allowance for
doubtful accounts (62,000) (62,000)
Inventory 6,015,000 247,000 6,262,000
Notes receivable 908,000 139,000 1,047,000
Costs in excess of billings on
uncompleted contracts 333,000 79,000 412,000
Prepaid expenses 216,000 443,000 659,000
Total current assets 7,950,000 7,181,000 15,131,000
PROPERTY AND EQUIPMENT 3,000,000 2,198,000 5,198,000
OTHER ASSETS 85,000 85,000
NOTES RECEIVABLE 0 201,000 201,000
11,035,000 9,580,000 20,615,000
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable 2,853,000 1,863,000 4,716,000
Accrued liabilities 595,000 248,000 843,000
Notes payable 876,000 2,843,000 3,719,000
Unpaid distributions 45,000 1,468,000 1,513,000
Customer credits 118,000 0 118,000
Current portion of bond payable 59,000 39,000 98,000
Total current liabilities 4,546,000 6,461,000 11,007,000
NOTES PAYABLE 553,000 553,000
BOND PAYABLE 336,000 517,000 853,000
EQUITY
Common stock 55,000 12,000 67,000
Additional paid-in capital 6,724,000 797,000 7,521,000
Retained earnings (deficit) 249,000 1,793,000 2,042,000
7,028,000 2,602,000 9,630,000
Less treasury stock (1,428,000) (1,428,000)
Total equity 5,600,000 2,602,000 8,202,000
11,035,000 9,580,000 20,615,000
-24-
Pro forma Financial Statements Exhibit 7.3
VSI Holdings, Inc. and Vispac, Inc.
Year ended September 30, 1995
VSI Holding Vispac CONSOLIDATE
SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 SEPTEMBER 30, 1995
NET SALES 21,426,000 14,534,000 35,960,000
COST OF GOODS SOLD 14.419,000 3,108,000 17,527,000
Gross profits 7,007,000 11,426,000 18,433,000
OPERATING EXPENSES
Selling, general,
and administrative 6,345,000 10,083,000 16,428,000
Depreciation and amortization 377,000 369,000 746,000
Store closing costs 16,000 - 16,000
Total operating expenses 6,738,000 10,452,000 17,190,000
OPERATING INCOME (LOSS) 269,000 974,000 1,243,000
OTHER EXPENSE (INCOME)
Interest and other income (71,000) (11,000) (82,000)
Interest expense 101,000 222,000 323,000
Total other expense (income) 30,000 211,000 241,000
Income (loss) before income taxes 239,000 763,000 1,002,000
Provision for taxes (151,000) (250,000) (401,000)
Utilization of tax loss carryforwards 151,000 250,000 401,000
NET INCOME 239,000 763,000 1,002,000
Earnings (loss) per share $0.02 $0.05
Shares outstanding 12,121,287 18,321,287
-25-
Pro forma Financial Statements Exhibit 7.3
VSI Holdings, Inc. and Vispac, Inc.
Year ended September 30, 1996
VSI Holding Vispac CONSOLIDATE
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
ASSETS
CURRENT ASSETS
Cash 245,000 7,000 252,000
Accounts and Notes Receivable 1,102,000 7,681,000 8,783,000
less allowance for
doubtful accounts (100,000) (100,000)
Inventory 3,678,000 167,000 3,845,000
Notes receivable 40,000 353,000 393,000
Costs in excess of billings on
uncompleted contracts 535,000 167,000 702,000
Prepaid expenses 87,000 518,000 605,000
Total current assets 5,587,000 8,893,000 14,480,000
PROPERTY AND EQUIPMENT 2,952,000 2,408,000 5,360,000
OTHER ASSETS 61,000 61,000
NOTES RECEIVABLE 39,000 345,000 384,000
8,639,000 11,646,000 20,285,000
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable 2,391,000 3,193,000 5,584,000
Accrued liabilities 1,260,000 348,000 1,608,000
Notes payable 1,153,000 3,480,000 4,633,000
Unpaid distributions 580,000 1,488,000 2,068,000
Customer credits 88,000 17,000 105,000
Current portion of bond payable 65,000 39,000 104,000
Total current liabilities 5,537,000 8,565,000 14,102,000
NOTES PAYABLE 1,152,000 1,152,000
BOND PAYABLE 269,000 479,000 748,000
EQUITY
Common stock 55,000 12,000 67,000
Additional paid-in capital 6,341,000 797,000 7,138,000
Retained earnings(deficit)(3,287,000)1,793,000(1,494,000)
3,109,000 2,602,000 5,711,000
Less treasury stock (1,428,000) (1,428,000)
Total equity 1,681,000 2,602,000 4,283,000
8,639,000 11,646,000 20,285,000
-26-
Pro forma Financial Statements Exhibit 7.3
VSI Holdings, Inc. and Vispac, Inc.
Year ended September 30, 1996
VSI Holding Vispac CONSOLIDATE
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
NET SALES 28,300,000 16,575,000 44,875,000
COST OF GOODS SOLD 20.455,000 3,829,000 24,284,000
Gross profits 7,845,000 12,746,000 20,591,000
OPERATING EXPENSES
Selling, general,
and administrative 8,384,000 10,850,000 19,234,000
Depreciation and amortization 597,000 428,000 1,025,000
Store closing costs 754,000 - 754,000
Total operating expenses 9,735,000 11,278,000 21,013,000
OPERATING INCOME (LOSS) (1,890,000) 1,468,000 (422,000)
OTHER EXPENSE (INCOME)
Interest and other income (101,000) (219,000) (320,000)
Interest expense 207,000 297,000 504,000
Total other expense (income) 106,000 78,000 184,000
Income (loss) before income taxes (1,996,000) 1,390,000 (606,000)
Provision for taxes 0 0 0
Utilization of tax loss carryforwards 0 0 0
NET INCOME (1,996,000) 1,390,000 (606,000)
Earnings (loss) per share ($0.16) ($0.03)
Shares outstanding 12,121,287 18,321,287
-27-
