<PAGE> 1
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 JUNE 30, 1995
-----------------
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 1-5091
------
--------------------------------------------------------------------------------
VISTA RESOURCES, INC.
---------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-1988043
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE ATLANTIC CENTER, SUITE 5000
1201 W. PEACHTREE STREET, N.W., ATLANTA, GEORGIA 30309
------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 404-815-2000
------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of July 31, 1995, there
were 3,772,619 shares of Common Stock, Par Value $2.50 per share outstanding.
<PAGE> 2
VISTA RESOURCES, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
- June 30, 1995 and December 31, 1994
Condensed Consolidated Statements of Income
- for three months and six months ended June 30, 1995 and June
30, 1994
Condensed Consolidated Statements of Cash Flows
- for six months ended June 30, 1995 and June 30, 1994
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and Reports on Forms 8-K
(i)
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
VISTA RESOURCES, INC. AND SUBSIDIARIES
(Dollars in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
--------- -----------
<S> <C> <C>
ASSETS
Non-Insurance Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,166 $ 4,335
Investments available for sale . . . . . . . . . . . . . . . . . . . . . . . 8,306 9,884
Receivables, less allowance of $450 . . . . . . . . . . . . . . . . . . . . . 20,708 16,220
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,730 20,543
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 333
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,018 1,432
--------------------------
Total Non-Insurance Current Assets . . . . . . . . . . . . . . . . . . . . 59,328 52,747
--------------------------
Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 27,946 27,529
Less Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . (12,711) (12,561)
--------------------------
Net Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . 15,235 14,968
--------------------------
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 234
--------------------------
Total Non-Insurance Assets . . . . . . . . . . . . . . . . . . . . . . . . 74,697 67,949
Total Insurance Assets (Detail below) . . . . . . . . . . . . . . . . . . . 99,407 90,777
--------------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 174,104 $ 158,726
==========================
Insurance Assets
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 59,351 $ 57,497
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 6,901 6,111
Premiums receivable, less allowance of $200 . . . . . . . . . . . . . . . . . 12,118 2,972
Reinsurance receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,759 13,039
Deferred policy acquisition costs . . . . . . . . . . . . . . . . . . . . . . 2,012 1,429
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 757 1,917
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,528 1,749
Intangibles, principally goodwill, less amortization of $644; 1994, $562 . . 5,981 6,063
--------------------------
Total Insurance Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,407 $ 90,777
--------------------------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
1
<PAGE> 4
CONDENSED CONSOLIDATED BALANCE SHEETS
VISTA RESOURCES, INC. AND SUBSIDIARIES
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
--------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-Insurance Liabilities
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,250 $ 11,750
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . 6,525 8,490
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 1,014
Long-term liabilities due within one year . . . . . . . . . . . . . . . . . . 1,050 1,026
--------------------------
Total Non-Insurance Current Liabilities . . . . . . . . . . . . . . . . . . 25,884 22,280
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644 588
Long-term Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,186 14,445
--------------------------
Total Non-Insurance Liabilities . . . . . . . . . . . . . . . . . . . . . 40,714 37,313
Total Insurance Liabilities (Detail below) . . . . . . . . . . . . . . . . 62,952 57,091
--------------------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,666 94,404
--------------------------
Stockholders' Equity
Preference stock, $1 par value:
authorized 8,000,000 shares; none issued . . . . . . . . . . . . . . . . . - -
Common stock, $2.50 par value:
authorized 20,000,000 shares;
issued 3,837,670 shares; 1994, 3,831,670 shares . . . . . . . . . . . . . . 9,594 9,579
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . 14,434 14,374
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,452 44,188
Unrealized gains (losses) on investments . . . . . . . . . . . . . . . . . . 308 (2,469)
Treasury stock - at cost: 69,246 shares . . . . . . . . . . . . . . . . . . . (1,350) (1,350)
--------------------------
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . 70,438 64,322
--------------------------
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . $ 174,104 $ 158,726
==========================
Insurance Liabilities
Unpaid losses and loss adjustment expenses . . . . . . . . . . . . . . . . . $ 36,827 $ 37,826
Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,402 13,476
Commissions and other payables . . . . . . . . . . . . . . . . . . . . . . . 3,217 4,128
Reinsurance payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,560 1,451
Accrued income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . (54) 210
--------------------------
Total Insurance Liabilities . . . . . . . . . . . . . . . . . . . . . . . . $ 62,952 $ 57,091
--------------------------
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
2
<PAGE> 5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
VISTA RESOURCES, INC. AND SUBSIDIARIES
