================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-6633
FOR BETTER LIVING, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 5-2598411
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13620 LINCOLN WAY, SUITE 380 95603
AUBURN, CA (Zip code)
(Address of principal
executive offices)
AREA CODE (916) 823-9600
(Registrant's telephone number, including area code)
---------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
(Title of Class)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.05 PAR VALUE
(Title of Class)
---------------------
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates as of March
18, 1997 was $4,946,000.
Number of shares outstanding of each of the Registrant's classes of common
stock as of March 18, 1997:
COMMON STOCK, $.05 PAR VALUE--877,816 SHARES
---------------------
<TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
<CAPTION>
DOCUMENT IDENTIFICATION REFERENCE INCORPORATED
- ---------------------------------------------------------------------------- --------------------------
<S> <C>
Annual Report to Shareholders for the Fiscal Year Ended December 28, 1996 .. Parts I, II, and IV
Proxy Statement for Annual Meeting of Shareholders on May 14, 1997 ......... Part III
</TABLE>
The Exhibit Index appears on page 3
================================================================================
<PAGE>
FOR BETTER LIVING, INC.ANNUAL REPORT (FORM 10-K)
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
PART I
ITEM 1. BUSINESS
The text appearing under the caption "Business" on page 13 of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
28, 1996 is incorporated herein by reference in accordance with the provisions
of Rule 12b-23.
ITEM 2. PROPERTIES
<TABLE>
The following tabulation summarizes the approximate building and land areas
of the principal properties of the Registrant's operations as of December 28,
1996:
<CAPTION>
OWNED LEASED
----------------------- ------------------------------------
SQUARE FT. SQUARE FT.
OF FLOOR ACRES OF OF FLOOR ACRES OF EXPIRATION
LINE OF BUSINESS LOCATION TYPE SPACE LAND SPACE LAND DATE
- --------------------- ----------------------- -------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Quikset Organization.... Irvine, Ca Office 6,800 2006
Santa Ana, CA Plant 37,000 42.7 2034
Riverside, CA Plant 92,000 10.0 2003
Livermore, CA Plant 18,000 20.0 1999
San Diego, CA Plant 17,200 7.3 2001
Santa Paula, CA Plant 6,200 18.3 1997
Arlington, TX Plant 33,700
San Antonio, TX Plant 20,300 19.6
Katy, TX Plant 17,600 40.0
El Paso, TX Plant 24,000 20.0
Benton, AR Plant 12,100 15.6
Jonesboro, AR Plant 45,600 10.7 2002
Toccoa, GA Plant 17,100 12.8
Green Cove Springs, FL Plant 2,000 5.1
Magazine publications San Juan Capistrano, CA Office 16,400 1997
General office ......... Auburn, CA Office 1,583 1998
</TABLE>
All of the above facilities are in good operating condition and adequate for
current business requirements.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS
The text and tabular presentation appearing under the caption "Market for the
Registrant's Common Stock and Related Stockholder Matters" on page 14 of the
Registrant's Annual Report to Shareholders for the fiscal year ended December
28, 1996 is incorporated herein by reference in accordance with the provisions
of Rule 12b-23.
ITEM 6. SELECTED FINANCIAL DATA
The tabular presentation appearing under the caption "Selected Financial
Data" on page 15 of the Registrant's Annual Report to Shareholders for the
fiscal year ended December 28, 1996 is incorporated herein by reference in
accordance with the provisions of Rule 12b-23.
1
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The text appearing under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" commencing on page 12 and ending
on page 13 of the Registrant's Annual Report to Shareholders for the fiscal year
ended December 28, 1996 is incorporated herein by reference in accordance with
the provisions of Rule 12b-23.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and related Notes to Consolidated
Financial Statements and Independent Auditors' Report commencing on page 1 and
ending on page 11 of the Registrant's Annual Report to Shareholders for the
fiscal year ended December 28, 1996 are incorporated herein by reference in
accordance with the provisions of Rule 12b-23.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10-13.
The information required by these items will be included in a definitive
proxy statement pursuant to Regulation 14A filed with the Commission not later
than 120 days after the close of the fiscal year covered by this Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) Financial Statements:
Consolidated Balance Sheets as of December 28, 1996 and December 30, 1995 and
the related Consolidated Statements of Operations, Stockholders' Equity and Cash
Flows for each of the three fiscal years in the period ended December 28, 1996,
Notes to Consolidated Financial Statements and Independent Auditors' Report
commencing on page 1 and ending on page 11 of the Registrant's Annual Report to
Shareholders for the fiscal year ended December 28, 1996 are incorporated herein
by reference. With the exception of the pages referred to in the preceding
sentence and other information specifically incorporated by reference in this
Form 10-K, the Registrant's Annual Report to Shareholders for the fiscal year
ended December 30, 1995 is not deemed filed as a part of this Report.
(2) Financial Statement Schedules:
Independent Auditors' Report on Schedule II Valuation and Qualifying Accounts
for the Fiscal Years Ended December 28, 1996, December 30, 1995 and December 31,
1994. Financial statements and schedules not listed above are omitted because of
the absence of the conditions under which they are required or because the
information, if material, is set forth in the consolidated financial statements
or the notes thereto.
2
<PAGE>
<TABLE>
(3) The following Exhibits are filed as part of this Report: The numbers
refer to the Exhibit Table of Item 601 of Regulation S-K.
<CAPTION>
<S> <C>
3.1 Certificate of Incorporation of the Registrant as Amended October 17,
1994. Incorporated by reference to Exhibit 3.1 of the Registrant's
Amended Form 10-K for the year ended December 30, 1995.
3.2 By-Laws of the Registrant, as Amended May 7, 1991. Incorporated by
reference to Exhibit 3.2 of the Registrant's Amended Form 10-K for the
year ended December 30, 1995.
10.1 Performance Recognition Plan, dated December 25, 1993.(1)
10.2 Performance Share Plan, as Amended May 9, 1990. Incorporated by
reference to Exhibit 10.2 of the Registrant's Amended Form 10-K for the
year ended December 30, 1995.(1)
10.3 Amendment to Performance Share Plan, dated May 1, 1991.
10.4 Executive Deferred Compensation Plan. Incorporated by reference to
Exhibit 10.2 of the Registrant's Form 10-K for the year ended December
26, 1987.
10.5 Amendment to Executive Deferred Compensation Plan, dated May 1, 1991.
10.6 Incentive Bonus Compensation Plan, as Amended September 1980.
Incorporated by reference to Exhibit 10.4 of the Registrant's Amended
Form 10-K for the year ended December 30, 1995.(1)
10.7 Salary Continuation Plan. Incorporated by reference to Exhibit 5.4.1 of
the Registrant's Form 10-K for the year ended June 30, 1975.(1)
10.8 Loan and Security Agreement, Guarantees and Promissory Notes for loan
from The CIT Group/Equipment Financing, Inc. Incorporated by reference
to Exhibit 10 of the Registrant's Form 10-Q for the period ended March
26, 1994.
10.9 Loan and Security Agreement and Guarantees from the CIT Group/Credit
Finance, Inc. Incorporated by reference to Exhibit 10.2P of the
Registrant's Form 10Q-A for the period ended July 1, 1995.
13* Annual Report to Shareholders for the Fiscal Year Ended December 28,
1996 (parts not incorporated by reference are furnished for information
purposes only and are not filed herewith).
21* Subsidiaries of the Registrant.
23* Independent Auditors' Consent and Report on Schedule.
27* Financial Data Schedule
<FN>
(1) Designates management contracts or compensatory plan arrangements required
to be filed pursuant to Item 14(c) of Form 10-K.
* Items not previously filed are designated by an asterisk.
(b) No reports on Form 8-K were filed during the three months ended December
28, 1996.
</FN>
</TABLE>
3
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FOR BETTER LIVING, INC.
