-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BbbxVDSKULN4rtRxN03tNgFwuNVbvZi4VjF0ZS2znLBtruE0GTy00P87SR2pd9ot 7V36kzKCyioJo7dpUputDA== 0000927016-97-003329.txt : 19971211 0000927016-97-003329.hdr.sgml : 19971211 ACCESSION NUMBER: 0000927016-97-003329 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971003 ITEM INFORMATION: FILED AS OF DATE: 19971210 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECIALTY CATALOG CORP CENTRAL INDEX KEY: 0001020897 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 043253301 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-21499 FILM NUMBER: 97735521 BUSINESS ADDRESS: STREET 1: 21 BRISTOL DRIVE CITY: SOUTH EASTON STATE: MA ZIP: 02375 BUSINESS PHONE: 5082380199 MAIL ADDRESS: STREET 1: 21 BRISTOL DRIVE CITY: SOUTH EASTON STATE: MA ZIP: 02375 8-K/A 1 FORM 8-K/A ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 OCTOBER 3, 1997 Date of Report (Date of earliest event reported) COMMISSION FILE NUMBER: 0-21499 SPECIALTY CATALOG CORP. (Exact name of registrant as specified in its charter) DELAWARE 04-3253301 (State or Other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 21 BRISTOL DRIVE SOUTH EASTON, MASSACHUSETTS 02375 (Address of principal executive offices) TELEPHONE NUMBER (508) 238-0199 (Registrant's telephone number, including area code) ================================================================================ This report on Form 8-K/A amends and supplements a report on Form 8-K filed by Specialty Catalog Corp. (the "Company") on October 17, 1997 in connection with the Acquisition of the Daxbourne Group. The disclosure required by Item 2 is included in that report. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Business Acquired: The consolidated financial statements of Daxbourne Limited for the two most recent fiscal years, the accountant's report covering such financial statements and the interim financial statements required by this item are filed herewith as Exhibits 99.1, 99.2 and 99.3. (b) Pro Forma Financial Information: Unaudited Pro Forma Condensed Consolidated Balance Sheet As of September 27, 1997 Unaudited Pro Forma Condensed Consolidated Statement of Operations For The Nine Months Ended September 27, 1997 Unaudited Pro Forma Condensed Consolidated Statement of Operations For The Year Ended December 28, 1996 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements See pages F-1 through F-7. (c) Exhibits Exhibit No. Description ----------- ----------- 2.1 Terms of Offer made by Daxbourne Limited, Postinstant Limited and MC Hairways Limited to Daxbourne International Limited, incorporated herein by reference to Exhibit 2.1 to Form 8-K of Specialty Catalog Corp. dated October 3, 1997 (Commission File No. 0-21499). 2.2 The Offer Letter from Daxbourne Limited, Postinstant Limited and MC Hairways Limited addressed to Daxbourne International Limited, incorporated herein by reference to Exhibit 2.2 to Form 8-K of Specialty Catalog Corp. dated October 3, 1997 (Commission File No. 0-21499). 2 Exhibit No. Description ----------- ----------- 10.1 Credit Agreement dated as of October 3, 1997 between BankBoston, N.A. (acting through its London Branch) and Daxbourne International Limited, a subsidiary of the Registrant, incorporated herein by reference to Exhibit 10.5 to Form 10-Q of Specialty Catalog Corp. for the quarter ended September 27, 1997 (Commission File No. 0-21499). 23 Consent of Independent Accountant 99.1 Historical audited financial statements and related notes of Daxbourne Limited as of April 30, 1997 and for the year then ended. 99.2 Historical audited financial statements and related notes of Daxbourne Limited as of April 30, 1996 and for the year then ended. 99.3 Historical unaudited financial statements and related notes of Daxbourne Limited as of September 27, 1997 and December 31, 1996 and for the nine months ended September 27, 1997 and September 30, 1996. 