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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 27, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-23204
VISTA 2000, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C>
DELAWARE 58-1972066
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
221 West First Street, Kewanee, Illinois 61443
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (309) 856-8068
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock $.01 Par Value
Series A Warrants
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates computed
by reference to the price at which the stock was sold was $1,993,673 as of
May 13, 1998. This represents 31,898,764 shares at $.0625 per share. Since
the Company's common stock is not traded on any recognized stock exchange,
the price per share is based on unofficial trading history.
There were 47,466,432 shares of the Registrant's common stock and 2,300,000
Series A Warrants and 611,127 other warrants outstanding as of May 13, 1998.
<PAGE>
PART I
Item 1. Business
Vista 2000, Inc., the registrant, together with its subsidiaries, is
referred to herein as the "Company". The Company's executive offices are
located at 221 West First Street, Kewanee, Illinois 61443, and its telephone
number is (309) 856-8068.
All statements, other than statements of historical fact, included
in this Annual Report, including, without limitation, the statements under
"Current Developments", "General Business" and "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 the Company or persons acting on behalf of the
Company are expressly qualified in their entirety by such Cautionary
Statements.
General
The Company, successor by merger to Firearm Safety Products, Inc.
("Firearm"), was organized to design, develop, manufacture and market
consumer products. Firearm was organized on December 19, 1991 as
Triggerguard, Inc., a Georgia corporation. Effective August 10, 1992,
Triggerguard's name was changed to Firearm Safety Products, Inc. Pursuant to
a Plan and Agreement of Merger entered into October 20, 1993, Firearm was
merged into the Company, a newly formed Delaware corporation. In conjunction
with the plan of merger, Family Safety Products, Inc. ("FSPI"), a Georgia
corporation, was formed as a wholly-owned subsidiary of the Company, and the
assets and operations of Firearm were transferred to FSPI. FSPI manufactured
and marketed a broad range of personal safety and home security devices,
alarms and security systems. On October 24, 1994, the Company completed an
initial public offering of its common stock and warrants.
In 1995 the Company elected to change its fiscal year from September
30 to December 30. The Company engaged Grant Thornton LLP ("Grant Thornton")
to audit its financial statements for the period ending December 30, 1995. In
March, 1996, Grant Thornton advised the Company that contrary to prior
projections and previously filed financial reports, the Company had incurred
a substantial loss for the year-end and for prior quarters for fiscal year
1995. In March 1996, the Audit Committee of the Board of Directors
(consisting of the Company's two outside (i.e. non-employee) directors)
initiated an investigation of the integrity of the Company's financial
reporting procedures as well as the integrity of management.
Richard P. Smyth ("Smyth") Chairman of the Board of Directors and
Chief Executive Officer, was placed on leave of absence pending the Audit
Committee's review. On April 16, 1996,
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the Company announced Smyth's resignation as Chairman of the Board of
Directors and Chief Executive Officer of the Company and the Company filed a
lawsuit against Mr. Smyth, alleging, among other things, breach of fiduciary
duty. This litigation is currently pending.
As a result of the Audit Committee's investigation, the Company
reported a restatement of its results for the fiscal year ended September 30,
1994. The Company had previously reported a loss for the period of $329,000.
The restated loss for this period was $2.1 million. Further, the Company
reported a loss for the three (3) month stub period ended December 31, 1994
of approximately $1 million. The Company had reported a loss from its
consolidated operations for the fiscal year ended December 30, 1995 of $12.9
million or $2.04 per share based on approximately 6.3 million weighted
average shares outstanding during the period. This loss has been restated to
$14.7 million or $2.33 per share as presented in the Company's Form 10-K for
the year ended December 30, 1995.
Beginning in mid-April 1996, 17 class action lawsuits were filed
against the Company and certain other entities and individuals relating to
activities of the Company while under control of previous management and the
previous Board of Directors. All of the lawsuits were eventually
consolidated. The lawsuits were filed in the United States District Court for
the Northern District of Georgia, and on March 14, 1997, the litigation was
settled by a Final Judgment and Order of Dismissal by the Court. Further, the
Securities and Exchange Commission ("SEC") commenced an investigation of the
Company and its former officers and directors in 1997.
On April 26, 1996, the Company received a letter from the NASDAQ
Stock Market, Inc. ("NASDAQ") notifying the Company that its securities were
scheduled to be delisted from NASDAQ effective May 10, 1996. The Company
requested a formal hearing on the matter which was held on May 22, 1996. On
May 30, 1996, the Company was advised by NASDAQ that the Company's securities
were delisted effective May 31, 1996. The Company will not be eligible to
trade its securities on either the Electronic Bulletin Board Market or the
"pink sheets" market until (i) an application is made on behalf of the
Company by a NASD member firm as a market maker for the Company's securities
and (ii) the application is accepted by NASDAQ.
On June 7, 1996, the Company entered into an agreement with a
shareholder, Ginarra Holdings, Inc. ("Ginarra") to add six (6) additional
outside directors to the Board of Directors which, at that time, consisted of
three (3) members. Pursuant to the terms of the agreement, the directors
amended the Company's bylaws to increase the size of the Board of Directors
from five (5) to nine (9) and voted to add six (6) Ginarra nominees as
directors of the Company. The nominees assumed office immediately following
the issuance of a Form 8-K filed with the SEC on June 6, 1996 for the year
ended December 30, 1995 in lieu of a Form 10-K (the "June 1996 Form 8-K").
Since that time, the three original directors and one of the newly-elected
directors have resigned and one new director has been added.
As previously disclosed in the June 1996 Form 8-K, Grant Thornton
had disclaimed an opinion on the Company's consolidated financial statements
for the year ended December 30, 1995
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because evidence supporting the results of operations of the Company's
subsidiaries, FSPI, Promotional Marketing, Inc. ("PMI") and Intelock
Technologies, Inc. ("Intelock") was not available. However, Grant Thornton
advised that it could express, and the Company did receive, an unqualified
opinion on the financial statements of the Company's subsidiary, American
Consumer Products, Inc. ("ACPI"), presented on an historical basis for twelve
(12) months ended December 30, 1995. Without an opinion on the Company's
consolidated financial statements, the Company was not able to comply with
the applicable rules and regulations of the SEC regarding reports and NASDAQ
regarding the listing of the Company's securities. This resulted in, among
other things, the delisting of the Company's securities from the NASDAQ
National Market described above.
Following the issuance of the June 1996 Form 8-K, Grant Thornton was
able to perform additional audit procedures with respect to the fiscal year
ended December 30, 1995. After performing these procedures, Management
identified certain corrections that have been made to the financial
statements for the year-ended December 30, 1995. As a result of these
corrections, on March 12, 1997, Grant Thornton re-issued its Auditors' Report
on the Company's 1995 consolidated financial statements. This re-issued
Report of Independent Certified Public Accounts, which now contains an
unqualified opinion of Grant Thornton, was filed on May 1, 1997 with the
Company's Form 10-K for the year ended December 30, 1995.
The Company's Form 10-K for the year ending December 28, 1996 was
filed on August 25, 1997 and included an unqualified opinion of Grant
Thornton, the Company's independent certified public accountants. All
required quarterly SEC filings for the fiscal year ended December 27, 1997
have been made.
Acquisitions and Dispositions
On April 18, 1997, the Company sold all of its 94% interest in
Intelock's common stock to a company managed by a minority (4.2%) shareholder
of Intelock, who was an officer and director of Intelock prior to the
purchase of Intelock by the Company in 1995. Proceeds from the sale were
$5,000 in cash and a $95,000 promissory note, which matures on April 11,
1998. This sale resulted in a 1997 gain of approximately $128,000 since the
net operating assets of Intelock had been previously written off during the
third quarter of the 1996 fiscal year when Intelock ceased operations.
On June 19, 1997, the Company sold all of the stock of Alabaster to
W. R. Hill & Co., Inc., for $2.0 million. Payment consisted of $500,000 cash
and a $1.5 million note receivable, secured by a first mortgage on the land
and buildings which comprise Alabaster's manufacturing, sales and
administrative operations. During the quarter ended June 28, 1997, the
Company recorded a loss of approximately ($1.8 million) on the sale. During
the year ended December 28, 1996, the Company had recorded losses of
approximately ($3.6 million), as a result of operating losses and asset write
downs at Alabaster. Alabaster represented approximately $2.8 million of the
Company's consolidated sales for the year ended December 27, 1997.
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On August 25, 1997, the Company completed the sale of certain assets
of ACPI to Axxess Technologies, Inc. (the "Purchaser"). These assets
comprised primarily ACPI's key, key manufacturing, letters, numbers and signs
manufacturing, real estate and related businesses. The Company retained Boss
Manufacturing Company, Boss Balloon, Inc., Boss Real Estate, Inc. and the
ACPI Warren Pet Division. The business assets being sold accounted for
approximately $57.0 million of the Company's consolidated sales for the year
ended December 28, 1996. The Company recognized a loss of approximately ($1.8
million) on the sale, after accounting for legal expenses and other
transaction expenses.
Consideration for the sale consisted of cash of approximately $24.8
million and the assumption of approximately $3.3 million of liabilities by
the Purchaser. Except for approximately $3.0 million of cash, which was
retained by the Company to pay, among other things, closing costs and other
expenses associated with the transaction, the balance of the cash proceeds
were used to retire debt, including a payment of approximately $18.6 million
against ACPI's revolving line of credit. Immediately after this payment the
ACPI revolving line of credit had an outstanding balance of approximately
$3.4 million. As a result of this sale of ACPI's assets, including inventory
and accounts receivable, which comprised a significant portion of the
revolving line of credit borrowing base, ACPI's borrowing limit was reduced
from $30.0 million to $10.0 million.
Operations
With the asset and business sales which have occurred during the
years ended December 27, 1997 and December 28, 1996, the concentration of the
Company's operations have shifted to work gloves and protective wear. Boss
Manufacturing Company ("Boss"), a wholly-owned subsidiary of the Company's
ACPI subsidiary, manufactures and distributes the Company's work glove and
protective wear products. The headquarters of Boss is in Kewanee, Illinois,
with manufacturing and distribution facilities in the United States, Canada
and Mexico.
Marketing
The Company markets its product lines directly through its own sales
force to major retail stores and through distributors and manufacturer
representatives. Retail products are primarily purchased from the Company by
businesses located in the United States, including mass merchandising stores,
supermarkets, hardware stores, drug and variety stores, and other retail
outlets and by wholesalers who resell to such retailers. The Company's
products are also marketed outside the United States in Canada.
Raw Material
The Company expects to have multiple sources of supply for
substantially all of its material requirements. The raw materials and various
purchased components required for its products have generally been available
in sufficient quantities.
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Competition
In the work glove and protective clothing market the Company
competes with a few well-established domestic and foreign manufacturers as
well as a number of smaller manufacturers. Many of the Company's products
also compete against a number of substitute products. The fragmented nature
of the competitive market does not permit the Company to form a reliable
opinion as to its precise competitive position within these markets, however,
the Company believes it has a significant share in many of the markets for
some of its products.
Regulation
The Company is subject to federal, state and local regulations
concerning the environment, occupational safety and health, and consumer
products safety. The Company has not experienced significant difficulty in
complying with such regulations and compliance has not had a material adverse
effect on the Company's business.
Employees
The Company has approximately 413 full-time associates including 57
salaried personnel. Approximately 25 hourly associates are represented by
labor organizations under collective bargaining agreements at the Company's
Boss Manufacturing facilities.
Executive Officers of the Registrant
The following is a list of the names and ages of all the executive
officers of the registrant and principal subsidiaries as of December 27, 1997
indicating all positions and offices with the registrant held by each such
person, and each such persons' principal occupations or employment during the
past five years.
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THE REGISTRANT
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Name Age Positions and Offices Held and
Principal Occupations or Employment during past 5 years
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G. Louis Graziadio III 48 Chairman of the Board and Chief Executive Officer since June 1996.
He is also the Chairman and CEO of Ginarra Holdings, Inc., a holding
company with investments through various corporations, and a director
of Imperial Credit Industries, Inc., Imperial Bancorp, Imperial
Trust, Imperial Financial Group and Lynx Golf, Inc.
Shyam H. Gidumal 38 President since November, 1997. From 1989 through 1992 Mr. Gidumal
was a partner with the Boston Consulting Group. Mr. Gidumal has
served as President of Strategic Turnarounds Investment Corp. &
Affiliates since 1992, and Managing Director of Crown Capital Group
since 1997.
SUBSIDIARIES
Ken Fristad 57 President, ACPI Subsidiary (1) and Boss Manufacturing Company
</TABLE>
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(1) Mr. Ken Fristad, the President of ACPI's subsidiary, Boss Manufacturing
Company, was named President of ACPI effective May 7, 1997.
Item 2. Properties
The following table shows the location, general character, square
footage, annual rent and lease expiration date of the principal operating
facilities owned or leased by the Company as of December 27, 1997. The
executive offices are located in Kewanee, Illinois, which is an owned
facility occupying approximately 50,400 square feet. The Company considers
its properties to be in generally good condition and well-maintained, and are
generally suitable and adequate to carry on the Company's business.
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Location City General Character Square Annual Lease Expiration
Feet Rent
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<S> <C> <C> <C> <C> <C>
Alabama Greenville Manufacturing 86,000 0 owned
Alabama Monroeville Manufacturing 5,000 3,600 month-to-month
Arizona Phoenix Manufacturing 68,600 179,172 05/14/98
Br. Columbia, Vancouver Distribution 6,000 14,400 month-to-month
Canada
Florida Hollywood Manufacturing 15,000 90,000 12/31/98
Georgia Atlanta Administrative Office 400 6,000 month-to-month
Illinois Kewanee Manufacturing and 50,400 0 owned
Administrative Office
Illinois Springfield Manufacturing 80,000 0 owned
Mexico Juarez Manufacturing 35,400 0 owned
Ontario, Canada Concord Manufacturing 18,400 62,560 month-to-month
Texas El Paso Manufacturing 1,770 11,664 month-to-month
Washington Kent Warehouse 25,000 90,000 month-to-month
</TABLE>
Item 3. Legal Proceedings.
