<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
----------------- ------------------
Commission file number: Not yet assigned
A. Full title of the plan and address of the plan, if different from that of
the issuer named below:
SPARTA, INC. PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
SPARTA, INC.
23041 AVENIDA DE LA CARLOTA, SUITE 325
LAGUNA HILLS, CA 92653-1507
<PAGE> 2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or the other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on the Plan's behalf by the
undersigned, thereunto duly authorized.
SPARTA, INC. PROFIT SHARING PLAN
Date: June 30, 1999 /s/ JERRY R. FABIAN
----------------------------------------
Jerry R. Fabian, Special Trustee
<PAGE> 3
- --------------------------------------------------------------------------------
WARNICK ROBERT S. WARNICK, CPA
MAESTAS RONALD J. MAESTAS, CPA
& HICK WALTER H. HICK, JR., CPA
MARTIN L. MARONEY, CPA
An Accountancy Corporation
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors
Sparta, Inc. Profit Sharing Plan
Laguna Hills, California
We have audited the accompanying statements of net assets available for plan
benefits (modified cash basis) of the Sparta, Inc. Profit Sharing Plan as of
January 1, 1999 and January 2, 1998, and the related statements of changes in
net assets available for plan benefits (modified cash basis) for the years then
ended. These financial statements are the responsibility of the Plan'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.
As described in Note 6, these financial statements and supplemental schedules
were prepared on a modified cash basis of accounting, which is a comprehensive
basis of accounting other than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Sparta,
Inc. Profit Sharing Plan as of January 1, 1999 and January 2, 1998, and the
changes in net assets available for plan benefits for the years ended January 1,
1999 and January 2, 1998, on the basis of accounting described in Note 6.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules (modified cash
basis) of assets held for investment purposes and transactions in excess of 5%
of the current value of plan assets are presented for purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
WARNICK, MAESTAS & HICK
COSTA MESA, CALIFORNIA
June 25, 1999
<PAGE> 4
SPARTA, INC.
PROFIT SHARING PLAN
Financial Statements
For The Years Ended January 1, 1999
And January 2, 1998
Together With Auditor's Report
<PAGE> 5
SPARTA, INC. PROFIT SHARING PLAN
--------------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
----------------------------------------------------
FOR THE YEARS ENDED JANUARY 1, 1999
-----------------------------------
AND JANUARY 2, 1998
-------------------
ASSETS
<TABLE>
<CAPTION>
January 1, January 2,
1999 1998
----------- -----------
<S> <C> <C>
INVESTMENTS, at fair value (Note 2):
Sparta, Inc. common stock (Notes 4 and 5) $25,899,587 $18,338,137
Corporate stock 3,388,846 2,815,338
Mutual funds 9,643,502 7,611,822
Government securities 29,841 103,829
Limited partnership interests 51,263 60,960
Commodities 363 422
----------- -----------
Total investments 39,013,402 28,930,508
----------- -----------
RECEIVABLES:
Contribution from Sparta, Inc. (Note 1) 619,867 385,674
Notes receivable from participants (Note 2) 1,304,669 1,357,599
Accrued interest receivable 25,315 38,450
Employee contribution to 401(k) plan (Note 1) 122,505 85,206
----------- -----------
Total receivables 2,072,356 1,866,929
----------- -----------
CASH (Note 2) 7,985,360 8,281,304
----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $49,071,118 $39,078,741
=========== ===========
</TABLE>
THE ACCOMPANYING FOOTNOTES ARE AN INTEGRAL
PART OF THESE STATEMENTS
<PAGE> 6
SPARTA, INC. PROFIT SHARING PLAN
--------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------
AVAILABLE FOR PLAN BENEFITS
---------------------------
FOR THE YEARS ENDED JANUARY 1, 1999
-----------------------------------
AND JANUARY 2, 1998
-------------------
<TABLE>
<CAPTION>
January 1, January 2,
1999 1998
----------- -----------
<S> <C> <C>
ADDITIONS:
Contributions -
Sparta, Inc. (Note 5) $ 3,923,621 $ 3,089,623
Employees (Note 1) 1,564,459 971,004
Interest and dividend income 1,291,726 1,195,979
----------- -----------
Total additions 6,779,806 5,256,606
DEDUCTIONS:
Benefits paid to participants 4,104,469 1,447,257
Administration expenses 121,948 91,216
----------- -----------
Total deductions 4,226,417 1,538,473
----------- -----------
NET REALIZED AND UNREALIZED APPRECIATION
IN FAIR VALUE OF INVESTMENTS (Note 2) 7,438,988 4,820,560
----------- -----------
NET ADDITIONS 9,992,377 8,538,693
NET ASSETS AVAILABLE FOR BENEFITS,
at beginning of year 39,078,741 30,540,048
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS,
at end of year $49,071,118 $39,078,741
=========== ===========
</TABLE>
THE ACCOMPANYING FOOTNOTES ARE AN INTEGRAL
PART OF THESE STATEMENTS
<PAGE> 7
SPARTA, INC. PROFIT SHARING PLAN
--------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
FOR THE YEARS ENDED JANUARY 1, 1999
-----------------------------------
AND JANUARY 2, 1998
-------------------
(1) Description of the Plan -
- ------------------------------
The profit sharing plan of Sparta, Inc., (the Plan) is a contributory
defined contribution plan that covers substantially all employees and provides
for retirement and disability benefits. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974. Employer contributions are
allocated to participants based on compensation and years of service. The Plan
provides for immediate eligibility and 100 percent vesting for all employees who
complete more than 1,000 hours of service within the plan year. In addition, the
Plan provides for separate, segregated accounts for substantially all
participants. Each participant with a segregated account directs the investment
activity of such segregated account. In addition, the participants may use the
funds in their accounts to purchase shares of Sparta, Inc. stock.