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
LEATHER OPERATIONS:
Net Sales . . . . . . . . . . . . . . . . . . . . . . . $ 37,732 $ 34,780 $ 64,572 $63,305
------------------------------------------------------
Costs and Expenses:
Cost of sales . . . . . . . . . . . . . . . . . . . . 32,870 29,955 56,744 55,025
Selling and administrative expenses . . . . . . . . . 2,279 1,902 3,940 3,540
------------------------------------------------------
Total costs and expenses . . . . . . . . . . . . . . 35,149 31,857 60,684 58,565
------------------------------------------------------
Income from Leather Operations Before Interest
Expense and Income Taxes . . . . . . . . . . . . . $ 2,583 $ 2,923 $ 3,888 $ 4,740
======================================================
INSURANCE OPERATIONS:
Revenues:
Net earned premiums . . . . . . . . . . . . . . . . . $ 9,390 $ 9,020 $ 19,309 $18,411
Net investment income . . . . . . . . . . . . . . . . 1,004 970 2,141 1,733
------------------------------------------------------
Total insurance revenues . . . . . . . . . . . . . . 10,394 9,990 21,450 20,144
------------------------------------------------------
Costs and Expenses:
Losses and loss adjustment expenses . . . . . . . . . 6,884 6,664 14,023 13,018
Commission and underwriting expenses . . . . . . . . 2,327 2,191 4,589 4,302
Amortization of intangibles . . . . . . . . . . . . . 41 47 82 94
------------------------------------------------------
Total costs and expenses . . . . . . . . . . . . . . 9,252 8,902 18,694 17,414
------------------------------------------------------
Income from Insurance Operations Before Interest
Expense and Income Taxes . . . . . . . . . . . . . $ 1,142 $ 1,088 $ 2,756 $ 2,730
======================================================
CORPORATE INCOME AND EXPENSE:
Investment Income . . . . . . . . . . . . . . . . . . . $ 167 $ 94 $ 366 $ 184
General and Administrative Expenses . . . . . . . . . . 555 621 1,111 1,217
------------------------------------------------------
Net Corporate Expense Before Interest Expense
and Income Taxes . . . . . . . . . . . . . . . . . $ (388) $ (527) $ (745) $(1,033)
======================================================
INCOME BEFORE INTEREST EXPENSE
AND INCOME TAXES . . . . . . . . . . . . . . . . . . . $ 3,337 $ 3,484 $ 5,899 $ 6,437
Interest Expense . . . . . . . . . . . . . . . . . . . . 688 340 1,235 654
------------------------------------------------------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . 2,649 3,144 4,664 5,783
Income Taxes . . . . . . . . . . . . . . . . . . . . . . 830 1,025 1,400 1,862
------------------------------------------------------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . $ 1,819 $ 2,119 $ 3,264 $ 3,921
======================================================
PER SHARE:
NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ .47 $ .55 $ .85 $ 1.02
======================================================
Common shares and equivalents . . . . . . . . . . . . . . 3,857 3,859 3,861 3,862
======================================================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
VISTA RESOURCES, INC. AND SUBSIDIARIES
(Dollars in thousands)
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994
-------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Total Non-Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (6,599) $ (3,401)
Total Insurance (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . 917 2,255
-------------------------
Net Cash Used in Operating Activities . . . . . . . . . . . . . . . . . . (5,682) (1,146)
-------------------------
INVESTING ACTIVITIES
Non-Insurance
Sales of available for sale investments . . . . . . . . . . . . . . . . . . 2,625 94
Purchases of available for sale investments . . . . . . . . . . . . . . . . (375) (636)
Purchases of property, plant and equipment . . . . . . . . . . . . . . . . (1,160) (1,435)
-------------------------
Total Non-Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,090 (1,977)
Total Insurance (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,673 1,874
-------------------------
Net Cash Provided by (Used in) Investing Activities . . . . . . . . . . . 2,763 (103)
-------------------------
FINANCING ACTIVITIES
Non-Insurance
Net increase in notes payable . . . . . . . . . . . . . . . . . . . . . . . 6,500 3,000
Payment of long-term liabilities . . . . . . . . . . . . . . . . . . . . . (464) -
Additional long-term liabilities . . . . . . . . . . . . . . . . . . . . . 229 924
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . 75 295
Acquired shares for treasury . . . . . . . . . . . . . . . . . . . . . . . - (310)
-------------------------
Total Non-Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,340 3,909
Total Insurance (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . (1,800) (1,200)
-------------------------
Net Cash Provided by Financing Activities . . . . . . . . . . . . . . . . 4,540 2,709
-------------------------
Increase (Decrease) in Cash and Cash Equivalents
Non-Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 831 (1,469)
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790 2,929
-------------------------
Cash and Cash Equivalents, Beginning of Year
Non-Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,335 4,812
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,111 8,315
-------------------------
Cash and Cash Equivalents, End of Period
Non-Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,166 3,343
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,901 $ 11,244
=========================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 7
VISTA RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
1. PER SHARE CALCULATIONS:
Per share calculations are based on the average number of shares outstanding
plus common stock equivalents. Common stock equivalents include the effect of
options granted to key employees under Vista's stock option plans. Fully
diluted per share calculations are not significantly different from those
reported.
