<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 1998
Commission File No. 0-23204
VISTA 2000, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1972066
- -------- -------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
221 West First Street
Kewanee, Illinois 61443
----------------------------------------
(Address of principal executive offices)
(309) 856-8068
---------------------------
(Issuer's telephone number)
Check 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 at least
the past 90 days. Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at April 24, 1998
- ----- ------------------------------
Common Stock, $.01 par value 47,466,432
<PAGE>
PART I.- FINANCIAL INFORMATION
Item 1. Financial Statements
2
<PAGE>
VISTA 2000, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
March 28, 1998 December 27, 1997
----------------------- ----------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 1,500 $ 2,122
Accounts receivable, net 6,254 7,729
Inventories 11,904 12,493
Prepaid expenses & other 608 650
----------------------- ----------------------
Total current assets 20,266 22,994
----------------------- ----------------------
Property and Equipment, net 4,219 4,270
Note Receivable, net 1,038 1,042
Other Assets 174 256
----------------------- ----------------------
$ 25,697 $ 28,562
----------------------- ----------------------
----------------------- ----------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,189 $ 1,390
Current portion of long-term obligations 88 137
Accrued payroll and related expenses 661 548
Accrued liabilities & other 2,598 3,481
----------------------- ----------------------
Total current liabilities 4,536 5,556
----------------------- ----------------------
Long-term obligations, net of current portion 1,751 3,883
Commitments and Contingencies -- --
Stockholders' Equity
Common stock 478 448
Additional paid-in capital 67,428 67,370
Accumulated deficit (46,687) (46,875)
Currency translation (59) (70)
----------------------- ----------------------
21,160 20,873
Less: treasury shares - at cost 1,750 1,750
----------------------- ----------------------
Total Stockholders' equity 19,410 19,123
----------------------- ----------------------
$ 25,697 $ 28,562
----------------------- ----------------------
----------------------- ----------------------
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
VISTA 2000, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Quarter ended
March 28, 1998 March 29,1997
<S> <C> <C>
Net Sales $ 10,251 $ 23,579
Cost of Sales 6,500 16,517
------------ ------------
Gross profit 3,751 7,062
Operating expenses 3,532 6,687
------------ ------------
Operating profit 219 375
Other income and (expense)
Interest (37) (542)
Other 16 (16)
------------ ------------
Income (loss) before income tax 198 (183)
Income tax (expense) benefit (10) (24)
------------ ------------
Net income (loss) $ 188 $ (207)
------------ ------------
------------ ------------
Weighted average shares outstanding 45,089,891 17,732,779
Basic earnings (loss) per common share $ 0.00 $ (0.01)
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an intergral part of these statements.
4
<PAGE>
Vista 2000, Inc. and Subsidiaries
Consolidated Unaudited Statement of Stockholders' Equity
Three Months ended March 28, 1998
(Dollars and share amounts in thousands)
<TABLE>
<CAPTION>
Additional Accumulated Currency Total
Common Stock Treasury Stock Paid-In Earnings Translation Stockholders'
Shares Dollars Shares Dollars Capital (Deficit) Adjustment Equity
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 27,1997 44,845 $ 448 (341) $ (1,750) $ 67,370 $(46,875) $ (70) $ 19,123
Exercise of common stock options 2,963 30 58 88
Foreign currency translation adjustment 11 11
Net Profit (Loss) 188 188
-----------------------------------------------------------------------------------------
Balance at March 28, 1998 47,808 $ 478 (341) $ (1,750) $ 67,428 $(46,687) $ (59) $ 19,410
-----------------------------------------------------------------------------------------
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</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE>
VISTA 2000, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Quarter ended
March 28, 1998 March 29, 1997
<S> <C> <C>
Cash flows used by operating activities:
Net profit (loss) $ 188 $ (207)
Adjustments to reconcile net profit (loss) to net cash used
by operations:
Depreciation and amortization 80 599
(Gain) Loss on disposal of property and equipment -- --
(Increase) decrease in operating assets:
Accounts receivable 1,475 3,138
Inventories 589 (74)
Prepaid expenses and other current assets 42 375
Deferred charges and other assets 82 1,437
Increase (decrease) in operating liabilities:
Accounts Payable (201) (270)
Accrued liabilities (770) (1,817)
--------------- --------------
Net cash used by operating activities 1,485 3,181
--------------- --------------
Cash flows used by investing activities:
Purchases of property and equipment (27) (2,323)
--------------- --------------
Net cash used by investing activities (27) (2,323)
--------------- --------------
Cash flows provided by financing activities:
Proceeds from long-term obligations 9,462 5,135
Payments on long-term obligations (11,642) (6,696)
Proceeds from exercise of stock options and warrants 89 --
--------------- --------------
Net cash provided by financing activities (2,091) (1,561)
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Effect of exchange rates on cash and cash equivalents 11 (9)
--------------- --------------
Net increase (decrease) in cash during period (622) (712)
Cash and cash equivalents at the beginning of the period 2,122 1,165
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Cash and cash equivalents at the end of the period $ 1,500 $ 453
--------------- --------------
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</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
Vista 2000, Inc. And Subsidiaries
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 28, 1998
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements included in this report have been
prepared by Vista 2000, Inc. (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission for interim reporting and
include all normal and recurring adjustments which are, in the opinion of
management, necessary for a fair presentation. These financial statements have
not been audited by an independent accountant. The consolidated financial
statements include the accounts of the Company and its subsidiaries.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and regulations
for interim reporting. The Company believes that the disclosures are adequate to
make the information presented not misleading. However, these financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K, for the year ended
December 28, 1997. The financial data for the interim periods presented may not
necessarily reflect the results to be anticipated for the complete year.