(Registrant)
Date: March 18, 1997 By: KARL M. STOCKBRIDGE
-------------------------- ----------------------------
Karl M. Stockbridge
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<CAPTION>
Signature Capacity Date
- ----------------------- ---------------------------------------------- ------------------
<S> <C> <C>
RICHARD G. FABIAN Chairman of the Board March 18, 1997
----------------------- (Principal Executive Officer and Director)
Richard G. Fabian
F.G. FABIAN Chairman Emeritus and Director March 18, 1997
-----------------------
F.G. Fabian
WILLIAM S. FARMER Director March 18, 1997
-----------------------
William S. Farmer
DANNA LEWIS-GORDON Director March 18, 1997
-----------------------
Danna Lewis-Gordon
STEVEN A. HASSMANN Director March 18, 1997
-----------------------
Steven A. Hassmann
KARL M. STOCKBRIDGE Director March 18, 1997
-----------------------
Karl M. Stockbridge
PETER F. SULLIVAN Director March 18, 1997
-----------------------
Peter F. Sullivan
GEORGE S. WEST Director March 18, 1997
-----------------------
George S. West
</TABLE>
4
<PAGE>
SCHEDULE II
FOR BETTER LIVING, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 28, 1996, DECEMBER 30, 1995 AND DECEMBER 31, 1994
(IN THOUSANDS)
1996 1995 1994
------- ------- -------
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Balance at beginning of fiscal year ............ $ 747 $ 841 $ 570
Provision charged to income .................... 344 230 424
Uncollectible receivables written off, net
of recoveries ................................ (244) (324) (153)
----- ----- -----
Balance at end of fiscal year .................. $ 847 $ 747 $ 841
===== ===== =====
5
<PAGE>
<TABLE>
FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------- 1
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<CAPTION>
DECEMBER 28, DECEMBER 30,
1996 1995
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................................................. $ 1,518 $ 1,528
Accounts receivable (less allowance for doubtful accounts of $847,000
and $747,000 at December 28, 1996 and December 30, 1995, respectively) ................... 17,259 13,177
Inventories ................................................................................ 9,978 8,401
Deferred income taxes ...................................................................... 1,873 2,065
Other current assets ....................................................................... 2,483 3,881
-------- --------
Total current assets .................................................................... 33,111 29,052
-------- --------
PROPERTY:
Property at cost ........................................................................... 40,379 39,967
Less accumulated depreciation and amortization ............................................. (29,271) (28,614)
-------- --------
Property, net ........................................................................... 11,108 11,353
-------- --------
AVAILABLE-FOR-SALE SECURITIES ................................................................ 164 1,700
OTHER ASSETS ................................................................................. 2,633 477
-------- --------
$ 47,016 $ 42,582
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations .............................. $ 1,624 $ 1,217
Accounts payable ............................................................................. 4,647 4,139
Accrued salaries and wages ................................................................... 2,976 1,941
Deferred income .............................................................................. 2,009 1,860
Accrued insurance ............................................................................ 467 999
Other current liabilities .................................................................... 1,806 3,026
-------- --------
Total current liabilities ................................................................ 13,529 13,182
-------- --------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS ................................................. 15,565 11,718
-------- --------
OTHER LIABILITIES (primarily deferred compensation) .......................................... 893 1,039
-------- --------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred stock--par value $1 per share (authorized, 150,000 shares;
outstanding, none)
Common stock--par value $.05 per share (authorized, 2,500,000 shares;
outstanding, 877,816 shares) ............................................................. 44 44
Additional paid-in capital ................................................................. 1,083 1,083
Net unrealized gains on available-for-sale securities, net of taxes ........................ 33 214
Retained earnings .......................................................................... 15,869 15,302
-------- --------
Total stockholders' equity ............................................................... 17,029 16,643
-------- --------
$ 47,016 $ 42,582
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
2 -----------------------------------------------------------------------------
(IN THOUSANDS)
<CAPTION>
YEARS ENDED
----------------------------------------------------
DECEMBER 28, DECEMBER 30, DECEMBER 31,
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
NET REVENUES ....................................................... $ 97,971 $ 81,517 $ 71,396
COST AND EXPENSES:
Cost of sales .................................................... 62,853 50,422 45,563
Selling, general and administrative expenses ..................... 32,324 29,265 27,711
Interest expense ................................................. 1,607 1,253 873
-------- -------- --------
Total cost and expenses ........................................ 96,784 80,940 74,147
-------- -------- --------
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR
TAXES ............................................................. 1,187 577 (2,751)
PROVISION (BENEFIT) FOR TAXES ...................................... 532 261 (915)
-------- -------- --------
NET INCOME (LOSS) .................................................. $ 655 $ 316 $ (1,836)
======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE ................................. $ .75 $ 0.36 ($ 2.09)
======== ======== ========
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
NET UNREALIZED
GAINS ON
COMMON STOCK ADDITIONAL AVAILABLE-FOR-SALE
------------------ PAID-IN SECURITIES, RETAINED
SHARES AMOUNT CAPITAL NET OF TAXES EARNINGS TOTAL
-------- -------- ------------ ------------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 25, 1993 .............. 878 $ 44 $ 1,083 $16,998 $18,125
Effect of change in accounting principle,
net of taxes ........................... $ 716 716
Net unrealized gains on available-
for-sale securities, net of taxes 51 51
Net loss ................................ (1,836) (1,836)
Cash dividends ($.10 per share) ......... (88) (88)
------- ------- ------- ------- ------- -------
BALANCE, December 31, 1994 .............. 878 44 1,083 767 15,074 16,968
Net unrealized gains on available-
for-sale securities, net of taxes ...... (553) (553)
Net income .............................. 316 316
Cash dividends ($.10 per share) ......... (88) (88)
------- ------- ------- ------- ------- -------
BALANCE, December 30, 1995 .............. 878 44 1,083 214 15,302 16,643
Net unrealized gains on available-
for-sale securities, net of taxes ...... (181) (181)
Net income .............................. 655 655
Cash dividends ($.10 per share).......... (88) (88)
------- ------- ------- ------- ------- -------
BALANCE, December 28, 1996 .............. 878 $ 44 $ 1,083 $ 33 $15,869 $17,029
======= ======= ======= ======= ======= =======
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
FOR BETTER LIVING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------ 3
(IN THOUSANDS)
<CAPTION>
YEARS ENDED
---------------------------------------------
DECEMBER 28, DECEMBER 30, DECEMBER 31,
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .......................................................... $ 655 $ 316 $(1,836)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization of property ............................... 1,538 1,803 2,065
Other amortization ...................................................... 139 145 70
Provision for losses on accounts receivable ............................. 344 230 424
Deferred income taxes ................................................... 426 (412) (718)
Deferred compensation ................................................... 92 73 (50)
(Gain) loss on sales of available-for-sale securities ................... (330) (1,255) 4
Write-down of real estate to fair market value .......................... 502
Other ................................................................... (66) (70) (18)
Changes in operating assets and liabilities:
Accounts receivable .................................................. (4,426) (4,057) 399
Inventories .......................................................... (1,577) 5 950
Other current assets ................................................. 1,292 (451) (1,713)
Other assets ......................................................... (967) 661 (270)
Accounts payable ..................................................... 508 (890) 399
Accrued salaries and wages ........................................... 1,035 327 (739)
Deferred income ...................................................... 149 269 406
Other current liabilities ............................................ (1,752) (273) (548)
Other liabilities .................................................... (238) (390) (544)
------- ------- -------
Net cash used in operating activities ............................. (3,178) (3,969) (1,217)
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property ...................................................... (2,836) (2,343) (1,574)
Purchases of available-for-sale securities ................................. (373) (717)
Proceeds from sale of property and available-for-sale
securities ............................................................... 3,801 1,886 194
------- ------- -------
Net cash provided by (used in) investing activities ............... 592 (457) (2,097)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt and capital lease obligations ............................. (1,474) (5,957) (7,204)
Cash used to secure lending arrangements.................................... (1,300) -- --
Proceeds from short-term borrowings ........................................ 3,025 1,225
Proceeds from long-term debt ............................................... 5,438 7,146 7,000
Dividends paid ............................................................. (88) (88) (88)
------- ------- -------
Net cash provided by financing activities ......................... 2,576 4,126 933
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ................................................................. (10) (300) (2,381)
CASH AND CASH EQUIVALENTS, beginning of year ................................. 1,518 1,828 4,209
------- ------- -------
CASH AND CASH EQUIVALENTS, end of year ....................................... $ 1,518 $ 1,528 $ 1,828
======= ======= =======
SUMMARY OF NON-CASH INVESTING ACTIVITIES:
Equipment acquired through capital lease transaction ....................... $ 257 $ -- $ --
======= ======= =======
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
FOR BETTER LIVING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4 ------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING
PRINCIPLES AND OTHER
Nature of Operations--For Better Living, Inc. (the Company) was incorporated
in Delaware in 1969. The Quikset Organization, a wholly-owned subsidiary, is
primarily engaged in the manufacture and distribution of precast concrete and
plastic products, which are primarily marketed to utility companies throughout
the United States and Canada. Surfer Publications, also a wholly-owned
subsidiary, is primarily engaged in the publication of specialty magazines.
Surfer Publications also produces cable television and home video programs.
Principles of Consolidation--The accompanying consolidated financial
statements include the accounts of For Better Living, Inc. and its wholly-owned
subsidiaries (the Company). All significant intercompany balances and
transactions have been eliminated.
Fiscal Year-end--The Company's fiscal year ends on the last Saturday in
December.
Inventories--Inventories are stated principally at the lower of first-in,
first-out cost or market.
Cash Equivalents--The Company considers all highly-liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
Property, Depreciation and Amortization--The cost of property is depreciated
over the estimated useful lives of the assets by application of the
straight-line method to specific assets. The cost of leasehold improvements is
amortized over the shorter of the estimated useful lives of the assets or the
remaining lease periods of the associated leases.
Investments--The Company accounts for investments in debt and equity
securities in accordance with Statement of Financial Accounting Standards (SFAS)
No. 115, Accounting for Certain Investments in Debt and Equity Securities. SFAS
No. 115 requires the classification of investments in debt and equity securities
into three categories; held to maturity, trading and available-for-sale. At
December 28, 1996 the Company has only available-for-sale securities which are
non- current assets. Equity securities classified as available-for-sale
securities are reported at estimated fair value, with unrealized gains and
losses excluded from earnings and reported as a separate component of equity,
net of deferred taxes.
Revenue Recognition--Revenue is generally recognized upon shipment.
Income Taxes--Deferred income tax assets and liabilities are computed
annually for the difference between the financial statement and income tax basis
of assets and liabilities. Such deferred income tax asset and liability
computations are based on enacted tax laws and rates applicable to periods in
which the differences are expected to reverse. A valuation allowance is
established, when necessary, to reduce deferred income tax assets to the amount
expected to be realized. Income tax expense is the tax payable or refundable for
the period plus or minus the change during the period in deferred income tax
assets and liabilities.
Income (Loss) Per Common Share--Income (loss) per common share is computed by
dividing net income (loss) by the weighted average number of shares of common
stock outstanding during each year. The number of common shares used in
computing earnings per common share for the fiscal years ended December 28,
1996, December 30, 1995 and December 31, 1994 is 877,816.
Deferred Income--Deferred income represents amounts received from
subscriptions in advance of magazine deliveries and is reflected in revenues
over the subscription term.
Reclassifications--Certain amounts as previously reported have been
reclassified to conform to the current period presentation.
Related Party Transactions--A director of the Company is associated with a
law firm that rendered legal services resulting in fees charged to the Company
during 1996 and 1995 of approximately $93,000 and $156,000, respectively.
Approximately $7,000 and $51,000 is included in other current liabilities as of
December 28, 1996 and December 30, 1995, respectively. A director of the Company
is the principal of an investment banking firm that provided consulting services
resulting in fees charged to the Company during 1996 and 1995 of approximately
$75,000 and $60,000, respectively.
Stock-based Compensation--The Company accounts for its stock-based awards to
employees using the intrinsic value method in accordance with Accounting
Principles Board No. 25, Accounting for Stock Issued to Employees and its
related interpretations.
The Company adopted the disclosure portion of Statement of Financial
Accounting Standards No. 123 Accounting for Stock-based Compensation, as of
January 1, 1996. The new standard defines a fair value method of accounting for
stock options and other equity instruments. Under the fair value method,
compensation costs is measured at the grant date based on the fair value of the
award and is recognized over the
<PAGE>
- ------------------------------------------------------------------------------ 5
service period. At December 28, 1996 the Company was not required to provide
additional disclosures for its stock-based compensation plans under this
statement.
Fair Value of Financial Instruments--The carrying value of accounts
receivable and accounts payable approximate fair value due to the short
maturities of such instruments. The carrying value of notes receivable and
long-term debt approximate fair value due to the fact the majority of the
instruments are based on variable interest rates.
Use of Estimates--The preparation of consolidated 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 revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
Magazine Distribution--The Company has an agreement with an outside service
bureau that handles all subscription mailings of its specialty magazines. The
Company also has an agreement with a newsstand distributor that handles all
shipments, returns and collections with respect to single copy magazine sales.
The termination of either agreement could result in delays in magazine
distribution which could have a material adverse effect on the Company's
business, operating results and financial condition until alternative sources of
distribution could be obtained.