The Corporation is involved in various lawsuits in the ordinary
course of business. These lawsuits primarily involve claims for damages
arising out of commercial disputes.
The SEC notified the Company in April 1996 that it had commenced an
informal investigation of the Company. The status of the investigation was
changed to a formal private investigation in January, 1997. The Company has
responded to the SEC's request for information and will continue to cooperate
with the SEC in this matter. Independently, the Company through its Audit
Committee has conducted an internal investigation of the facts and
circumstances surrounding the investigation.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders during
the year ended December 27, 1997, as neither an annual meeting was held nor a
proxy statement issued during 1997.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The Company's common stock (symbol: VISTE) was traded on NASDAQ
until May 31, 1996, when the Company's stock was delisted. Since that time,
the Company's stock has not been listed on any official stock exchange. The
following table sets forth the range of high and low bid prices for the
Company's Common Stock as quoted by NASDAQ. These quotations represent prices
between dealers in securities, do not include retail mark-ups, mark-downs or
commissions and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Quarter Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended October 25, 1994 thru
December 27, 1997(1) December 28, 1996(1) December 30, 1995 December 31, 1994
High Bid Low Bid High Bid Low Bid High Bid Low Bid High Bid Low Bid
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
First N/A 14-7/8 8-1/2 2-5/8 1-1/2 N/A
Second(2) N/A 10-1/8 1-7/16 6-9/32 1-15/16 N/A
Third N/A N/A 7-3/8 5-3/16 N/A
Fourth N/A N/A 10-1/2 4-5/8 3-15/16 2-1/2
</TABLE>
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(1) There were in excess of 1000 record holders of the Company's common stock
on these dates. Holders of Common Stock are entitled to dividends when, as,
and if declared by the Board of Directors out of funds legally available
therefore. The Company has not paid any cash dividends on its Common Stock
and, for the immediate future, intends to retain earnings, if any, to finance
the development and expansion of its business.
(2) Represents market prices second quarter through May 31, 1996, the date
the stock was delisted.
Item 6. Selected Financial Data.
The selected consolidated financial data of the Company shown below
for the five year and three month period ended December 27, 1997 are derived
from the consolidated financial statements of the Company. The information
set forth below is qualified in its entirety by the more detailed financial
statements and notes thereto included elsewhere herein together with the
reports issued by the independent certified public accounts. The following
table should be read in conjunction with Management's Discussion and Analysis
of Results of Operations and Financial Condition and the Company's audited
Consolidated Financial Statements and Notes thereto appearing elsewhere
herein.
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<TABLE>
<CAPTION>
Year ended 12/27/97 Year ended 12/28/96 Year ended 12/30/95
------------------- ------------------- -------------------
Consolidated Balance Sheet Data (as of period (Amounts in thousands, except shares and per share data)
end) ------------------------------------------------------------------
<S> <C> <C> <C>
Working capital $ 17,438 $ 30,587 $ 30,393
Total assets 28,562 61,771 65,311
Long-term debt, including current 4,020 24,302 23,636
Stockholders' equity 19,123 24,161 21,125
Consolidated Statement of Operations Data
Net sales $ 78,400 $ 110,955 $ 32,422
Cost of sales 57,909 82,563 28,244
Gross profit 20,491 28,392 4,178
Operating expenses 21,190 34,235 17,318
(Loss) from Asset Sales/Writedowns (3,792) (10,787) -----
(Loss) from disposed business ----- ----- (1,147)
Operating (loss) (4,491) (16,630) (14,287)
Interest (expense) (1,799) (2,174) (649)
Other income (expense) 11 (351) 273
Net (loss) before Income Taxes (6,279) (19,155) (14,663)
Income Tax (Expense) (256) (246) -----
(Net loss) (6,535) $ (19,401) $ (14,663)
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(Loss) per share $ (0.21) $ (1.20) $ (2.33)
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Weighted average shares outstanding 31,862,273 16,133,508 6,294,361
</TABLE>
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
The Company reported a net loss of $6.5 million or $.21 loss per
share for the year ended December 27, 1997 compared to a net loss of $19.4
million or $1.20 loss per share for the year ended December 28, 1996 and a
net loss of $14.7 million or $2.33 loss per share for the year ended December
30, 1995.
The 1997 loss is primarily attributable to losses on the sale of
Alabaster and the ACPI key and letters, numbers and signs businesses, and to
a lesser degree, operating losses resulting from the restructuring of the
Company following the sale of the ACPI businesses. The 1997 loss also
reflected additional legal and other costs associated with the settlement of
the claims of preferred and common shareholders of the Company.
The 1996 loss is primarily attributable to operating losses and
substantial losses on the sale of the assets of FSPI, a write-down of the
assets of Alabaster and Intelock, and accrued costs resulting from settlement
of the Class Action shareholder lawsuit. In addition, high general overhead
costs were incurred in the operation of the Company's corporate offices.
The loss for the year ended December 30, 1995 was primarily
attributable to acquisition and reorganization costs, inventory liquidations
below normal selling prices, production start-up costs, related material and
manufacturing costs, and high general overhead costs.
RESTATEMENT OF FINANCIAL STATEMENTS OF PRIOR PERIODS
Financial Statements for the Year ended September 30, 1994
The audited financial statements previously issued for the year
ended September 30, 1994 have been restated to reflect two prior period
accounting adjustments. First, previously recognized revenue from the sale of
an exclusive license agreement for one of the Company's products,
consideration for which was substantially in the form of a $1.2 million note
receivable, has been reversed as a result of a 1996 investigation initiated
by the Audit Committee of the Board of Directors. Second, $635,000 of
previously reported sales have been reversed also as a result of the Audit
Committee investigation referred to above. The effects of these two prior
period adjustments on operations results in a reduction of revenue, an
increase in net loss and an increase in accumulated deficit all in the amount
of $1.8 million.
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Quarterly Reports filed on Forms 10-Q
The unaudited interim financial statements filed on Forms 10-Q for
the quarters ended December 31, 1994, March 31, 1995, June 30, 1995 and
September 30, 1995 have been amended. These amendments were necessary to
properly reflect certain year-end 1995 adjustments, correct accounting errors
determined as a result of the audit of the December 30, 1995 financial
statements, and record the prior period accounting adjustments referred to
above related to the September 30, 1994 financial statements. The individual
quarterly effects of the adjustments for the respective comparative quarters
have been reported in the Company's Forms 10-Q for the quarters ending March
30, 1996, June 29, 1996 and September 28, 1996, which were filed on May 1,
1997. Descriptions of the nature of these adjustments are as follows:
- - The effective date of the acquisition of PMI by Vista was not October 31,
1994 as previously reported but instead, May 1, 1995, immediately prior to
the closing date of the acquisition in May of 1995.
- - The effective date of the acquisition of Alabaster by Vista was not May 1,
1995 as previously reported but instead, the closing date of the
acquisition was on July 31, 1995.
- - The effective date of the acquisition of ACPI by Vista was not August 31,
1995 as previously reported but instead, September 30, 1995, subsequent to
the initiation of the tender offer through which Vista achieved majority
ownership and control of ACPI.
- - Inventory costing adjustments necessary to properly state year-end FSPI
inventories, in large part, related to the previously reported quarterly
results. During prior quarters cost of goods sold for FSPI was artificially
computed to be approximately 52% of net sales. Upon examination of the
actual costs of products sold by FSPI it was determined that costs as a
percentage of net sales was much higher than the 52% factor used in
computing the quarterly gross profit amounts.
- - Accruals for various stock-based compensation costs were not recorded in
the quarterly results.
RESULTS OF OPERATIONS
Consolidated for fiscal years ending December 27, 1997 and December 28, 1996.
Net sales were $78.4 million for the year ended December 27, 1997
compared to $111.0 million for the year ended December 28, 1996. The decrease
is primarily the result of the sale of ACPI's key and letters, numbers and
signs business in August, 1997, the sale of the Company's Alabaster
subsidiary in June, 1997, and the sale of the assets of the Company's FSPI
subsidiary in August, 1996.
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Gross profit was $20.5 million for the year ended December 27, 1997
compared to $28.4 million for the year ended December 28, 1996. The decrease
is primarily the result of the sale of ACPI's key and letters, numbers and
signs business in August, 1997, the sale of the Company's Alabaster
subsidiary in June, 1997, and the sale of the assets of the Company's FSPI
subsidiary in August, 1996. Gross profit was 26.1% of net sales for the year
ended December 27, 1997 compared to 25.6% of net sales for the year ended
December 28, 1996.
Operating expenses were $21.2 million for the year ended December
27, 1997 compared to $34.2 million for the year ended December 28, 1996. In
addition to operating expense reductions resulting from the sale of certain
ACPI assets, the Alabaster subsidiary, and the sale of FSPI assets, the
Company reduced its general overhead. Operating expenses were 27.0% of net
sales for the year ended December 27, 1997 compared to 30.8% of net sales for
the year ended December 28, 1996.
Net loss for the year ended December 27, 1997 was $6.5 million
compared to $19.4 million for the year ended December 28, 1996. The 1997 loss
includes a loss of $3.8 million on the sale of businesses and operating
assets while the 1996 loss included a loss of $10.8 million from the sale and
write-down of operating assets.
Consolidated for fiscal years ended December 28, 1996 and December 30, 1995.
Net sales were $111.0 million for the year ended December 28, 1996
compared to $32.4 million for the year ended December 30, 1995. The increase
is primarily a result of the inclusion of a full year's operating results of
ACPI and Alabaster, both of which were acquired during 1995.
Gross profit was $28.4 million for the year ended December 28, 1996
compared to $4.2 million for the year ended December 30, 1995. The increase
was primarily a result of the acquisitions of ACPI and Alabaster during 1995.
Gross profit was 25.6% of net sales for the year ended December 20, 1996
compared to 12.9% of net sales for the year ended December 30, 1995. Gross
profit in 1996 improved as a result of having a full year's results for ACPI
versus three months in 1995, substantially mitigating gross profit losses at
FSPI.
Operating expenses were $34.2 million for the year ended December
28, 1996 compared to $17.3 million for the year ended December 30, 1995. The
increase was primarily a result of the acquisitions of ACPI and Alabaster,
and growth of parent company operations at Vista. Operating expenses were
30.8% of net sales for the year ended December 28, 1996 compared to 53.4% of
net sales for the year ended December 30, 1995.
Net loss for the year ended December 28, 1996 was $19.4 million
compared to $14.7 million for the year ended December 30, 1995.
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Separate Company Analysis
The following is an analysis of results of operations on a separate
company basis using financial data included in the consolidated financial
statements.
Vista and FSPI (combined) for fiscal years ended December 27, 1997 and
December 28, 1996
There were no sales for the year ended December 27, 1997 compared to
$2.9 million for the year ended December 28, 1996. Due to the sale of all
FSPI assets in August, 1996 and Vista having no operations, these units had
no sales during the year ended December 27, 1997.
Gross profit (loss) was $0.00 for the year ended December 27, 1997
and $(764,000) or (26.2%) for the year ended December 28, 1996. The 1996
losses were due to a number of factors, the most significant of which were:
- - Excessive production costs related to gas detection products primarily
caused by product rework, excessive direct labor costs, high indirect labor
and engineering costs and high manufacturing overhead costs.
- - Shrinkage caused by loss of control over quantities of physical
inventories, primarily manufactured goods.
Operating expenses were $2.2 million for the year ended December 27,
1997 compared to $9.2 million for the year ended December 28, 1996. Operating
expenses in 1997 decreased primarily due to the absence of FSPI expenses and
further reductions in the overhead costs associated with Vista.
Net loss was $3.7 million and $19.0 million for the years ended
December 27, 1997 and December 28, 1996, respectively. The net loss for 1997
includes $1.7 million on the sale and disposal of assets and businesses. The
net loss for 1996 included a $8.8 million loss on the sale of substantially
all of the operating assets of FSPI.
Vista and FSPI (combined) for the years ended December 28, 1996 and December
30, 1995
Sales were $2.9 million for the year ended December 28, 1996,
compared to $2.0 million for the year ended December 30, 1995. The increase
in sales in 1996 was due to 1996 consisting of eight months of sales of gas
detection devices while 1995 represented only three months of these sales.
Gross profit (loss) was $(764,000) or (26.2%) for the year ended
December 28, 1996 compared to $(3.15) million or (157.5%) for the year ended
December 30, 1995. The 1996 loss was due to a number of factors, the most
significant of which were:
Page 14
<PAGE>
- - Excessive production costs related to gas detection products primarily
caused by product rework, excessive direct labor costs, high indirect
labor and engineering costs and high manufacturing overhead costs.
- - Shrinkage caused by loss of control over costs and quantities of
physical inventories, primarily manufactured goods.
The loss for the year ended December 30, 1995 was due to low volume,
high overhead costs and research and development expenditures for gas
detection devices.
Operating expenses were $9.2 million for the year ended December 28,
1996 compared to $9.7 million for the year ended December 30, 1995. Operating
expenses during 1996 decreased primarily as a result of reduction in staffing
at the Company's corporate office. Operating expenses during 1995 were higher
due to increased marketing and promotional costs, increased research and
development costs, costs associated with start-up of full production
operations for gas detection devices at FSPI, growth of parent company
operations including executive and management staff at the parent company,
equity based compensation awards at the parent company, and other less
individually significant items. Operating expenses were 324% of net sales for
the year ended December 28, 1996 compared to 485% of net sales for the year
ended December 30, 1995.
The net loss was $19.0 million and $13.7 million for the year ended
December 28, 1996 and the year ended December 30, 1995, respectively. The net
loss for 1996 includes a $8.8 million loss on the sale of substantially all
of the operating assets of FSPI.
Intelock for the fiscal years ended December 27, 1997 and December 28, 1996
Sales were $0 for the year ended December 27, 1997 compared to
$262,000 for the year ended December 28, 1996. Sales in 1996 were reduced as
the Intelock operations wound down and eventually ceased operating in the
third quarter of 1996.
