FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended: FEBRUARY 26, 2000
-----------------
-OR-
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ________ to ________.
COMMISSION FILE NUMBER 0-13099
TRISTAR CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3129318
------------------------------- -------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
105 S. ST. MARY'S STREET, SUITE 1800, SAN ANTONIO, TEXAS 78205
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(210) 402-2200
--------------
(Registrant's telephone number, including area code)
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 [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
ON APRIL 11, 2000, THERE WERE OUTSTANDING 16,773,741 SHARES OF
COMMON STOCK, $.01 PAR VALUE, OF THE REGISTRANT.
<PAGE>
TRISTAR CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----------
<S> <C>
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets--February 26, 2000 and August 28, 1999..................... 3
Consolidated statements of operations and comprehensive income--thirteen and twenty-
six week periods ended February 26, 2000 and February 27, 1999, respectively.... 5
Consolidated statement of shareholders' equity -- twenty-six week period
ended February 26, 2000......................................................... 6
Consolidated statements of cash flows--twenty-six week periods ended
February 26, 2000 and February 27, 1999, respectively........................... 7
Notes to consolidated financial statements--February 26, 2000.......................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.. 13
Item 3. Qualitative and Quantitative Disclosure About Market Risk.............................. 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................................................... 19
Item 2. Changes in Securities.................................................................. 19
Item 3. Defaults Upon Senior Securities........................................................ 19
Item 4. Submission of Matters to a Vote of Security Holders.................................... 19
Item 5. Other Information...................................................................... 19
Item 6. Exhibits and Reports on Form 8-K....................................................... 19
SIGNATURES........................................................................................ 20
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRISTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 26,
2000 AUGUST 28,
ASSETS (UNAUDITED) 1999 *
----------- -----------
<S> <C> <C>
Current assets:
Cash ..................................................... $ 98,000 $ 90,000
Accounts receivable, less allowance for doubtful accounts
of $822,000 and $651,000, respectively ................. 13,602,000 13,519,000
Accounts receivable - related parties - net .............. 4,436,000 4,118,000
Inventories .............................................. 12,724,000 9,531,000
Other current assets ..................................... 201,000 72,000
----------- -----------
Total current assets ................................... 31,061,000 27,330,000
----------- -----------
Property, plant and equipment, less accumulated depreciation
of $11,224,000 and $10,434,000 ........................... 8,628,000 8,364,000
----------- -----------
Other assets:
Goodwill, less accumulated amortization of $89,000 ....... 5,141,000 --
Other assets ............................................. 511,000 435,000
----------- -----------
Total other assets ..................................... 5,652,000 435,000
----------- -----------
Total assets ............................................... $45,341,000 $36,129,000
=========== ===========
</TABLE>
* Prepared from audited financial statements for the year ended August 28, 1999
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
TRISTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
FEBRUARY 26,
2000 AUGUST 28,
LIABILITIES AND SHAREHOLDERS' EQUITY (UNAUDITED) 1999 *
------------ ------------
<S> <C> <C>
Current liabilities:
Revolving credit agreement borrowings .................................... $ 10,763,000 $ 8,926,000
Accounts payable--trade .................................................. 7,817,000 7,055,000
Accounts payable--related parties - net .................................. 3,311,000 3,516,000
Accrued interest expense-related party ................................... 1,731,000 1,731,000
Other accrued expenses ................................................... 3,174,000 1,997,000
Current portion of capital lease obligations ............................. 71,000 132,000
Current portion of long-term debt ........................................ 1,582,000 1,283,000
Current portion of subordinated debt ..................................... 1,196,000 --
------------ ------------
Total current liabilities .............................................. 29,645,000 24,640,000
Long-term debt, less current portion ....................................... 2,608,000 2,738,000
Subordinated debt, less current portion .................................... 3,060,000 --
Obligations under capital leases, less current portion ..................... 16,000 20,000
------------ ------------
Total liabilities ....................................................... 35,329,000 27,398,000
------------ ------------
Commitments and contingencies (Note 6)
Shareholders' equity (deficit):
Preferred stock, $.05 par value; authorized 1,000,000 shares;
Series A, 537,142 shares issued and outstanding ........................ 3,760,000 3,760,000
Series B, 120,690 shares issued and outstanding ........................ 4,511,000 4,511,000
Series C, 100,000 and 78,333 respectively, shares issued and outstanding 6,133,000 4,699,000
Common stock, $.01 par value; authorized 30,000,000 shares;
issued and outstanding 16,773,741 shares and 16,768,859 shares,
respectively .......................................................... 168,000 168,000
Additional paid-in-capital ............................................... 13,456,000 12,841,000
Related party receivables ................................................ (2,740,000) (2,365,000)
Accumulated deficit ...................................................... (15,276,000) (14,883,000)
------------ ------------
Total shareholders' equity ............................................. 10,012,000 8,731,000
------------ ------------
Total liabilities and shareholders' equity ................................. $ 45,341,000 $ 36,129,000
============ ============
</TABLE>
* Prepared from audited financial statements for the year ended August 28, 1999
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
TRISTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
----------------------------- -----------------------------
FEBRUARY 26, FEBRUARY 27, FEBRUARY 26, FEBRUARY 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales ..................................... $ 13,624,000 $ 13,440,000 $ 27,087,000 $ 28,515,000
Cost of sales ................................. 9,495,000 9,865,000 18,704,000 20,471,000
------------ ------------ ------------ ------------