2. MANDATORY CHANGES IN ACCOUNTING FOR INVESTMENTS:
Effective January 1, 1994, Vista adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"). In accordance with SFAS 115, prior period financial
statements have not been restated to reflect the change in accounting
principle. The cumulative effect on net income as of January 1, 1994 of
adopting SFAS 115 for investments which previously were classified as held to
maturity and are now classified as trading securities was immaterial. The
balance of stockholders' equity as of January 1, 1994 was increased by
$1,238,000, net of income taxes, to reflect the net unrealized gains on
investments previously classified as held to maturity which are now classified
as available for sale.
3. INVENTORIES:
Inventories consisted of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
(Dollars in thousands) 1995 1994
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 1,938 $ 4,016
Work in progress 11,982 9,213
Raw materials and supplies 9,810 7,314
-------- --------
$ 23,730 $ 20,543
======== ========
</TABLE>
4. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
(Dollars in thousands) 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest payments $ 963 $ 518
-------- --------
Income tax payments $ 2,121 $ 2,371
-------- --------
</TABLE>
5. CAPITAL STOCK:
During the first three months of 1995, there were no options for common
stock exercised; during the second quarter of 1995, options for 6,000 shares
were exercised at $8.50 per share.
5
<PAGE> 8
6. STATEMENT OF CASH FLOWS - INSURANCE:
Cash flows of the insurance operations were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
(Dollars in thousands) 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities
Net cash provided by operating activities $ 917 $ 2,255
-------- --------
Investing activities
Sales of available for sale investments 2,102 24,245
Purchases of available for sale investments (429) (22,371)
-------- --------
Net cash provided by investing activities 1,673 1,874
-------- --------
Financing activities
Dividends paid (1,800) (1,200)
-------- --------
Net cash used in financing activities (1,800) (1,200)
-------- --------
Increase in cash and cash equivalents 790 2,929
Cash and cash equivalents, beginning of year 6,111 8,315
-------- --------
Cash and cash equivalents, end of period $ 6,901 $ 11,244
======== ========
</TABLE>
7. INSURANCE INVESTMENTS:
Investments in securities at June 30, 1995 were as follows:
<TABLE>
<CAPTION>
COST OR GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
(Dollars in thousands) COST GAINS LOSSES VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available For Sale
Preferred stocks $ 7,931 $ 260 $ (80) $ 8,111
Debt securities issued by state
& political subdivisions 20,232 640 (34) 20,838
Debt securities issued by the U.S.
Treasury and other U.S. Government
corporations & agencies 25,259 313 0 25,572
Corporate debt securities 601 153 0 754
-------- -------- -------- --------
$ 54,023 $ 1,366 $ (114) $ 55,275
-------- -------- -------- --------
Held to Maturity
Debt securities issued by state
& political subdivisions $ 1,513 $ 18 $ (10) $ 1,521
Debt securities issued by the U.S.
Treasury and other U.S. Government
corporations & agencies 1,572 36 (6) 1,602
Corporate debt securities 100 0 (5) 95
-------- -------- -------- --------
$ 3,185 $ 54 $ (21) $ 3,218
-------- -------- -------- --------
Trading Securities
Preferred stocks $ 891 $ 0 $ 0 $ 891
-------- -------- -------- --------
</TABLE>
In accordance with SFAS 115, available for sale investments and trading
securities are recorded at fair value and held to maturity investments are
carried at cost.