Gross profit (loss) was $0 for the year ended December 27, 1997
compared to $(32,000) or (12.2%) of sales for the year ended December 28,
1996. The loss in 1996 was primarily due to low volume levels, product
returns, excessive customer credits and allowances related to product quality
issues and inventory obsolescence reserves.
Operating expenses were $20,000 for the year ended December 27, 1997
compared to $207,000 for the year ended December 28, 1996. Decreased
operating expenses were primarily due to the winding down of Intelock
operations during 1996.
The net loss was $20,000 for the year ended December 27, 1997
compared to $896,000 for the year ending December 28, 1996. The 1996 loss
included a loss of $659,000 on writing down Intelock's assets to net
realizable value.
Page 15
<PAGE>
Intelock for fiscal years ended December 28, 1996 and December 30, 1995
Sales were $262,000 for the year ended December 28, 1996 compared to
$480,000 for the period from June 30, 1995 (acquisition date) to December 30,
1995. Sales in 1996 were reduced as the Intelock operations wound down and
eventually ceased operating in the third quarter of 1996. Sales volumes in
1995 were lower than anticipated due to product quality and reliability
problems resulting in significant returns and customer credits.
Gross profit (loss) was $(32,000) or (12.2%) of sales for the year
ended December 28, 1996 compared to ($6,000) or (1.2%) for the period from
June 30, 1995 (acquisition date) to December 30, 1995. The loss was primarily
due to low volume levels, product returns, excessive customer credits and
allowances related to product quality issues and inventory obsolescence
reserves.
Operating expenses were $207,000 for the year ended December 28,
1996 compared to $537,000 for the period from June 30, 1995 (acquisition
date) to December 30, 1995. Decreased operating expenses were primarily due
to the winding down of Intelock operations.
The net loss was $896,000 for the year ending December 28, 1996
compared to $543,000 for the period from June 30, 1995 (acquisition date) to
December 30, 1995. The 1996 loss includes a loss of $659,000 on writing down
assets to net realizable value.
Alabaster for fiscal years ended December 27, 1997 and December 28, 1996
Sales were $2.8 million for the year ended December 27, 1997
compared to $8.9 million for the year ended December 28, 1996. Sales during
1997 are only through June 18, 1997, the date of the sale of Alabaster.
The gross profit was $245,000 or 8.6% of net sales for the year
ended December 27, 1997 compared to $723,000 or 8.1% of net sales for the
year ended December 28, 1996.
Operating expenses were $862,000 for the year ended December 27,
1997 compared to $2.3 million for the year ended December 28, 1996. Operating
expenses were 30.4% of net sales for the year ended December 27, 1997
compared to 25.6% of net sales for the year ended December 28, 1996. The
reduction of operating expenses in 1997 were primarily a result of the sale
of Alabaster in June, 1997.
The net loss was $751,000 for the year ended December 27, 1997
compared to $3.6 million for the year ended December 28, 1996. The 1996 loss
included a loss of $1.8 million on the write down of assets to net realizable
value.
Page 16
<PAGE>
Alabaster for fiscal years ended December 28, 1996 and December 30, 1995
Sales were $8.9 million for the year ended December 28, 1996
compared to $3.9 million for the period from July 31, 1995 (acquisition date)
to December 30, 1995.
The gross profit was $723,000 or 8.1% of net sales for the year
ended December 28, 1996 compared to $142,000 or 3.6% for the period from July
31, 1995 (acquisition date) to December 30, 1995. The gross profit in 1995
was negatively impacted by liquidations of excess and slow moving inventory
which were not in accordance with management's sales and distribution
strategies. Additionally, inventory costs in 1995 were high due to low
manufacturing capacity utilization during the period. 1995 gross profit was
also impaired due to valuation reserves necessary to absorb losses sustained
from additional liquidations of 1995 year-end inventories during the first
quarter of 1996.
Operating expenses were $2.3 million for the year ended December 28,
1996 compared to $1.2 million for the period from July 31, 1995 (acquisition
date) to December 30, 1995. Operating expenses were 25.6% of net sales for
the year ended December 28, 1996 compared to 30.8% of net sales for the
period from July 31, 1995 (acquisition date) to December 30, 1995. The
operating expense decrease was achieved primarily through reductions in
administrative staffing.
The net loss was $3.6 million for the year ended December 28, 1996
compared to $1.1 million for the period from July 31, 1995 (acquisition date)
to December 30, 1995. The 1996 loss included a loss of $1.8 million on the
write down of assets to net realizable value.
ACPI for fiscal years ended December 27, 1997 and December 28, 1996
Sales for the year ended December 27, 1997 were $75.6 million
compared to $100 million for the year ended December 28, 1996. The decline in
sales from 1996 to 1997 was due primarily to the sale of ACPI's key and
letter, numbers and signs business in August, 1997.
The gross profit for the year ended December 27, 1997 was $20.2
million or 26.7% of sales compared to $28.5 million or 28.4% of sales for the
year ended December 28, 1996. The gross profit for 1997 was reduced by the
sale of the key and letters, numbers and signs business, which carried higher
gross profit margins than the remaining operations.
Operating expenses were $18.0 million for the year ended December
27, 1997 compared to $22.7 million for the year ended December 28, 1996.
Operating expenses were 23.7% and 22.6% of net sales for the years ended
December 27, 1997 and December 28, 1996, respectively. The reduction in
operating expenses from 1996 to 1997 was primarily the result of the sale of
certain ACPI operating assets in August, 1997.
The net profit was $1.5 million for the year ended December 27, 1997
compared to $4.2 million for the year ended December 28, 1996. The profit for
the year ended December 27, 1997 was reduced by a loss of $2.4 million on the
sale of the key and letters, numbers and sign businesses
Page 17
<PAGE>
and interest expense of $1.7 million . The profit for the year ended December
28, 1996 included a gain of $472,000 on the sale of businesses and a $2.1
million interest expense.
ACPI for fiscal years ended December 28, 1996 and December 30, 1995
Sales for the year ended December 28, 1996 were $100 million
compared to $105 million for the year ended December 30, 1995 (including
amounts which are not included in the consolidated financial statements of
Vista 2000, Inc.) Sales were $26.0 million for the period from September 30,
1995 (acquisition date) to December 30, 1995. The decline in sales was
primarily attributable to a reduction in sales of the KA-BAR product line and
the loss of one half of Wal-Mart's key business. The loss of the Wal-Mart key
business was due to the introduction by an ACPI competitor of improved key
identification and cutting technology.
The gross profit for the year ended December 28, 1996 was $28.5
million or 28.4% compared to $26.9 million or 25.6% for the year ended
December 30, 1995 (including amounts which are not included in the
consolidated financial statements of Vista 2000, Inc.) The gross profit was
$7.2 million or 27.6% for the period from September 30, 1995 (acquisition
date) to December 30, 1995.
Operating expenses were $22.7 million for the year ended December
28, 1996 compared to $25 million for the year ended December 30, 1995
(including amounts which were not included in the consolidated financial
statements for Vista 2000, Inc.) Operating expenses were $6.0 million for the
period from September 30, 1995 (acquisitions date) to December 30, 1995.
Operating expenses were 22.6% and 23.8% of net sales for the years ended
December 28, 1996 and December 30, 1995 respectively. Operating expenses for
the period September 30, 1995 to December 30, 1995 were 23.1% of net sales.
Operating expenses for the year ended December 28, 1996 were favorably
affected by certain purchase accounting adjustments, primarily those related
to valuation of long-term assets, which result in significant decrease in
annual depreciation on existing assets. Operating results were also favorably
affected by reductions in operating cost from fewer employees in 1996, saving
$750,000.
Pretax income (loss) was $4.2 million for the year ended December
28, 1996 and ($774,000) for the year ended December 30, 1995 (including
amounts which were not included in the consolidated financial statements of
Vista 2000, Inc.). Pre-tax income for the period from September 30, 1995
(acquisition date) to December 30, 1995 was $620,000.
Page 18
<PAGE>
FINANCIAL CONDITION
Consolidated for the year ended December 27, 1997
Consolidated working capital at December 27, 1997 was $17.4 million
exclusive of the $3.1 million ACPI revolver debt which matures in May, 2000.
Due to the sale of assets which secured the ACPI credit facility, the line of
credit limit was reduced from $30 million to $10 million in August, 1997. As
of December 27, 1997, $3.1 million was drawn under the line of credit.
Regarding the use of the Company's income tax loss carryforward,
during 1995 and 1996 the Company experienced a change in control, as defined
under Section 382 of the Internal Revenue Service Code. Additionally, another
change in control occurred during 1997 upon issuance of the common stock in
settlement of the class action lawsuit. As a result, the utilization of a
significant portion of the tax loss carryforwards will be limited on an
annual basis and may expire unused.
Consolidated for the year ended December 28, 1996
Consolidated working capital at December 28, 1996 was $30.6 million
exclusive of the $20.4 million ACPI revolver debt. The ACPI credit facility
was replaced in May 1997. The new loan agreement expires in May, 2000.
During 1996, Vista raised approximately $21.2 million, net of
issuance costs, through convertible preferred stock offerings and common
stock offerings issued pursuant to the exemption from registration of
Regulation S under the Act. The proceeds of these offerings were used to fund
operating losses and working capital requirements.
Separate Company Analysis
ACPI for the year ended December 27, 1997
$16.0 million of consolidated working capital is from ACPI. As of
December 27, 1997, ACPI had $6.9 million available under its $10.0 million
revolving line of credit, of which $2.0 million was restricted to secure
letters of credit issued in conjunction with the sale of the ACPI key and
letters, numbers and signs businesses.
The line of credit bears interest at the Fleet National Bank Prime
Rate plus .5% or LIBOR plus 2.5% and is collateralized by accounts
receivable, inventory, equipment and real estate. The interest rate at
December 27, 1997 was 9.0%. Borrowings under the line of credit are based on
a formula which includes eligible accounts receivable and inventories. The
revolving credit facility provides for intercompany advances to Vista/ACPI
affiliates based upon a percentage of excess cash flow as defined in the
credit agreement.
Page 19
<PAGE>
ACPI for the year ended December 28, 1998
$30.0 million of consolidated working capital is from ACPI. As of
December 28, 1996, ACPI had $8.5 million available under its $28.9 million
revolving line of credit. Borrowings under the line of credit are based on a
formula which includes eligible accounts receivable and inventories. The line
of credit bears interest at the base rate plus 3/8% (8.625% at December 28,
1996) and is collateralized by accounts receivable, inventories and equipment
and is guaranteed by each of ACPI's subsidiaries. The ACPI revolving credit
facility does not provide for intercompany advances to non-ACPI Vista
affiliates other than for payment of dividends and trading transactions
occurring through the normal course of business.
The existing line of credit was replaced on May 7, 1997 with a new
line of credit in the total amount of $30 million. The line bears interest at
the Fleet National Bank prime rate plus .5% or LIBOR plus 2.5% and is
collateralized by accounts receivable, inventory, equipment and real estate.
Borrowings under the line of credit are based on a formula which includes
eligible accounts receivable and inventories. The revolving credit facility
provides for intercompany advances to non-ACPI Vista affiliates based upon a
percentage of excess cash flow as defined in the credit agreement.
Vista for the year ended December 27, 1997
Working capital at Vista at December 27, 1997 was $1.4 million.
Staffing costs and most overhead costs have been reduced or eliminated,
thereby minimizing working capital requirements. If required, working capital
could be obtained through dividends from Vista's ACPI subsidiary.
Parent Company, FSPI and Intelock ("Vista Group") for the year ended
December 28, 1996
Working capital at the Vista Group at December 28, 1996 was
$100,000. Due to the sale of FSPI assets and the closing and sale of
Intelock, their cash requirements are minimal. The staffing costs and
overhead of the parent company have been substantially reduced. Working
capital for the Vista Group is derived primarily through dividends and cost
reimbursements from ACPI for expenses advanced or paid on behalf of ACPI.
Alabaster for the year ending December 27, 1997
Due to the sale of Alabaster in June, 1997, the Company's working
capital at December 27, 1997 did not include any assets or liabilities of
Alabaster.
Alabaster for the year ending December 28, 1996
Working capital at Alabaster at December 28, 1996 was $500,000. In
September 1996, Alabaster entered into a revolving credit and demand loan
agreement. The amount of the credit was $2.5 million. As of December 28,
1996, availability under the credit agreement was $1.25 million of which
$908,000 had been borrowed. Interest was at the greater of 9% or prime plus
3-1/4%. The
Page 20
<PAGE>
agreement was secured by substantially all of the assets of Alabaster and was
guaranteed by Vista. The agreement expired June, 1997 when Alabaster was sold.
Year 2000
The Company's primary software applications are not currently year 2000
compliant. To resolve this issue, the Company is in the process of selecting
new software which is planned for implementation during the second half of
1998 and first half of 1999. Total implementation costs are expected to be in
the $250,000 to $500,000 range including software, hardware and training.
In addition to addressing the Year 2000 problem, this new software will
benefit the Company by providing improved system integration as well as
significant enhancements to the current software applications. The Company
believes the schedule for implementation should allow completion prior to the
development of any potential Year 2000 dating anomalies.
Outlook for 1998
Since the date of the election of the incumbent Board of Directors, the
Company has been involved in a major restructuring, which has included the
sale of its interest in FSPI, Intelock, Alabaster and a significant portion
of the assets of ACPI. The sale of these assets, while resulting in a loss,
enabled the Company to substantially reduce its outstanding debt and improve
its prospects for future profitability.
Consolidated revenues are expected to decline sharply from the prior year
because of the operations sold in 1997. The Company's revenues and earnings
will principally reflect its concentration in the glove, boot and rainwear
business. These businesses are seasonal and dependent upon weather patterns
and other factors beyond the Company's control.
During 1998, the Company will continue to pursue initiatives to streamline
and focus the business. These initiatives include improvements in
distribution and logistics, and consolidation of corporate headquarters with
the primary operating subsidiaries.