The amount of the annual contribution to the Plan is determined by the
Board of Directors of Sparta, Inc., (the Company) at its discretion. The
Company's contribution to the Plan each year may be made in the form of Sparta,
Inc. stock, cash or both at the discretion of the Board of Directors.
Matching contributions may be made on behalf of certain employees of
Sparta, Inc. at the discretion of the Board of Directors. These employees may
elect to make pre-tax contributions to the Plan ("401(k) deferrals") under
Section 401(k) of the Internal Revenue Code.
The Plan's investments are held in the name of a trust company. An
officer of the Company is the trustee with respect to Sparta, Inc. securities
held by the Plan. Delaware Charter Guarantee & Trust Co. is the trustee of the
Plan.
(2) Significant Accounting Policies -
- --------------------------------------
(a) Accounting Periods Presented -
-----------------------------------
The Plan operates on a 52/53 week fiscal year. In 1998 and
1997 the Plan's fiscal year ended on the Friday nearest to December 31.
The periods presented in these financial statements are the fiscal
years ended January 1, 1999 and January 2, 1998.
(b) Valuation of Investments -
-------------------------------
Corporate stocks, mutual funds, government securities, and
bonds are stated at aggregate fair value. Securities traded on a
national securities exchange are valued at the latest reported sales
price on the last business day of the plan year; investments traded on
the over-the-counter market and listed securities for which no sale was
reported on that date are valued at the average of the last reported
bid and asked prices.
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 8
Stock investments in the employer corporation are valued using
a quarterly adjusted formula which is used in all transactions
affecting Sparta, Inc. stock. The value at January 1, 1999 was $9.15
per share based upon the quarterly adjusted formula calculation as of
October 21, 1998.
An independent valuation firm determined that the stock
valuation (using the quarterly adjusted formula) was a proper
reflection of the fair market value at the valuation date of March 31,
1998. The stock value as determined by the independent valuation firm
was $8.32 at May 7, 1998 and was consistent with the value as
previously computed using the quarterly adjusted formula. An
independent stock valuation was prepared subsequent to the plan year
end and was also consistent with the prevailing value using the
quarterly adjusted formula.
The fair value of the commodities were based on the average
price traded on the market on the last business day of the plan year.
The fair value of the limited partnership interests were based
on the estimated fair value of their underlying assets.
Investments greater than or equal to 5% of plan assets are:
<TABLE>
<CAPTION>
January 1, 1999 January 2, 1998
----------------------- -----------------------
Principal Principal
Amount or Amount or
Number of Fair Number of Fair
Shares Value Shares Value
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sparta, Inc. Common Stock 2,830,556 $25,899,587 2,657,701 $18,338,137
Paine Webber
Money Funds 6,837,824 $ 6,837,824 7,615,406 $ 7,615,406
</TABLE>
During the plan year, the Plan's investments (including
investments bought, sold and held during the year) appreciated in value
by $7,438,988 and $4,820,560 for the years ended January 2, 1998 and
January 1, 1999, as follows:
<TABLE>
<CAPTION>
January 1, January 2,
1999 1998
----------- -----------
<S> <C> <C>
Sparta, Inc. Common Stock $ 6,172,746 $ 3,945,706
Corporate stock 802,268 312,522
Mutual Funds 468,959 578,512
Government Securities 4,772 10,423
Limited Partnership Interests (9,697) (26,683)
Commodities (60) 80
Bonds 0 0
----------- -----------
$ 7,438,988 $ 4,820,560
=========== ===========
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 9
The Plan places a substantial portion of its assets with Paine Webber
a broker/dealer that is custodian for most investments of the Plan. Among them
are the $6,837,824 of temporary cash investments consisting principally of money
market funds that are potentially subject to risk because a substantial portion
is not insured by the Securities Investors Protection Corporation. The Plan
administrator and Company management do not believe that the Plan is at risk and
that no significant loss will occur.
(c) Plan Expenses -
--------------------
The company absorbs a significant portion of plan expenses
incurred for the administration and management of the Plan.
Administrative fees are deducted from the account of each participant.
(d) Plan Termination -
-----------------------
Although it has not expressed any intent to do so, the Company
has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA. In
the event of Plan termination, the net assets of the Plan will be
allocated to the participants in accordance with the terms of the Plan.
(e) Participant Loans -
------------------------
Pursuant to the Plan, loans are available to eligible
participants, bear interest at a fair market value, require adequate
security, and require repayment over a reasonable period of time. The
Plan requires that loans be in compliance with Internal Revenue Code
Section 72.
(f) Plan Benefits -
--------------------
A participant becomes eligible to receive a retirement benefit
payment equal to 100% of his or her vested account balance upon
reaching normal retirement age. The Plan also provides for death,
disability and termination benefits, as defined.
The method of payment shall be a lump-sum distribution of cash
except to the extent that the participant elects to have his benefits
distributed in kind.
(g) Estimates -
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires the plan
administrator to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results may
differ from those estimates.