Gross profit .................................. 4,129,000 3,575,000 8,383,000 8,044,000
Selling, general and administrative expenses .. 3,799,000 3,746,000 7,254,000 7,665,000
------------ ------------ ------------ ------------
Income (loss) from operations ................. 330,000 (171,000) 1,129,000 379,000
Other income (expense):
Interest expense .......................... (523,000) (307,000) (944,000) (638,000)
Other expense ............................. 14,000 (8,000) 25,000 (3,000)
------------ ------------ ------------ ------------
Income (loss) before provision for income taxes (179,000) (486,000) 210,000 (262,000)
Provision for income taxes .................... -- 24,000 3,000 24,000
------------ ------------ ------------ ------------
Net income (loss) ............................. (179,000) (510,000) 207,000 (286,000)
------------ ------------ ------------ ------------
Less:
Preferred stock dividends ................. (223,000) (197,000) (434,000) (404,000)
Beneficial conversion feature ............. (31,000) (40,000) (372,000) (681,000)
------------ ------------ ------------ ------------
Net loss applicable to common stock ........... $ (433,000) $ (747,000) $ (599,000) $ (1,371,000)
============ ============ ============ ============
Loss per common share:
Basic ..................................... $ (.03) $ (.04) $ (.04) $ (.08)
============ ============ ============ ============
Diluted ................................... $ (.03) $ (.04) $ (.04) $ (.08)
============ ============ ============ ============
Net income (loss) ............................. $ (179,000) $ (510,000) $ 207,000 $ (286,000)
Other Comprehensive Income .................... -- -- -- --
------------ ------------ ------------ ------------
Comprehensive income (loss) ................... $ (179,000) $ (510,000) $ 207,000 $ (286,000)
============ ============ ============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
TRISTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY(UNAUDITED)
TWENTY-SIX WEEKS ENDED FEBRUARY 26, 2000
<TABLE>
<CAPTION>
PREFERRED STOCK
-------------------------------------------------------------
COMMON STOCK SERIES A SERIES B
----------------------------- ---------------------------- ----------------------------
NUMBER NUMBER NUMBER
OF SHARES AMOUNT OF SHARES AMOUNT OF SHARES AMOUNT
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, August 28, 1999* .. 16,768,859 $ 168,000 537,142 $ 3,760,000 120,690 $ 4,511,000
============ ============ ============ ============ ============ ============
Net income .................
Preferred Stock C Dividends
Contribution to 401(k) Plan 4,882
Issuance of Series C
Preferred Stock and
related warrants ........
Issuance of options relating
to FIL acquisition ......
Related party receivables ..
------------ ------------ ------------ ------------ ------------ ------------
Balance, Febraury 26, 2000 . 16,773,741 $ 168,000 537,142 $ 3,760,000 120,690 $ 4,511,000
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCK
----------------------------
SERIES C
---------------------------- RELATED
NUMBER ADDITIONAL PARTY ACCUMULATED
OF SHARES AMOUNT PAID-IN-CAPITAL RECEIVABLES DEFICIT
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, August 28, 1999* .. 78,333 $ 4,699,000 $ 12,841,000 $ (2,365,000) $(14,883,000)
============ ============ ============ ============ ============
Net income ................. 207,000
Preferred Stock C Dividends (228,000)
Contribution to 401(k) Plan 29,000
Issuance of Series C
Preferred Stock and
related warrants ........ 21,667 1,434,000 185,000 (372,000)
Issuance of options relating
to FIL acquisition ...... 401,000
Related party receivables .. (375,000)
------------ ------------ ------------ ------------ ------------
Balance, Febraury 26, 2000 . 100,000 $ 6,133,000 $ 13,456,000 $ (2,740,000) $(15,276,000)
============ ============ ============ ============ ============
</TABLE>
* Prepared from audited financial statements for the year ended August 28, 1999
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE>
TRISTAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
-----------------------------
FEBRUARY 26, FEBRUARY 27,
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ...................................... $ 207,000 $ (286,000)
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation ......................................... 788,000 868,000
Amortization of Goodwill ............................. 89,000 --
Amortization of discounts ............................ 11,000 --
Provision for losses on accounts receivable .......... 354,000 325,000
Provision for inventory allowances ................... 58,000 11,000
Issuance of stock in connection with 401(K) .......... 29,000 13,000
Amortization of warrant valuation .................... 6,000 52,000
Amortization of deferred loan costs .................. 140,000 127,000
Change in operating assets and liabilities:
Accounts receivable ............................... 1,798,000 167,000
Accounts receivable affiliates .................... (693,000) --
Inventories ....................................... (721,000) 717,000
Other current assets .............................. (226,000) (80,000)
Accounts payable .................................. (1,461,000) (2,497,000)
Accrued expenses .................................. 960,000 17,000
------------ ------------
Net cash provided by (used in) operating activities .. 1,339,000 (566,000)
------------ ------------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Capital expenditures ................................... (565,000) (509,000)
Investment in business acquisition; net of cash acquired (441,000) --
------------ ------------
Net cash used in investing activities ................ (1,006,000) (509,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Book overdraft ......................................... -- (334,000)
Repayment of revolving credit facility ................. (31,248,000) (4,746,000)
Borrowings under revolving credit facility ............. 30,103,000 2,126,000
Proceeds from long-term debt ........................... 891,000 380,000
Principal payments under long-term debt ................ (1,025,000) (442,000)
Principal payments on capital leases ................... (65,000) (64,000)
Issuance of Preferred Stock Series C ................... 1,300,000 4,699,000
Payment of issuance costs for Preferred Stock Series C . (53,000) (374,000)
Payment of dividends on Preferred Stock Series C ....... (228,000) (188,000)
------------ ------------
Net cash provided by (used in) financing activities .. (325,000) 1,057,000
------------ ------------
NET INCREASE (DECREASE) IN CASH ............................ 8,000 (18,000)
CASH AT BEGINNING OF PERIOD ................................ 90,000 66,000
------------ ------------
CASH AT END OF PERIOD ...................................... $ 98,000 $ 48,000
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
7
<PAGE>
TRISTAR CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FEBRUARY 26, 2000
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Tristar
Corporation ("the Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statement presentation.
