SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended March 31, 1997
TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File No. 1-12942
VSI HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Georgia 22-2135522
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
4900 Highlands Parkway
Smyrna, Georgia 30082
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code: (770)432-0636
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark whether the Registrant has filed
all documents and reports required to be filed by Sections
12, 13, or 14(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No N/A .
There were 13,189,209 shares of Common Stock, par value
$.01 per share, outstanding at March 31, 1997. The Company
held 1,091,122 of these shares as treasury stock.
Part I - Financial Statements
VSI HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, March 31, September 30,
ASSETS 1997 1996 1996
(Unaudited) (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 325,000 $ 18,000 $ 243,000
Accounts and notes receivable
net of allowance of $0 in 1996 986,000 139,000 69,000
Inventories 2,147,000 5,158,000 3,352,000
Notes Receivable 145,000 0 0
Prepaid expenses and other 114,000 81,000 59,000
TOTAL CURRENT ASSETS 3,717,000 5,396,000 3,723,000
OTHER ASSETS 87,000 141,000 61,000
PROPERTY AND EQUIPMENT:
Land 103,000 103,000 103,000
Building 820,000 820,000 820,000
Furniture, fixtures and equipment 3,920,000 3,451,000 3,107,000
Leasehold improvements 1,881,000 2,271,000 2,038,000
6,724,000 6,645,000 6,068,000
Less accumulated depreciation and
amortization (4,418,000) (4,173,000)
(3,871,000)
TOTAL PROPERTY AND EQUIPMENT 2,306,000 2,472,000 2,197,000
$6,110,000 $8,009,000 $5,981,000
See notes to consolidated financial statements.
- -2-
VSI HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND March 31, March 31, September 30,
STOCKHOLDERS' EQUITY 1997 1996 1996
(Unaudited) (Unaudited)
CURRENT LIABILITIES:
Note payable $1,383,000 $ 872,000 $1,153,000
Accounts payable 622,000 2,085,000 2,101,000
Accrued expenses 456,000 503,000 952,000
Customer credits 443,000 65,000 88,000
Current portion of long-term debt 65,000 65,000 65,000
TOTAL CURRENT LIABILITIES 2,969,000 3,590,000 4,359,000
BOND PAYABLE 237,000 301,000 269,000
NOTE PAYABLE - Long term 1,152,000 1,152,000 1,152,000
STOCKHOLDERS' EQUITY:
Preferred stock - par value $1.00
per share; 2,000,000 shares
authorized; no shares issued
Common stock - par value $.01
per share; 60,000,000 shares
authorized 13,189,209 shares
issued and outstanding 132,000 55,000 55,000
Additional paid-in capital 6,328,000 4,861,000 4,861,000
Retained earnings (deficit) (3,280,000) (522,000)
(3,287,000)
3,180,000 4,394,000 1,629,000
Less treasury stock, at cost,
1,091,122 shares (1,428,000) (1,428,000)
(1,428,000)
TOTAL STOCKHOLDERS' EQUITY 1,752,000 2,966,000 201,000
$6,110,000 $8,009,000 $5,981,000
See notes to consolidated financial statements.
- -3-
VSI HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Thirteen Weeks Ended
March 31, March 31,
1997 1996
(Unaudited) (Unaudited)
NET SALES $5,314,000 $4,859,000
COST OF GOODS SOLD, including
occupancy and buying costs (3,708,000) (3,659,000)
Gross profit 1,606,000 1,200,000
OPERATING EXPENSES:
Selling, general, and
administrative expenses 1,296,000 1,835,000
Depreciation and amortization 113,000 110,000
Store closing expense 355,000 4,000
Total operating expenses 1,764,000 1,949,000
OPERATING INCOME (LOSS) (158,000) (749,000)
OTHER (INCOME) AND EXPENSES:
Interest and other income (20,000) (13,000)
Interest expense 64,000 50,000
Other income and expenses - net 44,000 37,000
EARNINGS BEFORE INCOME TAXES (202,000) (786,000)
INCOME TAX EXPENSE 0 0
NET EARNINGS (202,000) (786,000)
NET EARNINGS PER SHARE:
Primary ($0.02) ($0.18)
Fully diluted ($0.02) ($0.18)
Weighted Average Number of
Shares Outstanding 10,414,847 4,407,310
See notes to consolidated financial statements.