(3) Income Tax Status -
- ------------------------
The Internal Revenue Service has determined and informed the Company by
letter dated January 4, 1996, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
has not been amended since receiving the determination letter.
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 10
(4) Related Party Transactions -
- ---------------------------------
The Plan was amended, effective October 1, 1987, to allow the Plan to
purchase employer securities. During the Plan years ended January 1, 1999 and
January 2, 1998, the Plan purchased 223,280 and 234,762 shares of the Company,
respectively, at prices ranging from $9.15 to $5.93 per share. In addition,
during the Plan years ended January 1, 1999 and January 2, 1998, the Plan sold
297,936 and 343,481 shares of the Company, respectively, at prices ranging from
$9.15 to $4.66 per share.
(5) Employer Contributions -
- -----------------------------
For the year ended January 1, 1999, total contributions made by the
employer of $3,923,621 were comprised of 247,511 shares of the Company Stock
valued at $2,022,289, with per share prices ranging from $9.15 to $7.69, and
cash contributions of $1,901,332.
For the year ended January 2, 1998, total contributions made by the
employer of $3,089,623 were comprised of 241,672 shares of the Company Stock
valued at $1,551,353 with per share prices ranging from $6.90 to $5.93 and cash
contributions of $1,538,270.
(6) Basis of Accounting -
- --------------------------
The plan's financial statements are presented using the modified cash
basis of accounting in order to conform to the accounting method employed by the
trustee and the plan administrator.
Under the modified cash basis of accounting expenses are recorded when
paid and investment gains and losses are computed under the "revalued method."
(7) Benefit Claims Payable -
- -----------------------------
Net assets available for benefits at January 1, 1999 include $7,425,280
allocated to the accounts of participants who, as of or prior to that date, had
terminated employment and either remained in the Plan as allowed under the Plan
provisions or withdrew completely from participating in the earnings and
operations of the Plan.
(8) Subsequent Event -
- -----------------------
On April 12, 1999, CNA Trust Corporation was appointed as the new plan
trustee. Sparta, Inc. was named as the plan administrator.
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 11
(9) SPARTA, INC. PROFIT SHARING PLAN
--------------------------------
TRANSACTIONS OR SERIES OF TRANSACTIONS
--------------------------------------
IN EXCESS OF 5% OF PLAN ASSETS
------------------------------
FOR THE YEAR ENDED JANUARY 1, 1999
----------------------------------
<TABLE>
<CAPTION>
Principal
Amount or
Number of Purchase Selling Cost Gain
Shares Price Price (Note 6) (Note 6)
--------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
SPARTA, INC. STOCK
- ------------------
Purchases 223,280 $1,788,490
Sales 297,936 $2,422,074 $2,058,242 $366,832
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 12
SPARTA, INC. PROFIT SHARING PLAN
--------------------------------
ASSETS HELD FOR INVESTMENT PURPOSES
-----------------------------------
FOR THE YEAR ENDED JANUARY 1, 1999
----------------------------------
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMODITIES
- -----------
Citibank Silver Certificate 73.28 1,000.00 362.74
--------------------
362.74
====================
GOVERNMENT SECURITIES
- ---------------------
CTR 15 MAY 0% 4,240 1,328.18 3,797.30
PRIN Treas 08-15-25 1,000 239.41 239.06
TINT-11-15-20 1,000 306.25 297.06
TINT Treas 11-15-14 5,000 1,950.45 2,104.70
TINT Trsy 11-15-14 7,000 2,707.10 2,946.58
US Treas Note 05-15-00 20,000 20,001.20 20,456.40
--------------------
29,841.10
====================
LIMITED PARTNERSHIPS
- --------------------
Balcor Pension Investors 10 5,000.00 2,669.00
CNL Income V, Ltd 6 3,000.00 2,796.00
Ledcor Properties 10,000 20,000.00 23,532.00
Ledcor Properties 2,500 5,000.00 5,883.00
Ledcor Properties 2,500 5,000.00 5,883.00
RIC 25, Ltd 118 3,000.00 2,935.25