Certain amounts in prior year's financial statements have been
reclassified to conform to the 1998 presentation.
NOTE 2. NET EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per common share has been calculated using the
weighted average number of shares of common stock outstanding during each
period. Fully diluted net income per common share is not disclosed because the
effect of the exchange or exercise of common stock equivalents would be
antidilutive.
NOTE 3. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
March 28, Dec 27,
1998 1997
--------------- ------------
<S> <C> <C>
Raw materials $ 1,774 $ 1,752
Work-in-process 431 330
Finished goods 9,699 10,411
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$11,904 $12,493
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------- -------
</TABLE>
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
All statements, other than statements of historical fact, included in
this Quarterly Report including, without limitation, the statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" are, or may be deemed to be, forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934. Important factors
that could cause actual results to differ materially from those discussed in
such forward-looking statements ("Cautionary Statements") include: the general
strength or weakness of the consumer products industry and the pricing policies
of competitors. All subsequent written and oral forward-looking statements
attributable to Vista or persons acting on the behalf of Vista are expressly
qualified in their entirety by such Cautionary Statements.
SALES AND COST OF SALES
Total revenues for the three months ended March 28, 1998 were
$10,251,000 versus $23,579,000 for the three months ended March 29, 1997. The
decrease in sales is primarily attributable to the sale of ACPI's key, key
manufacturing, letters, numbers and signs manufacturing, real estate and related
businesses on August 25, 1997 and the resulting absence of this activity in
1998. In addition, sales at the Company's Boss Manufacturing operations declined
slightly due to warmer than usual weather during the first quarter of 1998.
The Company anticipates a more significant seasonal impact on revenues
in future periods in comparison to prior years due to its increased emphasis on
glove operations. Sales from this segment tend to be greater during the cold
weather quarters.
Cost of sales for the three months ended March 28, 1998 were $6,500,000
compared to a cost of sales in the corresponding 1997 period of $16,517,000.
Gross margin for the three months ended March 28, 1998 was approximately 36.6%
compared to 30.0% for the three months ended March 29, 1997 due to the change in
product mix resulting from the ACPI operations sold in 1997.
OPERATING EXPENSES
Operating expenses (selling, general and administrative expenses)
totaled $3,532,000 for the three months ended March 28, 1998, as compared to
$6,687,000 for the corresponding period of 1997. The decrease is substantially
attributable to reductions of staff, legal and auditing expenses at the
Company's corporate headquarters and the sale of ACPI operations during August
1997. The Company anticipates continued consolidation/rationalization of its
administrative structure in 1998. Rationalization is expected to include
continuing consolidation of administrative functions and consolidation of
warehousing and manufacturing facilities.
LIQUIDITY AND CAPITAL RESOURCES
As of March 28, 1998 the Company had approximately $15,730,000 of
working capital, including $1,500,000 in cash. Working capital declined
approximately 9.8% from year-end 1997 due to seasonal reductions in accounts
receivable and inventory. Under the terms of its $10,000,000 revolving line of
credit, as of March 28, 1998, the Company had drawn
8
<PAGE>
approximately $988,000 plus had an additional $2,000,000 of availability
temporarily restricted to secure letters of credit issued in connection with the
sale of ACPI assets. This left approximately $7,012,000 available to be drawn,
if required.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
Not applicable.