3 SPECIALTY CATALOG CORP. UNAUDITED PRO FORMA FINANCIAL STATEMENTS INTRODUCTION: This unaudited pro forma financial information is presented to give effect to the Company's acquisition of certain assets and liabilities (the "Acquisition") of Daxbourne Limited and its wholly owned susidiaries (the "Daxbourne Group" or "Daxbourne"). The Unaudited Pro Forma Condensed Consolidated Statements of Operations reflect adjustments as if the Acquisition had occurred on December 31, 1995. The Unaudited Pro Forma Condensed Consolidated Balance Sheet reflects adjustments as if the Acquisition had occurred on September 27, 1997. The Acquisition has been accounted for using the purchase method of accounting. Accordingly, assets acquired and liabilities assumed have been recorded at their estimated fair values. Management does not expect that the final allocation of the purchase price for the Acquisition will differ materially from the allocations set forth in the unaudited pro forma financial information presented herein. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable. The Unaudited Pro Forma Condensed Consolidated Financial Statements do not purport to present the financial position or results of operations of the Company had the acquisition of Daxbourne occurred on the dates specified, nor are they necessarily indicative of the results of operations that may be achieved in the future. The Unaudited Pro Forma Condensed Consolidated Statements of Operations do not reflect any adjustments for synergies that management expects to realize commencing upon consummation of the acquisition. There are no assurances as to the amount of cost savings or revenue enhancements, if any, that actually will be realized. The unaudited pro forma financial information is based on certain assumptions and adjustments described in the Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements and should be read in conjunction therewith and with the consolidated financial statements and related notes of the Company included in its Annual Report on Form 10-K for the fiscal year ended December 28, 1996 and the consolidated financial statements and related notes of Daxbourne included herein under exhibits 99.1 and 99.2. F-1 SPECIALTY CATALOG CORP. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 27, 1997
Historical Pro Forma Specialty Historical Pro Forma F/N Specialty Catalog Corp. Daxbourne Adjustments Ref. Catalog Corp. ------------- --------- ----------- ---- ------------ Current assets: Cash and cash equivalents $ 3,725 $ 2,202 $ --- $ 5,927 Accounts receivable, net 1,153,744 295,035 --- 1,448,779 Inventories 5,456,495 508,874 --- 5,965,369 Prepaid expenses 2,613,256 --- (119,952) A 2,493,304 ----------- ---------- ----------- ------------ Total current assets 9,227,220 806,111 (119,952) 9,913,379 ----------- ---------- ----------- ------------ Property and equipment, net 1,200,298 469,441 --- 1,669,739 ----------- ---------- ----------- ------------ Deferred income taxes 5,698,570 --- --- 5,698,570 ----------- ---------- ----------- ------------ Intangible assets, net --- --- 3,918,119 B 3,918,119 ----------- ---------- ----------- ------------ Other assets 300,367 --- 67,753 C 368,120 ----------- ---------- ----------- ------------ Total assets $16,426,455 $1,275,552 $ 3,865,920 $21,567,927 =========== ========== =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses 1,794,532 249,544 778,778 E 2,822,854 Line of credit 2,027,760 --- 1,831,479 D 3,859,239 Liabilities to customers 882,667 --- --- 882,667 Income taxes 111,640 --- --- 111,640 Current portion of long-term debt 500,000 --- 500,000 Deferred consideration --- --- 483,900 F 483,900 ----------- ---------- ----------- ------------ Total current liabilities 5,316,599 249,544 3,094,157 8,660,300 ----------- ---------- ----------- ------------ Long-term debt 4,500,000 --- 1,797,771 D 6,297,771 Stockholders' equity: Common stock 49,670 807 (807) G 49,670 Additional paid-in capital 15,696,393 --- --- 15,696,393 Deferred compensation (70,238) --- --- (70,238) Accumulated deficit (9,065,969) 1,025,201 (1,025,201) G (9,065,969) ----------- ---------- ----------- ------------ Total stockholders' equity 6,609,856 1,026,008 (1,026,008) 6,609,856 ----------- ---------- ----------- ------------ Total liabilities and stockholders' Equity $16,426,455 $1,275,552 $ 3,865,920 $21,567,927 =========== ========== =========== ===========
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. F-2 SPECIALTY CATALOG CORP. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 27, 1997