6
<PAGE> 9
8. PREMIUMS CEDED AND INSURANCE RECOVERIES:
For the three months and six months ended June 30, 1995, premiums ceded to
reinsurance companies were $1,433,000 and $3,093,000 (1994, $1,553,000 and
$3,072,000). Reinsurance recoveries in the three and six months ended June 30,
1995 were ($598,000) and ($64,000) (1994, $3,539,000 and $4,812,000).
-----------------------
The unaudited condensed financial statements reflect all adjustments
(consisting of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods. It is suggested that these unaudited condensed consolidated financial
statements be read in conjunction with the consolidated financial statements
and notes thereto included in Vista's 1994 Annual Report.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OPERATIONS
Leather Operations:
Net sales of the leather operations were higher in 1995 than in 1994 by
approximately 8.5% for the second quarter and 2.0% for the first six months.
These increases were due principally to price increases which exceeded the
impact of lower volume of leather shipped to producers of shoes who were
adversely impacted by weak retail demand. Sales to foreign customers,
representing 33.4% of net sales in the second quarter of 1995, increased 6.8%
over the second quarter of 1994. The leather operations' backlog of orders at
June 30, 1995 was $48.1 million which was 40.2% higher than the amount of
backlog at June 30, 1994.
The operating profit percentage of net sales for the second quarter of 1995
was 6.8% (1994, 8.4%) and for the first half of 1995 was 6.0% (1994, 7.5%),
primarily due to the reduction in production volume and higher costs associated
with start up of a new product in the first half of 1995.
Selling and administrative expenses of the leather operations for 1995 were
11.3% higher for the first six months and 19.8% higher for the second quarter
as compared to the comparable periods in 1994. These increases resulted
principally from higher commissions related to foreign sales.
Accounts receivable were higher, $20,708,000 at June 30, 1995, as compared
to $16,220,000 at the end of 1994, due principally to increased foreign sales
and seasonal factors. Inventory levels increased to $23,730,000 at June 30,
1995 from $20,543,000 at December 31, 1994 reflecting new product start up and
delivery rescheduling by customers in the first half of 1995.
Capital expenditures in the first six months of 1995 were $1,247,000.
Estimated capital expenditures for the full year of 1995 are expected to be
approximately $2,150,000, excluding approximately $1,370,000 of expenditures
for environmental facilities. Depreciation expense in the first six months of
1995 was $893,000 as compared to $871,000 in 1994.
Insurance Operations:
Net earned premiums in the second quarter of 1995 were $9,390,000, an
increase of 4.1% as compared to $9,020,000 reported in the second quarter of
1994. Net earned premiums for the first six months of 1995 were $19,309,000,
an increase of 4.9% as compared to $18,411,000 in the comparable period of the
prior year. These increases were due to favorable premium adjustments on
certain accounts associated with claims and to new customers. Investment
income was $1,004,000 in the second quarter of 1995 as compared to $970,000 in
the second quarter of 1994. For the first six months of 1995, investment
income was $2,141,000 as compared to $1,733,000 in the comparable period of the
prior year. This increase was due principally to higher yields on fixed
maturity interest bearing investments in 1995.
7
<PAGE> 10
Total losses and loss adjustment expenses for the second quarter of 1995
were $6,884,000 as compared to $6,664,000 for the comparable period of 1994, an
increase of 3.3%. Total losses and loss adjustment expenses for the first six
months of 1995 were $14,023,000 which were 7.7% higher than the comparable
period in 1994. These increases were due principally to unusually high claims
in March and April of 1995.
The increases from December 31, 1994 to June 30, 1995 of both premiums
receivable (from $2,972,000 to $12,118,000) and unearned premiums (from
$13,476,000 to $21,402,000) result from writing a significant amount of
premiums during the early part of the year which will be earned during the
remainder of the year.
Corporate Income and Expense:
Investment income in the first six months of 1995 was $366,000 as compared
to $184,000 in the comparable period of 1994. For the second quarter of 1995,
investment income was $167,000 as compared to $94,000 in the second quarter of
1994. These increases result principally from higher amounts of investments in
1995.
General and administrative expenses in 1995 were approximately 10.6% less
for the second quarter and 8.7% less for the first six months than the
comparable periods of 1994.
Interest expense for the first six months increased from $654,000 in 1994 to
$1,235,000 in 1995. In the second quarter interest expense increased from
$340,000 in 1994 to $688,000 in 1995, reflecting the additional borrowings used
to finance higher levels of receivables and inventories at the leather
operations.