The accompanying unaudited consolidated financial statements include the
accounts of Tristar Corporation and its subsidiaries. Effective November 1,
1999, the Company, through a newly formed wholly owned subsidiary, Tristar USA,
Inc. ("Tristar USA") acquired Fragrance Impressions Limited (See Note 8 of the
Notes to Consolidated Financial Statements for further details).
Certain prior period amounts have been reclassified to conform to the current
year presentation.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the thirteen and twenty-six week periods ended February
26, 2000, are not necessarily indicative of the results that may be expected for
the year ending August 26, 2000.
NOTE 2: EARNINGS (LOSS) PER COMMON SHARE
A reconciliation of the numerators and denominators of the basic and diluted
earnings (loss) per share computations, as required by SFAS No. 128, is
presented below:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
----------------------------- -----------------------------
FEBRUARY 26, FEBRUARY 27, FEBRUARY 26, FEBRUARY 27,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Basic EPS:
Net loss applicable to common stock ..................... $ (433,000) $ (747,000) $ (599,000) $ (1,371,000)
Weighted-average number of common shares outstanding .... 16,771,931 16,763,845 16,770,828 16,762,669
------------ ------------ ------------ ------------
Basic EPS .................................................... $ (.03) $ (.04) $ (.04) $ (.08)
============ ============ ============ ============
Diluted EPS (1):
Net loss applicable to common stock ..................... $ (433,000) $ (747,000) $ (599,000) $ (1,371,000)
Weighted-average number of common shares outstanding .... 16,771,931 16,763,845 16,770,828 16,762,669
Add: effects of assumed exercise of options and warrants
Exercise of stock options ............................ _ _ _ _
Exercise of warrants ................................. _ _ _ _
------------ ------------ ------------ ------------
Weighted-average number of common shares outstanding
plus shares from assumed exercise of options and
warrants ............................................. 16,771,931 16,763,845 16,770,828 16,762,669
------------ ------------ ------------ ------------
Diluted EPS .................................................. $ (.03) $ (.04) $ (.04) $ (.08)
============ ============ ============ ============
</TABLE>
8
<PAGE>
1. Dilutive EPS equals basic EPS for the thirteen and twenty-six week periods
ended February 26, 2000 and February 27, 1999, as the assumed conversion of
convertible preferred stock and the assumed exercise of outstanding options
and warrants would have an anti-dilutive effect.
NOTE 3: INVENTORIES
Inventory is stated at the lower of cost or market. The components of inventory
are as follows:
-----------------------------------------------------------------
FEBRUARY 26, AUGUST 28,
2000 1999
-----------------------------------------------------------------
Raw materials ............ $ 6,094,000 $ 4,183,000
Work-in-process .......... 752,000 630,000
Finished goods ........... 7,284,000 5,395,000
------------ ------------
14,130,000 10,208,000
Reserves for market
valuation ................ (1,025,000) (305,000)
LIFO valuation
allowance ................ (381,000) (372,000)
------------ ------------
$ 12,724,000 $ 9,531,000
============ ============
-----------------------------------------------------------------
NOTE 4: CREDIT AGREEMENT BORROWINGS
In December 1997, the Company entered into a $22,000,000 credit agreement (the
"Credit Agreement") with its principal lender. In November 1999, the Credit
Agreement was amended and restated to provide for a revolving credit facility
(the "Revolving Credit") of $15,100,000 of maximum borrowings; $10,600,000 and
$4,500,000 of the Revolving Credit was allocated to support the requirements of
Tristar Corporation and Tristar USA respectively (See Note 8 of the Notes to
Consolidated Financial Statements for further details on Tristar USA
acquisition). Such borrowings bear interest, at the Company's election, at the
Alternate Base Rate (the higher of the prime rate or the Federal Funds Rate plus
.50%) plus 1.00% or the London Interbank Offered Rate (LIBOR) plus 3.50%
(although borrowings based on LIBOR, cannot exceed 60% of the total outstanding
borrowings under the Revolving Credit). At February 26, 2000, the Revolving
Credit bore interest at rates of 9.73% and 9.38%, respectively, in accordance
with the above noted interest computations. Borrowings under the Revolving
Credit are limited by a formula based on Eligible Accounts Receivable and
Inventory, as defined in the agreement. Remaining availability under the line as
of February 26, 2000 approximated $2,584,000 based on the borrowing formula.
Commitment fees equal to .50% per annum on the unused portion of the Revolving
Credit are payable monthly. The Credit Agreement contains certain provisions
giving the lender the right to accelerate payment of all outstanding amounts
upon the occurrence of certain events. Accordingly, all revolving Credit amounts
are classified as current in the accompanying consolidated balance sheets. All
outstanding amounts under the Revolving Credit Agreement are due in December
2002.
The Credit Agreement also provides for a $3,400,000 term loan (the "Term Loan")
and a $3,500,000 capital expenditure facility (the "Cap Ex Facility"). The Term
Loan bears interest, payable monthly, at the Alternate Base Rate (8.73% at
February 26, 2000) plus 2.00%. Principal payments on the Term Loan consist of
equal monthly principal payments in the amount of $56,667 for 60 months
beginning in January
9
<PAGE>
1998. Additionally, 50% of annual excess cash flow, as defined in the Cap Ex
Facility, must be applied to the Term Loan installments in the inverse order of
maturity.