Swift Energy 30 30,000.00 3,424.00
Windsor Park Properties 5 150 4,762.25 4,140.59
--------------------
51,262.84
====================
MUTUAL FUNDS
- ------------
AIM Adv Flex Fund 18,586.56 170,996.44 372,846.38
AIM Advisor Flex Fund 1,787.19 16,103.13 35,850.99
AIM Blue Chip Fund 216.64 7,409.31 8,986.05
Aim Charter Class A 8,309.60 94,891.89 123,896.07
Aim Constellation Fund 120.48 3,178.73 3,676.99
Aim Emerging Mkts 1,138.39 19,840.30 8,412.73
AIM Global Aggress Growth 469.87 8,215.16 8,321.30
Aim Global Telecommunications 1,298.93 17,529.64 20,553.16
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 13
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
AIM Value Fund 773.16 24,604.09 31,073.26
Alliance Worldwide Privatization 2,570.23 26,510.00 26,576.14
Amcent 20th Cent Intl Growth 5,164.60 27,392.71 49,476.87
Amer Mutual Funds Inc 1,429.52 24,206.18 42,385.23
American Balanced Fund 94.99 1,605.12 1,496.99
American Capital World Fund 731.69 17,097.52 18,599.47
American Capital World Growth 203.80 5,340.17 5,180.51
American Century Ultra 753.09 23,985.50 25,160.64
American Mutual Funds Inc 2,485.94 62,808.34 73,708.15
Babson Enterprise II Fund 41.73 1,121.10 948.17
Baron Asset Fund 212.90 10,093.94 10,759.71
Berger 100 Fund 725.05 9,863.65 10,585.67
Berger Growth & Income 1,505.93 18,032.88 20,119.28
Bond Fund Of America 30,617.92 420,008.38 429,940.25
Brandywine Fund 1,031.43 32,279.05 31,231.64
Capital World Grow & Inc 1,506.40 25,928.04 38,292.74
Delaware Cap Concept 1 Fund 82.50 1,766.56 1,955.18
Dreyfus High Yield Strategies 530.00 7,720.16 6,062.13
Europacific Growth Fund 3,330.06 66,637.30 94,573.57
Evergreen Total 1,208.09 34,257.84 34,841.20
Fasciano Fund 608.56 20,747.81 18,980.92
Federated Growth Tr Fund 424.54 8,012.07 12,239.60
Fidelity Adv Equity Inc 43.00 1,159.07 1,219.51
Fidelity Adv Growth Opp 23.33 1,045.72 1,172.15
Fidelity Adv Overseas 55.89 1,004.33 983.61
Fidelity Advisor Equity Port Grow 1,704.33 83,634.95 97,266.06
Fidelity Advisor Growth Opport 1,040.29 29,667.49 52,233.11
Fidelity Brokerage & Invest 234.63 10,000.00 9,026.25
Fidelity ContraFund 2,277.98 92,306.41 129,366.54
Fidelity Convertible Fund 1,095.14 16,339.95 20,249.10
Fidelity Dividend Growth 1,224.47 32,696.34 35,179.00
Fidelity Emerging Mkt 167.08 4,846.26 5,308.23
Fidelity Equity Inc II 2,300.44 54,751.26 69,036.05
Fidelity Growth 163.94 6,439.05 8,364.12
Fidelity Low Priced Stock 495.18 11,755.65 11,314.91
Fidelity Magellan Fund 109.65 7,746.16 13,248.40
Fidelity Midcap Stock 762.42 11,613.01 13,632.05
Fidelity Port Grow & Inc 936.62 20,894.04 42,934.80
Fidelity Select Electronic 64.63 2,901.57 3,009.31
Fidelity Select Financial 84.40 7,370.04 8,324.17
Fidelity Select Reg Bank 191.26 6,761.41 8,199.10
Fidelity Select Technology 127.39 6,921.16 10,046.13
Franklin AGE High Income 7,324.81 22,273.31 20,216.47
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 14
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Franklin Income Fund 5,569.73 14,242.49 13,144.57
Franklin Templeton Dev Mkts 256.89 3,375.42 2,622.82
Fundamental Investors 834.90 18,484.80 24,145.30
Gabelli Small Cap Growth 1,434.28 21,188.32 30,134.20
Growth Fund of America 12,997.40 175,765.97 291,141.64
GT Global Growth & Income 6,326.90 35,695.81 53,019.38
GT Global Strategic Income 1,136.15 9,957.71 12,543.06
GT Global Telecomm A 341.35 5,969.56 6,403.65
GT Telecommunication B 11.77 5,528.81 5,697.25
IDS Blue Chip Advantage 374.25 3,585.72 4,216.34
IDS Discovery Fund 699.74 9,311.35 7,842.16
IDS Diversified Equity Income 13.47 132.54 125.80
IDS Emerging Mkts Fund 27.11 120.55 98.51
IDS Equity Select Fund 9.08 132.89 130.86
IDS Equity Value Fund 11.25 135.31 124.21
IDS Extra Income Fund 819.85 3,614.96 3,218.76
IDS Global Growth Fund 477.86 3,515.50 3,932.81
IDS Growth Fund 113.59 3,514.09 4,083.19
IDS Managed Allocation Fund 11.43 132.95 118.31
IDS Mutual Fund 9.64 134.87 124.75
IDS New Dimensions Funds 1,603.28 38,500.78 46,141.06
IDS Progressive Fund 15.37 138.30 117.47
IDS Research Opportunities 584.91 3,615.80 4,241.19
IDS Small Company Index Fund 572.84 3,543.43 3,488.02
IDS Stock Fund 4.71 129.70 124.68