In the first quarter of 1994, Vista adopted Statement of Financial
Accounting Standard No. 115 ("SFAS 115"), which changed the accounting and
reporting for investments in certain debt and equity securities. The
cumulative effect of adopting SFAS 115 was to increase equity by $1,238,000 as
of January 1, 1994 for the unrealized gains, net of tax, on investments
previously classified as held to maturity which are now classified as available
for sale. The cumulative effect on net income as of January 1, 1994 from
investments which were classified as held to maturity and are now classified as
trading securities was immaterial.
In March 1995, the Financial Accounting Standards Board issued Statement No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" ("SFAS 121"). SFAS 121 requires that long-lived
assets and certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances based on future expected cash flows indicate
that the carrying amount may not be recoverable. SFAS 121 is effective for
financial statements for fiscal years beginning after December 15, 1995. Upon
adoption, Vista does not believe that SFAS 121 will have a material impact on
its consolidated financial statements.
Vista's financial statements are recorded on the basis of historical cost.
While it is difficult to measure the impact of inflation, management believes
that the effects of inflation on Vista have not been significant. To the
extent that inflationary pressures have an adverse effect through higher raw
material and asset replacement costs, Vista will attempt to minimize these
effects through cost reductions and productivity improvements, as well as price
increases.
LIQUIDITY AND CORPORATE DEVELOPMENT:
Vista's non-insurance cash and cash equivalents and investments at June 30,
1995 were $13,472,000 as compared to $14,219,000 at December 31, 1994 and
$7,639,000 at June 30, 1994. The non-insurance current ratio was 2.3 to 1.0 at
June 30, 1995 as compared to 2.4 to 1.0 at December 31, 1994 and 2.2 to 1.0 at
June 30, 1994.
At June 30, 1995, the insurance operations had $66,252,000 of cash and
marketable securities, as compared to $63,608,000 at December 31, 1994. The
insurance operations have historically provided positive cash flow.
In March 1995, Vista's leather operations amended its agreement for
short-term borrowings to support working capital. The amended agreement
provides the leather operations with additional borrowing capacity of
$5,000,000 at comparable terms and rates as the previous agreement.
8
<PAGE> 11
Management believes that Vista and its subsidiaries have adequate liquidity
and borrowing capacity to meet obligations when due.
Vista's corporate development goal is to maximize stockholder value. In
this regard, management continuously considers and evaluates various courses of
action including, but not limited to, mergers, acquisitions and dispositions.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On July 20, 1995, Vista's Board of Directors named Lawrence P. Klamon, a
Director, effective immediately, and President and Chief Executive Officer,
effective August 1, 1995. J. Rex Fuqua was elected as Vice Chairman and John
J. Huntz, Jr. was elected to Executive Vice President and Chief Operating
Officer, both effective August 1, 1995. Samuel W. Norwood III, a former
Director, President and CEO, resigned these positions effective July 31, 1995
and subsequently entered into a severance agreement with Vista that provides
for salary and benefits continuation through January 15, 1996.
Additionally, on July 20, 1995, management announced their intent to take
the necessary steps to change the corporation's name from Vista Resources, Inc.
to Fuqua Industries, Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Listing of Exhibits
<TABLE>
<CAPTION>
EXHIBITS INCORPORATED HEREIN BY REFERENCE
--------------------------------------------------------
DESIGNATION DOCUMENT WITH WHICH EXHIBIT DESIGNATION OF SUCH
OF EXHIBIT IN DESCRIPTION OF WAS PREVIOUSLY FILED WITH EXHIBIT IN THAT
THIS FORM 10-Q EXHIBITS COMMISSION DOCUMENT
-------------- -------------------------------------- ----------------------------------- -------------------
<S> <C> <C> <C>
3(a) Restated Certificate of Incorporation Annual Report on Form 10-K Exhibit 3(a)