Borrowings under the Cap Ex Facility are limited to 80% of the cost of new
machinery and equipment, limited to annual utilization of $1,500,000. These
borrowings also bear interest, payable monthly, at the Alternate Base Rate (8.73
% at February 26, 2000) plus 2.00%. Principal payments on the Cap Ex Facility
commence one month after the related borrowing in an amount based on a five year
amortization for borrowings made prior to October 4, 1998 and a three year
amortization for borrowings made subsequent to October 4, 1998. However, a
balloon payment in an amount equal to all outstanding borrowings under the Cap
Ex Facility is also due in December 2002. As of February 26, 2000, the Company
had outstanding borrowings under the Cap Ex Facility totaling $2,235,000
principal payments are currently set at the rate of $75,000 per month.
Borrowings under the Credit Agreement are collateralized by all of the Company's
present and future assets. At February 26, 2000, the Company was not in
violation of any restrictive financial covenant. New restrictive financial
covenants including Minimum Tangible Net Worth, Minimum EBITDA, Maximum Loss,
Minimum Fixed Charge Coverage, Maximum Leverage and Maximum Capital
Expenditures, reflective of consolidated Tristar Corporation and Tristar USA
(See Note 8 of the Notes to Consolidated Financial Statements) for periods
beyond November 1999 have been agreed upon. Additional covenants limit
borrowings, asset sales and dividends.
NOTE 5: SUBORDINATED DEBT
Subordinated debt consists of the following:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FEBRUARY 26, AUGUST 28,
2000 1999
----------- -----------
<S> <C> <C>
Notes to selling shareholders; senior subordinated debt; interest at prime; principle and
interest is payable in quarterly installments ............................................ $ 2,950,000 _
Notes to key employees for change in control; senior subordinated debt; interest at 7 1/2%;
principle and interest payable in quarterly installments ................................. 376,000 _
Notes to consultant; senior subordinated debt; interest at prime; principle and interest
payable in quarterly installments ........................................................ 321,000 _
Notes to creditor; senior subordinated debt; interest at prime; principle and interest
payable in quarterly installments ........................................................ 536,000 _
Notes payable- other; senior subordinated debt; interest at prime and non-interest
bearing; principle payments quarterly and annually, interest is payable quarterly ........ 73,000 _
----------- -----------
Total subordinated debt .................................................................. $ 4,256,000 _
Less: current portion of subordinated debt ............................................... (1,196,000) _
----------- -----------
Total subordinated debt less current portion ............................................. $ 3,060,000 _
=========== ===========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
NOTE 6: LITIGATION AND CONTINGENCIES
The Company is subject to ordinary and routine litigation arising out of the
conduct of its business. Management believes that the ultimate disposition of
these proceedings will not have a material adverse effect on the Company's
financial condition.
NOTE 7: RELATED PARTY TRANSACTIONS
Certain suppliers of fragrance product components and the primary suppliers of
cosmetic products are affiliates of the Sheth Group who beneficially own 73% of
the Company's outstanding common stock. Related party accounts payable result
from the purchase of products from those vendors. Related party accounts
receivable result from the sale of products to those and other affiliates of the
Sheth Group. The payables and receivables balances for individual parties are
offset for presentation purposes and the net balance of accounts receivable or
accounts payable is presented on the balance sheet. Related party payables also
include payables due members of the Company's Board of Directors which result,
in the normal course of business, from expenses associated with Board and
related committee meetings. The following summarizes the presentations at
February 26, 2000 and August 28, 1999.
- -------------------------------------------------------------------------------
FEBRUARY 26, AUGUST 28,
2000 1999
----------- -----------
ACCOUNTS RECEIVABLE:
Total accounts receivable-related parties .... $ 4,926,000 $ 4,568,000
Offset amount ................................ (490,000) (450,000)
----------- -----------
Net related parties receivables .............. $ 4,436,000 $ 4,118,000
=========== ===========
ACCOUNTS PAYABLE:
Total accounts payable-related parties ....... $ 3,801,000 $ 3,966,000
Offset amount ................................ (490,000) (450,000)
----------- -----------
Net related parties payables ................. $ 3,311,000 $ 3,516,000
=========== ===========
- -------------------------------------------------------------------------------
Certain related party accounts receivable and accounts payable balances will not
be settled in the normal course of business. Accordingly, net outstanding
related party receivables totaling $2,740,000 have been reclassified to
shareholder's equity at February 26, 2000. It is contemplated that such amount
will be settled in fiscal 2000 through a redemption of preferred stock
controlled by the Sheth Group.
11
<PAGE>
The Company purchases finished goods and fragrance product components from Sheth
Group affiliates. During the twenty-six week period ended February 26, 2000, and
for the comparable period in fiscal 1999, the Company purchased approximately
$1,520,000 and $2,266,000, respectively.
During the twenty-six week period ended February 26, 2000, and for the
comparable period in fiscal 1999, the Company sold products to Sheth Group
affiliates in the amounts of approximately $1,417,000 and $ 1,881,000,
respectively.
NOTE 8: PURCHASE OF FRAGRANCE IMPRESSIONS LIMITED ("FIL")
On November 15, 1999, Tristar Corporation (the "Company"), and its newly formed
wholly owned subsidiary, Tristar USA, Inc. ("Tristar USA"), entered into an
acquisition agreement dated effective November 1, 1999 to acquire Fragrance
Impressions Limited, a Connecticut corporation ("FIL"). FIL, headquartered in
Bridgeport, Connecticut, markets and distributes designer alternative
fragrances, cosmetics and bath and body products. Under the terms of the
acquisition agreement, FIL was merged into Tristar USA which purchased all of
the issued and outstanding common stock of FIL for $350,000 in cash, $3,050,000
in promissory notes ("Notes"), and options to purchase up to 100,000 shares of
the Company's common stock at $5.82 per share which were valued at approximately
$307,000 utilizing the Black Scholes Method. The Notes are subject to post
closing adjustments to the outstanding principle balance, based upon sales
achievement during the next two calendar years. In connection with the FIL
acquisition, the Company assumed and entered into other notes payable with key
employees and consultants for change in control and other liabilities amounting
to $1,498,000 (See Note 5 of the Notes to Consolidated Financial Statements).