- -4-
VSI HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Twenty Six Weeks Ended Year Ended
March 31, March 31, September 30,
1997 1996 1996
(Unaudited) (Unaudited)
NET SALES $11,316,000 $11,910,000 $22,086,000
COST OF GOODS SOLD, including
occupancy and buying costs 8,084,000 8,639,000 17,018,000
Gross profit 3,232,000 3,271,000 5,068,000
OPERATING EXPENSES:
Selling, general, and
administrative expenses 2,562,000 3,766,000 7,267,000
Depreciation and amortization 216,000 200,000 422,000
Store closing costs 355,000 4,000 754,000
Total operating expenses 3,133,000 3,970,000 8,443,000
OPERATING INCOME (LOSS) 99,000 (699,000) (3,375,000)
OTHER (INCOME) AND EXPENSES:
Interest and other income (35,000) (27,000) (46,000)
Interest expense 126,000 98,000 207,000
Other income and expenses - net 91,000 71,000 161,000
EARNINGS BEFORE INCOME TAXES 8,000 (770,000) (3,536,000)
INCOME TAX EXPENSE 0 0 0
NET EARNINGS 8,000 (770,000) (3,536,000)
EARNINGS PER SHARE:
Primary $0.00 ($0.17) ($0.80)
Fully diluted $0.00 ($0.17) ($0.80)
Weighted Average Number of
Shares Outstanding 7,411,079 4,407,310 4,407,310
See notes to consolidated financial statements.
- -5-
VSI HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twenty Six Weeks Ended
March 31, March 31,
1997 1996
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 8,000 ($770,000)
Adjustments to reconcile net earnings
to net cash provided by (used in)
continuing operations:
Depreciation and amortization 216,000 200,000
Changes in Assets and Liabilities:
Decrease (increase) in assets:
Trade accounts receivable (917,000) 36,000
Inventories 1,205,000 518,000
Prepaid expenses and other (55,000) 135,000
Notes Receivable (145,000) 0
Other assets ( 26,000) (56,000)
Increase (decrease) in liabilities:
Accounts payable (1,479,000) (386,000)
Accrued expenses (497,000) 11,000
Customer credits 355,000 4,000
Current portion of long-term debt 0 42,000
Net cash provided by operating activities ($1,335,000) ($266,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment - net $325,000 ($303,000)
Net cash used in investing activities $325,000 ($303,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional paid in capital 1,467,000 0
Common Stock 77,000 0
Proceeds (Payments) on long-term debt 0 (35,000)
Draws (Payments) on line of credit 230,000 614,000
Principal payments of bond payable (32,000) (18,000)
Net cash provided by financing activities $1,742,000 $561,000
NET INCREASE (DECREASE) IN CASH $ 82,000 ($8,000)
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF YEAR $243,000 $26,000
CASH AND SHORT-TERM INVESTMENTS AT
END OF QUARTER $325,000 $18,000
See notes to consolidated financial statements.
- -6-
VSI Holdings, Inc.
and Subsidiaries
Notes to Consolidated Financial Statements
1. The consolidated financial statements included herein have
been prepared by the Company without audit pursuant to the
rules of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations.
In the opinion of management, the consolidated financial
statements included all adjustments necessary for a fair
presentation of the results for interim period.
2. The interim financial information presented herein should be
read in conjunction with financial statements included in
the Registrant's Annual Report on Form 10-K for the year
ended September 30, 1996. The interim results for the six
months ended March 31, 1997 are not necessarily indicative
of the results that may be expected for the year ended
September 30, 1997.
3. Earnings per share amounts are based on the weighted average
number of shares outstanding during each period presented,
including outstanding stock options as common stock
equivalents if dilutive.