Historical Pro Forma Specialty Historical Pro Forma F/N Specialty Catalog Corp. Daxbourne Adjustments Ref. Catalog Corp. ------------- --------- ----------- ---- ------------- Net sales $31,531,937 $3,604,753 $ --- $35,136,690 Cost of sales (including buying, occupancy and order fulfillment costs) 10,701,088 1,109,263 --- 11,810,351 ----------- ---------- ---------- ----------- Gross profit 20,830,849 2,495,490 --- 23,326,339 Selling, general & administrative expenses 17,863,094 1,890,759 --- 19,753,853 Amortization of intangibles --- --- 230,015 H 230,015 ----------- ---------- ---------- ----------- Income from operations 2,967,755 604,731 (230,015) 3,342,471 Interest income (expense), net (598,240) 26,818 (257,677) I (829,099) ----------- ---------- ---------- ----------- Income before income taxes and extraordinary items 2,369,515 631,549 (487,692) 2,513,372 Income tax provision (benefit) 995,196 170,409 (113,597) J 1,052,008 ----------- ---------- ---------- ----------- Income before extraordinary items $ 1,374,319 $ 461,140 ($374,095) $ 1,461,364 =========== ========== ========== =========== Per common share: Income before extraordinary items $0.25 $0.26 =========== =========== Weighted average shares outstanding 5,523,587 5,523,587 =========== ===========
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. F-3 SPECIALTY CATALOG CORP. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 28, 1996
Historical Pro Forma Specialty Historical Pro Forma F/N Specialty Catalog Corp. Daxbourne Adjustments Ref. Catalog Corp. ------------- ---------- ----------- ---- ------------- Net sales $36,271,663 $5,138,492 $ $41,410,155 --- Cost of sales (including buying, occupancy and order fulfillment costs) 12,810,921 1,679,809 --- 14,490,730 ----------- ---------- ------------ ----------- Gross profit 23,460,742 3,458,683 --- 26,919,425 Selling, general & administrative expenses 20,185,965 2,797,205 --- 22,983,170 Amortization of intangibles --- --- 306,687 H 306,687 ----------- ---------- ------------ ----------- Income from operations 3,274,777 661,478 (306,687) 3,629,568 Interest income (expense), net (1,657,471) 15,193 (343,570) I (1,985,848) ----------- ---------- ------------ ----------- Income before income taxes 1,617,306 676,671 (650,257) 1,643,720 Income tax provision (benefit) 644,047 260,846 (205,837) J 699,056 ----------- ---------- ------------ ----------- Net income $ 973,259 $ 415,825 ($444,420) $ 944,664 =========== ========== ============ =========== Per common share: Net income per share $0.25 $0.24 =========== =========== Weighted average shares outstanding 3,946,211 3,946,211 =========== ===========
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. F-4 SPECIALTY CATALOG CORP. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The acquisition of certain assets and liabilities of the Daxbourne Group has been accounted for using the purchase method of accounting. Accordingly, assets acquired and liabilities assumed have been recorded at their estimated fair values. Management does not expect that the final allocation of the purchase price for the acquisition of the Daxbourne Group will differ materially from the allocations set forth in the unaudited pro forma financial information presented herein. The Unaudited Pro Forma Condensed Consolidated Statements of Operations reflect adjustments as if the acquisition of the Daxbourne Group had occurred on December 31, 1995. The Unaudited Pro Forma Condensed Consolidated Balance Sheet reflects adjustments as if the acquisition of the Daxbourne Group had occurred on September 27, 1997. The Historical Daxbourne Balance Sheet as of September 27, 1997 has been adjusted to reflect only the assets and liabilities acquired by the Company. The translation of the Historical Daxbourne Financial Statements from pound sterling to United States dollars has been performed using the foreign currency exchange rate as of October 3, 1997 of $1.613 to (Pounds)1.00. 