Cash used to finance this transaction was derived from the sale of 21,667 shares
of Series C Preferred Stock in October 1999 (See Note 9 of the Notes to
Consolidated Financial Statements). The consideration paid by Tristar USA was
arrived at through negotiations between the Company, Tristar USA, and FIL and
was based on a variety of issues, including without limitation, earnings and
revenue, the value of goodwill and the nature of alternative designer fragrance,
cosmetic and bath and body industry.
The acquisition of FIL has been treated as a purchase acquisition for accounting
purposes. Accordingly, net assets acquired have been adjusted to fair value as
appropriate. The excess of the purchase price over the related fair value of net
assets acquired of approximately $5.2 million has been recorded as goodwill to
be amortized over 20 years.
The following represents supplemental consolidated pro-forma information for the
twenty-six weeks ended February 26, 2000 and February 27, 1999:
2000 1999
---------- ----------
Net Sales 27,652,000 34,265,000
Net Income (720,000) (672,000)
NOTE 9: ISSUANCE OF SERIES C PREFERRED STOCK
In September 1998, the Company completed a private placement whereby it sold
78,333 share of Series C Senior Convertible Preferred Stock ("Series C Preferred
Stock") to a private investor. Effective October 14, 1999, the Company completed
a second private placement whereby it sold an additional 21,667 shares of Series
C Preferred Stock to a private investor for $60 per share.
The holders of the Series C Preferred Stock are entitled to receive a cumulative
cash dividend of $4.80 per share annually. The dividend is payable quarterly
($1.20 per share). The dividends may be paid by issuance of additional shares of
Series C Preferred Stock except such shares bear a cumulative cash dividend of
$7.80 per share annually. Dividends of approximately $120,000 and $94,000 were
paid on the Series C Preferred Stock for the thirteen week period ended February
26, 2000 and February 27, 1999, respectively. Dividends of approximately
$228,000 and $188,000 were paid on the Series C Preferred
12
<PAGE>
Stock for the twenty-six period ended February 26, 2000 and February 27, 1999,
respectively. The holders of the Series C Preferred Stock are entitled to
receive a liquidation preference equal to $60.00 per share plus interest thereon
from the date of issue until redemption or conversion at a compound rate of 20%
per year. The Series C Preferred Stock has full voting rights based on the
number of common shares into which it is convertible and is voted together with
the Common Stock as one class.
NOTE 10: SERIES A AND B PREFERRED STOCK
The holders of the Company's Series A and B Preferred Stock are entitled to
receive cumulative dividends of $.315 per share and $2.03 per share,
respectively. To date, no dividends have been paid on the Series A and B
Preferred Stock except those paid in connection with the sale of Trimex Stock
relative to the Company's sale of its wholly owned Mexican subsidiary. Dividends
accumulated on the Series A and B Preferred Stock for the thirteen week period
ended February 26, 2000 and February 27, 1999 of approximately $103,000 and
$103,000, and for the twenty-six week period then ended of approximately
$206,000 and $216,000, have been reflected as a reduction in net loss applicable
to common stock. Cumulative dividends in arrears on the Series A and B Preferred
Stock totaled approximately $1,261,000 at February 26, 2000.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This document contains certain statements that are "forward-looking" statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. All statements other than statements of
historical facts included in this document, including without limitation
statements that use terminology such as "anticipate", "believe," "continue,"
"estimate," "expect," "intend," "may,", "plan," "predict," "should," "will," and
similar expressions, are forward-looking statements. These forward-looking
statements include, among other things, the Company's business strategy and
expectations concerning the Company's market position, future operations,
margins, profitability, liquidity and capital resources, expenditures for
capital projects and attempts to reduce costs. Although the Company believes
that the assumptions upon which the forward-looking statements contained in this
document are based are reasonable, any of the assumptions could prove to be
inaccurate and, as a result, the forward-looking statements based on those
assumptions also could be incorrect. All phases of the operations of the Company
involve risks and uncertainties, many of which are outside the control of the
Company and any one of which, or a combination of which, could materially affect
the results of the Company's operations and whether the forward-looking
statements ultimately prove to be correct. Actual results and trends in the
future may differ materially depending on a variety of factors including, but
not limited to, the timing and extent of changes in fragrance components,
fragrance and cosmetic prices and underlying demand and availability of
fragrance components; changes in the cost or availability of means of
transporting products; execution of planned capital projects; adverse changes in
the credit ratings assigned to the Company's trade credit; the extent of the
Company's success in developing and marketing new product lines; state and
federal environmental, economic, safety and other policies and regulations, and
changes therein, and any legal or regulatory delays or other factors beyond the
Company's control; adverse rulings, judgments, or settlements in litigation or
other legal matters; actions of customers and competitors; economic conditions
affecting the areas in which the Company's products are marketed; political
developments in foreign countries; and the conditions of the capital markets and
equity markets during the periods covered by the forward-looking statements.
Many of the factors are described in greater detail in other of the Company's
filings with the Commission. All subsequent written and oral forward-looking
statements attributable to
13
<PAGE>
the Company or persons acting on its behalf are expressly qualified in their
entirety by the foregoing. The Company undertakes no obligation to publicly
release the results of any revisions to any such forward-looking statements that
may be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
CONSOLIDATED RESULTS OF OPERATIONS FOR THE THIRTEEN AND TWENTY-SIX WEEK PERIODS
ENDED FEBRUARY 26, 2000 AND FEBRUARY 27, 1999
Consolidated results of operations for the thirteen and twenty-six week periods
ended February 26, 2000 include the acquisition of Fragrance Impressions Limited
("FIL") effective November 1, 1999 (See Note 8 of the Notes to Consolidated
Financial Statements).