4. Certain reclassifications have been made to the March 31,
1997 financial statements to conform with the
classifications used at September 30, 1996.
5. These interim financial statements include the operating
results of Advanced Animations, Inc., a wholly-owned
subsidiary, for the two months of February 1, 1997 through
March 31, 1997.
- -7-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL SUMMARY
Summary financial information expressed as a percentage of net sales is as
follows:
Second Quarter Ended Six Months Ended
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
Net Sales $5,314,000 $4,859,000 $11,316,000 $11,910,000
Gross Profit 30.2% 24.7% 28.6% 27.5%
Selling, general, and
administrative expenses 24.4% 37.8% 22.6% 31.6%
Depreciation and
amortization 2.1% 2.3% 1.9% 1.7%
Store Closing expense 6.7% .1% 3.1% 0%
Interest and other (income -.4% -.3% -.3% -.2%
Interest expense 1.2% 1.0% 1.1% .8%
Earnings (Loss) before
income taxes -3.8% -16.2% 0.0% -6.5%
Income tax expense 0.0% 0.0% 0.0% 0.0%
Net earnings (Loss) -3.8% -16.2% 0.0% -6.5%
Summary of Earnings per Share information is as follows:
Net Earnings per share:
Primary ($0.02) ($0.18) $0.00 ($0.17)
Fully diluted ($0.02) ($0.18) $0.00 ($0.17)
Weighted Average Number of
Shares Outstanding 10,414,847 4,407,310 7,411,079 4,407,310
- -8-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
VSI HOLDINGS, INC. ("COMPANY")
At the Shareholders' Meeting held April 21, 1997, approximately
82% of shares were voted to approve all ballot items as follows:
1. Election of six Directors.
2. Ratification of the Company's 1997 Incentive Stock Option
Plan.
3. Ratification of the Company's 1997 Non-Qualified Stock
Option Plan.
4. Authorize an increase in the authorized number of shares of
the Company's $.01 par value common stock from 20,000,000 to
60,000,000.
5. Authorize management to effect a reverse split on the
Company's $.01 par value common stock and a converse
increase in its par value.
6. Authorize the re-incorporation of the Company from Texas to
Georgia.
7. Authorize the change of the Company's name to VSI Holdings,
Inc., and
8. Authorize the removal of certain archaic articles from the
Company's Articles of Incorporation.
At the Company's Shareholders' Meeting and subsequent Meeting of
the Board of Directors, the following actions were taken:
New VSI Holdings, Inc. stock certificates and the new ticker
symbol VIS.EC were made effective April 23, 1997. Stock
certificates of The Banker's Note were not recalled.
The wholly-owned subsidiary, JD Dash, Inc., was established to
perform back-office functions for another apparel retailer to
reduce the Company's overhead expenses.
- -9-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Officers were elected effective April 22, 1997 for VSI Holdings,
Inc. (formerly The Banker's Note, Inc.) and its wholly-owned
subsidiaries as follows:
VSI Holdings, Inc.
Steve Toth, Jr. - President
Martin S. Suchik - Executive Vice President
Harold D. Cannon - Secretary
Thomas W. Marquis - Treasurer
Wholly-Owned Subsidiaries:
Advanced Animations, Inc.
Steve Toth, Jr. - President
Thomas W. Marquis - Vice President, Secretary, and Treasurer
BKNT Retail Stores, Inc.(RSI)d/b/a/ Dress Code and BKNT Inc.
Martin S. Suchik - President
Harold D. Cannon - Vice President, Secretary, and Treasurer
JD Dash, Inc.
Harold D. Cannon - President, Secretary, and Treasurer
Martin S. Suchik - Vice President
BUSINESS COMBINATION:
The Company acquired the outstanding shares of Advanced
Animations ("AAI") in exchange for 7,563,077 shares of the
Company's $.01 common stock on February 1, 1997. The Company has
a total of 12,096,087 shares outstanding. The former owner of
AA, Visual Services, Inc., a marketing-services company
controlled by a related party and its affiliates, will become the
largest shareholder of the Company with 6,652,483 shares.