2. INVESTMENTS
Aggregate cost and fair value of available-for-sale securities are as follows
(in thousands):
DECEMBER DECEMBER
28, 1996 30, 1995
-------- --------
Aggregate cost ............................... $ 110 $ 1,342
Aggregate market value ....................... 164 1,700
Gross unrealized gains ....................... 60 378
Gross unrealized losses ...................... (5) (20)
Net unrealized gains included
in stockholders' equity, net
of taxes .................................... 33 214
Purchases .................................... 373
Proceeds from sale ........................... 1,605 1,795
Net gains and losses realized on the disposition of investments included in
the consolidated statements of operations for the fiscal years ended December
28, 1996, December 30, 1995 and December 31, 1994 were $330,000, $1,255,000 and
$(4,000), respectively.
3. INVENTORIES
Inventories consist of the following (in thousands):
DECEMBER DECEMBER
28, 1996 30, 1995
-------- --------
Finished products ............................ $6,585 $5,455
Work-in-process .............................. 398 337
Raw materials and supplies ................... 2,995 2,609
$9,978 $8,401
4. PROPERTY
Property consists of the following (in thousands):
ACCUMULATED
DEPRECIATION
PROPERTY, AND PROPERTY,
AT COST AMORTIZATION NET
------- ------- -------
December 28, 1996:
Land ............................... $ 1,765 $ -- $ 1,765
Buildings and leasehold
improvements ...................... 10,297 5,820 4,477
Machinery and equipment ............ 28,317 23,451 4,866
------- ------- -------
$40,379 $29,271 $11,108
======= ======= =======
ACCUMULATED
DEPRECIATION
PROPERTY, AND PROPERTY,
AT COST AMORTIZATION NET
------- ------- -------
December 30, 1995:
Land ............................... $ 2,287 $ -- $ 2,287
Buildings and leasehold
improvements ...................... 9,691 5,626 4,065
Machinery and equipment ............ 27,989 22,988 5,001
------- ------- -------
$39,967 $28,614 $11,353
======= ======= =======
5. BORROWING ARRANGEMENTS AND
LONG-TERM DEBT
Long-term debt (exclusive of the current portion included in current
liabilities) consists of the following (in thousands):
DECEMBER DECEMBER
28, 1996 30, 1995
-------- --------
Secured line of credit, due June 27, 1999 ............ $12,514 $ 7,076
Secured term loan, due July 31, 2000 ................. 2,500 3,500
Subordinated income debentures,
due December 15, 1997 (less unamortized
discount of $_________ and $72,000,
respectively) ....................................... -- 496
Other ................................................ 58 280
--------- --------
$15,072 $11,352
========= ========
In 1994 the Company entered into a $7 million term loan agreement (the Term
Loan) secured by virtually all of the Company's machinery and equipment.
The Term Loan bears interest at the 30-day London
<PAGE>
6 -----------------------------------------------------------------------------
Interbank Offered Rate, plus 2.97% (8.35% at December 28, 1996) and requires
repayments through June 30, 2000. The Company was not in compliance with all
covenants of the Term Loan at the end of 1996. The Company has received a
commitment from the lender of the Term Loan to refinance the remaining balance
of the Term Loan and to extend additional debt. The lender has further proposed
that all loan covenants be removed. The Company anticipates that it will accept
the lender's proposal, or secure more favorable financing, during fiscal year
1997. Accordingly, the Company has classified its Term Loan in accordance with
the terms of the expected refinancing.
In June 1995, the Company entered into a revolving line of credit agreement
(the Line of Credit) which provided the Company up to $10 million of available
funds on a revolving basis (based on a borrowing base formula, as defined).
During the second quarter of 1996 the Company renegotiated the Line of Credit to
provide for: an increase in the credit availability from $10 million to $20
million, a reduction of the interest rate from prime plus 1.25% to prime plus
1.00%, a two year extension of the agreement from June 27, 1997 to June 27, 1999
and a reduction in early termination fees in the event the Company chooses to
terminate the agreement before the end of the term. The prime rate was 8.25% at
December 28, 1996. The Line of Credit is collateralized by essentially all of
the Company's accounts receivable, inventories, plant and equipment (excluding
land and buildings), and certain intangible assets. The commitment under the
Line of Credit may be used to support letters of credit issued for the Company,
the face amounts of which are applied to total commitment. The terms of the Line
of Credit require the Company to maintain a minimum tangible net worth.
The subordinated income debentures mature December 15, 1997. The interest
rate is variable at the rate of 1% per annum for each $100,000 of consolidated
net income for the immediately preceding fiscal year, with minimum and maximum
rates of 5% and 10%, respectively. The interest rate was 5% per annum at
December 28, 1996, which rate will be effective through June 30, 1997. The
interest rate will be 7% per annum for the period July 1, 1997 through December
15, 1997. The income debentures were discounted to approximate the market rate
of interest at date of issuance for similar obligations (approximately 11%).
As of December 28, 1996, the Company had two standby letters of credit
outstanding, one for $808,000 and one for $445,000.
Cash interest payments on borrowing arrangements and long-term debt during
the fiscal years ended December 28, 1996, December 30, 1995 and December 31,
1994 were $1,408,000, $1,080,000 and $828,000, respectively.
Future principal payments on long-term debt as of December 28, 1996 are
summarized as follows (in thousands):
1997 .................................................. $ 1,496
1998 .................................................. 13,514
1999 .................................................. 1,000
2000 .................................................. 500
2001 .................................................. --
Thereafter ............................................ 58
-------
$16,568
=======
6. LEASES
The Company leases a significant portion of its facilities under operating
leases that expire at various times through 2034.
Future rental commitments at December 30, 1996 under operating leases are
summarized as follows (in thousands):
1997 ........................................................ $ 2,113
1998 ........................................................ 1,930
1999 ........................................................ 1,016
2000 ........................................................ 866
2001 ........................................................ 852
Thereafter .................................................. 7,594
-------
Total minimum rental commitments ........................ $14,371
=======
Rental expense under operating leases is summarized as follows (in
thousands):
YEARS ENDED
-----------------------------
DECEMBER DECEMBER DECEMBER
28, 1996 30, 1995 31, 1994
-------- -------- --------
TOTAL RENTAL EXPENSE ....................... $1,850 $984 $1,068
During January 1996, the Company entered into an agreement for the sale and
leaseback of miscellaneous machinery and equipment. The lease is classified as
an operating lease in accordance with Statement of Financial Accounting
Standards No. 13, "Accounting for Leases". The book value and associated
depreciation of the machinery and equipment, approximately $1,084,000 and
$203,000, respectively, were removed from the accounts and a loss of
approximately $7,000 recognized on the transaction. Payments under the lease,
which commenced in February 1996 for 60 months, approximate $312,000 annually.
<PAGE>
- ------------------------------------------------------------------------------ 7
The Company also leases certain properties under capital leases. Property
held under capital leases is summarized as follows (in thousands):
DECEMBER DECEMBER
28, 1996 30, 1995
-------- --------
Land ........................................... $-- $ 80
Buildings and leasehold
improvements .................................. $570 $570
Machinery and equipment ........................ $354 $511
Accumulated amortization ....................... $383 $653
Future minimum lease payments as of December 28, 1996 under capital leases
are summarized as follows (in thousands):
1997 ............................................................. $159
1998 ............................................................. 130
1999 ............................................................. 130
2000 ............................................................. 129
2001 ............................................................. 129
Thereafter ....................................................... 69
----
Total future minimum lease payments .............................. 746
Less amount representing interest at rates
implicit in the lease agreements ................................ 125
Present value of net minimum lease payments ...................... 621
Less current portion ............................................. 128
----
Noncurrent portion ............................................... $493
====
To reduce the cost of its lease financing, the Company has pledged some of
its cash reserves as security for lending arrangements.
Interest paid on capital lease obligations was $33,000, $37,000 and $51,000
for the fiscal years ended December 28, 1996, December 30, 1995 and December 31,
1994, respectively.
7. STOCKHOLDERS' EQUITY
The Company has adopted a Performance Share Plan (Plan) under which
performance share units (Units) may be awarded by the Board of Directors to key
employees of the Company. Units mature five years after the award date (subject
to certain extensions), have a maturity value equal to the increase in the book
value per common share (as defined) since the date of award and vest to the
participant at the rate of 20% per year. The Plan permits, among other options,
the participant to receive the value of the matured Units in cash or, subject to
certain limitations, to apply the value of vested Units towards the purchase of
an equal number of the Company's $.05 par value common stock (Stock) at the
prevailing market price. As of December 28, 1996, the Company had 114,149 Units
outstanding, of which 67,687 were vested. Of the vested Units, 2,280 could be
surrendered to purchase shares of the Company's Stock during 1997.
8. TAXES BASED ON INCOME
The provision (benefit) for taxes based on income consists of the following
(in thousands):
YEARS ENDED
-----------------------------------
DECEMBER DECEMBER DECEMBER
28, 1996 30, 1995 31, 1994
-------- -------- --------
Currently payable:
Federal .......................... $ 42 $(161) $(543)
State ............................ 64 10 346
Deferred:
Federal .......................... 303 343 (480)
State ............................ 123 69 (238)
----- ----- -----
$ 532 $ 261 $(915)
===== ===== =====
As of December 28, 1996 and December 30, 1995, the Company had net deferred
tax assets as follows (in thousands):
DECEMBER DECEMBER
28, 1996 30, 1995
-------- --------
Restructuring provisions ......................... $ 105 $ 236
Deferred compensation plan ....................... 244 254
Vacation accruals ................................ 231 180
Allowance for doubtful accounts .................. 395 323
Workers compensation plan ........................ -- 62
Inventory reserves ............................... 1,047 1,064
Net operating loss carryforward .................. 89 119
California unitary assessment .................... 262 262
Write-down of fixed asset ........................ -- 217
Miscellaneous loss reserves ...................... 91 229
Other ............................................ 103 132
Alternative minimum tax credit
carryforward .................................... 180 214
------- -------
Gross deferred tax assets ........................ 2,747 3,292
Excess of tax depreciation over
financial depreciation .......................... (454) (441)
State taxes ...................................... (190) (222)
Unrealized gain on available-for-sale
securities ...................................... (24) (155)
Other ............................................ (200) (233)
-------- --------
Gross deferred tax liabilities ................... (868) (1,051)
-------- --------
Net deferred tax asset ........................... $ 1,879 $ 2,241
======== ========
The Company estimates that the majority of its deferred tax assets will be
realized during the next three fiscal years.