For 1998 and future periods, the Company intends to focus on improved
earnings. To do so, management will evaluate a number of alternatives
including expanded sales and marketing programs, product line expansion,
licensing opportunities, and potential acquisition and disposition
opportunities. There can be no assurance as to the success of such
alternatives, if implemented, due to, among other factors, capital
constraints faced by the Company to maintain adequate liquidity and the
market reaction from competitors in the industry who are, in certain cases,
larger than the Company with greater capital resources.
Page 21
<PAGE>
SIGNIFICANT SUBSEQUENT EVENTS
On February 25, 1998, W.R. Hill and Company, Inc. sold its interest
in Alabaster to A.I. Holdings, Inc. ("AI"), a company comprised of a
management group from Alabaster. The Company gave its consent for AI to
assume the first mortgage (see Acquisitions and Dispositions in this Form
10-K) on Alabaster's land and buildings. On April 1, 1998, the Company was
advised that Alabaster had filed for bankruptcy protection under Chapter 11
of the Federal Bankruptcy Statutes. As a result of these events, the Company
has taken a reserve against the face value of the note which Management
believes will be sufficient to cover any losses on the collection of the note.
On April 9, 1998, the Company was notified by Axxess of a claim
against the Company related to the purchase by Axxess of the key and letter,
numbers and signs businesses of the Company's ACPI subsidiary. The Company
believes that it will ultimately prevail and has instituted claims of its
own. However, the results of arbitration and litigation are unpredictable and
should Axxess prevail, its claim would have a material adverse impact on the
Company.
In April, 1998, the Company hired Mr. Bruce Lancaster to serve as
its Chief Financial Officer, replacing Mr. Larry Cobb, who had served in this
capacity since April, 1996. Prior to joining the Company, Mr. Lancaster
served as Vice President of Finance and Administration for Acme Boot Company,
Inc. from December 1995 to April 1998, and previously as Vice-President of
Finance and Controller for Kinark Corporation from 1989 to 1995. Mr.
Lancaster's previous experience includes two years with the Texas Society of
CPA's, four years with Perry Equipment Corporation and four years with United
States Steel Corporation. Mr. Lancaster received BA and MBA degrees from
Texas A&M University and is a CPA, licensed in the State of Texas.
In accordance with the terms of the June 30, 1997 agreement covering
the sale of ACPI assets to Axxess Technologies, Inc., the Company has changed
the names of its wholly-owned subsidiaries as follows:
Boss Manufacturing Holdings, Inc., f/k/a American Consumer Products, Inc.
Boss Manufacturing Marketing, Inc., f/k/a Product Merchandisers, Inc.
Boss Manufacturing Real Estate II, Inc., f/k/a ACPI Real Estate, Inc.
Item 8. Financial Statements and Supplemental Data.
The following consolidated financial statements of the Company and
its Accountants' Opinion are set forth in Part IV, Item 14, of this Report:
(i) Consolidated Statements of Operations, Cash
Flows and Shareholders' Equity for the year ended December 27,
1997 the year ended December 28, 1996 and the year ended
December 30, 1995.
(ii) Consolidated Balance Sheet - December 27,
1997 and December 28, 1996.
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<PAGE>
(iii) Notes to the Consolidated Financial Statements;
and Unqualified Opinion of Independent Accountants dated
February 19, 1998.
Item 9. Changes in And Disagreements With Auditors on Accounting And Financial
Disclosures.
Not applicable.
Page 23
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information as to directors of the registrant is set forth
below. The information as to the executive officers of the registrant is
included in Part I hereof under the caption "Executive Officers of the
Registrant." Directors are elected by the stockholders at each annual meeting
and serve until the next annual meeting of stockholders, or until their
successors are duly elected and qualified. At the present time, the Company's
Board of Directors consists of six directors. The following table sets forth
certain information concerning the members of the Board of Directors of the
Company at December 27, 1997:
<TABLE>
<CAPTION>
Name Age Position
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
G. Louis Graziadio, III(1) 48 Chief Executive Officer and Chairman of the Board since
June 1996. He is also the Chairman and CEO of Ginarra Holdings, Inc.,
a holding company with investments through various
corporations, and a director of Imperial Credit Industries, Inc.,
Imperial Bancorp, Imperial Trust, Imperial Financial Group
and Lynx Golf, Inc.
Perry A. Lerner 55 Director since June 1996. Mr. Lerner is a Managing Director of Crown Capital
Group, Inc., a New York-based investment company. A graduate of Harvard Law
School and Claremont McKenna College, Mr. Lerner was a partner of the law
firm O'Melveny & Meyers from 1984-1996 and is a member of the State Bar of
New York, State Bar of California and American Bar Association. Mr. Lerner
also serves on the Board of Directors of Imperial Credit Industries, Inc. and
Imperial Financial Group.
Lee E. Mikles(1) 42 Director since June 1996. Mr. Mikles is Chairman of Mikles/Miller Management,
Inc. Prior to the formation of that company, he headed Mikles/Miller Group,
an affiliate of Shearson Lehman Brothers after serving as First Vice
President of the Corporate Finance Department at Bateman Eichler, Hill
Richards Inc. and as First Vice President with Drexel Burnham Lambert, Inc.
from 1981 through 1989. Mr. Mikles also serves on the Board of Directors of
Imperial Bancorp, Imperial Bank, Imperial Ventures, Coastcast Corporation
and Imperial Financial Group.
Paul A. Novelly 54 Director since June 1996. Mr. Novelly controls Apex Oil Company in St.
Louis, MO with a refinery in Long Beach, CA; International Dunraine, Ltd., a
publicly-held company; and AIC, Limited, which, headquartered in Bermuda,
trades petroleum products internationally through its office in Monaco. Mr.
Novelly is a substantial shareholder and director of Intrawest Corp. He also
serves on the Board of Directors of Apex Oil Company, Inc. International
Dunraine, Ltd., Coastcast Corporation, Imperial Bank and Imperial Financial
Group.
</TABLE>
Page 24
<PAGE>
<TABLE>
<S> <C> <C>
Richard D. Squires 40 Director since June 1996. Mr. Squires serves as President of RS Holdings,
Inc., a Dallas, Texas based real estate and high-yield investment company,
and as President of R3 Realty Corporation, formerly Pace Membership
Warehouse, Inc., a former subsidiary of K-Mart Corporation. Mr. Squires has
previously served as Chief Financial Officer of Ft. Worth Holdings, Inc. and
Vice President of Finance at American Hotels Corporation and Second Vice
President of Finance at Punta Gorda Isles, Inc. Mr. Squires has a B.S. in
Accounting from Pennsylvania State University, and a Masters of Business
Administration from Harvard University.
Shyam H. Gidumal 38 President and Director since November, 1997. Mr. Gidumal serves as President
of Strategic Turnarounds Investment Corp. & Affiliates, a New York based
consulting firm, and Managing Director of Crown Capital Group, a New York
based investment firm. From 1989 through 1992, Mr. Gidumal was a partner in
the Boston Consulting Group. Mr. Gidumal is a graduate of Columbia University
and Harvard Business School.
</TABLE>
- ----------------------
(1) Mr. Graziadio and Mr. Mikles are first cousins; otherwise, there are no
family relationships existing between the officers and directors of the
Company.
Item 11. Executive Compensation.
Compensation Tables
The compensation paid in fiscal 1997 to the Company's Chief Executive
Officer and to each of the other executive officers and of the subsidiaries
whose total compensation exceeded $100,000 are as follows:
<TABLE>
<CAPTION>
1997 SUMMARY COMPENSATION TABLE
THE REGISTRANT
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Long-Term Compensation
Compensation ---------------------------------
---------------- Other Annual Awards Payouts All Other
Name and Year Salary Bonus Compensation --------------------------------- Compensation
Principal Position ($) ($) ($) Restricted Options LTIP ($)
Stock SARs Payout
Awards (#)(3) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. Louis Graziadio, 1997 -0- --- --- 2,400,000 465,000
III(1) CEO and
Chairman of the Board 1996 -0- -0- -0- 138,000
Shyam H. Gidumal, 1997 2,400,000 1,035,000
President(2)
</TABLE>
Page 25
<PAGE>
THE SUBSIDIARIES
<TABLE>
<CAPTION>
1997 SUMMARY COMPENSATION TABLE
THE REGISTRANT
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Long-Term Compensation
Compensation ---------------------------------
---------------- Other Annual Awards Payouts All Other
Name and Year Salary Bonus Compensation --------------------------------- Compensation
Principal Position ($) ($) ($) Restricted Options LTIP ($)
Stock SARs Payout
Awards (#)(3) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ken Fristad, President
of ACPI Subsidiary 1997 95,865 48,000
</TABLE>
- ---------------------------
(1) On June 6, 1996, Mr. Graziadio was elected Chief Executive Officer by
the Board of Directors. Compensation for his services is as
periodically determined by the Board's Compensation Committee, based
on the type and extent of services Mr. Graziadio provided.
(2) Compensation shown for Mr. Gidumal was paid to companies in which Mr.
Gidumal is a principal for activities prior to Mr. Gidumal being
elected as an officer and director. (See Item 13. Certain
Relationships and Related Transactions.)
Mr. Gidumal was elected President of the Company effective November 1,
1997.
(3) All figures in this column reflect options to purchase shares of
Common Stock.
There were 4,800,000 options granted to the Executive Officers of the
Company and its subsidiaries during the fiscal year ending December 27, 1997.
The Company has no stock appreciation rights ("SARs") outstanding.
The following sets forth the value of options exercised during the year
and unexercised options held by the named executive officers on December 27,
1997:
Page 26
<PAGE>
Aggregated Options/SAR Exercises in the last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Name Shares (1) (2) Number of (1)
Acquired on Value Securities Underlying Value of Unexercised
Exercise (#) Realized ($) Unexercised In-the-Money Options/SARs
Options/SARs at Fiscal at Fiscal Year-End($)
Year End (#)
---------------------- ---------------------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
------------- ------------ ---------------------- ---------------------------
<S> <C> <C> <C> <C>
G. Louis Graziadio III 1,200,000 39,000 0 / 1,200,000 0 / 39,000
Shyam H. Gidumal 1,200,000 39,000 0 / 1,200,000 0 / 39,000
</TABLE>
- ------------------------
(1) Assumes a market price of $.0625 per share based on unofficial trading
history less the option exercise price of $.03 per share.
(2) All figures in this column reflect options to purchase shares of Common
Stock.
Page 27
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of May 13, 1998, certain information
regarding the bene-ficial ownership of Common Stock by (i) each person known by
the Company to be beneficial owner of more than five percent of the outstanding
shares of Common Stock, (ii) each director; (iii) each Named Executive Officer;
and (iv) all directors and executive officers as a group. This table includes
787,500 currently exercisable options granted to directors of the Company on
December 31, 1996.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner (1) Common Stock Beneficially Owned
---------------------------------------- ---------------------------------
No. of Shares % of Class
------------- -----------
<S> <C> <C>
Mr. G. Louis Graziadio, III (4) 5,039,328 10.4 %
2325 Palos Verdes Drive West, Suite 211
Palos Verdes Estates, CA 90274
Mr. Perry A. Lerner 525,000 1.1 %
660 Madison Ave., New York, NY 10022
Mr. Lee E. Mikles (3) 1,982,085 4.1 %
Mikles/Miller Management, Inc.
100 Wilshire Blvd., Santa Monica, CA 90401
Mr. Paul A. Novelly (2) 2,182,085 4.5 %
8182 Maryland Ave., St. Louis, MO 63105
Mr. Richard D. Squires 1,982,085 4.1%
4229 Cochran Chapel, Dallas, TX 75209
Mr. Shyam H. Gidumal 3,857,085 8.0%
660 Madison Ave., New York, NY 10022
All Directors and Executive Officers as a Group 15,567,668 32.2%
(6 Persons)
</TABLE>
(1) Unless otherwise noted, the Company believes that all persons named in
the table have sole voting and investment power with respect to all
shares of common stock beneficially owned by them. Under the rules of
the Securities and Exchange Commission, a person is deemed to be a
"beneficial" owner of securities if he or she has or shares the power
to vote or direct the voting of such securities or the power to direct
the disposition of such securities. A person is deemed to be the
beneficial owner of any securities of which that person has the right
to acquire beneficial ownership within 60 days. More than one person
may be deemed to be a beneficial owner of the same securities.
(2) Includes presently exercisable options to acquire 262,500 shares of
Common Stock.
Page 28
<PAGE>
(3) Includes presently exercisable options to acquire 525,000 shares of
stock.
(4) Mr. Graziadio disclaims the beneficial ownership of approximately
1,582,686 of these shares which are owned by Ginarra Holdings, Inc. and
an additional 511,378 shares which are owned by the Graziadio Family
Trust.
Item 13. Certain Relationships and Related Transactions.
In July 1996, the Board of Directors contracted with a turnaround
management company, S. Gidumal & Company, Inc., and its affiliate, Strategic
Turnarounds & Investment Corp. (collectively "STIC"), to assist with the
restructuring of the Company, including operations, financing, litigation,
strategic planning and divestitures. Mr. Shyam Gidumal is a principal with
STIC and in September 1996 became a member of the Board of Directors of ACPI
and other subsidiaries of ACPI. In November, 1997, Mr. Gidumal became a
member of the Board of Directors of Vista and was elected President of the
Company. STIC was involved in the resolution of the Class Action Litigation,
sale of the assets of FSPI, financings involving ACPI and Alabaster, and the
sale of the key and numbers, letters and signs business of ACPI. STIC was
paid approximately$1,035,000 and $308,000, respectively for its services in
1997 and 1996. In addition, in December 1996, Mr. Gidumal was granted options
to acquire 2,400,000 shares of common stock of the Company at an exercise
price of $.03 per share. Of the options granted, 1,200,000 were immediately
exercisable, with the balance exercisable on December 31, 1997. As of May 13,
1998, Mr. Gidumal had exercised his options and acquired 2,400,000 shares of
the Company's common stock.