IDS Strategy Aggressive Fund 181.74 3,324.34 3,989.07
Income Fund America 1,392.87 23,686.40 24,152.41
International Investors 984.59 5,838.21 6,488.44
Investment Co. of America 94,566.37 2,396,759.90 2,887,682.24
Janus 20 Fund 453.83 11,973.76 24,189.35
Janus Balanced Fund 1,159.09 20,276.36 22,729.70
Janus Flexible Income 6,309.68 62,262.48 62,781.33
Janus Fund 1,607.03 28,954.04 54,076.45
Janus Overseas Fund 1,902.79 26,538.38 38,208.02
Janus Venture Fund 237.58 9,713.43 13,575.21
Janus Worldwide Fund 3,609.58 80,319.46 170,949.67
John Hancock Regional Bank 337.61 15,056.77 17,662.04
Kaufmann Fund 1,242.37 7,323.12 7,056.68
Legg Mason Value Trust 629.52 33,637.99 38,765.72
Longleaf Partners 1,163.22 25,196.11 28,370.81
Loomis Sayles Bond 1,735.66 21,694.56 20,741.13
Mainstay Equity Index 670.91 20,419.80 26,480.77
MFS Emerging Growth Fund 978.14 34,225.63 42,558.96
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 15
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Midas Fund 1,411.78 6,986.43 2,131.79
ML Dev Capital Mkts Fund 304.36 3,400.26 2,629.66
ML Developing Cap Mkts 728.70 5,783.22 6,295.99
ML Global Allocation Fund 667.54 8,005.31 8,290.85
ML Growth Fund 1,304.70 27,921.35 25,827.45
ML Special Value Fund 258.99 5,116.17 4,247.42
Mutual Series Beacon 688.30 7,598.73 9,030.47
Mutual Shares Fund 163.00 3,436.57 3,176.77
Neuberger Berman Focus Fund 897.82 30,479.68 31,782.93
Neuberger Berman Genesis 182.70 3,114.55 2,638.13
Neuberger Berman Guardian 1,229.19 31,800.19 27,558.37
New Economy Funds 1,988.94 34,686.52 45,646.12
New Perspective Fund 6,781.64 108,953.90 155,638.57
Nicholas Fund 119.98 10,754.69 10,296.51
Oak Value Fund 781.89 20,034.11 21,337.78
Oakmark Smallcap Fund 4,149.22 100,704.61 108,804.32
Oppenheimer Quest Smallcap 656.53 15,207.24 11,705.89
Oppenheimer Quest Value Fund 874.08 17,805.36 18,644.15
Pace Global Fixed Income 1,271.65 15,102.16 16,569.52
Pace Gov Fixed Income 2,549.72 31,246.02 31,871.47
Pace Intl Emerging Mkts 460.41 6,145.97 4,166.68
Pace Intl Equity 1,065.77 14,477.87 16,828.53
Pace Large Co Equity 1,352.65 22,340.84 27,066.60
Pace Lg Co Growth 1,474.15 23,582.42 35,350.21
Pace Lg Co Value 59.36 1,221.77 1,187.83
Pace Sm/Med Co Growth 1,227.18 15,155.33 20,334.28
Pace Sm/Med Co Value 1,138.69 17,066.50 16,693.12
Pace Strategic Fixed Income 2,624.90 32,955.68 34,386.22
Paine Webber Tactical Allocation 979.71 24,450.76 28,921.08
Paine Webber Tactical Asset Fund 57.54 1,447.51 1,698.61
Phoenix Balanced Fund 784.94 10,983.95 13,587.31
Phoenix Growth Fund 628.58 11,657.84 16,908.69
Phoenix Midcap Portfolio 774.47 10,963.99 14,041.15
Phoenix SBI Balanced Fund 73.96 1,035.78 1,280.16
Phoenix SBI Growth Fund 150.04 2,996.42 4,035.97
Phoenix Strategic Fund 3,505.77 56,361.96 57,261.39
Phoenix Strategic Theme Fd 3,093.88 38,560.35 50,399.29
Phoenix Tactical Allocation 9.54 239.55 281.67
Pioneer Capital Growth Fund 601.12 12,203.24 11,433.24
Pioneer II Fund 1,624.22 14,111.99 33,962.46
Putnam Asset Allocation Growth B 795.69 8,700.74 10,725.95
Putnam Europe Growth 44.93 1,046.42 954.78
Putnam Growth & Income 219.49 3,269.52 3,064.10
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 16
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Putnam Growth & Income II 269.68 12,893.80 11,997.01
Putnam Growth Opportunities 685.50 10,493.00 11,145.83
Putnam Health Sciences 499.90 16,213.44 31,894.34
Putnam Intl Growth 365.55 4,269.44 4,050.34
Putnam New Opportunity Fund 796.41 31,320.26 46,226.12
Putnam Research Fund 142.54 2,008.66 2,152.39
Putnam Vista Fund 348.76 4,461.97 4,558.31
Putnam Voyager Fund 3,164.49 36,244.56 64,969.63
PW Balanced Fund A 4,186.90 44,212.85 50,242.78
PW Equity Trust REIT 132.00 2,041.38 1,828.20
PW Financial Services Growth 4,375.67 141,176.85 137,394.79
PW Growth & Income Fund 1,830.63 41,637.94 59,422.28
PW Growth Fund 2,177.61 45,588.91 56,182.20
PW Low Duration US Gov Inc 11,083.22 26,379.47 26,488.88
PW Small Cap Fund 78.14 895.08 875.97
PW Tactical Allocation Fund 4,069.58 109,759.63 120,118.20
PW Utility Income Fund 71.37 925.95 1,011.35
Rainier Small Midcap Eq Port 819.09 13,516.26 18,175.63