2. THE DAXBOURNE ACQUISITION On October 3, 1997, Daxbourne International Limited, a wholly owned subsidiary of SC Corporation, which in turn is the principal operating subsidiary of Specialty Catalog Corp., accepted an offer to acquire the assets of the Daxbourne Group. The Daxbourne Group is a leading retailer of women's wigs, hairpieces and related products in the U.K. The Daxbourne Group distributes wigs and hairpieces under its Jacqueline Collection, Pretty Woman and Natural Image brands, and has established a strong presence in the U.K. through catalog, retail and wholesale distribution channels. As part of this transaction, the Company has acquired substantially all of the inventory, real property, physical plant and equipment, intangible assets and other assets used in connection with Daxbournes' business. The Company financed this acquisition through its senior facility with BankBoston N.A., which was increased from an $11 million U.S. facility to a $15 million combined U.S. and U.K. facility. F-5 SPECIALTY CATALOG CORP. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3. DESCRIPTION OF CONSIDERATION The aggregate consideration for the acquisition of certain assets and liabilities of the Daxbourne Group was $4,874,776, with $3,629,250 paid at closing and $483,900 payable without interest one year from closing, plus acquisition costs of $761,626. The following is a summary of the allocation of the purchase price to net assets acquired as a result of the Daxbourne acquisition: Cash $ 2,202 Accounts receivable, net 295,035 Inventory 508,874 Property and equipment 469,441 Deferred debt costs 67,753 Current liabilities (386,648) Customer list 250,000 Covenant not to compete 806,500 Trade Names 1,100,000 Goodwill 1,761,619 ---------- $4,874,776 ==========
The purchase price was allocated to the assets and liabilities acquired based on their estimated respective fair values. 4. PRO FORMA ADJUSTMENTS RELATED TO THE DAXBOURNE ACQUISITION A. To eliminate acquisition costs paid by Specialty Catalog Corp. prior to closing which are included in the aggregate purchase price. B. To record the adjustments for the estimated fair values of the customer list, covenant not to compete, tradenames, and goodwill acquired. C. To record the deferred debt costs associated with obtaining the borrowings under the UK Line of Credit and the UK Term Loan. These cost are to be amortized over four years. D. To record the $1,831,479 borrowing under the UK Line of Credit and the $1,797,771 borrowing under the UK Term Loan. F-6 SPECIALTY CATALOG CORP. NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS E. To record accrued acquisition costs of $778,778, including certain integration costs of Daxbourne. F. To record the deferred purchase price consideration which is payable one year from the closing. G. To eliminate Daxbourne's common stock of $807 and retained earnings of $1,025,201. H. To record amortization expense based on amortization of the customer list and the covenant not to compete over 5 years, and amortization of the tradenames and goodwill over 30 years, resulting in an adjustment of $230,015 for the nine months ended September 27, 1997 and $306,687 for the year ended December 28, 1996. I. To record interest expense on the borrowings under the UK Line of Credit and UK Term Loan to finance the acquisition at an interest rate of 9% per annum and the amortization of the deferred debt costs. J. To record income tax provision (benefit). F-7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SPECIALTY CATALOG CORP. Dated: December 10, 1997 /s/ Steven L. Bock ------------------------------------ Steven L. Bock Chairman and Chief Executive Officer Dated: December 10, 1997 /s/ J. William Heise ------------------------------------ J. William Heise Senior Vice President, Chief Financial Officer (Principal Accounting and Financial Officer) EX-23 2 CONSENT OF INDEPENDENT ACCOUNTANT EXHIBIT 23 F.L.R. LININGTON FAPA, ATII --------------------------- CONSENT OF INDEPENDENT ACCOUNTANT We consent to the inclusion in this current report on Form 8-K/A, as amended, of our reports dated October 22, 1997 on our audit of the financial statements of Daxbourne Limited as of April 30, 1997 and April 30, 1996. /s/ F.L.R. Liningtion ----------------------------------- F.L.R. Linington December 10, 1997 EX-99.1 3 DAXBOURNE LIMITED FINANCIAL STATEMENTS 04-30-97 EXHIBIT 99.1 DAXBOURNE LIMITED FINANCIAL STATEMENTS 30/TH/ APRIL 1997 Company Registration Number 1320298 F.L.R. LININGTON FAPA, ATII ---------------------------- Registered Auditor 83 High Street Caterham Surrey CR3 5UF DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES FINANCIAL ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997 CONTENTS 1. & 2. Report of the Director Statement of Director's Responsibilities 3. Report of the Auditor to the Shareholders 4. Consolidated Profit and Loss Account 5. Consolidated Balance Sheet 6. Balance Sheet 7. Consolidated Cash Flow Statement 8. Notes to the Accounts DAXBOURNE LIMITED DIRECTOR'S REPORT FOR THE YEAR ENDED 30/TH/ APRIL 1997 The Director has pleasure in submitting the Annual Report and Financial Statements for the year ended 30/th/ April 1997. RESULTS AND DIVIDEND - -------------------- The Results of the year are stated in the Financial Statements. A dividend of (Pounds)160 per share was paid during the year. ACTIVITIES - ---------- The activities of the Group are of importing and distributing a range of products. FIXED ASSETS - ------------ Information relating to changes in Tangible Fixed Assets is given in Note 7 to the Financial Statements. CHARITABLE AND POLITICAL CONTRIBUTIONS - -------------------------------------- During the year the Company made no political contributions (1996 - (Pounds)nil). Donations to the U.K. Charities amounted to Nil (1996 - (Pounds)350). DIRECTOR - -------- The Director of the Company during the year, together with his shareholdings, was as follows: 30.4.97 30.4.96 ------- ------- M.J. STANNARD 500 500 TAX STATUS - ---------- The Director is of the Opinion that the Company is a close Company as defined by the S414 Income and Corporation Taxes Act 1988. DIRECTORS RESPONSIBILITIES - -------------------------- Company law requires the director to prepare financial statements for each financial year which give true and fair view of the state of affairs of the company at the end of the year and of the profit and loss for the year ended. In preparing those financial statements, the director is required to select suitable accounting policies, as described on page 8, and then apply them on a consistent basis, making judgements and estimates that are prudent and reasonable. The director must also prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The director is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and enable him to ensure that the financial statements comply with the 1 DAXBOURNE LIMITED DIRECTOR'S REPORT FOR THE YEAR ENDED 30/TH/ APRIL 1997 (CONTINUED) Companies Act 1985. The director is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. POST BALANCE SHEET EVENT - ------------------------ There have been significant events which have occurred since the year end and these are covered in note 19 of the financial statements. AUDITOR - ------- A resolution to re-appoint F.L.R. Linnington FAPA ATII, as auditor for the ensuing year will be proposed at the annual general meeting in accordance with section 385 of the Companies Act 1985. Registered Office: Signed on behalf of the Director 9 Fenning Street London SE1 9QR /s/ R R Searle -------------------------- R R Searle Company Secretary Approved by the director on 5/th/ September 1997 2 REPORT OF THE AUDITOR TO THE MEMBERS OF DAXBOURNE LIMITED I have audited the Financial Statements on pages 4 to 14 in accordance with approved auditing standards. RESPECTIVE RESPONSIBILITIES OF DIRECTOR AND AUDITOR As described in the director's report, the director of the company is responsible for the preparation of financial accounts. It is my responsibility to form an independent opinion, based on my audit, on those statements and to report my opinion to you. BASIS OF OPINION I conducted my audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial accounts, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial accounts are free from material misstatement, whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements. In my opinion the Financial Statements, which have been prepared under the historical cost convention, give a true and fair view of the state of affairs of the Company and the Group at the 30/th/ April 1997 and of its Profit and Loss results and Cash Flows for the year then ended and have been properly prepared in accordance with the Companies Act 1985 applicable to small companies. /s/ F.L.R. Linington ----------------------------------------- F.L.R. LININGTON, F.A.P.A., A.T.I.I. Registered Auditor ------------------ 83 High Street Caterham Surry CR3 5UF 22/nd/ October 1997 3 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997