The Company has received a claim for payment of legal fees from
former members of the Company's Board of Directors, pursuant to inquiries
made by the SEC. The Company may be obligated to pay certain of these legal
fees but does not believe these fees will materially impair the Company's
overall performance.
During May 1997, four of the Company's directors, together with Mr.
Gidumal and an unaffiliated third party, (the "Individual Purchasers")
purchased approximately 57% of the Company's outstanding Convertible
Preferred Stock directly from the security holders to settle potential and
substantial legal and fraud claims against the Company related to activities
which occurred prior to the date the Company's current management and Board
of Directors assumed control of the Company. During July 1997, the Individual
Purchasers purchased an additional 1,250 preferred shares, or approximately
30% of the Company's outstanding Convertible Preferred Stock directly from
the security holder. As a result of these purchases, subsequent conversions
and additional common shares issued for release of claims, each of the
Individual Purchasers acquired 1,457,085 shares of the Company's common stock
or an aggregate of 8,742,510 shares for all of the Individual Purchasers.
Page 29
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules And Reports on Form 8-K.
(a) List of financial statements, financial statement schedules
and exhibits:
(i) List of financial statements.
The following consolidated financial statements of Vista
2000, Inc. and Report of Independent Accountants are attached to this report
as follows:
Consolidated Statements of Operations, Cash Flows and
Shareholders' Equity - year ended December 27, 1997, the
year ended December 28, 1996 and the year ended December 30,
1995;
Consolidated Balance Sheet - December 27, 1997 and
December 28, 1996;
Notes to the Consolidated Financial Statements; and
Report of Independent Accountants dated February 19, 1998.
(ii) list of financial statement schedules
The following financial statement schedules of Vista
2000, Inc. for the years ended December 27, 1997, December 28, 1996, and
December 30, 1995 are included pursuant to Item 8:
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants on Schedules . . . . . . . . . . S-1
Schedule II: Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . S-2
</TABLE>
Schedules not listed above have been omitted because they
are not applicable or are not required for the information required to set forth
therein is included in the Financial Statements or notes thereto.
The following consolidated financial statements schedules of
Vista 2000, Inc. are included in this report:
Unqualified Opinion of Independent Accountants and Financial
Statements Schedule
Page 30
<PAGE>
(b) Reports on Form 8-K:
A report on Form 8-K containing information on the June 19,
1997 sale of the Company's Alabaster subsidiary was filed
September 19, 1997.
A report on Form 8-K containing information on the August
25, 1997 sale of the key and numbers, letters and signs
assets of the Company's ACPI subsidiary was filed on
September 25, 1997.
(c) Exhibits:
The exhibits required by Item 601 of Regulation SKB are
filed herewith. (See Index of Exhibits.)
(d) Financial Statement Schedules:
The Financial Statement Schedules required by Regulation SX
are filed herewith.
Page 31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
(Registrant) Vista 2000, Inc.
By (Signature and Title) /s/ G. Louis Graziadio, III
------------------------------------------------------
G. Louis Graziadio, III, Chief Executive Officer
Date: June 17, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By (Signature and Title) /s/ G. Louis Graziadio, III
------------------------------------------------------
G. Louis Graziadio, III, Chairman of the Board
Date: June 17, 1998
By (Signature and Title ) /s/ Shyam H. Gidumal
------------------------------------------------------
Shyam H. Gidumal, President and Director
Date: June 17, 1998
By (Signature and Title) /s/ Perry A. Lerner
------------------------------------------------------
Perry A. Lerner, Director
Date: June 17, 1998
By (Signature and Title) /s/ Lee E. Mikles
------------------------------------------------------
Lee E. Mikles, Director
Date: June 17, 1998
By (Signature and Title) /s/ Paul A. Novelly
------------------------------------------------------
Paul A. Novelly, Director
Date: June 17, 1998
By (Signature and Title) /s/ Richard D. Squires
------------------------------------------------------
Richard D. Squires, Director
Date: June 17, 1998
Page 32
<PAGE>
[LETTERHEAD] [LOGO]
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
VISTA 2000, INC. AND SUBSIDIARIES
December 27, 1997 and December 28, 1996
[ADDRESS]
<PAGE>
[LETTERHEAD] [LOGO]
Report of Independent Certified Public Accountants
Board of Directors
Vista 2000, Inc.
We have audited the accompanying consolidated balance sheets of Vista 2000,
Inc. and subsidiaries as of December 27, 1997 and December 28, 1996, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 27, 1997.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Vista 2000,
Inc. and subsidiaries as of December 27, 1997 and December 28, 1996, and the
consolidated results of their operations and their consolidated cash flows
for each of the three years in the period ended December 27, 1997 in
conformity with generally accepted accounting principles.
/s/ GRANT THORNTON LLP
Atlanta, Georgia
February 19, 1998
2
[ADDRESS]
<PAGE>
Vista 2000, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands except per share data)
ASSETS
<TABLE>
<CAPTION>
December 27, December 28,
1997 1996
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,122 $ 1,165
Accounts receivable, net of allowance for
doubtful accounts and returns of $507
and $1,405, respectively 7,729 16,187
Inventories 12,493 25,157
Prepaid expenses 374 1,564
Other current assets 276 205
------------ ------------
Total current assets 22,994 44,278
PROPERTY AND EQUIPMENT, NET 4,270 15,927
OTHER ASSETS
Note receivable, less allowance of $450 1,042 -
Other 256 1,566
------------ ------------
1,298 1,566
------------ ------------
$ 28,562 $ 61,771
-------------- -------------
-------------- -------------
</TABLE>
3
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 27, December 28,
1997 1996
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Note payable $ - $ 908
Current portion of long-term debt 137 383
Accounts payable 1,390 5,209
Accrued payroll and related expenses 548 3,596
Accrued liabilities 3,481 3,595
------------ ------------
Total current liabilities 5,556 13,691
LONG-TERM LIABILITIES
Long-term debt 3,883 23,512
Other - 407
------------ ------------
Total long-term liabilities 3,883 23,919
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock $1 par value, 500,000 shares
authorized, 0 and 4,220 shares issued
and outstanding, respectively - 3,985
Common stock, $.01 par value, 50,000,000 shares
authorized, 44,845,273 and 18,074,120 shares
issued and outstanding, respectively 448 181
Additional paid-in capital 67,370 62,108
Accumulated deficit (46,875) (40,340)
Cumulative translation adjustment (70) (23)
------------ ------------
20,873 25,911
Less: 341,341 treasury shares - at cost 1,750 1,750
------------ ------------
Total stockholders' equity 19,123 24,161
------------ ------------
$ 28,562 $ 61,771
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Vista 2000, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands except per share data)
<TABLE>
<CAPTION>
Year ended Year ended Year ended
December 27, December 28, December 30,
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Net sales $ 78,400 $ 110,955 $ 32,422
Cost of sales 57,909 82,563 28,244
------------ ------------ ------------
Gross profit 20,491 28,392 4,178
Operating expenses 21,190 34,235 17,318
------------ ------------ ------------
(699) (5,843) (13,140)
Loss on sale of business and
operating assets (3,792) (8,311) (1,147)
Writedown of operating
assets - (2,476) -
------------ ------------ ------------
Loss from operations (4,491) (16,630) (14,287)
Other income and
(expense)
Interest expense (1,799) (2,174) (649)
Other 11 (351) 273
------------ ------------ ------------
Net loss before
income taxes (6,279) (19,155) (14,663)
Income tax expense (256) (246) -
------------ ------------ ------------
Net loss $ (6,535) $ (19,401) $ (14,663)
------------ ------------ ------------
------------ ------------ ------------
Net loss per common share
Basic $ (.21) $ (1.20) $ (2.33)
Diluted $ (.21) $ (1.20) $ (2.33)
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Vista 2000, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 27, 1997, December 28, 1996 and December 30, 1995
(Dollars and share amounts in thousands)
<TABLE>
<CAPTION>
Preferred Stock
------------------------------------------------------------------
Series A Series B Series C Series D Common stock Additional
-------------- --------------- --------------- --------------- --------------- Paid-in
Shares Dollars Shares Dollars Shares Dollars Shares Dollars Shares Dollars Capital
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 - $ - - $ - - $ - - $ - 3,281 $ 33 $ 7,030
Issuance of stock in acquisitions - - - - - - - - 550 5 1,096
Issuance of preferred stock, net
of issuance costs of $1,241 87 8,291 3 2,462 1 11,603 2 1,940 - - -
Preferred stock conversions (72)(6,852) (2) (1,232) (1) (10,231) - - 4,086 41 18,274
Issuance of common shares, net
of issuance costs of $290 - - - - - - - - 2,533 25 6,762
Exercise of stock options, net of
12 shares exchanged - - - - - - - - 196 2 214
Exercise of warrants - - - - - - - - 250 3 622
Common stock issued for services - - - - - - - - 280 3 557
Acquisitions of treasury stock - - - - - - - - - - -
Debt conversions - - - - - - - - 450 4 716
Issuance of warrants for services - - - - - - - - - - 40
Compensatory stock options - - - - - - - - - - 890
Foreign currency translation
adjustment - - - - - - - - - -
Net loss - - - - - - - - - -
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ---------
Balance at December 30, 1995 15 1,439 1 1,230 - 1,372 2 1,940 11,626 116 36,201
</TABLE>
<TABLE>
<CAPTION>
Cumulative Treasury stock Total
Accumulated Translation --------------- Stockholders'
Deficit Adjustment Shares Dollars Equity (Deficit)
----------- ----------- ------ ------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $(6,276) $ - (69) $ (796) $ (9)
Issuance of stock in acquisitions - - 69 796 1,897
Issuance of preferred stock, net
of issuance costs of $1,241 - - - - 24,296
Preferred stock conversions - - - -
Issuance of common shares, net
of issuance costs of $290 - - - - 6,787
Exercise of stock options, net of
12 shares exchanged - - - - 216
Exercise of warrants - - - - 625
Common stock issued for services - - - 560
Acquisitions of treasury stock - - (71) (215) (215)
Debt conversions - - - - 720
Issuance of warrants for services - - - - 40
Compensatory stock options - - - - 890
Foreign currency translation - (19) - - (19)
adjustment
Net loss (14,663) - - - (14,663)
---------- ----------- ------- ------ ------------
Balance at December 30, 1995 (20,939) (19) (71) (215) 21,125
</TABLE>
6
<PAGE>
Vista 2000, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - CONTINUED
Years ended December 27, 1997, December 28, 1996, and December 30, 1995
(Dollars and share amounts in thousands)
<TABLE>
<CAPTION>
Preferred Stock
-------------------------------------------------------------------
Series A Series B Series C Series D Common stock Additional
-------------- --------------- --------------- --------------- --------------- Paid-in
Shares Dollars Shares Dollars Shares Dollars Shares Dollars Shares Dollars Capital
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of preferred stock, net
of issuance costs of $600 - - - - - - 20 19,400 - - -
Issuance of common stock - - - - - - - - 300 3 1,797
Preferred stock conversions (14) (1,317) (1) (1,230) - (274) (19) (18,575) 5,491 55 21,341
Treasury stock acquired for cash - - - - - - - - - - -
Exercise of stock options - - - - - - - - 637 7 988
Exercise of warrants - - - - - - - - 20 - 40
Compensatory stock options
and treasury shares acquired
via stock rescissions - - - - - - - - - - 1,741
Foreign currency translation
adjustment - - - - - - - - - - -
Net loss - - - - - - - - - - -
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ---------
Balance at December 28, 1996 1 122 - - - 1,098 3 2,765 18,074 181 62,108
Purchase and retirement of
preferred stock - - - - - - - (340) - - 246
Preferred stock conversions (1) (122) - - - (1,098) (3) (2,425) 3,095 31 3,614
Common stock issued for
settlement of class action
lawsuit - - - - - - - - 14,653 146 769
Common stock issued in
settlement with preferred
shareholders - - - - - - - - 5,795 58 304
Common stock issued for
untendered ACPI shares - - - - - - - - 3 - 159
Exercise of stock options - - - - - - - - 3,225 32 65
Compensatory stock options - - - - - - - - - - 105
Foreign currency translation
adjustment - - - - - - - - - -
Net loss - - - - - - - - - -
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ---------
Balance at December 27, 1997 - $ - - $ - - $ - - $ - 44,845 $448 $67,370
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ---------
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ---------
</TABLE>
<TABLE>
<CAPTION>
Cumulative Treasury stock Total
Accumulated Translation --------------- Stockholders'
Deficit Adjustment Shares Dollars Equity (Deficit)
---------- ----------- ------- ------ ----------------
<C> <C> <C> <C> <C>
Issuance of preferred stock, net
of issuance costs of $600 - - - - 19,400
Issuance of common stock - - - - 1,800
Preferred stock conversions - - - - -
<S> - - (50) (602) (602)
Treasury stock acquired for cash - - - - 995
Exercise of stock options - - - - 40
Exercise of warrants
Compensatory stock options
and treasury shares acquired - - (220) (933) 808
via stock rescissions
Foreign currency translation - (4) - - (4)
adjustment (19,401) - - - (19,401)
---------- ----------- ------- ------ ------------
(40,340) (23) (341) (1,750) 24,161
Balance at December 28, 1996
Purchase and retirement of - - - - (94)
preferred stock - - - - -
Preferred stock conversions
Common stock issued for
settlement of class action - - - - 915
lawsuit
Common stock issued in
settlement with preferred - - - - 362
shareholders
Common stock issued for - - - - 159
untendered ACPI shares - - - - 97
Exercise of stock options - - - - 105
Compensatory stock options
Foreign currency translation - (47) - - (47)
adjustment (6,535) - - - (6,535)
---------- ----------- ------- ------- ------------
Balance at December 27, 1997 $(46,875) $ (70) (341 ) $(1,750) $19,123
---------- ----------- ------- ------- ------------
---------- ----------- ------- ------- ------------
</TABLE>
The accompanying notes are an integral part of this statement.