Robertson Stephen Value 0.04 0.95 1.14
Schwab 1000 Fund 444.68 11,310.70 14,901.06
Scudder Global Fund 99.63 3,193.10 2,857.45
Scudder Growth & Income Fund 858.24 24,784.40 22,580.23
Select Ten 984 Dow Defined Asset 10,777.14 10,834.75 11,747.09
Seligman Communications & Info 1,644.65 41,703.92 50,540.05
Smallcap Capital World 96.02 2,486.96 2,364.99
Smallcap Growth Fund 1,034.25 22,735.35 25,473.52
Smallcap World 40,245.55 966,294.68 988,934.99
Sogen Intl fund 667.72 15,992.27 15,383.46
Sound Shore Fund 1,658.64 46,280.84 49,128.77
Steinroe Young Investor 45.34 1,040.51 1,212.36
Strong Schafer Value Fund 46.20 3,111.08 2,739.38
T Rowe Price Blue Chip Fund 496.05 13,243.72 15,179.16
T Rowe Price Equity Inc Fund 344.12 6,870.48 9,057.13
T Rowe Price Equity Income 384.15 10,119.09 10,110.85
T Rowe Price European Stock Fund 760.18 8,905.06 16,549.05
T Rowe Price Mid Cap Growth 478.57 11,306.83 16,309.50
T Rowe Price Science & Tech 464.35 13,446.26 17,492.14
Templeton Americas Gov Fd 2,081.64 16,766.45 20,150.29
Templeton Foreign Fund I 4,659.28 53,542.20 39,091.32
Templeton Global Bond 3,710.32 37,395.71 35,990.07
Templeton Global Opportunity 466.26 6,447.16 6,821.31
Templeton Growth Fund 6,190.98 94,824.29 101,346.26
Templeton World Fund 2,184.56 20,888.63 34,799.98
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 17
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
U S Global Inv World 755.95 15,915.60 7,090.85
UTS Equity Inc Dow 96 15,448.00 15,069.68 16,096.82
Vanguard Index 500 Fund 681.97 65,424.14 77,710.82
Vanguard Windsor II 1,128.90 33,456.45 33,697.64
Washington Mutual Funds 7,432.93 188,617.69 244,617.68
Weitz Value Portfolio 743.06 20,817.89 21,600.67
--------------------
9,643,501.81
====================
CORPORATE SECURITIES
- --------------------
Access Worldwide Comm 300 2,721.36 2,512.50
Adtran Inc 1,270 37,110.32 23,257.04
Advanced Fibre Commun 600 9,290.50 6,562.80
Airtouch Communications 100 2,912.50 7,243.80
Alcatel Adr 163 6,665.31 3,983.39
Allsate Corp 184 3,500.00 7,084.00
AMDL Inc 250 7,127.85 62.50
Amer Oncology Res 400 4,963.06 5,825.20
America Online Inc 150 9,240.87 23,268.75
American Express 23 2,290.51 2,351.75
American Homestar Corp 800 17,220.73 12,000.00
Amgen Inc 200 10,825.00 20,912.60
Ampex Corp 600 1,764.50 637.80
Apache Corp 300 8,757.41 7,593.75
Apple Computer 1,200 24,522.32 49,125.60
Applied Magnetics Corp 200 2,200.00 1,237.60
Applied Materials 540 18,080.58 23,051.52
Armco, Inc. 850 8,870.07 3,718.75
Associates First Capital 447 8,814.30 18,941.62
Asyst Technologies 100 1,360.74 2,037.50
At Home Corp 460 21,986.18 34,155.00
AT&T Corp 60 2,466.77 4,545.00
Atlantic Richfield 150 9,954.39 9,806.25
Azco Mining Co 400 1,067.97 200.00
Ballard Power Systems 300 3,449.78 8,250.00
Bat Intl Inc 850 988.50 178.50
Bell Canada Intl 200 1,866.99 2,250.00
BGR Precious Metals Inc 750 8,114.55 4,657.50
Biopore Inc. 500 500.00 0.00
Boeing Company 1,175 68,150.59 38,334.37
Books-A-Million Inc 109 3,496.65 1,417.00
Boston Scientific 110 994.73 2,949.43
Brightpoint Inc 200 3,231.00 2,750.00
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 18
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bristol Myers 50 1,565.35 6,690.65
Bristol Myers Squibb 400 37,850.00 53,525.20
Cable & Wireless PLC 400 8,022.43 14,700.00
Cambridge Technology 90 4,073.00 1,991.25
Catellus Develop Corp 300 3,931.51 4,293.90
Cedar Fair LP 200 3,299.32 5,200.00
Cendant Corp 637 9,997.28 12,302.37
Central Garden & Pet 870 16,352.46 12,506.25
Champion Intl Corp 100 5,802.17 4,050.00
Check Point Software Tech 80 2,174.04 3,665.04
Chevron Corp 200 13,794.75 16,587.60
Chiron Corp 120 3,041.60 3,142.56
Cirrus Logic Inc 625 13,036.89 6,133.12
Cisco Systems Inc 1,621 56,923.05 150,449.80
Citigroup Inc 250 10,610.74 12,422.00
Coca Cola Co 2,101 104,130.18 140,767.00
Compaq Computer 920 27,151.83 38,638.14
Contl American Transn Inc 6,350 3,687.48 63.50
Core Laboratories 79 2,099.04 1,510.87
CTS Corp 500 14,863.54 21,750.00
Cubic Corp 100 3,927.46 1,875.00
Cyprus Amax Minerals 1,300 13,859.26 13,000.00
Daimler Benz 248 10,695.91 23,823.62