- -10-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
VSI HOLDINGS, INC. - OPERATING RESULTS:
References to proforma results are stated to include the combined
results for prior year of Advanced Animations, Inc. as if the
transaction had taken place in the prior year.
NET SALES:
For the Quarter ended March 31, 1997, sales were $5,314,000
compared to $4,859,000, an increase of 9.4%. Net sales for
Advanced Animations, Inc. ("AAI") are included from February 1 to
March 31, 1997. On a proforma comparison basis, net sales
increased $113,000 or 2.1%.
For the six months, sales declined to $11,316,000 from
$11,910,000 or (5%) and on a proforma basis from $12,252,000 or a
decrease of (7.6%).
The decrease in revenues is attributed to the reduction from 43
stores in operation to 23 in the Dress Code retail operations.
GROSS PROFIT:
Gross profit increased to $1,606,000 from $1,200,000 for the 2nd
Quarter. Gross margins were 30.2 % for the Quarter compared to
24.7%.
For the six months, gross profits were $3,232,000 compared with
$3,271,000. Gross margins were 28.6% compared to 27.5%.
The improvement was the result of an increase in AAI's completion
of outstanding orders during the period.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES (SG&A)
For the Quarter ended March 31, 1997, SG&A expenses declined
29.4% to $1,296,000 from $1,835,000. For the six months, the
decline was 32.0% to $2,562,000 from $3,766,000.
The decline resulted from the reduced number of Dress Code retail
stores in operation compared to the prior year and successful
efforts to reduce operating costs in the retail group.
- -11-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
STORE CLOSING EXPENSE:
Store closing expenses related to the retail operation of
$355,000 were charged to the Quarter ended March 31, 1997. The
Company does not anticipate any additional closings this year
other than those that may result during the normal course of
lease renewals.
OTHER INCOME AND EXPENSE:
For the 2nd Quarter, interest expense increased to $64,000 from
$50,000 and to $126,000 from $98,000 for the six months.
NET EARNINGS (LOSS):
The net loss for the Quarter was ($202,000) and net earnings were
$8,000 for the six months compared with a loss of ($786,000) for
last year's quarter and a loss of ($770,000) for the six months.
Without store closing expenses, the Company would have earned
$153,000 for the Quarter and $363,000 for the six months.
On a proforma basis, the ($202,000) loss compared to a ($930,000)
loss for the Quarter and $8,000 in earnings compared to a loss of
($920,000) last year. Management believes that substantial
improvements in revenues and earnings will result in earnings for
the year in excess of $1,000,000.
LIQUIDITY:
The Company's working capital, cash position, and credit
availability remain adequate to maintain current and future
operating levels.
Exercise of Stock Options
Three employees of the Company exercised stock options totaling
125,700 shares granted pursuant to the Company's Employee Stock
Option Plans on January 21, 1997. The Board of Directors
authorized the optionees to be allowed to exercise the options by
delivery of a 24 month, 6% Promissory Note secured by the
exercised shares.
- -12-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Summary of Stock Issuance
Shares outstanding beginning of year 4,407,310
Net of 1,109,122 treasury shares
issued pursuant to:
Business combination with
Advanced Animations 7,563,077
Stock option exercise 125,700
Acquisition of trade name 2,000
12,098,087
Subsequent to the end of the Quarter, 13,200 shares were
purchased by employees of Advanced Animations directly from the
Company. These shares were unregistered.
DEBT:
CLT Line
Effective September 27, 1996, the Company further modified its
Loan Agreements with CLT, a Michigan General Partnership ("CLT")
controlled by a related party, to increase the line of credit to
$3,150,000 and extend the expiration date to December 31, 1997.