Of the total net deferred tax assets shown above, $6,000 and $176,000,
respectively, are included in other assets as of December 28, 1996 and December
30, 1995 on the accompanying consolidated balance sheets.
<PAGE>
8 -----------------------------------------------------------------------------
A reconciliation between the provision (benefit) for taxes computed by
applying the federal statutory rate to income before taxes and the actual
provision (benefit) for taxes is as follows (in thousands):
YEARS ENDED
-------------------------------
DECEMBER DECEMBER DECEMBER
28, 1996 30, 1995 31, 1994
-------- -------- ---------
Provision (benefit) for taxes at
statutory rate ............................... $ 404 $ 202 $(935)
State taxes, after federal
income tax benefit .......................... 123 52 (115)
Dividend exclusion ............................ (61) (96) (16)
Other, net .................................... 66 103 151
----- ----- -----
$ 532 $ 261 $(915)
===== ===== =====
Effective income tax rate ..................... 44.8% 45.2% 33.3%
===== ===== =====
Income tax cash payments during the fiscal years ended December 28, 1996,
December 30, 1995 and December 31, 1994 were $104,000, $77,000 and $380,000,
respectively.
The Company received, in prior periods, notices of proposed assessments from
the California Franchise Tax Board (CFTB) relating to its 1978-1981 tax years.
The principal issue raised in these notices was whether the Company's oil and
gas operations were part of a unitary business with the other operations of the
Company. The CFTB has taken the position that the oil and gas operations are not
unitary in nature and, therefore, has disallowed, for California purposes,
losses arising from oil and gas operations. The Company paid the assessed taxes
of $379,000 and associated interest of $946,000 in 1992. It filed suit in 1994
and received a decision in its favor in February 1995 for recovery of these
amounts, plus interest. The CFTB has appealed that decision however, and the
matter is now pending before the California Court of Appeal. The Company expects
a decision before the end of 1997.
Deductions similar to those questioned by the CFTB for the 1978-1981 tax
years were also taken by the Company in its subsequent tax years. The CFTB is
currently examining these subsequent periods and, as a result of its
examination, has issued a notice of pro- posed assessment of additional taxes
for tax years 1982-1987. The proposed assessment is for $272,000 in additional
taxes which would result in associated interest expense of approximately
$535,000 through the end of fiscal year 1996. The Company's management believes
that the ultimate outcome of this matter will not have a material adverse effect
on the Company's consolidated financial statements.
9. SEGMENT INFORMATION
As of December 28, 1996, the significant industry segments of the Company
were (1) the manufacture and distribution of precast concrete and plastic
structures (The Quikset Organization), and (2) the publication of specialty
magazines (Communications Group). Total revenues by industry include both
revenues to unaffiliated customers, as reported in the Company's consolidated
statements of operations and intersegment revenues. Intersegment revenues are
accounted for on the same basis as revenues to unaffiliated customers.
The Quikset Organization markets a substantial portion of its products to
utility companies and general contractors serving the utility industry. This
segment's risk of loss due to granting credit to its customers is reduced by,
among other things, the use of applicable lien laws to secure payments.
Operating profit is equal to net revenues less operating expenses. In
computing operating profit, taxes on income, general corporate expenses and
interest expense have been excluded.
Identifiable assets by industry are those assets that are used in the
Company's operations in each industry segment.
<PAGE>
- ----------------------------------------------------------------------------- 9
REVENUES (IN THOUSANDS)
UNAFFILIATED INTER-
CUSTOMERS SEGMENT TOTAL
-------- --------- --------
Fiscal year ended December 28, 1996:
The Quikset Organization ............... $ 80,476 $ $ 80,476
Communications Group ................... 16,437 16,437
Other .................................. 1,058 26 1,084
-------- --------- --------
97,971 26 97,997
Eliminations ........................... (26) (26)
-------- --------- --------
Consolidated net revenues .............. $ 97,971 $ -- $ 97,971
Fiscal year ended December 30, 1995:
The Quikset Organization ............... $ 64,704 $ -- $ 64,704
Communications Group ................... 14,889 14,889
Other .................................. 1,924 158 2,082
-------- --------- --------
81,517 158 81,675
Eliminations ........................... (158) (158)
-------- --------- --------
Consolidated net revenues .............. $ 81,517 $ -- $ 81,517
Fiscal year ended December 31, 1994:
The Quikset Organization ............... $ 60,267 $ -- $ 60,267
Communications Group ................... 10,958 10,958
Other .................................. 171 158 329
-------- --------- --------
71,396 158 71,554
Eliminations ........................... (158) (158)
-------- --------- --------
Consolidated net revenues .............. $ 71,396 $ -- $ 71,396
-------- --------- --------
OPERATING PROFIT (LOSS) (IN THOUSANDS)
DECEMBER DECEMBER DECEMBER
28, 1996 30, 1995 31, 1994
------- ------- -------
The Quikset Organization ..................... $ 1,816 $ (41) $(1,745)
Communications Group ......................... 1,864 1,985 1,243
Other ........................................ 1,055 2,038 (122)
------- ------- -------
Total operating profit (loss) .............. 4,735 3,982 (624)
General corporate expenses ................... (1,941) (2,152) (1,254)
Interest expense ............................. (1,607) (1,253) (873)
------- ------- -------
Income (loss) before provision (benefit)
for taxes ................................. $ 1,187 $ 577 $(2,751)
======= ======= =======
IDENTIFIABLE ASSETS, DEPRECATION, AMORTIZATION AND
PROPERTY ADDITIONS (IN THOUSANDS)
DEPRECIATION
IDENTIFIABLE AND PROPERTY
ASSETS AMORTIZATION ADDITIONS
------ ------------ ---------
December 28, 1996:
The Quikset Organization ................. $37,478 $1,446 $2,416
Communications Group ..................... 4,164 58 389
Corporate ................................ 4,250 167 31
Other .................................... 1,124 6
------- ------ ------
$47,016 $1,677 $2,836
December 30, 1995:
The Quikset Organization ................. $32,632 $1,692 $2,273
Communications Group ..................... 4,958 48 51
Corporate ................................ 2,447 174 19
Other .................................... 2,545 34
------- ------ ------
$42,582 $1,948 $2,343
December 31, 1994:
The Quikset Organization ................. $30,108 $ 1,931 $1,477
Communications Group ..................... 3,917 42 71
Corporate ................................ 3,046 111 26
Other .................................... 2,433 51
------- ------- ------
$39,504 $ 2,135 $1,574
======= ======= ======
<PAGE>
10 ----------------------------------------------------------------------------
10. PENSION PLAN
The Company has a defined benefit pension plan (Pension Plan) covering
certain employees. The benefits associated with the Pension Plan are determined
by a formula based on years of service. The Company's funding policy is to
contribute amounts that are sufficient to satisfy legal funding requirements and
are deductible for federal income tax purposes.
Pension expense for the fiscal years ended December 28, 1996, December 30,
1995 and December 31, 1994 consists of the following (in thousands):
DECEMBER DECEMBER DECEMBER
28, 1996 30, 1995 31, 1994
-------- -------- --------
Service cost ............................... $150 $ 132 $ 170
Interest cost .............................. 255 232 222
Return on plan assets ...................... (164) (131) (134)
Other ...................................... (81) (115) (100)
---- ----- -----
$160 $ 118 $ 158
==== ===== =====
A reconciliation of the funded status of the Pension Plan with the amount
included in other current liabilities consists of the following (in thousands):
DECEMBER DECEMBER
28, 1996 30, 1995
------- --------
Plan assets at fair value ........................ $ 3,406 $ 3,209
Actuarial present value of
accumulated plan benefits:
Vested .......................................... 3,282 3,057
Nonvested ....................................... 64 43
------- -------
3,346 3,100
Additional projected benefits .................... 158 154
------- -------
Projected benefit obligation ..................... 3,504 3,254
------- -------
Deficit of plan assets over projected
benefit obligation .............................. (98) (45)
Less:
Unrecognized transition assets ................. 11 21
Unrecognized net gain .......................... 97 201
Unrecognized prior service cost ................ (124) (148)
------- -------
Pension liability ................................ $ (82) $ (119)
======= =======
Significant assumptions for the fiscal years ended December 28, 1996,
December 30, 1995 and December 31, 1994 were as follows:
Discount rate on projected benefit 8%
=
obligation
Long-term rate of return on plan assets 8%
=
Assets held by the Pension Plan consist of unallocated insurance contracts
stated at contract value which approximates market value.
<PAGE>
- ----------------------------------------------------------------------------- 11
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of For
Better Living, Inc.:
We have audited the accompanying consolidated balance sheets of For Better
Living, Inc. and subsidiaries as of December 28, 1996 and December 30, 1995, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three fiscal years in the period ended December 28, 1996.
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 audits.
We conducted our audits 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 statements are 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 audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of For Better Living, Inc. and
subsidiaries at December 28, 1996 and December 30, 1995, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 28, 1996 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Costa Mesa, California
March 14, 1997
<PAGE>
12 ----------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
LIQUIDITY AND CAPITAL REQUIREMENTS
For the fiscal year ended December 28, 1996, cash and cash equivalents
decreased $10,000. The primary sources of cash in 1996 were $5,438,000 from
long-term borrowings and $3,801,000 from the sale of property and
available-for-sale securities. The predominant uses of cash included $3,178,000
used in operating activities, $2,836,000 for purchases of property primarily for
The Quikset Organization, $1,474,000 for the payments of debt and capital lease
obligations $1,300,000 pledged to reduce the cost of lease financing and
$373,000 for the purchase of available-for-sale securities.
For the fiscal year ended December 30, 1995, cash and cash equivalents
decreased by $300,000. The primary source of cash in 1995 was $7,146,000 from
long-term borrowings and $3,025,000 from short-term borrowings. The predominant
uses of cash included $5,957,000 for the payments of debt and capital lease
obligations, $3,969,000 used in operating activities and $2,343,000 for
purchases of property, primarily for The Quikset Organization.
For the fiscal year ended December 31, 1994, cash and cash equivalents
decreased $2,381,000. The primary source of cash during the period was
$7,000,000 from long-term borrowings and $1,225,000 from short-term borrowings.
The predominant uses of cash included $7,204,000 for debt and capital lease
obligation repayments, $1,574,000 for purchases of property primarily for The
Quikset Organization, $1,217,000 for operating activities and $717,000 for
purchases of available-for-sale securities.