Dallas Semiconductor 50 1,727.20 2,037.50
Dell Computer Corp 2,420 118,879.81 177,114.91
Delta Pete Corp 798 1,811.26 1,546.52
Disney Walt Co 2,299 54,661.51 68,971.13
Dixon Ticonderoga 200 1,891.07 2,225.00
Duke Power Co 41 987.85 2,626.58
E Trade Group 300 9,493.96 14,034.30
Eastman Chemical 85 595.63 3,803.75
Eastman Kodak Co. 376 19,062.96 27,072.00
Edison Intl 100 3,189.68 2,787.50
EMC Corp Mass 69 2,295.97 5,865.00
Ensco Intl 400 6,196.00 4,275.20
Ericsson LM Tele 722 4,523.97 17,283.23
Escrow Wedgestone Fincl 100 1,125.00 0.00
Espirito Santo Finl Group 180 2,773.24 3,521.34
Exxon Corp 100 5,208.25 7,312.50
Fannie Mae 200 5,827.17 14,800.00
Federal Home Ln Mtg 82 2,711.90 5,283.91
Filenet Corp 400 2,223.85 4,587.60
Fletcher Challenge Bldg 21 506.62 315.00
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 19
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fletcher Challenge Energy 21 506.62 396.37
Fletcher Challenge Ltd Forests 1 0.00 3.12
Fletcher Challenge Paper Div 42 777.00 273.00
Ford Motor Co 640 18,986.17 37,560.32
Franklin Universal Trust 370 4,847.97 3,584.56
Freeport McMoran Copper & Gold 40 1,491.04 595.00
Galileo Technology 100 1,416.99 2,700.00
Gap Inc 24 817.50 1,350.00
Gateway 2000 Inc 200 10,699.30 10,237.60
General Amer Inv Co 860 10,003.24 26,176.68
General Electric Co 1,450 36,135.44 147,900.00
General Nutrition 200 6,564.48 3,250.00
General Re Corp 100 25,124.65 23,992.50
Genesis Health Ventures 11,700 116,740.04 99,450.00
Gillette Company 100 5,199.45 4,781.30
GRC Intl Inc 200 1,421.66 1,262.60
Grupo Radio Centro 200 1,154.49 1,075.00
Grupo Televisa SA 500 9,872.95 12,344.00
GTE Corp 400 16,208.35 26,243.80
GVC Venture Corp 2,000 2,404.35 0.00
Harbinger Corp 400 4,508.00 3,200.00
Harley Davidson Inc 140 2,001.83 6,632.50
Harrahs Entertainment 220 3,769.49 3,451.36
Hewlett Packard Co 300 14,595.27 20,493.90
Hilton Hotels 70 2,002.53 1,338.75
Hitachi LTD 200 13,008.25 12,087.60
Hollywood Park Inc 450 5,123.43 3,740.85
Home Depot Inc 625 25,902.04 38,242.35
Houston Industries 122 0.00 3,911.68
Human Genome Sciences 200 6,794.52 7,112.60
IBP Inc 370 15,881.14 37,168.75
Immucor Inc 200 1,891.92 1,750.00
Intel Corp 555 27,842.77 65,802.44
Intergraph Corp 1,100 13,351.85 6,325.00
Iomega Corp 349 3,361.56 2,552.23
Johnson & Johnson 25 1,854.67 2,096.88
K Mart Corp 370 4,255.00 5,665.81
Kellogg Co 90 2,874.88 3,071.25
Korea Elec Power 5,400 51,462.00 84,709.80
Korea Fund 2,000 13,419.80 18,500.00
Lakehead Pipeline 55 774.73 2,667.50
Liz Claiborne Inc 40 1,189.49 1,262.52
LM Ericsson Tele Co 160 9,926.60 3,830.00
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 20
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Loral Space & Communications 150 2,249.25 2,671.95
LSI Logic Group 235 4,851.79 3,789.37
Lucent Technologies 315 14,319.16 34,642.87
Manhattan Scientifics 4,000 1,299.32 2,400.00
Mapinfo Corp 150 3,449.50 2,325.00
Marine Drilling Cos 700 6,844.61 5,294.10
Matrasell Corp 9,000 970.77 0.00
Matria Healthcare 300 1,100.55 862.50
Mattel Inc 200 4,614.50 4,562.60
Medical Assurn Inc 306 8,212.50 10,117.27
Medpartners Inc 605 13,536.88 3,176.25
Medtronic Inc 280 10,163.93 20,798.68
Merck & Co 800 26,228.38 118,018.80
Meritor Automotive 33 0.00 695.06
Mesa Offshore Trust 2,000 330.00 62.60
Microsoft Inc 2,282 126,600.29 316,485.71
Mid-States PLC 6,400 6,232.26 2,867.00
Minera Andes Inc 4,000 7,879.50 1,600.00
Monsanto Co 30 1,111.99 1,425.00
Morgan JP & Co 167 17,283.33 17,545.52
Morgan Stanley Asia Pac 700 6,933.92 4,900.00
Morgan Stanley Emrg Mkt 4,900 30,375.00 34,300.00
Motorola Inc 966 52,223.00 58,986.69
MRV Communications 50 1,623.74 309.40
Nabor Industries Inc 150 3,420.44 2,034.45
Nautica Enterprises Inc 400 16,048.50 6,000.00
Navigant Intl 206 1,572.49 1,583.72
NCT Group Inc 700 1,748.18 196.70
Netspeak Corp 200 1,573.37 2,250.00
Nevada Manhattan Group 3,800 3,205.62 4,864.00
New Plan Realty Trust 200 4,543.92 4,437.60
Nexar Technologies 150 1,159.11 5.25
Nextel Communications 150 5,035.97 3,543.75
Niagara Mohawk Power 300 5,952.87 4,837.50
Nichols Research 782 28,793.76 16,324.25
Noble Drilling Corp 30 991.55 388.14