NOTES 1997 1996 ---- ---- ---- Turnover 2 (Pounds)3,081,397 (Pounds)3,345,291 Cost of sales (991,350) (1,191,592) --------- ----------- Gross profit 2,090,047 2,153,699 Non-operating expenses - ---------------------- Distribution costs (83,802) (128,156) Administration costs (1,400,973) (1,717,677) ----------- ----------- Operating profit 3 605,272 307,866 Other operating income - ---------------------- Interest receivable 4 12,097 10,220 ------ ------ 617,369 318,086 Interest payable 5 (6,259) (30,703) ------ ------- Profit on ordinary activities before taxation 611,110 287,383 Taxation 6 (182,468) (139,553) -------- -------- 428,642 147,830 Dividends (80,000) --- -------- -------- (Pounds)348,642 (Pounds)147,830 =============== =============== Profit in the year in - - ----------------------- The Company (Pounds)142,607 (Pounds)50,841 Subsidiaries 206,035 96,989 ------- ------ (Pounds)348,642 (Pounds)147,830 =============== ===============
4 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET AS AT 30/TH/ APRIL 1997
NOTES 1997 1996 ----- ---- ---- Fixed Assets - ------------ Tangible assets 7 (Pounds)313,631 (Pounds)304,268 =============== =============== Current Assets - -------------- Stocks 9 393,886 399,854 Debtors 10 329,485 279,035 Cash at bank and in hand 561,122 330,995 ------- ------- 1,284,493 1,009,884 Current Liabilities - ------------------- Amounts falling due within one year 11 (545,014) (608,382) --------- --------- Net Current Assets (Pounds)739,479 (Pounds)401,502 ================ ================ Total Assets Less Liabilities 1,053,110 705,770 Creditors due after more than one year 12 (2,279) (3,581) ------- ------- (Pounds)1,050,831 (Pounds)702,189 ================== ================ Capital Reserves - ---------------- Share capital 13 500 500 Reserves 14 1,050,331 701,689 --------- ------- (Pounds)1,050,831 (Pounds)702,189 ================= ===============
5 DAXBOURNE LIMITED BALANCE SHEET AS AT 30/TH/ APRIL 1997
NOTES 1997 1996 ----- ---- ---- Fixed Assets - ------------ Tangible assets 7 (Pounds)309,450 (Pounds)291,494 Investments 8 70,500 70,500 --------------- --------------- (Pounds)379,950 (Pounds)361,994 =============== =============== Current Assets - -------------- Stocks 9 393,886 399,854 Debtors 10 331,594 296,727 Cash at bank and in hand 538,324 309,966 --------------- --------------- 1,263,804 1,006,547 Current Liabilities Amounts falling due within one year 11 (1,227,927) (1,094,019) -------------- --------------- Net Current Assets (Pounds)35,877 (Pounds)(87,472) ============== =============== Total Assets Less Liabilities 415,827 274,522 Creditors due after more than one year 12 (2,279) (3,581) --------------- --------------- (Pounds)413,548 (Pounds)270,941 =============== =============== Capital Reserves - ---------------- Share capital 13 500 500 Reserves 14 413,048 270,441 --------------- --------------- (Pounds)413,548 (Pounds)270,941 =============== ===============
6 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30/TH/ APRIL 1997
1997 1996 ---------------- ---------------- NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)487,998 (Pounds)387,199 TAXATION Corporation tax paid (130,509) (182,351) INVESTING ACTIVITIES Receipts from sale of fixed assets 8,200 5,585 --------------- --------------- NET CASH INFLOW BEFORE FINANCING 365,689 210,433 FINANCING Purchase of fixed assets (55,562) (35,083) Dividend (80,000) --- --------------- --------------- NET CASH OUTFLOW FROM FINANCING (135,562) (35,083) --------------- --------------- INCREASE IN CASH AND CASH EQUIVALENTS (Pounds)230,127 (Pounds)175,350 =============== =============== RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES: Operating profit (Pounds)611,110 (Pounds)287,383 Depreciation 37,997 165,271 (Increase)/decrease in debtors (50,450) (31,416) Increase/(decrease) in creditors (116,627) (87,895) (Increase)/decrease in stocks 5,968 53,856 --------------- --------------- NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)487,998 (Pounds)387,199 =============== =============== ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS DURING THE YEAR Balance brought forward (Pounds)330,995 Net cash inflow 230,127 --------------- Balance carried forward (Pounds)561,122 ===============