As described in Note 5 of the Notes to Consolidated Financial Statements, the
Company was not in compliance with all financial covenants of the Term Loan
agreement at the end of 1996. The Company has received an offer from the Term
Loan lender to refinance the Term Loan removing all loan covenants relating to
financial statement balances, in addition to extending additional debt. The
Company anticipates that it will accept the lender's proposal, or secure more
favorable financing from another source, during fiscal year 1997.
The Company renegotiated its Line of Credit agreement in the second quarter
of 1996 to provide for an increase in credit availability to $20 million. The
Line of Credit agreement, entered into in June of 1995, had previously provided
up to $10 million of available funds.
Management believes that its cash position, together with available credit
and funds anticipated to be generated from its operations, will provide
sufficient cash resources to finance its operating activities.
RESULTS OF OPERATIONS
In fiscal year 1996, the Company's revenues increased $16,454,000. This was
the result of increases of $15,772,000 at The Quikset Organization and
$1,548,000 at the Communications Group, partially offset by a decrease in other
revenues (primarily gains on available-for-sale securities) of $866,000.
Revenues increased at The Quikset Organization as a result of increases in
sales of both the Company's traditional business lines and increases in more
highly engineered concrete and plastics products. There was particular growth in
sales of highly engineered products to the telecommunications markets. Revenues
increased at the Communications Group primarily as a result of increased
advertising sales for all five of its magazines.
During 1996 the Company's pre-tax income increased $610,000, primarily as the
result of an increase in operating profit of $1,857,000 at The Quikset
Organization and a decrease in general corporate expenses of $211,000. The
increase in operating profit was partially offset by a decrease in operating
profit of $121,000 at the Communications Group, a decrease in other operating
profit of $983,000, and an increase in interest expense of $354,000.
The increase in operating profit at the Quikset Organization was a result of
increased revenue, an increase in gross margins and a decrease in marketing
expense as a percentage of sales. The decrease in general corporate expenses was
due to a decrease in personnel and other administrative costs. The decrease in
operating profit at the Communications Group was due primarily to the expenses
associated with the start-up of its new publication Inside Golf. The decrease in
other operating profit was due primarily to a decrease in gains on the sale of
available-for-sale securities. Interest expense increased due to increased
borrowings to support increased accounts receivable balances and inventories as
a result of increased revenue.
In 1996, the Company realized a net profit on the sale of available-for-sale
securities of $330,000.
In fiscal year 1995 the Company's revenues increased $10,121,000. This was
the result of increases of $3,931,000 at the Communications Group, $4,437,000 at
The Quikset Organization, and $1,753,000 at the corporate level primarily as a
result of the sale of securities.
<PAGE>
- ----------------------------------------------------------------------------- 13
Revenues increased at the Communications Group primarily as a result of
increased advertising and newsstand sales for all four of its magazines.
Revenues increased at The Quikset Organization as a result of greater sales of
its products throughout its markets, especially at Quikset's Texas operations.
During 1995 the Company's pre-tax income increased $3,328,000, primarily as a
result of an increase in operating profit of $1,704,000 at Quikset, an increase
in the operating profit of $742,000 at the Communications Group, and an increase
of $2,160,000 in other operating profit. These increases were partially offset
by an increase in general corporate expense of $898,000 and an increase in
interest expense of $380,000.
The increase in Quikset's 1995 operating profit was a result of increased
revenue and associated profit, and a significant decrease in the write-offs for
obsolete and excess inventory. The increase in operating profit at the
Communications Group was primarily a result of increased revenue from
advertising and newsstand sales and associated profits. The increase in other
operating profit was primarily a result of the profitable disposition of
available-for-sale securities.
The increase in general corporate expenses was primarily due to the one-time
reversal in 1994 of previously accrued expenses which were no longer required.
The increase in interest expense was a result of the Company's increased
borrowing.
In 1995, the Company recognized a net profit on the sale of
available-for-sale securities of $1,255,000.
BUSINESS
For Better Living, Inc. was incorporated in Delaware in 1969 and first issued
publicly traded equity securities in 1972. The Company is primarily engaged in
(1) the manufacture and distribution of precast concrete and plastic products,
and (2) the publication of specialty magazines. Following is a description of
the Company's segments and the principal operations of each as of December 30,
1995 (see Note 9 in the accompanying consolidated financial statements):
CONCRETE AND PLASTIC PRODUCTS
Associated Concrete Products, Inc., Dalworth Concrete Products, Inc. and
DeKalb Concrete Products, Inc. (Concrete) and Associated Plastics, Inc.
(Plastics) comprise the concrete and plastic products segment (The Quikset
Organization). Concrete designs, manufactures and distributes underground
precast concrete structures. These products are marketed primarily to utility
companies and general contractors by Concrete's eleven plants located in
California, Texas, Arkansas, Georgia and Florida. Concrete has developed a
patented line of precast concrete sectional boxes to house underground
transformers, distribution systems and splicing manholes which are marketed
under the trade name of Quikset.
Concrete obtains its raw materials from domestic sources. Alternate sources
are readily available.
Although no reliable industry statistics are available, the Company believes
that Concrete is one of the larger producers of underground precast concrete
structures in the United States; however, in addition to other manufacturers of
precast concrete and plastic products, Concrete also competes with contractors
who pour structures on site.
Plastics produces plastic products using a fiber reinforced plastic process
and a "structural foam" process developed for injection molding. A number of
products are now manufactured out of plastic material and are similar to
existing product lines of Concrete.
These products are marketed primarily to electrical and telephone utility
companies throughout the United States and parts of Canada by Plastics' two
plants located in California and Arkansas. The primary raw materials used by
Plastics are acrylonitrile- butadiene-styrene copolymers, polyester resins and
glass fiber reinforcements, which are purchased from alternate domestic sources.
SPECIALTY MAGAZINE PUBLICATIONS
Surfer Publications (Communications Group) constitutes the specialty magazine
publications segment. As of December 28, 1996, this segment published Surfer,
Powder, Snowboarder, Bike and Inside Golf Magazines (published twelve, seven,
eight, ten and eight times, respectively, per year). In September 1996, the
first issue of Inside Golf was published. The Communications Group also produces
cable television and home video programs.
The in-house staff sells advertising, markets circulation and produces the
editorial product (which is prepared electronically to press-ready film). The
magazines are distributed to newsstands under contract with right of return for
unsold copies. Subscription fulfillment, printing and television post-production
services are procured from outside sources.
PRODUCT DEVELOPMENT
The Company believes that its future growth depends upon its ability to
continue developing new products and refining its existing products with a plus
that is better than competition.
<PAGE>
14 -----------------------------------------------------------------------------
During the fiscal years ended December 28, 1996, December 30, 1995 and
December 31, 1994, the Company spent $36,000, $248,000 and $179,000,
respectively, for product development. These activities were primarily directed
toward the improvement of existing products.
EMPLOYEES
As of December 28, 1996, the Company employed 607 persons.
MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED STOCKHOLDER MATTERS
The common stock of For Better Living, Inc. is traded on the NASDAQ Small-Cap
Market under the symbol FBTR. The per-share range of closing high and low bid
quotations and the dividends declared and paid, by quarter, for the fiscal years
ended December 28, 1996 and December 30, 1995 were as follows:
FISCAL YEAR ENDED DECEMBER 28, 1996
- --------------------------------------------------------------------------------
QUARTER
----------------------------------
First Second Third Fourth
----- ------ ----- ------
High bid ................................... $9.50 $16.50 $14.00 $14.00
Low bid .................................... 9.00 13.00 14.00 13.00
Dividends .................................. 0.10
FISCAL YEAR ENDED DECEMBER 30, 1995
- --------------------------------------------------------------------------------
QUARTER
----------------------------------
First Second Third Fourth
----- ------ ----- ------
High bid ................................... $9.00 $8.63 $8.63 $9.00
Low bid .................................... 8.50 8.50 8.50 8.50
Dividends .................................. 0.10
The market quotations were obtained from the NASD statistical report. Such
quotations reflect interdealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions. There were 200 record
holders of the Company's common stock as of March 18, 1997.
FORM 10-K AVAILABLE
The Company will furnish without charge to security holders a copy of its
most recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission. Direct your request to Karl M. Stockbridge, Executive Vice
President, For Better Living, Inc., 13620 Lincoln Way, Suite 380, Auburn,
California 95603.
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
(IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------- 15
<CAPTION>
DECEMBER 28, DECEMBER 30, DECEMBER 31, DECEMBER 25, DECEMBER 26,
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenues ........................... $ 97,971 $ 81,517 $ 71,396 $ 67,857 $ 68,846
======== ======== ======== ======== ========
Net income (loss) ...................... $ 655 $ 316 $ (1,836) $ (345) $ 720
======== ======== ======== ======== ========
Total assets ........................... $ 47,016 $ 42,582 $ 39,504 $ 40,481 $ 39,522
======== ======== ======== ======== ========
Long-term obligations .................. $ 15,565 $ 11,718 $ 5,790 $ 5,615 $ 7,486
======== ======== ======== ======== ========
Weighted average number of common
shares outstanding .................... 878 878 878 878 878
======== ======== ======== ======== ========
Income (loss) per common share ......... $ 0.75 $ 0.36 $ (2.09) $ (0.39) $ 0.82
======== ======== ======== ======== ========
Cash dividends declared per common share $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
======== ======== ======== ======== ========
</TABLE>
<PAGE>
16 ----------------------------------------------------------------------------
COMPANY INFORMATION
- --------------------------------------------------------------------------------
DIRECTORS INDEPENDENT ACCOUNTANTS
Richard G. Fabian Deloitte & Touche LLP
Chairman of the Board 695 Town Center Drive
For Better Living, Inc. Costa Mesa, California 92626
Episcopal Priest
COMMON STOCK
F. G. Fabian, Jr. REGISTRAR AND TRANSFER AGENT
Chairman Emeritus
For Better Living, Inc. U.S. Stock Transfer Corporation
1745 Gardena Avenue, Suite 200
William S. Farmer Glendale, California 91204
Attorney at Law
Collette & Erickson CORPORATE OFFICE
Steven A. Hassmann 13620 Lincoln Way, Suite 380
Principal Auburn, California 95603
Acacia Capital, Inc. Tel: (916) 823-9600
Fax: (916) 823-9650
Danna Lewis-Gordon
President OPERATING COMPANIES
Surfer Publications
THE QUIKSET ORGANIZATION
Karl M. Stockbridge 2301 Dupont Drive, Suite 100
Executive Vice President Irvine, California 92715
For Better Living, Inc.