and Amendments thereto of Vista for the year ended December 31,
1989
3(b) Bylaws of Vista Annual Report on Form 10-K Exhibit 3(b)
for the year ended December 31,
1989
4(a) Revolving Credit and Loan Agreement Quarterly Report on Form 10-Q Exhibit 4(a)
between Fleet Bank of Maine ("Lender") for the three months ended
and Irving Tanning Company March 31, 1994
("Borrower") dated April 5, 1994
4(b) First Amendment to Revolving Credit and Quarterly Report on Form 10-Q Exhibit 4(b)
Loan Agreement between Fleet Bank of for the three months ended
Maine ("Lender") and Irving Tanning March 31, 1995
Company ("Borrower") dated September 15,
1994
4(c) Second Amendment to Revolving Credit and Quarterly Report on Form 10-Q Exhibit 4(c)
Loan Agreement between Fleet Bank of for the three months ended
Maine ("Lender") and Irving Tanning March 31, 1995
Company ("Borrower") dated November 23,
1994
4(d) Third Amendment to Revolving Credit and Quarterly Report on Form 10-Q Exhibit 4(d)
Loan Agreement between Fleet Bank of for the three months ended
Maine ("Lender") and Irving Tanning March 31, 1995
Company ("Borrower") dated March 28,
1995
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBITS INCORPORATED HEREIN BY REFERENCE
--------------------------------------------------------
DESIGNATION DOCUMENT WITH WHICH EXHIBIT DESIGNATION OF SUCH
OF EXHIBIT IN DESCRIPTION OF WAS PREVIOUSLY FILED WITH EXHIBIT IN THAT
THIS FORM 10-Q EXHIBITS COMMISSION DOCUMENT
-------------- -------------------------------------- ----------------------------------- -------------------
<S> <C> <C> <C>
4(e) Term Note between Fleet Bank of Maine Quarterly Report on Form 10-Q Exhibit 4(b)
("Lender") and Irving Tanning Company for the three months ended
("Borrower") dated April 5, 1994 March 31, 1994
4(f) First Amendment to Promissory Note Quarterly Report on Form 10-Q Exhibit 4(f)
between Fleet Bank of Maine ("Lender") for the three months ended
and Irving Tanning Company ("Borrower") March 31, 1995
dated September 15, 1994
4(g) Second Amendment to Promissory Note Quarterly Report on Form 10-Q Exhibit 4(g)
between Fleet Bank of Maine ("Lender") for the three months ended
and Irving Tanning Company ("Borrower") March 31, 1995
dated November 23, 1994
4(h) Third Amendment to Promissory Note Quarterly Report on Form 10-Q Exhibit 4(h)
between Fleet Bank of Maine ("Lender") for the three months ended
and Irving Tanning Company ("Borrower") March 31, 1995
dated March 28, 1995
4(i) Security Agreement dated April 5, 1994 Quarterly Report on Form 10-Q Exhibit 4(c)
between Fleet Bank of Maine ("Lender") for the three months ended
and Irving Tanning Company ("Borrower") March 31, 1994
4(j) Limited Guaranty dated March 29, 1995 Quarterly Report on Form 10-Q Exhibit 4(j)
between Fleet Bank of Maine ("Lender"), for the three months ended
Irving Tanning Company ("Borrower") and March 31, 1995
Seagrave Leather Corporation
("Guarantor")
4(k) Limited Guaranty dated March 29, 1995 Quarterly Report on Form 10-Q Exhibit 4(k)
between Fleet Bank of Maine ("Lender"), for the three months ended
Irving Tanning Company ("Borrower") and March 31, 1995
Kroy Tanning Company, Incorporated
("Guarantor")
4(l) Agreement between Town of Hartland, Quarterly Report on Form 10-Q Exhibit 4(d)
Maine and Irving Tanning Company for the three months ended
dated September 26, 1994 related to September 30, 1994
General Obligations Bonds
10(a) Management Agreement between Annual Report on Form 10-K Exhibit 10(b)
Vista and Fuqua National Corporation for the year ended December 31,
dated April 10, 1989 1989
10(b) Assignment to Fuqua Capital Corpo- Annual Report on Form 10-K Exhibit 10(b)(1)
ration of the Management Agreement for the year ended December 31,
between Vista and Fuqua National 1990
Corporation
10(c) First Amendment to Management Agree- Quarterly Report on Form 10-Q Exhibit 10(b)(2)
ment between Fuqua Capital Corpo- for the three months ended
ration and Vista dated September 14, September 30, 1994
1994
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
EXHIBITS INCORPORATED HEREIN BY REFERENCE
--------------------------------------------------------
DESIGNATION DOCUMENT WITH WHICH EXHIBIT DESIGNATION OF SUCH
OF EXHIBIT IN DESCRIPTION OF WAS PREVIOUSLY FILED WITH EXHIBIT IN THAT
THIS FORM 10-Q EXHIBITS COMMISSION DOCUMENT