Current borrowing under the Company's line of credit with CLT as
of March 31, 1997 was as follows:
March 31, 1997
Total Line Availability $3,150,000
Standby Letters of Credit-NBD 228,000
Current Outstanding Borrowing 2,003,000 2,231,000
Net Availability $ 919,000
CLT Note
The Company had also modified its existing loan agreement with
CLT, its current lender, resulting in a note payable of $600,000
due June 7, 1997. The note has a fixed interest rate of 11% with
monthly payments of $8,265 including interest and principal.
- -13-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
NBD Bank
The Company entered into a Loan Agreement expiring December 31,
1996 with NBD N.A., a Detroit based bank, providing a $2,000,000
unsecured line of credit guaranteed by a Director of the Company,
who is a related party. Availability under this line was
$921,750 as of March 31, 1997. As the Company has completed the
business combination of Advanced Animations, it is presently
renegotiating its bank line of credit. NBD N.A. has provided the
Company a letter advising that the $2,000,000 line will be
renewed through December 31, 1997 and increased to $2,500,000.
SUMMARY:
Debt consists of the following as of year end and March 31, 1997:
September 30, 1996 March 31, 1997
NBD Borrowings $ 600,000 $ 850,000
CLT Note 553,000 533,000
Notes Payable $1,153,000 $1,383,000
Long Term
CLT Line $1,152,000 $1,152,000
Bond Payable $ 334,000 $ 302,000
Less Current (65,000) (65,000)
$ 269,000 $ 237,000
Bond payable is an Industrial Revenue Development Bond obtained
to finance the Company's Office/Warehouse.
- -14-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
ADVANCED ANIMATIONS, INC.
BUSINESS:
Advanced Animations Incorporated is a primary supplier of
animated robotic figures and properties for the retail,
entertainment, and casino industries. It was effectively merged
into the new entity, VSI Holdings, Inc., as of February 1, 1997,
to become the Company's second operating Division (RSI, d/b/a
"Dress Code" is the other). Results in the period reflect only
two months of AAI's operations.
STRATEGY AND COMPETITION:
The animation industry, beyond the captive competency of Disney
Entertainment, is not dominated by any large supplier. Advanced
Animations, Inc. is perceived as a primary provider in the high
end technology segment. AAI's state of the art compliant motion
systems provide the Company with a competitive advantage in the
top tier segment of a fragmented industry.
In the last few years, the utilization of high end animatronics
has accelerated, driven by entertainment venues such as the EFX
theatrical revue at MGM's Grand Casino in Las Vegas, Universal
Studio's "Terminator 2" in Orlando, Jurassic Park and other major
productions. AAI's products are components of retail
environments of such established retailers as FAO Schwartz and
the Simon DeBartolo Shopping Center's new Forum Mall at Ceasars
Palace in Las Vegas. The Company has theme park projects in
process in Tiawan, Japan, United Kingdom and casinos in Las
Vegas, the Gulf coast, and Atlantic City.
The Company's strategy is to continue its emphasis at the Tier
One level of product development and manufacture and to seek
viable acquisitions both horizontal and vertical to support this
perception and position.
A further initiative has been launched by the Company into that
of a packager of touring animated shows for museums and
zoological parks. AAI entered into a joint venture with United
Exhibits Group of Denmark to design, manufacture and distribute
shows through its newly formed Advanced Exhibits Unit (AE).
Initially, the venture will produce two touring "Missing Links '
Alive!" presentation based on the evolution of humans and the
works of famous paleoanthropologists, including the family of
Louis and Mary
Leakey. It highlights their finding of humanoid fossils which
date
- -15-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
back millions of years. In addition, present-day researchers in
animated and video form present the most comprehensive story
about human evolution. The United States premiere for the show
is February 1998 at the Los Angeles County Museum. It will
introduce a second tour by June 1998 and a third show is
anticipated to come onstream in the last quarter of 1998.
The Company is also working with creative design groups to
develop related venues for Science Museums that would have
interaction attributes and serve substantial educational content.
By being a tour sponsor, AAI opens up audience participation
revenue opportunities beyond manufacturing. The Company believes
educational exposure to Internet subject matter and other
academic curriculum has stimulated substantial interest and
encouraged participation in these non-video offerings by both
adults and students.