SURFER PUBLICATIONS
33046 Calle Aviador
Peter F. Sullivan San Juan Capistrano, California 92675
Marketing Manager Eastern Area
Pre-Sales Consulting
J.D. Edwards & Company
George S. West
President
The Quikset Organization
OFFICERS
Richard G. Fabian
Chairman of the Board
Karl M. Stockbridge
Executive Vice President
EXHIBIT 10.1
FOR BETTER LIVING, INC.
Performance Recognition Plan
Effective December 25, 1993
ARTICLE I
TITLE AND PURPOSE
This plan shall be known as the "For Better Living, Inc. Performance
Recognition Plan" and units granted under the Plan shall be known as Performance
Recognition Units. The purpose of this Plan is to provide (i) a long-term
performance incentive to certain officers, key employees, directors and
consultants of the Company and its subsidiaries and (ii) a means of attracting
and retaining the services of persons of outstanding abilities to serve in such
capacities.
ARTICLE II
DEFINITIONS
2.1. Appreciated Book Value shall mean the book value, calculated as
provided in Section 5.1, of a Unit as of any Valuation Date following the grant
of such Unit to a Participant.
2.2. Appreciated Fair Market Value shall mean the value, calculated as
provided in Section 5.2, of a Unit as of any Valuation Date following the grant
of such Unit to a Participant.
2.3. Base Book Value shall mean the book value, calculated as provided
in Section 5.1, of a Unit as of the Valuation Date coinciding with or
immediately preceding the Grant Date of such Unit.
2.4. Base Fair Market Value shall mean the value, calculated as
provided in Section 5.2, of a Unit as of the Valuation Date immediately
preceding or coinciding with the Grant Date of such Unit.
2.5. Board of Directors or Board shall mean the Board of Directors of
the Company.
2.6. Closing Price shall mean the closing bid price of the Common Stock
reported by the National Association of Securities Dealers Automated Quotation
Systems, Inc. ("NASDAQ") or, if the shares of Common Stock of the Corporation
are then listed on a National Securities Exchange (registered under the
Securities Exchange Act of 1934), or the NASDAQ National Market System or other
comparable listing which lists last sale prices, the
<PAGE>
reported last sale price per share or, in case no such reported sale takes place
on such day, the average of reported closing bid and asked prices per share, in
either case on such exchange, or if such prices are not recorded by NASDAQ and
the shares of Common Stock are not listed or admitted to trading on such a
National Securities Exchange, the mean between the closing bid and asked prices
as furnished by any member of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose.
2.7. Committee shall mean the group of individuals appointed and acting
in accordance with Article VIII.
2.8. Common Stock shall mean the common stock of the Company.
2.9. Company shall mean For Better Living, Inc., a Delaware
corporation.
2.10. Employment and Termination of Employment shall have the usual
meaning of such terms in referring to regular employees of the Company or its
subsidiaries. In the case of a participant other than a regular employee, such
as a director, consultant, or officer who serves the Company on a part-time
basis, "employment" shall mean the continuance of such relationship, and
"termination of employment" shall mean the termination of all significant
relationships between such Participant and the Company, but not a change in
nature of the relationship; for example, it shall not be deemed "termination of
employment" if a director is not reelected to the Board but continues as a
consultant to the Company or as an officer or full time employee of the Company.
Similarly, it shall not be deemed "termination of employment" if a participant
who has been a regular employee becomes, instead, a director, consultant or
part-time officer of the Company.
2.11. Fiscal Year shall mean the fiscal year of the Company.
2.12. Grant Date shall mean the date on which the Committee grants a
Unit or Units to a Participant.
2.13. Participant shall mean a person who has been selected to
participate in the Plan by the Committee pursuant to Article III.
2.14. Permanent and Total Disability shall mean the total and permanent
incapacity, as determined by the Committee based upon reasonable evidence, of a
Participant
2
<PAGE>
to render substantial services to the Company by reason of mental or physical
disability.
2.15. Plan shall mean the For Better Living Inc. Performance
Recognition Plan.
2.16. Unit shall mean one Performance Recognition Unit granted under
this Plan.
2.17. Unit Account shall mean the account maintained by the Committee
for each Participant in accordance with Article IV.
2.18. Valuation Date shall mean the last day of each Fiscal Quarter and
such other dates as may be approved by the Committee.
ARTICLE III
PARTICIPATION
Eligibility for participation in the Plan shall be determined by the
Committee and the Participants in the Plan shall be selected by the Committee
from time to time at such intervals as the Committee deems appropriate.
ARTICLE IV
GRANT OF UNITS
The Committee may from time to time grant Units to a Participant. A
Participant may receive more than one grant of Units.
The Units shall be used solely as a device for the measurement and
determination of the amounts to be paid as benefits under this Plan. The Units
shall not be treated as property or as a trust fund of any kind. All amounts at
any time attributable to the Units or allocated to a Participant's Unit Account
shall be and remain the sole property of the Company, and each Participant's
rights in the Units and Unit Account is limited to the right to receive cash as
herein provided.
The Committee shall establish a Unit Account for each Participant,
which account shall be a memorandum account on the books of the Company. Each
grant of Units to a Participant under this Plan shall be credited to his or her
Unit Account.
3
<PAGE>
ARTICLE V
VALUATION
5.1. Determination of Book Value. The Base Book Value of a Unit shall
be the consolidated shareholders' equity of the Company as reflected in the
Company's regularly prepared financial statements in accordance with generally
accepted accounting principles, consistently applied, divided by one-tenth of
the number of outstanding shares of Common Stock. The Appreciated Book Value of
a Unit shall be its book value determined as provided in the foregoing sentence
(using the same divisor) subject to the following adjustments: shareholders'
equity shall be increased by (i) cash dividends paid and (ii) the amount of any
distributions to shareholders (including any repurchases, redemptions or
retirements of shares), and shareholders' equity shall be reduced by any
additions to such equity arising from the issuance of shares or other capital
contributions, in either case occurring subsequent to the Valuation Date as of
which the Base Book Value of the Unit in question was determined.
Notwithstanding the generality of the foregoing, with respect to Units granted
prior to January 1, 1994, consolidated shareholder's equity shall not include
the effect of the adjustment made to the Company's financial statements in the
first quarter of 1994 as a result of the application of PASB Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investment in
Debt and Equity Securities."
5.2. Determination of Fair Market Value. The Base Fair Market Value of
a Unit shall be ten times (i) the average Closing Price for the Common Stock for
the 30 consecutive trading days ending on the last trading day immediately
preceding the Valuation Date in question, if during said 30 consecutive trading
days the trading volume of the Common Stock shall have exceeded ___% of the
total outstanding Common Stock, or (ii) in all other events, that amount
determined to be the fair market value of the Common Stock by the Board of
Directors. The Appreciated Fair Market Value of a Unit shall be determined in
the same way as the Base Fair Market Value but shall be adjusted to reflect
stock dividends, stock splits or like capital adjustments occurring subsequent
to the Valuation Date as of which the Base Fair Market Value was determined, and
any other adjustments deemed equitable by the Committee in determination of
Appreciated Fair Market Value shall be made as directed or approved by the
Committee, which may (among other things) apply such methods and information as
it may deem appropriate for ascertaining the market value of a share of stock at
any particular date if quoted trading prices are not readily available.
4
<PAGE>
5.3. Powers of the Committee. In making any determination for purposes
of this Plan as to the determinations of Base Book Value, Appreciated Book
Value, Base Fair Market Value or Appreciated Fair Market Value, or other
determination respecting the Units, the Committee shall have the power to fix
and alter, from time to time in its discretion, the computational methods and
formulae to be used in arriving at such determinations, for the purpose of
providing, as nearly as possible, in the sole judgment of the Committee,
mathematical determinations which carry out the intent and purposes of this Plan
after taking into account such factors as may have arisen over the life of the
Units and which may not have been specifically provided for herein.
ARTICLE VI
VESTING
6.1. Vesting Schedule. The interest of a Participant in his or her
Units shall vest and become nonforfeitable according to the following schedule:
Anniversary of Percentage
Grant Date Vested
---------- ------
1st 10%
2nd 20%
3rd 30%
4th 40%
5th 50%
6th 60%
7th 70%
8th 80%
9th 90%
10th 100%
6.2. Early Vesting. Notwithstanding the provisions of Section 6.1, the
interest of a Participant in his or her Units shall be 100% vested upon (i) his
or her attainment of age 65, (ii) his or her death, or (iii) his or her
Permanent and Total Disability.
6.3. Fully-Vested Units. Fully Vested Units are Units that are 100%
vested. Notwithstanding the vesting schedule provisions of Section 6.1., the
Committee may grant Fully Vested Units to a Participant. Fully Vested Units are
still subject to the maturity provisions of Section 7.1.2.
5
<PAGE>
ARTICLE VII
BENEFITS
7.1.1. Amount and Timing of Benefits on Termination. Upon a
Participant's termination of employment with the Company, his or her Units will
be treated as retired and he or she shall become entitled to a payment from the
Company. With respect to each Unit, the amount of such payment shall be equal to
the greater of (a) or (b) where
(a) is equal to the difference (if a positive number) between the
Appreciated Book Value, as of the Valuation Date immediately preceding the date
of termination of employment, and the Base Book Value of such Unit multiplied by
his or her vested percentage determined under Article VI of the Plan, and
(b) is equal to the difference (if a positive number) between the
Appreciated Fair Market Value, as of the Valuation Date immediately preceding
the date of termination of employment, and the Base Fair Market Value of such
Unit multiplied by his or her vested percentage determined under Article VI of
the Plan.
7.1.2. Amount and Timing of Benefits on Maturity of Units. Units mature
on the first to occur of the following:
(1) the tenth anniversary of their grant date; or
(ii) one of the events triggering the early vesting of Units under the
provisions of Section 6.2.
Upon the maturity of a Unit, the participant shall become entitled to a
payment from the Company with respect to such Unit in an amount equal to 100% of
the greater of (a) or (b), as defined in Section 7.1.1, above, and, upon payment
of such amount, said matured Units shall be retired.
7.2. Manner of Payment. Except as otherwise provided in Section 7.3,
payment shall be in the form of a cash lump sum payment on or before the first
day of the third month beginning after the Participant's termination of
employment or the maturity of the Unit, as the case may be.
Notwithstanding the generality of the foregoing, a Participant may
elect to defer receipt of all or any portion of a cash lump sum otherwise
payable to participant upon maturity of Units, and, instead, have said amount
credited to Participant's account in the For Better Living, Inc. Deferred
Compensation Plan. Participant's election to so defer shall be in writing and
shall be delivered to the
6
<PAGE>
Committee on or before the day immediately preceding the day on which the
Participant's Units mature.