7
<PAGE>
Vista 2000, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Year ended Year ended Year ended
December 27, December 28, December 30,
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Cash flows used by operating activities:
Net loss $ (6,535) $ (19,401) $ (14,663)
Adjustments to reconcile net loss to net
cash used by operations:
Loss on sale of operating assets 3,792 8,311 -
Writedown of operating assets - 2,476 -
Write off of affiliate trade receivables (429) - -
Depreciation 1,910 2,108 611
Loss on disposal of property and
Equipment 118 400 84
Stock based compensation expense 466 808 1,490
(Increase) decrease in operating assets,
net of businesses acquired and disposed:
Accounts receivable (229) (1,113) 2,722
Inventories 1,218 (3,627) (2,264)
Prepaid expenses and other
current assets 572 (385) 342
Other assets 1,208 (1,143) (224)
Increase (decrease) in operating
liabilities, net of businesses
acquired:
Accounts payable (189) (4,222) 3,662
Accrued liabilities (847) (585) 1,996
------------- ------------- ------------
Net cash provided (used) by
operating activities 1,055 (16,373) (6,244)
------------- ------------- ------------
Cash flows used by investing activities:
Acquisitions, net of cash acquired
American Consumer Products, Inc. - - (13,925)
Alabaster Industries, Inc. - - (157)
Intelock Technologies - - 754
Proceeds from sale of operating assets 24,021 2,806 -
Proceeds from sale of property and
equipment - 54 -
Purchases of property and equipment (3,937) (5,931) (2,365)
Proceeds from payments on note receivable 8 - -
------------- ------------- ------------
Net cash provided (used) by
Investing activities 20,092 (3,071) (15,693)
------------- ------------- ------------
</TABLE>
8
<PAGE>
Vista 2000, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Year ended Year ended Year ended
December 27, December 28, December 30,
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Cash flows provided by financing activities:
Net proceeds (payment) from short-term
borrowings (908) 908 -
Net borrowings (repayments) on long-term
revolving line of credit 1,330 (2,200) -
Proceeds from long-term debt 1,985 - -
Repayment of long-term debt (22,147) (599) (9,331)
Other long-term liabilities (406) - -
Proceeds from issuance of common
stock, net of issue costs - 1,800 6,787
Proceeds from issuance of preferred
stock, net of issue costs - 19,400 24,296
Proceeds from exercise of stock
options and warrants 97 1,035 841
Purchase of treasury stock and warrants (94) (602) (215)
------------- ------------- ------------
Net cash provided (used) by
financing activities (20,143) 19,742 22,378
------------- ------------- ------------
Effect of exchange rate changes on cash (47) (4) (19)
------------- ------------- ------------
Net increase (decrease) in cash during period 957 294 422
Cash and cash equivalents at the beginning
of the period 1,165 871 449
------------- ------------- ------------
Cash and cash equivalents at the end of the
period $ 2,122 $ 1,165 $ 871
------------- ------------- -----------
------------- ------------- -----------
Supplemental disclosure:
Interest paid $ 1,769 $ 2,750 $ 754
Income taxes paid 313 287 -
</TABLE>
9
<PAGE>
Vista 2000, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
Year ended Year ended Year ended
December 27, December 28, December 30,
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Noncash investing and financing activities:
Acquisition of treasury stock via
stock rescissions $ - $ 933 $ -
Assets purchased under long-term
obligations $ - $ 3,227 $ 170
Assets sold for assumption of
related obligation $ - $ 169 $ -
Capital lease obligations incurred $ - $ - $ 228
Conversion of debt to common stock $ - $ - $ 720
Acquisition of businesses
Fair value of assets acquired $ - $ - $ 63,330
Cash paid - - (14,689)
Common stock issued - - (1,897)
------------- ------------- -------------
Liabilities assumed $ - $ - $ 46,744
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these statements.
10
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(1) Nature of Business and Summary of Significant Accounting Policies
Nature of Business
Vista 2000, Inc. and its subsidiaries, (the Company), are engaged primarily
in the manufacture, distribution and sale of specialty consumer products
including pet products, balloons, gloves, boots and rainwear. The Company's
customers are primarily mass merchandisers and do-it-yourself retailers
located throughout North America.
Public Offerings
On October 24, 1994, the Company completed an initial public offering of its
common stock. The offering resulted in the sale of 1,000,000 units at $5.50
per unit before underwriting discounts and other offering expenses. Each unit
consisted of one share of Company common stock and Series A Warrants to
purchase two Company common shares. Each warrant entitled the holder to
purchase, for a period of 48 months ending October 26, 1998, one share of
common stock at an exercise price of $7.00 per share during the first 24
months and $10.00 per share thereafter, subject to adjustment in certain
circumstances. In December, 1994, an additional 150,000 of the units,
representing the underwriters' over-allotment option with respect to the
offering, were sold.
During 1995 the Company completed four preferred stock offerings and one
common stock offering pursuant to the exemption from registration under
Regulation S of the Securities Act of 1933. $24,296 and $6,787, net of
issuance costs, were raised through the preferred stock offerings and the
common stock offerings, respectively.
During 1996, the Company completed one preferred stock offering and one
common stock offering pursuant to the exemption from registration under
Regulation S of the Securities Act of 1993. $19,400 and $1,800, net of
issuance costs, were raised through the preferred stock offering and common
stock offering, respectively.
11
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
1) Nature of Business and Summary of Significant Accounting Policies - Continued
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Vista 2000, Inc. ("Vista"), and its wholly-owned subsidiaries, American
Consumer Products, Inc. and subsidiaries ("ACPI"), Alabaster Industries, Inc.
("Alabaster"), Family Safety Products, Inc. ("FSPI"), and Intelock
Technologies ("Intelock"), collectively ("the Company"). All significant
intercompany balances and transactions have been eliminated in the
consolidated financial statements.
During 1996 and 1997, Vista disposed of substantially all of the operating
assets of all subsidiaries with the exception of Boss Manufacturing, a
subsidiary of ACPI and the Warren Pet division of ACPI.
Fiscal Year
The Company maintains a 52/53 week year ending on the last Saturday in the
calendar year. Fiscal years 1997, 1996 and 1995 each contained 52 weeks.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents.
Revenue Recognition
The Company recognizes revenue and provides for the estimated cost of returns
and allowances in the period the products are shipped. Approximately 21% of
the Company's revenue was from two customers in 1996, accounting for
approximately 11% and 10%, respectively, of total revenue. Approximately 15%
of revenue was from one customer in 1995. No single customer accounted for
10% or more of the Company's revenue in 1997.
12
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
1) Nature of Business and Summary of Significant Accounting Policies - Continued
Inventories
Inventories are stated at the lower of average cost or market. Cost for
approximately 80% and 83% of inventories at December 27, 1997 and December
28, 1996, respectively, have been determined using the last-in, first-out
(LIFO) method. Cost for the remainder of the inventories has been determined
primarily using the first-in, first-out (FIFO) method.
Had the Company used the first-in, first-out (FIFO) method of accounting for
all inventories, gross profit would have been substantially the same for all
years presented.
Advertising Costs
The Company expenses the cost of advertising the first time advertising takes
place. Costs of trade shows and developing advertising materials are expensed
at the time of the trade shows or as the advertising materials are produced
and distributed to customers. Advertising expense for 1997, 1996 and 1995 was
$651, $1,950 and $1,685, respectively.
Income Taxes
The Company accounts for income taxes using the asset and liability method.
Under this method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates applied to taxable income. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. A valuation allowance is
provided for deferred tax assets when it is more likely than not that the
asset will not be realized.
13
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(1) Nature of Business and Summary of Significant Accounting Policies-Continued
Property, Equipment, Depreciation and Amortization
Property and equipment are recorded at historical cost. The Company provides
for depreciation and amortization using the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
Machinery and equipment 3 to 10 years
Office Furniture and equipment 3 to 8 years
Buildings 35 years
</TABLE>
Depreciation expense was $1,910, $2,108 and $611 for 1997, 1996 and 1995,
respectively.
Warranty Costs and Returns
The Company provides for estimated warranty costs and returns at the time of
sale. Accrued costs applicable to warranty obligations and returns are
classified as accrued liabilities and are not material.
Research and Development Costs
Research and development costs are charged to expense as incurred and totaled
$396, $590 and $297 for 1997, 1996 and 1995, respectively.
Foreign Currency Translation
Assets and liabilities of the Company's Canadian subsidiary are translated
into U.S. dollars at fiscal year end exchange rates. Income and expense
accounts are translated into U.S. dollars at average rates of exchange
prevailing during the year. Adjustments resulting from translating the
Canadian accounts are reflected as a foreign currency translation adjustment
in stockholders' equity. Translation adjustments of the Mexican subsidiary,
for which the functional currency is U.S. dollars, and transaction gains and
losses are included in the results of operations for the year.
Net exchange losses included in the results of operations were not
significant in any of the reported periods.
14
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
1) Nature of Business and Summary of Significant Accounting Policies - Continued
Earnings Per Share
The Company adopted Statement of financial Accounting Standards No. 128 (SFAS
128), Earnings Per Share, in the fourth quarter of 1997. Basic net earnings
per common share is based upon the weighted average number of common shares
outstanding during the period. Diluted net earnings per common share is based
upon the weighted average number of common shares outstanding plus dilutive
potential common shares, including options and warrants outstanding during
the period. All comparative earnings per share data for prior periods
presented has been restated.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Fair Value of Financial Instruments
The Company's financial instruments include cash, cash equivalents and
long-term debt. The carrying value of cash and cash equivalents approximates
fair value due to the relatively short period to maturity of the instruments.
The carrying value of the Company's long-term obligations approximates fair
value based upon borrowing rates currently available to the Company for
borrowings with comparable maturities.
15
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(2) Inventories
Inventories consist of the following :
<TABLE>
<CAPTION>
December 27, December 28,
1997 1996
------------ ------------
<S> <C> <C>
Raw Materials $ 1,752 $ 4,714
Work in Progress 330 2,154
Finished Goods 10,411 18,289
------------- ------------
$ 12,493 $ 25,157
------------- ------------
------------- ------------
</TABLE>
(3) Property and Equipment
Property and Equipment consists of the following:
<TABLE>
<CAPTION>
December 27, December 28,
1997 1996
------------ ------------
<S> <C> <C>
Machinery and equipment $ 987 $ 8,376
Buildings and improvements 3,317 7,419
Office furniture and equipment 216 847
------------- ------------
Total property and equipment 4,520 16,642
Less accumulated depreciation 588 2,372
------------- ------------
3,932 14,270
Land 338 1,657
------------- ------------
$ 4,270 $ 15,927
------------- ------------
------------- ------------
</TABLE>
16
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(4) Notes Payable and Long-term Liabilities
Note Payable
Note payable at December 28, 1996 represented borrowings under a revolving
credit and demand loan agreement (the Agreement) entered into by Alabaster
with a financial institution which provided for borrowings of up to $2,500.
This Agreement was assumed by the purchaser of Alabaster in 1997.
Long-term Debt
Long-term debt, including capital lease obligations, consists of the following:
<TABLE>
<CAPTION>
December 27, December 28,
1997 1996
------------ ------------
<S> <C> <C>
ACPI revolving line of credit $ 3,110 $ 20,400
Boss mortgage note payable to a lender. Requires
monthly payments of $10, including interest
at 11%, through May 1999. All outstanding
principal is due in June 1999. Collateralized
by all real and personal property of Boss. 810 -
Other 100 3,495
------------- ------------
Total long-term debt 4,020 23,895
Less current maturities 137 383
------------- ------------
Long-term debt $ 3,883 $ 23,512
------------- ------------
------------- ------------
</TABLE>
Scheduled principal payments of long-term debt are as follows:
<TABLE>
<CAPTION>
Fiscal year:
<S> <C>
1998 $ 137
1999 773
2000 3,110
-------------
Total $ 4,020
-------------
</TABLE>
17
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(4) Long-term Debt - Continued
At December 31, 1996, the ACPI revolving credit agreement represented an
agreement with two banks that provided for borrowings on a revolving line of
credit of up to $28,900. Interest at the banks' base rate plus 3/8%
(effective rate of 8.6% at December 28, 1996) and a loan commitment fee of
3/8% on the unused portion of the revolving credit commitment were payable
quarterly. In May 1997, the Company entered into a loan and security
agreement (the "1997 Agreement") with another bank to refinance the existing
revolving credit facility. The 1997 Agreement, which expires in May 2000, was
amended in August 1997, concurrent with the sale of certain ACPI assets (see
Note 12). The 1997 Agreement, as amended, provides for a credit facility up
to $10,000, based on a formula that includes eligible accounts receivable and
inventory. Interest is payable monthly at the bank's prime rate plus .5% or,
at the ACPI's option, LIBOR plus 2.50% (effective rate of 9% at December 27,
1997). Available interest rates may decrease based upon financial performance
of the Company as defined. ACPI will incur an annual facility fee of $33
payable at the beginning of each contract year and a loan commitment fee of
3/8% per annum on the unused portion of the credit facility. The 1997
Agreement provides for certain restrictive covenants including, among others,
limitations as to intercompany transfers and capital expenditures and
maintenance of certain minimum financial ratios. The Company has received
waivers for all events of noncompliance at December 27, 1997.
The credit facility is secured by essentially all the assets of ACPI and its
subsidiaries and is guaranteed by each of the ACPI subsidiaries. The bank has
also committed to $3,500 for letters of credit as part of the maximum
borrowings under the line of credit. At December 27, 1997, borrowings of
$3,110 and an outstanding letter of credit totaling $2,000 were outstanding
under the 1997 Agreement.
(5) Commitments and Contingencies
Operating Leases
The Company leases certain office and operating facilities and certain
equipment under operating lease agreements which expire on various dates
through 2000 and require the Company to pay all maintenance costs. Rent
expense under these leases was approximately $1,021, $1,379 and $809 for
1997, 1996 and 1995, respectively.
Future commitments under noncancellable operating leases as of December 27,
1997 are $126, $50 and $27 for 1998, 1999 and 2000, respectively.
18
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(5) Commitments and Contingencies - Continued
Operating Leases - Continued
ACPI leased two facilities from related parties. The Company was responsible
for repairs and maintenance, taxes and insurance of these facilities.