For the thirteen week period ended February 26, 2000, the Company recorded
consolidated net loss of $179,000 compared to consolidated net loss of $510,000
for the thirteen week period ended February 27, 1999 or a 65% improvement over
the prior year despite relatively flat sales. The improved results were
primarily due to reduced cost of sales as a result of continued efficiencies in
operations, partially offset by increased interest expense associated with a
higher level of borrowings. After giving effect to preferred stock dividends and
the cost of accumulated beneficial conversion feature, the Company recorded
consolidated net loss applicable to common stock of $433,000 or $.03 per diluted
share and $747,000 or $.04 per diluted share for the related thirteen week
periods ended February 26, 2000 and February 27,1999, respectively.
For the twenty-six week period ended February 26, 2000, the Company recorded
consolidated net income of $207,000 compared to consolidated net loss of
$286,000 for the comparable period in 1999. The significant improvement versus
the prior period was achieved despite lower sales and is the result of
operational efficiencies, lower SG&A expenses partially offset by increased
interest expense associated with increased borrowing levels. After giving effect
to preferred stock dividends and the cost of accumulated beneficial conversion
feature, the Company recorded consolidated net loss applicable to common stock
of $599,000 or $.04 per diluted share and $1,371,000 or $.08 per diluted share
for the related twenty-six week periods ended February 26, 2000 and February
27,1999, respectively.
NET SALES
Net sales were $13,624,000 for the thirteen week period ended February 26, 2000,
or slightly up versus net sales of $13,440,000 for the comparable period in
fiscal 1999. For the twenty-six week period ended February 26, 2000, net sales
were $27,087,000, a decrease of approximately 5 percent versus net sales of
$28,515,000 for the twenty-six week period ended February 27, 1999. Net sales in
the thirteen-week period ended February 26, 2000 were impacted by volume
decreases in Latin America and U.S. wholesale market in the Royal selection
fragrance line. This volume decline was offset by increased sales of Apple
cosmetic pencils in the U.S. wholesale market and volume increases associated
with the FIL acquisition (See Note 8 of the Notes to Consolidated Financial
Statements).
The decline in net sales for the twenty-six week period ended February 26, 2000
was primarily due to volume decreases in Latin America and U.S. wholesale
markets in the Royal Selections fragrance line and the combined U.S. chain,
specialty chain, and mass merchandising channel in the Regal and Euro Collection
lines. In addition, sales were lower over the prior period as a result of the
Company's sale of its wholly owned Mexican subsidiary, effective November 29,
1998. This decline was partially offset by volume increases in the U.S.
wholesale markets in the new Royal Selection Crown II Series fragrance line,
U.S. chain, specialty chain and mass merchandising channel in the Euro Garden
Collection line and Apple cosmetic pencils in the U.S. wholesale market as well
as volume increases associated with the FIL acquisition (See Note 8 of the Notes
to Consolidated Financial Statements).
14
<PAGE>
NET SALES - CHANNELS OF DISTRIBUTION
The Company markets and distributes products to wholesalers, distributors, chain
stores, mass merchandisers and independent retail channels in various markets
throughout North and South America. For the thirteen week period ended February
26, 2000, net sales of the Company were up slightly over the prior period. Net
sales increased over the prior period due to volume increases associated with
the FIL acquisition (See Note 8 of the Notes to Consolidated Financial
Statements). This increase was partially offset by a decline in the U.S. and
Latin American wholesale channels which continue to experience significant
financial and economic instability in the world's emerging markets.
For the twenty-six week period ended February 26, 2000 the Company experienced a
decline over the prior period mainly in Latin American and U.S. wholesale
markets and U.S. chain, specialty chain and mass merchandising channel. In
addition, sales were lower over the prior period as a result of the Company's
sale of its wholly owned Mexican subsidiary. The Company's sales decline was
partially offset by volume increases associated with the acquisition of FIL (See
Note 8 of the Notes to Consolidated Financial Statements).
NET SALES - RELATED PARTIES
In the thirteen and twenty-six week period ended February 26, 2000, sales to
affiliates of the Sheth Group was $756,000 and 1,417,000, respectively, compared
with $1,274,000 and $1,881,000 for the same period in fiscal 1999.
PRODUCTS PURCHASED FROM RELATED PARTIES
The Company purchases finished goods and fragrance components from Sheth Group
affiliates. During the twenty-six week period ended February 26, 2000, and for
the comparable period in fiscal 1999, the Company purchased approximately
$1,520,000 and $2,266,000, respectively.
GROSS PROFIT
The Company's gross profit for the thirteen week periods ended February 26, 2000
and February 27, 1999 was $4,129,000 or 30.3% of sales and $3,575,000 or 26.6%
of sales, respectively. The Company's gross profit for the thirteen week period
was favorably impacted versus the prior year by increased efficiencies in
operations and a favorable product mix involving increased sales of higher
margin products.