PART II. --OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
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 AND REPORTS ON FORM 8-K
(a) See Index to Exhibits
(b) For the three months ended March 28, 1998, no form 8-K's were
filed.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
VISTA 2000, INC.
Dated: June 24, 1998 By: /s/ J. Bruce Lancaster
-----------------------
J. Bruce Lancaster
Chief Financial Officer
(principal financial officer)
10
<PAGE>
INDEX TO EXHIBITS
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENTS, LIQUIDATION OR
SUCCESSION. Not applicable.
(3) (i) ARTICLES OF INCORPORATION
3.1(a) Certificate of Incorporation (Exhibit 3.1)
(ii) BY-LAWS
3.2(a) By-Laws (Exhibit 3.2)
(4) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
4.1(c) Specimen of Common Stock Certificate (Exhibit 4.1)
4.2(a) Form of Warrant Agreement covering Series A Warrants (Exhibit 4.2)
4.3(c) Specimen of Series A Warrant (Exhibit 4.3)
4.4(b) Form of Preferred Stock Certificate covering Series A Preferred Stock
(Exhibit 4.1)
4.5(b) Form of Preferred Stock Certificate covering Series B Preferred Stock
(Exhibit 4.2)
4.6(b) Form of Preferred Stock Subscription Agreement covering Series B
Preferred Stock (Exhibit 4.3)
4.7(b) Form of Preferred Stock Certificate covering Series C Preferred Stock
(Exhibit 4.4)
4.8(b) Form of Preferred Stock Certificate covering Series D Preferred Stock
(Exhibit 4.5)
4.9(b) Form of Preferred Stock Subscription Agreement covering Series D
Preferred Stock (Exhibit 4.6)
(10) MATERIAL CONTRACTS
10.1(a) Lease Agreement, dated January 5, 1993 between Roswell Business Centers
Associates, LP and the Company as amended. (Exhibit 10.1)
10.2(a) Patent Rights Purchase Agreement, dated October 1, 1993 between Blue
Ridge Ventures, Inc. and the Company. (Exhibit 10.2)
10.3(a) 1993 Incentive Stock Option Plan (Exhibit 10.4)
<PAGE>
10.4(b) 1993 Non-Employee Director Stock Option Plan, as amended. (Exhibit
10.2)
10.5(a) Form of Series 1992B 15% Subordinated Debenture, as amended. (Exhibit
10.8)
10.6(a) Form of 1992B Warrant to Purchase Common Stock. (Exhibit 10.9)
10.7(a) Form of Series 1993A 15% Subordinated Convertible Debenture. (Exhibit
10.10)
10.8(a) Form of 1993A Warrant to Purchase Common Stock. (Exhibit 10.11)
10.9(d) Form of Employment Agreement to be entered into between the Company and
Robert M. Fuller, Richard P. Smyth and Norman W. Wicks, respectively.
(Exhibit 10.12)
10.10(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between
Robert M. Fuller and the Company. (Exhibit 10.27)
10.11(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between
Richard P. Smyth and the Company. (Exhibit 10.28)
10.12(a) Nonstatutory Stock Option Agreement dated December 1, 1993 between
Norman W. Wicks and the Company. (Exhibit 10.29)
10.13(b) Prospectus for the Company's 1993 Incentive Stock Option Plan and 1993
Non- Employee Director Stock Option Plan. (Exhibit 10.1)
10.14(b) First Amendment to the Company's 1993 Incentive Stock Option Plan.
(Exhibit 10.1)
10.15(b) Employment Agreement between the Company and Arnold E. Johns, Jr.
(Exhibit 10.4)
10.16(b) Employment Agreement between the Company's subsidiary, American
Consumer Products, Inc., and Richard Bern. (Exhibit 10.5)
10.17(b) Employment Agreement between the Company's subsidiary, Alabaster
Industries, Inc., and Daniel A. Norris. (Exhibit 10.6)
10.18(b) Employment Agreement between the Company's subsidiary, American
Consumer Products, Inc., and Stephen W. Cole. (Exhibit 10.7)
10.19(f) Employment Agreement between the Company and Robert E. Altenbach.
(Exhibit 10.19)
10.20(g) Asset Purchase Agreement between Vista 2000, Inc., Family Safety
Products, Inc. and Therm Acquisition, Inc. dated August 23, 1996.
(Exhibit 10.20)
<PAGE>
10.21(g) Loan and Security Agreement between Alabaster Industries, Inc. and
Century Business Credit Corporation dated September 20, 1996. (Exhibit
10.21)
10.22(h) Loan and Security Agreement between American Consumer Products, Inc.,
Products Merchandisers, Inc., Boss Manufacturing Company andn Fleet
Capital Corporation dated May 7, 1997 (Exhibit 10.22).