Expenses for these operating leases were $639 and $735 in 1996 and 1995. ACPI
purchased one of these facilities during 1996 and purchased the second of
these facilities during 1997 (see Note 9).
Class Action Lawsuit
In April 1996, the Company together with certain officers, directors and
third parties were named as a defendant in seventeen (17) class action
lawsuits filed by stockholders of the Company in the United States District
Court for the Northern District of Georgia. The lawsuits alleged that the
Company violated the Federal Securities Laws, particularly Sections 10-b and
20-a of the Securities Exchange Act of 1934, as amended, and the rules and
regulations, including Rules 10-b-5 thereunder as well as common law claims.
In August 1996, the court certified the plaintiffs as representatives of a
class of all persons who purchased the Company's common stock or warrants
during the period October 24, 1994 through June 8, 1996, except for the
defendants and certain officers, directors and related parties. The Company
and the other defendants reached an agreement in principle to settle the
action in December 1996. Pursuant to the settlement, the Company issued a
sufficient amount of shares of its common stock to the class to convey
ownership of forty percent (40%) of the common stock of the Company to the
class, based on common shares outstanding at December 1, 1996. During 1997,
the Company issued approximately 14,654,000 common shares in accordance with
the settlement. Approximately $903 has been charged to 1996 operations
related to this settlement and was included in accrued liabilities at
December 28, 1996. The Company's insurance carrier contributed $300 to the
settlement to cover certain expenses related to the settlement. The
settlement is in satisfaction of all claims of the class. The district court
approved the settlement and the judgment became final on April 14, 1997.
Preferred Stockholders
During 1997, Vista settled all claims with its former preferred stockholders.
The former preferred stockholders agreed to release Vista from all claims in
exchange for the issuance of approximately 5,795,000 shares of common stock.
Approximately $362 has been charged to 1997 operations related to this
settlement. Additionally, all outstanding preferred shares were exchanged for
approximately 3,095,000 common shares.
19
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(5) Commitments and Contingencies - Continued
Sale of ACPI
During 1997, certain assets of ACPI were sold (see Note 12). The sale
agreement provided for certain post closing adjustments to account for
changes in assets and liabilities between the date of the agreement and the
closing of the sale. The Company and the purchaser are currently disputing
the amount of the post closing adjustments. Additionally, the purchaser has
asserted claims against the Company for alleged breaches of representations
and warranties in connection with the purchase agreement. Management believes
these assertions to be without merit and intends to vigorously defend itself.
However, the ultimate outcome of these disputes and claims cannot be
determined at this time. Accordingly, no provision for any liabilities that
may result on the ultimate outcome of these uncertainties has been provided
in these financial statements.
Other Litigation
In July 1996, the Company commenced an action against Richard P. Smyth, a
former officer and director, alleging that Mr. Smyth committed fraudulent and
unlawful acts resulting in substantial harm to the Company and its
shareholders. In September 1996, Mr. Smyth filed a counterclaim seeking,
among other things, indemnification in connection with the class action
lawsuit described above. The Company intends to vigorously pursue its action
and contest the allegations in the counterclaim; however, management and
legal counsel are unable to determine the possible outcome of this matter at
this time.
The Company is also a defendant or has been notified of claims in several
other actions against it. In the opinion of management, the ultimate outcome
of these actions will not have a material adverse effect on the financial
position of the Company.
SEC Investigation
The Company has been notified by the Securities and Exchange Commission
("SEC") that it had commenced a formal private investigation of the Company.
The Company intends to cooperate with the SEC in this matter. The Company
cannot predict the eventual outcome of this investigation. Independently, the
Company through its Audit Committee has conducted an internal investigation
of the facts and circumstances surrounding the investigation.
20
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(6) Stockholder's Equity
Warrants
At December 30, 1995, warrants for the purchase of 36,408 shares of Company
common stock that were issued in conjunction with debentures sold by the
Company were issued and outstanding. These warrants expired as unexercised in
January 1997. In addition, in March 1994, the Company issued 235,598 of its
1994 convertible debenture warrants to all the former debenture holders that
acquired common stock of the Company on September 30, 1993 pursuant to their
right of conversion. The 1994 convertible debenture warrants each provide for
the purchase of one share of common stock at an exercise price of $2.50 per
share and expire in March 1999.
2,000,000 Series A warrants were outstanding at December 27, 1997, which were
issued in connection with the Company's initial public offering. The warrants
are exercisable at an exercise price of $10.00 per share through October,
1998. Additionally, the Company agreed to sell to the Underwriters, as
additional compensation, warrants to acquire units representing up to 100,000
shares of common stock at $9.08 per share and up to 200,000 shares of common
stock underlying the Series A warrants at $11.55 per share. These warrants
expire in October 1999.
During 1995, the Company issued warrants to various consultants to acquire up
to 645,529 common shares at prices per share ranging from $2.00 to $12.00. A
$40 expense was recorded during 1995 as a result of the issuance of these
warrants. During 1996 and 1995, warrants were exercised to acquire 20,000 and
250,000 common shares, respectively.
Common Stock Issued for Services in Lieu of Cash
During 1995, the Company issued 280,000 shares of common stock to various
consultants at per share market values at the agreement dates ranging from
$1.88 to $2.06. In connection with the issuance of these shares, the Company
recorded professional fees totaling $560.
21
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(6) Stockholder's Equity - Continued
Stock Options
The Company has adopted two stock option plans providing for the issuance of
options covering up to 8,000,000 shares of common stock to be issued to
officers, directors, or consultants to the Company. Various vesting
conditions apply to these options, based on either tenure or certain
performance criteria. For options granted to employees at strike prices less
than the fair market value of the underlying shares on the date of the grant,
the difference in value is recognized as compensation expense over the
applicable vesting periods. Options granted to nonemployees are recognized
over the related service period based on the estimated fair value of the
options This resulted in charges to operations amounting to $104, $808 and
$900 for 1997, 1996 and 1995, respectively.
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
Year ended Year ended Year ended
December 27, 1997 December 28, 1996 December 30, 1995
------------------- -------------------- ---------------------
Weighted Weighted Weighted
average average average
exercise exercise exercise
Shares price Shares price Shares price
----------- --------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning
of period 118,550 $4.51 1,550,950 $3.46 225,000 $6.05
Granted 7,810,000 0.03 420,000 3.63 1,759,350 3.24
Exercised (3,225,000) 0.03 (678,450) 2.15 (208,400) 1.60
Cancelled (112,800) 4.54 (1,173,950) 4.18 (225,000) 6.05
----------- --------- ----------- ---------- ---------- ---------
Outstanding, end
of period 4,590,750 $0.04 118,550 $4.51 1,550,950 $3.46
----------- --------- ----------- ---------- ---------- ---------
----------- --------- ----------- ---------- ---------- ---------
</TABLE>
22
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(6) Stockholder's Equity - Continued
Stock Options - Continued
The following table summarizes information about stock options outstanding at
December 27, 1997:
<TABLE>
<CAPTION>
Options outstanding and exercisable Options exercisable
------------------------------------------------------------- ----------------------------
Weighted
Number average Number Weighted
outstanding at remaining Weighted outstanding at average
Exercise December 27, contractual average December 27, exercise
price 1997 life (years) exercise price 1997 price
---------- -------------- ------------- -------------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
$3.93 5,750 7.8 $3.93 5,750 $3.93
0.03 4,585,000 9.0 0.03 680,000 0.03
-------------- ------------- -------------- ---------------- ---------
4,590,750 8.8 $0.04 685,750 $0.06
-------------- ------------- -------------- ---------------- ---------
-------------- ------------- -------------- ---------------- ---------
</TABLE>
The Company uses the intrinsic value method in accounting for its stock options
issued to employees. In applying this method, no compensation cost has been
recognized related to the granting of options to employees. Had compensation
cost for the Company's stock options plans been determined based on the fair
value at the grant dates for awards to employees under those plans, the
Company's net loss and loss per share would have resulted in the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ------------- ------------
<S> <C> <C> <C>
Net earnings As reported $ (6,535) $ (19,401) $ (14,663)
Pro forma $ (6,548) (19,414) (15,927)
Basic net loss per As reported $ (.21) $ (1.20) $ (2.33)
common share Pro forma (.21) (1.20) (2.53)
Diluted net loss per As reported $ (.21) $ (1.20) $ (2.33)
common share Pro forma (.21) (1.20) (2.53)
</TABLE>
For purposes of the pro forma amounts above, the fair value of each option
grant was estimated on the date of grant using the Black-Scholes
options-pricing model with the following weighted-average assumptions used
for grants in 1997, 1996 and 1995; expected volatility of 295%, 295% and
107%, risk-free interest rates of 5.9%, 5.9% and 6.6%; and expected lives of
2 years.
23
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(6) Stockholder's Equity - Continued
Stock Rescissions
During 1996, certain shareholders rescinded approximately 220,000 shares of
common stock previously issued and returned the shares to the Company. The
Company holds these shares in treasury at amounts which were recorded when the
shares and related options were issued, totaling approximately $933.
Series Convertible Preferred Stock:
The Company has designated 142,000 of its 500,000 authorized preferred shares as
follows:
<TABLE>
<CAPTION>
Shares authorized Liquidation preference per share
------------------ --------------------------------
<S> <C> <C>
Series A 100,000 $100
Series B 20,000 $1,000
Series C 2,000 $10,000
Series D 20,000 $1,000
</TABLE>
The remaining 358,000 authorized preferred shares have not been designated as
a series. The preferred stock was recorded net of issuance costs.
The Company's preferred stock was issued in several series pursuant to
separate subscription agreements.
During 1997, the Company issued approximately 3,095,000 common shares in
exchange for all of the remaining outstanding preferred stock. Additionally,
the Company issued approximately 5,796,000 common shares to certain former
preferred stockholders as settlement of any and all outstanding claims,
resulting in a charge to operations of $362.
24
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(7) Earnings Per Share
The following table sets forth the computation of basic and diluted loss per
share.
<TABLE>
<CAPTION>
1997 1996 1995
----------- ------------ -----------
<S> <C> <C> <C>
Numerator for basic and diluted net loss per
common share - loss attributable to
common stockholders $ (6,535) $ (19,401) $ (14,663)
----------- ------------ -----------
----------- ------------ -----------
Denominator for basic net loss per common
share - weighted average shares outstanding 31,862 16,134 6,294
Effective of dilutive options and warrants - - -
----------- ------------ -----------
Denominator for diluted net loss per common
share - adjusted weighted average shares
outstanding 31,862 16,134 6,294
----------- ------------ -----------
----------- ------------ -----------
Net loss per common share
Basic $ (.21) $ (1.20) $ (2.33)
Diluted $ (.21) $ (1.20) $ (2.33)
</TABLE>
(8) Employee Retirement Savings Plan
ACPI and Boss contribute to employee retirement plans covering substantially all
of its employees. Charges to consolidated operations for these plans were as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Discretionary Contribution Profit
Sharing - 401(k) $ 183 $ 225 $ 223
Multi-Employer Pension Plan 265 507 774
------------ ------------ ------------
$ 448 $ 732 $ 997
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The contributions to the union sponsored, multi-employer pension plan were
determined based upon the number of employees working per week. Participation in
the multi-employer pension plan was attributable to ACPI only, and was assumed
by the purchaser of the ACPI assets in August 1997 (see Note 12).
25
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(9) Related Party Transactions
During 1997 and 1996, fees incurred to stockholders and directors totaled
approximately $1,358 and $225, respectively.
In October 1996, ACPI, through one of its wholly-owned subsidiaries, purchased
certain land and manufacturing facilities from a partnership controlled by
certain officers of ACPI for $1,773 cash and assumption of a $3,227 mortgage
note. This facility was previously leased by ACPI from the related party. These
related parties are no longer affiliated with the Company.
During 1997, ACPI, through one of its wholly-owned subsidiaries, purchased a
second manufacturing facility from a corporation controlled by certain officers
of ACPI for $1,158 cash and assumption of a $842 mortgage note. This facility
was previously leased by ACPI from the related parties. These related parties
are no longer affiliated with the Company.
At December 27, 1997, the Company has a note receivable outstanding from a
former officer. This note is fully reserved pending final settlement with the
Company.
(10) Income Taxes
The Company's temporary differences result in a net deferred income tax asset
which is reduced to zero by a related valuation allowance, summarized as
follows:
<TABLE>
<CAPTION>
December 27, December 28,
1997 1996
------------ ------------
<S> <C> <C>
Deferred tax assets:
Operating loss carryforwards $ 17,999 $ 14,531
Accounts receivable 383 790
Accruals 661 661
Compensation related 44 636
Tax credit carryforwards 236 236
Other 1 28
------------ ------------
Gross deferred tax assets 19,324 16,882
Deferred tax asset valuation allowance (17,151) (14,511)
------------ ------------
Net deferred tax asset 2,173 2,371
------------ ------------
------------ ------------
</TABLE>
26
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(10) Income Taxes - Continued
<TABLE>
<CAPTION>
December 27, December 28,
1997 1996
------------ ------------
<S> <C> <C>
Deferred tax liabilities:
Inventories 1,576 1,710
Fixed assets 597 661
------------ ------------
2,173 2,371
------------ ------------
Net deferred income tax asset $ - $ -
------------ ------------
------------ ------------
</TABLE>
Included in the tax credit carryforward is approximately $236 of alternative
minimum tax credits and research and experimentation credits available to reduce
future income taxes payable. These credits do not have an expiration date.
Income tax expense for 1997 and 1996 consists primarily of current state taxes
attributable to ACPI and its subsidiaries.
At December 27, 1997, the Company had operating loss carryforwards for U.S.
income tax purposes of approximately $47,365 available to reduce future taxable
income, which expire as follows:
<TABLE>
<CAPTION>
Net
Year of operating
expiration loss
---------- ------------
<S> <C>
2002 $ 1,436
2008 1,693
2009 8,483
2010 4,284
2011 19,249
2012 12,220
------------
$ 47,365
------------
------------
</TABLE>
27
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(10) Income Taxes - Continued
Included in the operating loss carryforward is $1,436 of losses which expire in
2002 and which can only be utilized by the Boss Manufacturing subsidiary of
ACPI.