For the twenty-six weeks ended February 26, 2000 and February 27, 1999, the
Company's gross profit was $8,383,000, or 30.9% of sales and $8,044,000, or
28.2% of sales, respectively. The Company's gross profit for the twenty-six week
period improved over the prior comparable period due to increased efficiencies
in operations as well as an overall favorable product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("SG&A") for the thirteen week
period ended February 26, 2000 was $3,799,000, or relatively flat versus
$3,746,000 for the comparable period ended February 27, 1999. For the twenty-six
weeks ended February 26, 2000 and February 27, 1999, SG&A was $7,254,000 and
$7,665,000, respectively or a decrease of 5.4%. As a percent of sales, SG&A was
26.8% and 26.9%, for the twenty-six week periods respectively. The improvement
in SG&A for the twenty-six week period was primarily due to restructuring of
business processes and expense levels together with staff realignment. In
addition, SG&A was lower as a result of the Company's sale of it's wholly owned
subsidiary in Mexico which was effective November 29, 1998. The overall
decrease in SG&A was partially offset by the inclusion of SG&A expenses
associated with the FIL acquisition (See Note 8 of the Notes to Consolidated
Financial Statements).
15
<PAGE>
NON-OPERATING INCOME OR EXPENSE
Interest expense increased when comparing the thirteen and twenty-six week
period of fiscal 2000 to the same period of fiscal 1999 as a result of higher
revolving credit borrowings.
LIQUIDITY AND CAPITAL RESOURCES
The Company currently is obtaining its working capital from a revolving line of
credit (See Note 4 of the Notes to Consolidated Financial Statements).
OPERATING ACTIVITIES
Operations in the twenty-six week periods ended February 26, 2000, provided
$1,339,000 in cash primarily due to net income as adjusted for non-cash items,
decreases in accounts receivable and increases in accrued liabilities partially
offset by an increase in inventory and a decrease in accounts payable.
Accounts receivable decreased mainly due to collection efforts and lower sales.
Inventory increased primarily due to sales being lower than forecast. Accounts
payable decreased as the Company made payments to related parties and certain
vendors, bringing those accounts closer to normal terms. Accrued liabilities
increased primarily due to returns and allowance provisions.
INVESTING ACTIVITIES
Capital expenditures during the twenty-six week periods were $565,000,
consisting primarily of investments in production-related machinery and
equipment, facilities related items, and computer equipment. Capital
expenditures in fiscal 2000 are expected to approximate the fiscal 1999 level
with the major portion being devoted to manufacturing equipment to enable the
Company to enhance its capacity, efficiency and level of customer service. In
addition, the Company utilized $441,000 in cash in connection with the recent
FIL acquisition.
FINANCING ACTIVITIES
During the twenty-six week period ended February 26, 2000, net cash used by
financing activities amounted to $325,000. Of this amount, cash was used for
payment of long-term debt of $1,025,000, payment of dividends on Series C
Preferred Stock of $228,000, and net borrowings under the revolving credit
agreement of $1,145,000. The cash used was partially offset by proceeds from
long-term debt of $891,000 and proceeds from the sale of Series C Preferred
stock of $1,300,000.
In December 1997, the Company entered into a $22,000,000 credit agreement (the
"Credit Agreement") with its principal lender. In November 1999, the Credit
Agreement was amended and restated to provide for a revolving credit facility
(the "Revolving Credit") of $15,100,000 of maximum borrowings; $10,600,000 and
$4,500,000 of the Revolving Credit was allocated to support the requirements of
Tristar Corporation and Tristar USA respectively (See Note 8 of the Notes to
Consolidated Financial Statements for further details on Tristar USA
acquisition). Such borrowings bear interest, at the company's election, at the
Alternate Base Rate (the higher of the prime rate or the Federal Funds Rate plus
.50%) plus 1.00% or the London Interbank Offered Rate (LIBOR) plus 3.50%
(although borrowings based on LIBOR, cannot exceed 60% of the total outstanding
borrowings under the Revolving Credit). At February 26, 2000, the Revolving
Credit bore interest at rates of 9.73 % and 9.38 %, respectively, in accordance
with the above noted interest computations. Borrowings under the Revolving
Credit are limited by a formula based on Eligible Accounts Receivable and
Inventory as defined in the agreement. Remaining availability under the line as
of February 26, 2000 approximated $2,584,000 based on the borrowing formula.
Commitment fees equal to .50% per annum on the unused portion of the Revolving
Credit are payable monthly. The Credit Agreement contains certain provisions
giving the lender the right to accelerate payment of all outstanding
16
<PAGE>
amounts upon the occurrence of certain events. Accordingly, all revolving Credit
amounts are classified as current in the accompanying consolidated balance
sheets. All outstanding amounts under the Revolving Credit Agreement are due in
December 2002.
The Credit Agreement also provides for a $3,400,000 term loan (the "Term Loan")
and a $3,500,000 capital expenditure facility (the "Cap Ex Facility"). The Term
Loan bears interest, payable monthly, at the Alternate Base Rate (8.73% at
February 26, 2000) plus 2.00%. Principal payments on the Term Loan will equal
monthly principal payments in the amount of $56,667 for 60 months beginning in
January 1998. Additionally, 50% of annual excess cash flow, as defined in the
Cap Ex Facility, must be applied to the Term Loan installments in the inverse
order of maturity.
Borrowings under the Cap Ex Facility are limited to 80% of the cost of new
machinery and equipment, limited to annual utilization of $1,500,000. These
borrowings also bear interest, payable monthly, at the Alternate Base Rate (8.73
% at February 26, 2000) plus 2.00%. Principal payments on the Cap Ex Facility
commence one month after the related borrowing in an amount based on a five year
amortization for borrowings made prior to October 4, 1998 and a three year
amortization for borrowings made subsequent to October 4, 1998. However, a
balloon payment in an amount equal to all outstanding borrowings under the Cap
Ex Facility is also due in December 2002. As of February 26, 2000, the Company
had outstanding borrowings under the Cap Ex Facility totaling $2,235,000;
principal payments are currently set at the rate of $75,000 per month.