7 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997 FORMING PART OF THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES ------------------- BASIS OF ACCOUNTING The accounts have been prepared under the historical cost convention and in accordance with applicable accounting standards. The historical cost convention has been modified to include revaluation of land and buildings. CONSOLIDATION The Consolidated Financial Statements incorporate the Accounts of the Company and all its subsidiaries being made up to 30/th/ April 1997 in accordance with the Companies Act 1985. A separate Profit and Loss Account for Daxbourne Limited is not presented as the result of the Company are disclosed in the consolidated Profit and Loss Account. The effect of events related to the year ended 30/th/ April 1997 which occurred before 5/th/ September 1997, the date of approval of the Financial Statements by the Board of Directors have been included in the Statements to the extent required to show a true and fair view of the state of affairs at 30/th/ April 1997 and the results for the year ended on that date. TAXATION The charge for taxation is based on the Profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. No provision for deferred taxation is made if there is reasonable evidence that such deferred taxation will not be payable in the foreseeable future. TURNOVER Turnover represents the net invoiced sale of goods, excluding VAT. TANGIBLE FIXED ASSETS No depreciation is provided on freehold property which is maintained such that its estimated residual value is in excess of the book value in these financial statements. Depreciation is provided on other fixed assets at the following annual rates in order to write off each asset over its estimated useful life: Motor Vehicles 25% on net book value Plant and Equipment 10% on cost Computer Equipment 20% on cost INTANGIBLE FIXED ASSETS Costs have been capitalized and are amortized over the estimated life of the asset as follows: Goodwill: in equal installments over three years STOCKS Stocks are valued at the lower of cost and net realizable value after making due allowance for obsolete and slow-moving items. There has been an amendment during the year to the basis used for stock from FIFO to average cost. In valuing stock the Company has continued with its policy of applying a fixed exchange rate for the US Dollar of $1.50/(Pounds)1. 8 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) HIRE PURCHASE AGREEMENTS Assets held under hire purchase agreements are capitalized and disclosed under tangible fixed assets at their fair value. The capital element of the future payments is treated as a liability and the interest is charged to the profit and loss account. OPERATING LEASE AGREEMENTS Rentals applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits as incurred. PENSION COSTS The Company operates a defined contribution pension scheme. Contributions payable for the year are charged in the profit and loss account. The level of contributions is calculated with actuarial advice. Independent actuarial valuations of the scheme are made every three years. 2. TURNOVER -------- The Turnover and Profit (1996 - Profit) before taxation for the year is attributable to the principal activity of the Company which is importing and distributing a range of products. In the opinion of the Director's, 5% of the company's turnover is attributable to geographical markets outside of the UK. (1996 - 5%). 3. OPERATING PROFIT ----------------
1997 1996 ---- ---- Operating profits is stated after charging: Directors Emoluments (Pounds)85,389 (Pounds)57,153 Directors Pension 26,250 17,500 Depreciation of Fixed Tangible Assets 37,993 30,271 Depreciation of Intangible Assets --- 135,000 Auditors Renumeration 36,000 24,650
4. INTEREST RECEIVABLE -------------------
1997 1996 ---- ---- Interest from Bank Deposits (Pounds)12,097 (Pounds)10,220
9 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 5. INTEREST PAYABLE ----------------
1997 1996 ---- ---- Finance Charges (Pounds)656 (Pounds)711 Other interest and similar charges 5,603 29,992 ----- ------ (Pounds)6,259 (Pounds)30,703 ============= ==============