Northern Telecom 240 9,720.00 12,000.00
Occidental Petroleum 200 5,224.18 3,375.00
Oracle Corp 400 9,910.50 17,250.00
Oxford Health Plans 75 878.11 1,115.62
Paine Webber Group 100 4,937.75 3,862.50
Parametric Technology 200 4,652.87 3,250.00
Pegasystems Inc 380 4,085.18 1,579.28
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 21
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pennsylvania Engineering 5 0.31 0.00
Pepsico Inc 510 17,758.90 20,846.25
Pfizer Inc 148 12,521.20 18,505.70
Pharmacopeia Inc 100 2,052.34 950.00
Philip Morris Cos 1,141 43,425.52 61,043.50
Philips Electronics Netherlands 100 4,000.00 6,768.80
Pixar Inc 100 6,754.99 3,500.00
Placer Dome 1,600 25,300.00 18,400.00
Platinum Technology 850 6,761.75 16,256.25
PMA Capital Corp 50 1,102.49 978.15
Polymet Mining Corp 15,000 11,641.20 12,450.00
Pride Intl 200 2,494.08 1,412.60
Procter & Gamble Co 600 8,690.39 54,787.50
QMS Inc 100 1,029.05 318.80
Qualcomm Inc 100 5,694.00 5,181.25
R & B Falcon Corp 510 12,819.91 3,857.13
Range Petroleum 3,400 3,967.20 1,768.00
RCN Corp 400 9,207.32 7,075.20
Regions Financial 30 1,117.62 1,209.39
Reliastar Finl Corp 800 12,723.24 36,900.00
Rhone Poulenc SA Amer 158 6,436.03 7,939.50
Royce Value 1,072 4,169.15 14,740.00
Safeskin Corp 600 12,660.00 14,475.00
Safeway Inc 90 4,517.38 5,484.42
Saks Inc 125 3,062.50 3,945.38
SBC Communciations 150 4,162.50 8,043.75
Schlumberger Ltd 300 9,967.40 13,912.50
Sci Systems 200 7,790.37 11,550.00
Scientific Atlanta 400 8,072.87 9,125.20
Seagate Technology 300 12,269.25 9,075.00
Sears Roebuck 50 5,489.67 2,125.00
Security Dynamics Tech 55 2,002.53 1,265.00
Sequus Pharmaceuticals Inc 930 7,467.40 18,832.50
Site Technologies Inc 200 0.00 12.00
Sony Corp 200 18,958.25 14,400.00
Southern Co 400 6,278.60 11,625.20
St Jude Medical Inc 300 11,920.11 8,362.50
Sun Microsystems 400 10,829.00 34,250.00
Superior Telecom 200 8,429.95 9,450.00
Swift Transportation 450 0.00 12,614.09
Swiss Helvetia Fund 430 5,899.17 6,880.00
Sysco Corp 200 5,004.10 5,487.00
Telefonos de Mexico 500 18,795.34 24,344.00
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 22
<TABLE>
<CAPTION>
DESCRIPTION UNITS COST CURRENT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tellabs Inc 200 15,623.50 13,712.40
Template Software 200 1,205.99 893.80
Texas Instrument 195 5,186.00 16,696.87
Thermo Electron Co 207 9,057.60 3,506.16
Thermotex Corp 400 7,942.10 3,425.20
Three Com Corp 50 1,706.04 2,242.19
Transpro Inc 2,900 21,352.80 14,137.50
Tri Continental Corp. 961 8,884.62 27,388.50
Tricon Global Restaurants] 50 1,221.48 2,506.24
Triton Energy Ltd 1,000 8,336.17 7,938.00
Unilever NV 100 6,697.85 8,293.00
Unique Casual Rest Inc 300 2,211.00 1,912.50
United Healthcare Corp 40 2,574.82 1,722.52
Vaughn Communications 600 6,183.00 5,550.00
Visage Technology 300 2,861.27 375.00
Volu-Sol Inc 200 0.00 2.00
Vtel Corp 1,150 9,532.50 2,947.44
Warner Lambert Co 100 2,026.91 7,518.80
WD 40 Co 194 4,614.70 5,553.25
Webb Del Corp 100 2,225.10 2,756.30
Wellman Inc 500 10,810.09 5,093.75
Wells Fargo 20 852.95 798.76
Winstar Comm 300 8,537.95 11,700.00
Workflow Mgmt Inc 159 1,720.41 1,053.37
--------------------
3,388,846.22
====================
EMPLOYER STOCK
Sparta Inc. 2,583,045 12,752,639.01 23,634,861.75
Sparta Inc.-'98 PSP Contrb 236,295 1,929,268.36 2,162,099.25
Sparta Inc.-'98 401k Contrb 11,216 93,020.63 102,626.40
--------------------
25,899,587.40
====================
</TABLE>
SEE INDEPENDENT AUDITOR'S REPORT
<PAGE> 23
- --------------------------------------------------------------------------------
WARNICK ROBERT S. WARNICK, CPA
MAESTAS RONALD J. MAESTAS, CPA
& HICK WALTER H. HICK, JR., CPA
MARTIN L. MARONEY, CPA
An Accountancy Corporation
- --------------------------------------------------------------------------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-45915) of the Sparta, Inc. Profit Sharing Plan of
our report dated June 25, 1999 contained in this Report on Form 11-K of the
Sparta, Inc. Profit Sharing Plan for the Plan year 1998.
/s/ WARNICK, MAESTAS & HICK
- -------------------------------
WARNICK, MAESTAS & HICK
Costa Mesa, California
July 13, 1999