7.3. Company's Right to Withhold. The Company shall have the right to
deduct from any payment any federal, state or local taxes required by law to be
withheld with respect to such payments.
7.4. Forfeitures. Upon termination of a Participant's employment with
the Company, the unvested portion of Units previously granted to the Participant
shall be deemed retired and shall cease to exist and the Company shall not
thereafter be obligated to the Participant with respect thereto.
ARTICLE VIII
ADMINISTRATION
8.1. The Committee. The Compensation Committee of the Company's Board
of Directors, as it shall be constituted from time to time, shall serve as the
committee hereunder.
8.2 Committee Action. The Committee shall, for the purpose of
administering the Plan, choose a Secretary who may be, but is not required to
be, a member of the Committee, who shall keep minutes of the Committee's
proceedings and all records and documents pertaining to the Committee's
administration of the Plan. A member of the Committee shall not vote or act upon
any matter which relates solely to himself as a Participant in this Plan. The
Secretary may execute any certificate or other written direction on behalf of
the Committee. Any act which this plan authorizes or requires the Committee to
do may be done by a majority of its members. The action of such majority,
expressed from time to time by a vote at a meeting or by unanimous written
consent of Committee members without a meeting, shall constitute the action of
the Committee.
8.3. Rights and Duties. Subject to the limitations of this Plan, the
Committee shall be charged with the general administration of this Plan and the
responsibility for carrying out its provisions, and shall have powers necessary
to accomplish those purposes, including, but not by way of limitation, the
following:
(a) To construe, interpret and administer the Plan;
(b) To select the Participants to be granted Units under the Plan;
7
<PAGE>
(c) To determine the number of Units included in each grant;
(d) To determine the time or times when Units will be granted;
(e) To make all other determinations required by this Plan;
(f) To compute and certify the amount of benefits payable to
Participants;
(g) To authorize all payments pursuant to the Plan;
(h) To maintain all the necessary records for the administration of the
plan;
(i) To make and publish rules for the administration, interpretation
and regulation of the plan;
(j) To communicate to each Participant annually, as soon as practicable
after the close of each Fiscal Year, the number of Units credited to his or her
Unit Account and his or her vested percentages in such Units; and
(k) To establish claims procedures consistent with regulations of the
Secretary of Labor for presentation of claims by Participants and Beneficiaries
for Plan benefits, consideration of such claims, review of claim denials and
issuance of a decision on review. Such claims procedures shall at a minimum
consist of the following:
(1) The Committee shall notify Participants and, where
appropriate, Beneficiaries of their right to claim benefits under the
claims procedures, shall make forms available for filing of such
claims, and shall provide the name of the person or persons with whom
such claims should be filed;
(2) The Committee shall establish procedures for action
upon claims initially made and the communication of a decision to the
claimant promptly and, in any event, not later than 90 days after the
claim is received by the Committee, unless special circumstances
require an extension of time for processing the claim. If an extension
is required, notice of the extension shall be furnished to the claimant
prior to the end of the initial 90-day period, which notice shall
indicate the reasons for the extension and the expected decision date.
The extension shall not exceed 90 days. The claim may be
8
<PAGE>
deemed by the claimant to have been denied for purposes of further
review described below in the event a decision is not furnished to the
claimant within the period described in the three preceding sentences.
Every claim for benefits which is denied shall be denied by written
notice set forth in a manner calculated to be understood by the
claimant and shall state (i) the specific reason or reasons for the
denial, (ii) specific reference to any provisions of this Plan on which
the denial is based, (iii) description of any additional material or
information necessary for the claimant to perfect his or her claim with
an explanation of why such material or information is necessary, and
(iv) an explanation of the procedure for further reviewing the denial
of the claim under the Plan;
(3) The Committee shall establish a procedure for review
of claim denials, such review to be undertaken by the Committee. The
review given after denial of any claim shall be a full and fair review
with the claimant or his or her duly authorized representative having
60 days after receipt of denial of his or her claim to request such
review, the right to review all pertinent documents and the right to
submit issues and comments in writing; and
(4) The Committee shall establish a procedure for issuance
of a decision by the Committee not later than 60 days after receipt of
a request for review from a claimant unless special circumstances, such
as the need to hold a hearing, require a longer period of time, in
which case a decision shall be rendered as soon as possible but not
later than 120 days after receipt of the claimant's request for review.
The decision on review shall be in writing and shall include specific
reasons for the decision written in a manner calculated to be
understood by the claimant with specific reference to any provisions of
this plan on which the decision is based.
The determination of the Committee in good faith as to any disputed
question or controversy and the Committee's calculation of benefits payable to
Participant shall be conclusive. In performing its duties, the Committee shall
be entitled to rely on information, opinions, reports or statements prepared or
presented by: (i) officers or employees of the Company whom the Committee
believes to be reliable and competent as to such matters; and (ii) counsel (who
may be employees of the Company), independent accountants and other persons as
to matters which the
9
<PAGE>
Committee believes to be within such persons' professional or expert competence.
The Committee shall be fully protected with respect to any action taken or
omitted by it in good faith pursuant to the advice of such persons.
8.4. Indemnity and Liability. All expenses of the Committee shall be
paid by the Company, and the Company shall furnish the Committee with such
clerical and other assistance as is necessary in the performance of its duties.
No member of the Committee shall be liable for any act or omission of any other
member of the Committee nor for any act or omission on his or her own part,
excepting only his or her own willful misconduct or gross negligence. To the
extent permitted by law, the Company shall indemnify and save harmless each
member of the Committee against any and all expenses and liabilities arising out
of his or her membership on the Committee, excepting only expenses and
liabilities arising out of his or her own willful misconduct or gross
negligence.
ARTICLE IX
PLAN CHANGES TERMINATION
It is the expectation of the Company that this Plan shall be continued
indefinitely, but continuance of this Plan is not assumed as a contractual
obligation of the Company. The Board of Directors shall have the right to amend
this Plan in whole or in part from time to time or may at any time suspend or
terminate this Plan; provided, however, that no amendment or termination shall
cancel or otherwise adversely affect in any way any Participant's rights with
respect to Units previously granted or to any amounts previously credited to his
or her Unit Account without the prior written consent of such Participant. Such
amendments shall be stated in an instrument in writing and all Participants
shall be bound thereby.
ARTICLE X
MISCELLANEOUS
10.1. Receipt or Release. Any payment to any Participant in accordance
with the provisions of this Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Committee and the Company, and, to the
extent permitted by law, the Committee may require such Participant, as a
condition precedent to such payment, to execute a receipt and release to such
effect.
10.2. Limitation on Participant's Rights.
10
<PAGE>
Participation in this Plan shall not give any Participant the right to be
retained in the employ of the Company or any rights or interest other than as
herein provided. No Participant shall have any right to any payment or benefit
hereunder except to the extent provided in this Plan. The rights of any
Participant as an employee of the Company shall not be enlarged, guaranteed or
affected by reason of any of the provisions of the Plan. The Company reserves
the right to terminate the Participant's employment without any liability for
any claim against the Company under this Plan, except for payment of vested
benefits to the extent expressly provided herein with respect to Units granted
hereunder. This Plan and such Units shall create only a contractual obligation
on the part of the Company as to such amounts and shall not be construed as
creating a trust. This Plan, in and of itself, has no assets. Participants shall
have only the rights of general unsecured creditors of the Company with respect
to amounts credited to and benefits payable from their Unit Accounts.
10.3. Beneficiaries.
(a) Upon forms provided by the Committee each Participant
shall designate in writing the Beneficiary or Beneficiaries (as defined in
Section 10.3(b)) whom such Participant desires to receive any payments payable
after his or her death. A Participant may from time to time change his or her
designated Beneficiary or Beneficiaries without the consent of such Beneficiary
or Beneficiaries by filing a new designation in writing with the Committee.
However, if a married Participant wishes to designate a person other than his or
her spouse as Beneficiary, such designation shall be consented to in writing by
said spouse. Notwithstanding the foregoing, spousal consent shall not be
necessary if it is established that the required consent cannot be obtained
because said spouse cannot be located or because of other circumstances
prescribed by the Committee. The Company and the Committee may rely on the
Participant's designation of a Beneficiary or Beneficiaries last filed in
accordance with the terms of this Plan.
(b) A Participant's "Beneficiary" or "Beneficiaries" shall be
the person or persons, including a trustee, personal representative or other
fiduciary, last designated in writing by the Participant in accordance with the
provisions of Section 10.3(a) to receive the payments specified hereunder in the
event of the Participant's death. If there is no valid Beneficiary designation
in effect that complies with the provisions of Section 10.3(a), or if there is
no surviving designated Beneficiary, then the Participant's surviving spouse
shall be the Beneficiary. If
11
<PAGE>
there is no surviving spouse to receive any payments payable in accordance with
the preceding sentence, the duly appointed and currently acting personal
representative of the Participant's probate estate (which shall include either
the Participant's probate estate or living trust) shall be the Beneficiary. In
any case where there is no such personal representative of the Participant's
estate duly appointed and acting in that capacity within 90 days after the
Participant's death (or such extended period as the Committee determines as
reasonably necessary to allow such personal representative to be appointed, but
not to exceed 180 days after the Participant's death), then the Beneficiary or
Beneficiaries shall be the person or persons who can verify by affidavit or
court order to the satisfaction of the Committee that they are legally entitled
to receive the payment specified hereunder. In the event any amount is payable
under this Plan to a minor, payment shall not be made to the minor, but instead
shall be paid (a) to that person's then living parent(s) to act as custodian,
(b) if that person's parents are then divorced and one parent is the sole
custodial parent, to such custodial parent, or (c) if no parent of that person
is then living, to a custodian selected by the Committee to hold the funds for
the minor under the Uniform Transfers or Gifts to Minors Act in effect in the
jurisdiction in which the minor resides. If no parent is living and the
Committee decides not to select another custodian to hold the funds for the
minor, then payment shall be made to the duly appointed and currently acting
guardian of the estate for the minor or, if no guardian of the estate for the
minor is duly appointed and currently acting within 60 days after the date the
amount becomes payable, payment shall be deposited with the court having
jurisdiction over the estate of the minor. Subject to the foregoing, any
payments which would have been payable to any Participant if he or she had lived
shall be paid to the Participant's Beneficiary or Beneficiaries in the same
amounts and on the same dates as such payments would have been paid to the
Participant had he or she lived (and terminated his or her employment with the
Company on the date of his or her death).