-------------- -------------------------------------- ----------------------------------- -------------------
<S> <C> <C> <C>
10(d) 1989 Stock Option Plan of Vista Annual Report on Form 10-K Exhibit 10(c)
for the year ended December 31,
1989
10(e) 1992 Stock Option Plan Registration Statement on Form Exhibit 28
S-8 (Registration No. 33-54164)
10(f) Employment Agreement and amend- Annual Report on Form 10-K Exhibit 10(e)
ments thereto through December 15, 1989 for the year ended December 31,
between Richard C. Larochelle and 1992
Irving Tanning Company, a subsidiary
of Vista
10(g) Employment Agreement between Roy S. Annual Report on Form 10-K Exhibit 10(f)
Thompson, Jr. dated October 11, 1991 for the year ended December 31,
and American Southern, a subsidiary 1992
of Vista
10(h) Lease Agreement between Vista (Lessee) Annual Report on Form 10-K Exhibit 10(f)
and Sumitomo Life Realty (N.Y.) Inc. for the year ended December 31,
(Lessor) dated January 17, 1990 1990
10(i) Severance Agreement between Vista and
Samuel W. Norwood dated August 1, 1995
10(j) First Amendment to the Lease Agreement Annual Report on Form 10-K Exhibit 10(g)
between Vista (Lessee) and Sumitomo for the year ended December 31,
Life Realty (N.Y.) Inc. (Lessor) 1990
dated September 6, 1990
10(k) Second Amendment to Lease Agreement Annual Report on Form 10-K Exhibit 10(p)
between Vista (Lessee) and Sumitomo for the year ended December 31,
Life Realty (N.Y.) Inc. (Lessor) 1991
dated February 21, 1992
10(l) Third Amendment to Lease Agreement Quarterly Report on Form 10-Q Exhibit 10(i)(1)
between Vista (Lessee) and Sumitomo for the three months ended
Life Realty (N.Y.) Inc. (Lessor) September 30, 1994
dated October 28, 1994
10(m) Sublease Agreement between Vista Annual Report on Form 10-K Exhibit 10(l)
and Fuqua Capital Corporation, for the year ended December 31,
dated October 31, 1994 1994
10(n) Stock Purchase Agreement dated Interim Report on Form 8-K Exhibit 2(i)
September 17, 1991, among Vista, for the month of October 1991
Concorde Finance & Investment, Inc.,
InterRedec, Inc., InterRedec
Southern Company, Inc. and American
Southern
10(o) Non-negotiable Promissory Note, Interim Report on Form 8-K Exhibit 10(i)
dated October 11, 1991, between Vista for the month of October 1991
and InterRedec Southern Company, Inc.
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBITS INCORPORATED HEREIN BY REFERENCE
--------------------------------------------------------
DESIGNATION DOCUMENT WITH WHICH EXHIBIT DESIGNATION OF SUCH
OF EXHIBIT IN DESCRIPTION OF WAS PREVIOUSLY FILED WITH EXHIBIT IN THAT
THIS FORM 10-Q EXHIBITS COMMISSION DOCUMENT
-------------- -------------------------------------- ----------------------------------- -------------------
<S> <C> <C> <C>
10(p) Stock Pledge and Security Agreement, Interim Report on Form 8-K Exhibit 10(ii)
dated October 11, 1991, between Vista for the month of October 1991
and InterRedec Southern Company, Inc.
10(q) Lease Agreement between American Annual Report on Form 10-K Exhibit 10(n)
Southern (Lessee) and Northcreek for the year ended December 31,
Associates (Lessor) dated July 10, 1991
1989
10(r) First Amendment to Lease Agreement Annual Report on Form 10-K Exhibit 10(o)
between American Southern (Lessee) for the year ended December 31,
and Northcreek Associates (Lessor) 1991
dated April 23, 1990
10(s) Lease Agreement between Empire State Annual Report on Form 10-K Exhibit 10(q)
Building Company (Lessor) and Vista for the year ended December 31,
Resources, Inc. (Lessee) dated March 1, 1993
1993 along with Lease Modification
Agreement and Space Deletion Agree-
ment dated February 18, 1994
10(t) Consulting Agreement between American Current Report on Form 8-K dated Exhibit 99.2
Southern Insurance Company and The May 17, 1995
Seibels Bruce Group, Inc. dated
May 17, 1995
27 Financial Data Schedules (for SEC use only)
27.1 Consolidated Totals
27.2 Article 5
27.3 Article 7
</TABLE>
_____________________________________
(b) Reports on Form 8-K
Vista filed a Current Report on Form 8-K, dated May 17, 1995,
containing a press release announcing the execution of a
consulting agreement between its subsidiary, American Southern
Insurance Company, and The Seibels Bruce Group, Inc., an
insurance holding company headquartered in Columbia, South
Carolina.