The Company has experienced a change in control, as defined under Section 382
of the Internal Revenue Service Code, during 1995 and 1996. As a result, the
utilization of the net operating losses which expire in 2011 and prior are
limited to approximately $1,600 annually. Additionally, management believes
that a change in control also occurred during 1997, which will limit the
utilization of the net operating loss which expires in 2012 and could further
limit the utilization of the net operating losses which expire in 2011 and
prior. As a result of these limitations, a significant portion of the tax
loss carryforwards could expire unused.
(11) Writedown of Operating Assets
During 1996, Alabaster continued to incur significant operating losses.
Management's estimates of future operations did not support the carrying
amount of Alabaster's net assets. Accordingly, a charge of $1,817 was
recorded in the fourth quarter of 1996, representing management's estimate of
the excess of Alabaster's net assets over their estimated net realizable
value.
In September 1996, the Company closed the operations of Intelock and wrote
down all remaining Intelock assets to their estimated net realizable value.
Vista incurred a charge of $659 as a result of this write down. The assets
and liabilities of Intelock included in the accompanying December 28, 1996
consolidated balance sheet were not significant. Intelock, which was acquired
by Vista in 1995, was a manufacturer and distributor of digital locking
devices.
Alabaster and Intelock were sold during 1997 (see Note 12).
28
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(12) Acquisitions and Dispositions
1997
In August, 1997, Vista sold substantially all of the assets of ACPI, with the
exception of it's Warren Pet Division and Boss Manufacturing, an ACPI
subsidiary, for approximately $23,618 in cash, net of transaction costs of
approximately $1,186, plus the assumption of approximately $3,260 of
liabilities by the purchaser. Vista recorded a loss of approximately $1,840
on the sale of ACPI, including expenses related to the sale. Expenses related
to the sale of ACPI included $1,044 paid to a stockholder and an affiliate of
a stockholder of Vista.
In June, 1997, Vista sold all of the outstanding common stock of Alabaster
for $2,000, consisting of $500 cash and a $1,500 promissory note. The
promissory note requires monthly payments of $14, including interest at 10%,
through July 1999, at which time all outstanding principal and interest is
due. The promissory note is collateralized by certain real property of
Alabaster. Vista recorded a loss on the sale of Alabaster of approximately
$2,080, including expenses related to the sale.
In April, 1997, Vista sold all of its Intelock common stock for $5 cash and a
$95 promissory note. All outstanding principal is due in April, 1998. Vista
recorded a gain of approximately $128 on the sale of Intelock.
1996
In August 1996, the Company sold substantially all the assets of FSPI for
$1,800 cash and a $100 promissory note. The purchaser also assumed
substantially all operating liabilities of FSPI. Vista recognized a loss on
the sale of FSPI assets of $8,783. FSPI was a manufacturer and distributor of
gas detection devices and other home safety products.
In May 1996, ACPI sold the inventory, tooling and other supplies of a product
line for $1,059 in cash. The sale resulted in a gain of $472.
The assets and liabilities remaining from the FSPI and the disposed product
line operations included in the accompanying December 28, 1996 consolidated
balanced sheet were not significant.
29
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(12) Acquisitions and Dispositions - Continued
1995
During fiscal 1995 Vista completed four acquisitions and made one disposition
which are summarized below.
Effective September 30, 1995, Vista acquired all of the outstanding common
stock of ACPI, including its Boss Manufacturing subsidiary and Warren Pet
division, through a cash tender offer totaling approximately $13,834
exclusive of acquisition costs. ACPI manufactures and distributes consumer
hardware products including key blanks, related key accessories, knives,
letters, numbers, signs, gloves and pet products as well as other items.
Effective July 31, 1995, Vista acquired all of the outstanding common stock
of Alabaster in exchange for 400,000 shares of common stock issued by Vista
valued at $2 per share or $800, exclusive of acquisition costs. Alabaster
manufactures and distributes injection molded plastic products for the
housewares industry.
Effective June 30, 1995, Vista acquired all of the outstanding common stock
of Intelock and certain manufacturing assets owned by the former parent of
Intelock in exchange for 219,200 shares of common stock of Vista and warrants
to acquire 138,400 common shares of Vista, together valued at $1,097,
exclusive of $5 cash paid and acquisition costs. Intelock manufactures and
distributes digital locking devices.
The acquisitions of ACPI, Alabaster and Intelock were accounted for as
purchases. Accordingly, each of the purchase prices were allocated to assets
and liabilities based on their estimated fair values at the date of
acquisition. Results of operations of ACPI, Alabaster and Intelock have been
included in the consolidated financial statements from the respective date of
each acquisition.
Effective May 1995, Vista acquired all of the outstanding common stock of
Promotional Marketing, Inc. (PMI) and executed a non-competition agreement
with former principals of PMI for a total of $610 exclusive of acquisition
costs. PMI provided direct marketing services to a variety of customers. The
acquisition has been accounted for as a purchase using the equity method of
accounting. Effective November 30, 1995, PMI sold substantially all of its
operating assets net of operating liabilities back to a company owned by the
former principals of PMI in exchange for a guaranty of payment on a note
receivable held by Vista. Vista recognized a loss of $1,147 on the sale of
PMI. The accompanying 1995 consolidated statement of operations includes
PMI's results of operations for the seven month period from the acquisition
date to the date of disposition of substantially all the operating assets and
liabilities of PMI.
30
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(12) Acquisitions and Dispositions - Continued
Pro forma Results of Operations (Unaudited)
The pro forma results of operations which follow assume that the acquisition
of Boss Manufacturing and the Warren Pet division of ACPI occurred on January
1, 1995, and the disposition of all other subsidiaries and divisions occurred
on December 31, 1994. Accordingly, the pro forma results of operations which
follow include the results of operations of Vista, Boss and Warren Pet. In
addition to combining the historical results of operations of the companies,
the pro forma calculations include adjustments for the estimated effects on
the Company's historical results of operations for depreciation, interest and
other purchase accounting adjustments related to the acquisitions. These
results are not necessarily indicative of the results that would have
occurred if the transactions had occurred at the beginning of each period
presented nor are the results indicative of future results.
UNAUDITED
<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Sales $ 42,197 $ 43,183 $ 43,404
Net loss $ (646) $ (4,882) $ (3,018)
Net loss per common share
Basic $ (.02) $ (.30) $ (.48)
Diluted $ (.02) $ (.30) $ (.48)
</TABLE>
(13) New Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued the following
Statements of Financial Accounting Standards (SFAS):
SFAS 130, Reporting Comprehensive Income, which is effective for fiscal years
beginning after December 15, 1997. SFAS 130 requires companies to include
details about comprehensive income that arise during a reporting period.
Comprehensive income includes revenue, expenses, gains and losses that bypass
the income statement and are reported directly in a separate component of
equity.
31
<PAGE>
Vista 2000, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 27, 1997 and December 28, 1996
(Dollars amounts in thousands except per share data)
(13) New Accounting Pronouncements - Continued
SFAS 131, Disclosure About Segments of An Enterprise and Related Information,
which is effective for fiscal years beginning after December 15, 1997. SFAS
131 requires companies to report information about an entity's different
types of business activities and the different economic environments in which
it operates, referred to as operating segments.
Management does not expect the adoption of these new standards to have a
material impact on the Company's results of operations or financial condition.
32
<PAGE>
Report of Independent Certified Public Accountants
on Schedule
Board of Directors
Vista 2000, Inc.
In connection with our audit of the consolidated financial statements of
Vista 2000, Inc. and subsidiaries referred to in our reported dated February
19, 1998, which is included in the annual report to security holders and
incorporated by reference in Part II of this form, we have also audited
Schedule II for the years ended December 27, 1997, December 28, 1996 and
December 30, 1995. In our opinion, this schedule presents fairly, in all
material respects, the information required to be set forth therein.
GRANT THORNTON
Atlanta, Georgia
February 19, 1998
33
<PAGE>
Vista 2000, Inc., and subsidiaries
CONSOLIDATED SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Balance at Charged Balance
beginning to at end
Description of period expenses Deductions(1) of period
----------- ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Year ended December 27, 1997
Allowance for doubtful accounts
and returns $ 1,405 $ 131 $ 1,029 $ 507
Deferred tax asset valuation
allowance 14,511 2,640 - 17,151
Year ended December 28, 1996
Allowance for doubtful accounts
and returns 2,230 493 1,318 1,405
Deferred tax asset valuation
allowance 7,516 6,995 - 14,511
Year ended December 30, 1995
Allowance for doubtful accounts
and returns 40 2,190 - 2,230
Deferred tax asset valuation
allowance 2,310 5,206 - 7,516
</TABLE>
(1) - bad debt write offs and reduction in estimate of allowance requirements.
34
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<S> <C>
(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)
(9) Voting Trust Agreement
Not applicable.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(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)
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)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.18(b) Employment Agreement between the Company's subsidiary, American
Consumer Products, Inc., and Stephen W. Cole. (Exhibit 10.7)
10.19(e) Employment Agreement between the Company and Robert E. Altenbach
(Exhibit 10.19)
10.20(f) Asset Purchase Agreement between Vista 2000, Inc., Family Safety
Products, Inc. and Therm Acquisition, Inc. dated August 23, 1996
(Exhibit 10.20)
10.21(f) Loan and Security Agreement between Alabaster Industries, Inc. and
Century Business Credit Corporation dated September 20, 1996
(Exhibit 10.21)
10.22(g) Loan and Security Agreement between American Consumer Products,
Inc., Products Merchandisers, Inc., Boss Manufacturing Company and
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)
10.24(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
11.1 Statement re computation of per share earnings is included herein
as Exhibit 11.1 of this Report.
(12) Statements re Computation of Ratios Not applicable.
(13) Annual Report to Security Holders, Form 10-Q or Quarterly Report
to Security Holders Not applicable.
(16) Letter re Change in Certifying Accountant
Not applicable.
(18) Letter re Change in Accounting Principles
Not applicable.
(21) Subsidiaries of the Registrant
21.1 Subsidiaries of the Registrant are listed on Exhibit 21.1 included
in this Report.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(22) Published Report Regarding Matters Submitted to a Vote of Security
Holders
22.1(b) Proxy Statement for Special Meeting of Stockholders to be held
December 18, 1995. (Exhibit 20.1)
(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 herein as Exhibit 27.1 of this
Report.
(28) Information from Reports Furnished to State Insurance Regulatory
Authorities
Not applicable.
(99) Additional Exhibits
None.
</TABLE>
- --------------------
(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 9,
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-Q for the quarter
ended March 30, 1996. The exhibit number contained in parenthesis
refers to the Exhibit number in such Form 10-Q.
<PAGE>
(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 September 28, 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 June 28, 1997. 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.
<PAGE>
EXHIBIT 11.1
SHARE COMPUTATION
YEAR ENDED
DECEMBER 27, 1997
<TABLE>
<CAPTION>
Common Stock
------------------------------------------------------------------------
Prefered Total less Weighted Average
Stock Total Treasury Treasury Shares
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares outstanding at December 28, 1996 4,220 18,074,120 (341,341) 17,732,779 17,732,779
Preferred stock conversions (3,870) 3,094,769 3,094,769 962,151
Issue common shares for class settlement 14,653,672 14,653,672 9,474,706
Issue common shares for preferred claims 5,794,800 5,794,800 2,316,190
Exercise of stock options 3,225,000 3,225,000 1,375,650
Exchange ACPI shares from tender offer 2,912 2,912 797
Preferred stock repurchase (350) 0
------------------------------------------------------------------------------------------
Shares outstanding at December 27, 1997 0 44,845,273 (341,341) 44,503,932 31,862,273
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Net Loss $ (6,535,000)
Weighted average shares 31,862,273
Loss per share ($0.21)
------------------
------------------
</TABLE>
<PAGE>
Exhibit 21.1
<TABLE>
<S> <C>
1. Family Safety Products, Inc., a Georgia corporation.
2. Boss Manufacturing Holdings, Inc., f/k/a American Consumer Products,
Inc., a Delaware corporation.
3. Promotional Marketing, Inc., a Delaware corporation.
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
27, 1997 AUDITED FINANCIAL STATEMENTS OF VISTA 2000, INC., AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS IN FORM 10-K FOR THE YEAR
ENDED DECEMBER 27, 1997.
</LEGEND>
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-27-1997 DEC-28-1998
<PERIOD-START> DEC-29-1996 DEC-31-1995
<PERIOD-END> DEC-27-1997 DEC-28-1996
<CASH> 2,122,000 1,165,000
<SECURITIES> 0 0
<RECEIVABLES> 8,236,000 17,592,000
<ALLOWANCES> 507,000 1,405,000
<INVENTORY> 12,493,000 25,157,000
<CURRENT-ASSETS> 22,994,000 44,258,000
<PP&E> 4,270,000 15,927,000
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 28,562,000 61,771,000
<CURRENT-LIABILITIES> 5,556,000 13,691,000
<BONDS> 0 0
0 0
0 3,985,000
<COMMON> 448,000 181,000
<OTHER-SE> 18,675,000 19,995,000
<TOTAL-LIABILITY-AND-EQUITY> 28,562,000 61,771,000
<SALES> 78,400,000 110,955,000
<TOTAL-REVENUES> 78,400,000 110,955,000
<CGS> 57,909,000 82,563,000
<TOTAL-COSTS> 21,190,000 34,235,000
<OTHER-EXPENSES> 3,781,000 10,787,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,799,000 2,174,000
<INCOME-PRETAX> (6,279,000) (19,155,000)
<INCOME-TAX> 256,000 246,000
<INCOME-CONTINUING> (6,535,000) (19,401,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (6,535,000) (19,401,000)
<EPS-PRIMARY> (0.21) (1.20)
<EPS-DILUTED> (0.21) (1.20)
</TABLE>