10.23(h) Stock Purchase Agreement between Vista 2000, Inc. and W. R. Hill & Co.,
Inc. dated May 12, 1997 (Exhibit 2.1)
10.23(i) Asset Purchase Agreement between Vista 2000, Inc. and Axxess
Technologies, Inc. dated June 30, 1997 (Exhibit 2.1)
(11) STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
Not applicable.
(15) LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
Incorporated by reference, see Page 7 of this Form 10-Q for the Quarter
ended March 28, 1998.
(18) LETTER RE CHANGE IN ACCOUNTING PRINCIPLES
Not applicable.
(19) REPORT FURNISHED TO SECURITY HOLDERS
Not applicable.
(21) SUBSIDIARIES OF THE REGISTRANT
21.1(e) Subsidiaries of the Registrant. (Exhibit 21.1)
(23) CONSENTS OF EXPERTS AND COUNSEL
Not applicable.
(24) POWER OF ATTORNEY
Not applicable.
(27) FINANCIAL DATA SCHEDULE (FILED ONLY BY ELECTRONIC FILERS)
27.1 Financial Data Schedule is included as Exhibit 27.1 of this Report
(99) ADDITIONAL EXHIBITS
None.
<PAGE>
(a) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Registration Statement on Form SB-2
(Registration No. 33-73118-A). The exhibit number contained in
parenthesis refers to the exhibit number in such Registration
Statement.
(b) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 8-K dated June 29,
1996. The exhibit number contained in parenthesis refers to the Exhibit
number in such Form 8-K.
(c) Exhibit previously filed as part of and is incorporated by reference to
Amendment No. 2 to the Company's Registration Statement on Form SC-2
(Registration No. 33-73118-A). The exhibit number contained in
parenthesis refers to the exhibit numbers in such Registration
Statement.
(d) Exhibit previously filed as part of and is incorporated by reference to
Amendment No. 1 to the Company's Registration Statement on Form SC-2
(Registration No. 33-73118-A). The exhibit number contained in
parenthesis refers to the exhibit numbers in such Registration
Statement.
(e) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 10-K for the fiscal
year ended December 27, 1997. The exhibit number contained in
parenthesis refers to the Exhibit number in such Form 10-K.
(f) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 10-Q for the quarter
ended March 30, 1996. The exhibit number contained in parenthesis
refers to the Exhibit number in such Form 10-Q.
(g) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 10-Q for the quarter
ended September 28, 1996. The exhibit number contained in parenthesis
refers to the Exhibit number in such Form 10-Q.
(h) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 8-K dated June 19,
1997. The exhibit number contained in parenthesis refers to the Exhibit
number in such Form 8-K.
(i) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 8-K dated August 25,
1997. The exhibit number contained in parenthesis refers to the Exhibit
number in such Form 8-K.
(j) Exhibit previously filed as part of and is incorporated herein by
reference to the Company's Current Report on Form 10-Q for the quarter
ended June 28, 1997. The exhibit number contained in parenthesis refers
to the Exhibit number in such Form 10-Q.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
28, 1998 UNAUDITED FINANCIAL STATEMENTS OF VISTA 2000, INC. AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS IN FORM 10-Q FOR THE
QUARTER ENDED MARCH 28, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-START> DEC-28-1997
<PERIOD-END> MAR-28-1998
<CASH> 1,500,000
<SECURITIES> 0
<RECEIVABLES> 6,254,000
<ALLOWANCES> 0
<INVENTORY> 11,904,000
<CURRENT-ASSETS> 20,266,000
<PP&E> 4,219,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,697,000
<CURRENT-LIABILITIES> 4,536,000
<BONDS> 0
0
0
<COMMON> 478,000
<OTHER-SE> 18,932,000
<TOTAL-LIABILITY-AND-EQUITY> 25,697,000
<SALES> 10,251,000
<TOTAL-REVENUES> 10,251,000
<CGS> 6,500,000
<TOTAL-COSTS> 3,532,000
<OTHER-EXPENSES> (16,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,000
<INCOME-PRETAX> 198,000
<INCOME-TAX> 10,000
<INCOME-CONTINUING> 188,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 188,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0<F1>
<FN>
<F1>NOT DISPLAYED SINCE CALCULATION WOULD BE ANTIDILUTIVE.
</FN>
</TABLE>