12
<PAGE> 15
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.
VISTA RESOURCES, INC.
REGISTRANT
/s/ Brady W. Mullinax, Jr.
----------------------------------------
Brady W. Mullinax, Jr., Vice
President-Finance, Treasurer and Chief
Financial Officer (Principal Financial
and Accounting Officer and Executive
Officer duly authorized to sign on
behalf of the registrant)
Date: August 14, 1995
13
<PAGE> 1
Exhibit 10(i)
VISTA RESOURCES, INC.
INTER-OFFICE MEMORANDUM
DATE: August 1, 1995
TO: L. P. KLAMON
FROM: S. W. NORWOOD III
SUBJECT: RESIGNATION FROM VISTA
--------------------------------------------------------------------------------
In connection with my resignation as an officer of Vista Resources and its
subsidiaries as of July 31, 1995, the following constitutes our understanding
and agreement which supersedes and replaces any prior agreements on the items
discussed below:
1. My official responsibilities as an officer and director of Vista
Resources and its subsidiaries will end as of the conclusion of business on
July 31, 1995.
2. I will assist in the transition on a mutually agreeable basis during
the period from this date through January 15, 1996.
3. Vista will pay my current salary, director's fees and benefits
including monthly membership fees for the 191 Club as though I were a full time
employee and director of American Southern through January 15, 1996, and I will
be fully vested in the Vista 401K retirement and profit sharing plan.
4. I have a stock option which allows me to purchase 59,500 shares of
Vista stock at a price of $8.50 per share. When I exercise that option I
presently intend to sell all or some portion of those shares. Vista agrees
that it will cooperate with me in order that I may sell those shares in a
manner which is least disruptive to the market for Vista stock, maximizes the
return to me and is not disadvantageous to Vista.
Agreed: /s/ L. P. Klamon
------------------------------
L. P. Klamon
<TABLE> <S> <C>
<ARTICLE> CT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1995 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<TOTAL-ASSETS> 174,104
<COMMON> 9,594
0
0
<OTHER-SE> 60,844
<TOTAL-LIABILITY-AND-EQUITY> 174,104
<TOTAL-REVENUES> 86,022
<INCOME-TAX> 1,400
<INCOME-CONTINUING> 3,264
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,264
<EPS-PRIMARY> 0.85
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1995 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 5,166
<SECURITIES> 8,306
<RECEIVABLES> 21,158
<ALLOWANCES> (450)
<INVENTORY> 23,730
<CURRENT-ASSETS> 59,328
<PP&E> 27,946
<DEPRECIATION> (12,711)
<TOTAL-ASSETS> 74,697
<CURRENT-LIABILITIES> 25,884
<BONDS> 14,186
<COMMON> 9,594
0
0
<OTHER-SE> 24,389
<TOTAL-LIABILITY-AND-EQUITY> 74,697
<SALES> 64,572
<TOTAL-REVENUES> 64,572
<CGS> 56,744
<TOTAL-COSTS> 60,684
<OTHER-EXPENSES> 745
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 785
<INCOME-PRETAX> 2,301
<INCOME-TAX> 890
<INCOME-CONTINUING> 1,411
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,411
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1995 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 47,164
<DEBT-CARRYING-VALUE> 3,185
<DEBT-MARKET-VALUE> 3,218
<EQUITIES> 9,002
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 59,351
<CASH> 6,901
<RECOVER-REINSURE> 10,759
<DEFERRED-ACQUISITION> 2,012
<TOTAL-ASSETS> 99,407
<POLICY-LOSSES> 36,827
<UNEARNED-PREMIUMS> 21,402
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 0
<COMMON> 3,000
0
0
<OTHER-SE> 33,455
<TOTAL-LIABILITY-AND-EQUITY> 99,407
19,309
<INVESTMENT-INCOME> 1,948
<INVESTMENT-GAINS> 193
<OTHER-INCOME> 0
<BENEFITS> 14,023
<UNDERWRITING-AMORTIZATION> (583)
<UNDERWRITING-OTHER> 5,254
<INCOME-PRETAX> 2,363
<INCOME-TAX> 510
<INCOME-CONTINUING> 1,853
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,853
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