11.4. Benefits Not Assignable; Obligations Binding Upon Successors.
Benefits of a Participant under this Plan shall not be assignable or
transferable and any purported transfer, assignment, pledge or other encumbrance
or attachment of any payments or benefits under this Plan, other than by
operation of law or pursuant to Section 10.3, shall not be permitted or
recognized. Obligations of the Company under this Plan shall be binding upon
successors of the Company.
12
<PAGE>
10.5. California Law Governs; Severability. The validity of this Plan
or any of its provisions shall be construed, administered and governed in all
respects under and by the laws of the State of California. If any provisions of
this instrument shall be held by a court of competent jurisdiction to be invalid
or unenforceable, the remaining provisions hereof shall continue to be fully
effective.
10.6. Headings Not Part of Plan. Headings and subheadings in this Plan
are inserted for reference only and are not to be considered in the construction
of the provisions hereof.
10.7. Gender. The masculine pronoun and adjective shall be deemed to
include the feminine.
13
<PAGE>
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute this Plan document as of December 25, 1993.
FOR BETTER LIVING, INC.
By ____________________________
By ____________________________
14
EXHIBIT 10.3
FOR BETTER LIVING, INC.
Amendment to
Performance Share Plan and Appendix
This Amendment to Performance Share Plan and Appendix amends the For
Better Living, Inc. Performance Share Plan adopted June, 1976 and revised
October 13, 1987 (the "Plan") and the Appendix thereto (the "Appendix"). The
effective date of this Amendment is May 1, 1991 (the "Effective Date"). Unless
otherwise defined herein, capitalized terms used herein shall be as defined in
the Plan or the Appendix, as the case may be.
1. Section 5. Effective as of the Effective Date, Section 5 of the Plan
is hereby amended and restated in its entirety as follows:
5. Maturity date of a performance share unit shall be the
fifth anniversary of its award date, unless (i) a different
maturity date is fixed by the Board at the time of award or
(ii) the participant shall cease to be a full-time employee of
the Company or one of its subsidiaries, in which case the
maturity date of his performance shares shall be the last day
of the fiscal year preceding the date of termination of such
employment.
2. Section 9. Effective as of the Effective Date, Section 9 of the Plan
is hereby deleted in its entirety, but all other section numbers shall remain
the same.
3. Section 10. Effective as of the Effective Date, Section 10 of the
Plan is hereby deleted in its entirety, but all other section numbers shall
remain the same.
4. Section 16. Effective as of the Effective Date, Section 16 of the
Plan is amended and restated to read in its entirety as follows:
16. Participants who are deemed to be insiders of the Company
for purposes of Section 16 of the Securities Exchange Act of
1934, as amended, shall not surrender performance share units
for purchase of common stock at any time during which any such
participant is an insider, as so defined, and for a period of
six months thereafter.
5. Amendment to the Appendix. Effective as of the Effective Date, the
Appendix to the Plan is hereby amended as follows:
(a) Effective as of the Effective Date, Section 3.3(b) of the
Appendix is hereby amended and restated in its
<PAGE>
entirety as follows:
(b) FBLI Equity Fund. The Investment Return on this
Investment Option is calculated as if the Credits under this
Investment Option were invested in common stock of the
Company, purchased at the Net Worth per share, and credited
(or debited) with the primary income (loss) per common share
during the Computation Period. Participants who are deemed to
be insiders of the Company for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended, shall not avail
themselves of this Investment Option at any time during which
any such participant is an insider, as so defined, and for a
period of six months thereafter.
(b) Effective as of the Effective Date, Section 4.1 of the
Appendix is hereby amended by deleting therefrom the last paragraph thereto in
its entirety so that Section 4.1 of the Appendix shall read in its entirety as
follows:
4.1 Methods and Time of Payment. In making each
election pursuant to Section 2.1 of this Appendix, a
Participant shall elect, in writing, a method of payment of
the Credits relating to the performance shares for which such
election is made. There shall be a separate election for the
performance shares relating to each Maturity Date, Such
election shall specify the timing and form of payment of such
Credits, as follows:
(a) Timing: A Participant may choose that
payments commence as of (i) termination of employment
(including but not limited to death, retirement,
early retirement, resignation and discharge) or (ii)
a specified number of years from the date of the
election, provided that if a Participant's employment
terminates before such specified number of years,
then payments shall commence as of termination of
employment, regardless of the Participant's election.
(b) Form: A Participant may elect that
benefit payments be made either (i) as a single lump
sum on the date payments commence or (ii) over the
period of years specified by the Participant,
starting on the date
2
<PAGE>
payments commence. If a Participant elects payment
over a period of years, he may elect that all
remaining payments to his Beneficiary be made in a
lump sum upon his death.
6. Effect Of This Amendment. The terms of this Amendment shall apply
only to performance share units awarded on or after the Effective Date.
7. No Further Amendment. Except as amended hereby, the terms,
provisions and conditions of the Plan, including the Appendix, are hereby
ratified and confirmed as being in full force and effect, it being understood
and agreed that the Plan and Appendix as amended hereby may not be further
amended except in accordance with the terms of the Plan or the Appendix, as the
case may be.
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute this Amendment as of the Effective Date.
FOR BETTER LIVING, INC.
By ____________________________
Its ____________________________
By ____________________________
Its ____________________________
3
EXHIBIT 10.5
Amendment to
EXECUTIVE DEFERRED
COMPENSATION PLAN
FOR BETTER LIVING, INC.
This Amendment to Executive Deferred Compensation Plan amends the
Executive Deferred Compensation Plan of For Better Living, Inc. dated September
1, 1987 (the "Plan"). The effective date of this Amendment is May 1, 1991 (the
"Effective Date"). Unless otherwise defined herein, capitalized terms used
herein shall be as defined in the Plan.
1. Section 3.3(b). Effective as of the Effective Date, Section 3.3(b)
of the Plan is hereby amended and restated in its entirety as follows:
(b) FBLI Equity Fund. The Investment Return on this
Investment Option is calculated as if the Credits under this
Investment Option were invested in common stock of the
Company, purchased at the Net Worth per share, and credited
(or debited) with the primary income (loss) per common share
during the Computation Period. Participants who are deemed to
be insiders of the Company for purposes of Section 16 of the
Securities Exchange Act of 1934, as amended, shall not avail
themselves of this Investment Option at any time during which
any such Participant is an insider, as so defined, and for a
period of six months thereafter.
2. Section 4.1. Effective as of the Effective Date, Section 4.1 of the
Plan is hereby amended by deleting therefrom the last paragraph thereto in its
entirety so that Section 4.1 of the Plan shall read in its entirety as follows:
4.1 Methods and Time of Payment. In making each
election pursuant to Section 2.1 of this Appendix, a
Participant shall elect, in writing, a method of payment of
the Credits relating to the performance shares for which such
election is made. There shall be a separate election for the
performance shares relating to each Maturity Date, Such
election shall specify the timing and form of payment of such
Credits, as follows:
(a) Timing: A Participant may choose that
payments commence as of (i) termination of employment
(including but not limited to death, retirement,
early retirement, resignation and discharge) or (ii)
a
<PAGE>
specified number of years from the date of the
election, provided that if a Participant's employment
terminates before such specified number of years,
then payments shall commence as of termination of
employment, regardless of the Participant's election.
(b) Form: A Participant may elect that
benefit payments be made either (i) as a single lump
sum on the date payments commence or (ii) over the
period of years specified by the Participant,
starting on the date payments commence. If a
Participant elects payment over a period of years, he
may elect that all remaining payments to his
Beneficiary be made in a lump sum upon his death.
3. Effect Of This Amendment. The terms of this Amendment shall apply
only to elections made under the Plan on or after the Effective Date.
4. No Further Amendment. Except as amended hereby, the terms,
provisions and conditions of the Plan are hereby ratified and confirmed as being
in full force and effect, it being understood and agreed that the Plan as
amended hereby may not be further amended except in accordance with the terms of
the Plan.
IN WITNESS WHEREOF, the Company has caused its duly authorized officers
to execute this Amendment as of the Effective Date.
FOR BETTER LIVING, INC.
By ____________________________
Its ____________________________
By ____________________________
Its ____________________________
2
EXHIBIT 13
EXHIBIT 21
FOR BETTER LIVING, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
The following is a list of subsidiaries and sub-subsidiaries, each of which
is wholly-owned and included in the Registrant's consolidated financial
statements:
STATE OF
SUBSIDIARY INCORPORATION
- --------------------------------------- --------------
The Quikset Organization ............... California
Associated Concrete Products, Inc. .... California
DeKalb Concrete Products, Inc. ......... Georgia
Dalworth Concrete Products, Inc. ...... Texas
Associated Plastics, Inc. .............. California
Surfer Publications .................... California
BLI Facilities, Inc. ................... California
BLI Investments ........................ California
All unnamed subsidiaries, when consi dered in the aggregate as a single
subsidiary, would not constitute a signific ant subsidiary.
EXHIBIT 23
INDEPENDENT AUDITORS' REPORT ON SCHEDULE
To the Stockholders and Board of Directors of
For Better Living, Inc.:
We have audited the consolidated financial statements of For Better Living,
Inc. and subsidiaries as of December 28, 1996 and December 30, 1995, and for
each of the three fiscal years in the period ended December 28, 1996, and have
issued our report thereon dated March 14, 1997; such financial statements and
report are included in your 1996 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedule of For Better Living, Inc. and subsidiaries, listed
in Item 14. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
Deloitte & Touche LLP
Costa Mesa, California
March 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-28-1996
<PERIOD-END> Dec-28-1996
<CASH> 1,518,000
<SECURITIES> 0
<RECEIVABLES> 17,259,000
<ALLOWANCES> 847,000
<INVENTORY> 9,978,000
<CURRENT-ASSETS> 33,111,000
<PP&E> 40,379,000
<DEPRECIATION> 29,271,000
<TOTAL-ASSETS> 47,016,000
<CURRENT-LIABILITIES> 13,529,000
<BONDS> 0
<COMMON> 44,000
0
0
<OTHER-SE> 16,985,000
<TOTAL-LIABILITY-AND-EQUITY> 47,016,000
<SALES> 26,160,000
<TOTAL-REVENUES> 26,534,000
<CGS> 16,226,000
<TOTAL-COSTS> 26,137,000
<OTHER-EXPENSES> 9,911,000
<LOSS-PROVISION> 8,000
<INTEREST-EXPENSE> 446,000
<INCOME-PRETAX> 397,000
<INCOME-TAX> 215,000
<INCOME-CONTINUING> 182,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 182,000
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