OPERATIONS:
AAI's revenues are positive with year earlier results. New
initiatives will have negligible effect on year ending September
30, 1997 due to 1998 implementation.
- -16-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
DRESS CODE RETAIL STORES
STORE CLOSINGS/CONVERSIONS:
The Company's retail subsidiary operates a group of 23 retail
women's apparel stores under the trade name Dress Code as of
May 14, 1997.
Current Operations
As of FYE Qtr. End Qtr. End Current
9/30/96 12/31/96 3/31/97 Operations
Specialty Stores 24 23 23 23
Factory Outlets 10 10 0 0
Concept Store 1 1 0 0
35 34 23 23
The Company is negotiating one additional lease termination that
could reduce total stores to 22. There are no termination costs
associated with this possible closing.
The Company's accounting policy is to recognize store closing
expenses in the period when the store closed. Accordingly, the
Company has the following costs and write-offs associated with
the 11 closings that were charged to the 2nd Quarter's operating
results:
Leasehold Write-offs and
Furniture & Fixture Write-offs $380,000
Landlord Buyout (25,000)
Net Store Closing Expense $355,000
Restructure
From November through early March, the former Banker's Note
stores have been liquidating its traditional career apparel
inventory through a series of "Going Out Of Business" or
"Inventory Liquidation" sale events.
The Company acquired the rights to use the trade name Dress Code
and as the sale events were completed, all stores were converted
to and are now operating under the Dress Code name.
- -17-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Merchandise consisting of branded dresses, suits, sportswear, and
accessories at 33% to 50% off everyday prices is being offered.
A limited number of manufacturers are participating in a special
program by offering "guaranteed margins" and "just-in-time"
delivery of replacement merchandise. This will help to control
inventory costs and reduce markdowns.
Results of Dress Code to Date and New Store Opened
Dress Code stores are continuing to build business as the
customers learn about the new concept. Initial customer traffic
was below expectations and steps have been and are being taken to
increase customer response.
Dress Code Warehouse was opened April 18th in an Atlanta
wholesale district known as Chattahoochee Industrial Park. The
location is adjacent to a major ladies' shoe outlet store and a
menswear outlet store. The stores are open Friday, Saturday, and
Sundays. For the three weekends to date, sales have been double
the average Dress Code operations weekly volume.
- -18-
Pursuant to the requirement of the Securities and 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
May 14, 1997 /S/Steve Toth, Jr.
Steve Toth, Jr., Director,
President and Chief Executive
Officer
May 14, 1997 /S/Thomas W. Marquis
Thomas W. Marquis, Director,
Treasurer, Chief Accounting
and Financial Officer
- -19-
Part II - Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security
Holders
The following 8 matters were submitted for
shareholder approval at the Company's Annual
Meeting held April 21, 1997. All were approved.
1. Election of six directors to serve one-year
terms until the annual meeting of
shareholders in 1998 (and in each case, until
their respective successors shall be duly
elected and qualified);
2. A proposal to approve and ratify the
Company's 1997 Incentive Stock Option Plan (a
copy of which is Appendix B to the Proxy
Statement);
3. A proposal to approve and ratify the
Company's 1997 Non-Qualified Stock Option
Plan (a copy of which is Appendix B to the
Proxy Statement);
4. A proposal to authorize an increase in the
authorized number of shares of the Company's
$.01 par value Common Stock from 20,000,000
to 60,000,000;
5. A proposal to authorize management to effect
a reverse split of the Company's $.01 par
value Common Stock and a converse increase in
its par value;
6. A proposal to authorize the reincorporation
of the Company from Texas to Georgia;
7. A proposal to authorize the change of the
Company's name to "VSI Holdings, Inc.".
- -20-
8. A proposal to authorize the removal of
archaic Articles from the Company's Articles
of Incorporation.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
None.
(B) Reports on Form 8-K
None.
- -21-