Borrowings under the Credit Agreement are collateralized by all of the Company's
present and future assets. At February 26, 2000, the Company was not in
violation of any restrictive financial covenant. New restrictive financial
covenants including Minimum Tangible Net Worth, Minimum EBITDA, Maximum Loss,
Minimum Fixed Charge Coverage, Maximum Leverage and Maximum Capital
Expenditures, reflective of consolidated Tristar Corporation and Tristar USA
(See Note 8 of the Notes to Consolidated Financial Statements) for periods
beyond November 1999 have been agreed upon. Additional covenants limit
borrowings, asset sales and dividends.
The Company also purchases certain equipment, primarily office furniture,
computer equipment and software, under long-term purchase agreements. These
amounts are not material to the Company's cash flow. The Company does not have
any plans to pay any cash dividends on the Common or the Series A and B
Preferred Stock in the foreseeable future. Further, payments of such dividends
are subject to restrictions imposed by the Company's principal lender in
connection with the existing Credit Agreement. During the twenty-six week period
ended February 26, 2000, the Company paid $228,000 in dividends to the holders
of the Series C Preferred Stock.
The Company believes the lines of credit, together with cash generated by
operations should provide sufficient cash to meet the requirements of the
Company for fiscal 2000.
In September 1998, the Company completed a private placement whereby it sold
78,333 shares of Series C Senior Convertible Preferred Stock ("Series C
Preferred Stock") to a private investor. Effective October 14, 1999, the Company
completed a second private placement whereby it sold additional 21,667 shares of
the Series C Preferred Stock to a private investor for $60 per share.
The holder of the Series C Preferred Stock is entitled to receive a cumulative
cash dividend of $4.80 per annum. The dividend is payable quarterly ($1.20 per
share). The dividends may be paid by issuance of additional shares of Series C
Preferred Stock except such shares bear a cumulative cash dividend of $7.80 per
share annually. Dividends of approximately $228,000 were paid in cash on the
Series C Preferred Stock during the twenty-six week period ended February 26,
2000. The holders of the Series C Preferred Stock are entitled to receive a
liquidation preference equal to $60.00 per share plus interest thereon from the
date of issue until redemption or conversion at a compound rate of 20% per year.
The Series C Preferred Stock has full voting rights based on the number of
common shares into which it is convertible and is voted together with the Common
Stock as one class.
17
<PAGE>
The holders of the Company's Series A and B Preferred Stock are entitled to
receive cumulative dividends of $.315 per share and $2.03 per share,
respectively. To date, no dividends have been paid on the Series A and B
Preferred Stock except those paid in connection with the sale of the Company's
wholly owned Mexican subsidiary. Dividends accumulated on the Series A and B
Preferred Stock for the thirteen week periods ended February 26, 2000 and
February 27, 1999 of approximately $103,000 and $103,000,respectively and for
the twenty-six periods then ended of approximately $206,000 and $216,000,
respectively have been reflected as a reduction in net loss applicable to common
stock. Cumulative dividends in arrears on the Series A and B Preferred Stock
totaled approximately $1,261,000 at February 26, 2000.
ITEM 3.
QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
Market risk represents the risk of loss that may occur due to adverse changes in
financial market prices, including interest rate risk and foreign currency
exchange risk, and the effect they may have on the financial position, results
of operation or cash flow of the Company.
The Company's short term and long term debt at February 26, 2000 bears interest
at variable rates (See Notes 4 and 5 of the Notes to Consolidated Financial
Statements). A one-percentage point increase in the effective interest rate on
the debt based on amounts outstanding at February 26, 2000 result in an
approximate $200,000 reduction in annual pretax earnings. This estimate assumes
no change in the volume or composition of the short term and long term debt as
of February 26, 2000.
The Company's direct exports comprise approximately 35 % of net sales for the
twenty-six week periods ended February 26, 2000. In addition, certain U.S. based
customers ultimately distribute the Company's products into foreign countries.
As a result, the Company has exposure to risk associated with the decrease in
value of foreign currencies. Although the risk cannot be quantified, any
significant decrease in value of the currency of foreign countries where the
Company's products are distributed could have a material adverse effect on the
Company's sales and results of operations.
18
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 6 of the Notes to the Consolidated Financial Statement.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS
(a) Exhibits
*27.1 Financial Data Schedule.
---------------------------
* FILED HEREWITH.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRISTAR CORPORATION
(Registrant)
Date: April 11, 2000 By: /s/ Richard R. Howard
------------------ ---------------------------
RICHARD R. HOWARD
President and Chief Executive Officer
(Principal Executive Officer)
Date: April 11, 2000 By: /s/ Robert M. Viola
------------------ ---------------------------
ROBERT M. VIOLA
Senior Executive Vice-President and Chief
Financial Officer (Principal Financial and
Accounting Officer)
20
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-26-2000
<PERIOD-END> FEB-26-2000
<CASH> 98,000
<SECURITIES> 0
<RECEIVABLES> 18,038,000
<ALLOWANCES> 822,000
<INVENTORY> 12,724,000
<CURRENT-ASSETS> 31,061,000
<PP&E> 8,628,000
<DEPRECIATION> 11,224,000
<TOTAL-ASSETS> 45,341,000
<CURRENT-LIABILITIES> 29,645,000
<BONDS> 0
0
14,404,000
<COMMON> 168,000
<OTHER-SE> (4,560,000)
<TOTAL-LIABILITY-AND-EQUITY> 45,341,000
<SALES> 13,624,000
<TOTAL-REVENUES> 13,624,000
<CGS> 9,495,000
<TOTAL-COSTS> 3,799,000
<OTHER-EXPENSES> (14,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 523,000
<INCOME-PRETAX> (179,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (179,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (179,000)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