6. TAXATION --------
1997 1996 ---- ---- UK Corporation Tax on profits for the year (Pounds)192,649 (Pounds)140,700 Prior Year's Adjustment (10,181) (1,147) ------ ----- (Pounds)182,468 (Pounds)139,553 =============== ===============
7. FIXED TANGIBLE ASSETS ---------------------
FREEHOLD PLANT & Group PROPERTY MACHINERY TOTAL ----- -------- --------- ----- At 1/st/ May 1996 (Pounds)200,000 (Pounds)273,705 (Pounds)473,705 Additions --- 55,563 55,563 Disposals --- (64,108) (64,108) --- ------ ------ At 30/th/ April 1997 (Pounds)200,000 (Pounds)265,160 (Pounds)465,160 =============== =============== =============== Depreciation ------------ At 1/st/ May 1996 (Pounds)--- (Pounds)169,437 (Pounds)169,437 Charge for year --- 31,153 31,153 Disposals --- (49,061) (49,061) --- ------ ------ At 30/th/ April 1997 (Pounds)--- (Pounds)151,529 (Pounds)151,529 =========== =============== =============== Net 30/th/ April 1997 (Pounds)200,000 (Pounds)113,631 (Pounds)313,631 =============== =============== =============== Net 30/th/ April 1996 (Pounds)200,000 (Pounds)104,268 (Pounds)304,268 =============== =============== ===============
DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 8. FIXED TANGIBLE ASSETS (continued) ---------------------
FREEHOLD PLANT & Company PROPERTY MACHINERY TOTAL ------- -------- --------- ----- At 1/st/ May 1996 (Pounds)200,000 (Pounds)214,120 (Pounds)414,120 Additions --- 55,365 55,365 Disposals --- (21,113) (21,113) --- ------ ------ At 30/th/ April 1997 (Pounds)200,000 (Pounds)248,372 (Pounds)448,372 =============== =============== =============== Depreciation ------------ At 1/st/ May 1996 (Pounds)--- (Pounds)122,627 (Pounds)122,627 Charge for year --- 29,493 29,493 Disposals --- (13,198) (13,198) --- ------ ------ At 30/th/ April 1997 (Pounds)--- (Pounds)138,922 (Pounds)138,922 =========== =============== =============== Net 30/th/ April 1997 (Pounds)200,000 (Pounds)109,450 (Pounds)309,450 =============== =============== =============== Net 30/th/ April 1996 (Pounds)200,000 (Pounds)91,494 (Pounds)291,494 =============== ============== ===============
9. FIXED ASSET INVESTMENTS -----------------------
1997 1996 ---- ---- Subsidiary Companies Shares at cost (Pounds) 70,500 (Pounds) 70,500 =============== ===============
GROUP ACCOUNTS AND SUBSIDIARIES The Company's subsidiaries are:
Registered Number & Country of Holding of Share Capital Profit/(Loss) for Subsidiary Companies Incorporation Ordinary shares and Reserves the Year -------------------- ----------------- --------------- ------------- ----------------- Postinstant Limited 1559076, England 100% 688,111 186,288 M.C. Hairways Limited 2758010, England 100% (82,827) 19,748
Stock purchases by subsidiaries from Daxbourne Limited were conducted at an appropriate transfer price. M.C. Hairways Limited ceased to trade during the year ended 30/th/ April 1997. DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 10. STOCKS ------
1997 1996 ---- ---- Group Company Group Company ----- ------- ----- ------- Goods for resale (Pounds)393,886 (Pounds)393,886 (Pounds)399,854 (Pounds)399,854 =============== =============== =============== ===============
11. DEBTORS -------
1997 1996 ---- ---- Due within one year: Group Company Group Company ----- ------- ----- ------- Trade Debtors (Pounds)264,891 (Pounds)245,530 (Pounds)221,658 (Pounds)180,113 Prepayments & accrued income 64,594 71,889 57,377 20,100 Intergroup --- 14,175 --- 96,514 --- ------ --- ------ (Pounds)329,485 (Pounds)331,594 (Pounds)279,035 (Pounds)296,727 =============== ============== =============== ===============
12. CREDITORS ---------
1997 1996 ---- ---- Group Company Group Company ----- ------- ----- ------- Amounts falling due within one year: ------------------------------------ Due to Subsidiaries (Pounds)--- (Pounds)847,833 (Pounds)--- (Pounds)579,787 Trade Creditors 72,224 56,930 77,594 69,185 Hire Purchases 1,302 1,302 1,342 1,342 Other Creditors 471,488 321,862 529,446 443,705 Bank Overdrafts (See note 15) --- --- --- --- --- --- --- --- (Pounds)545,014 (Pounds)1,227,927 (Pounds)608,382 (Pounds)1,094,019 =============== ================= =============== =================
12 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 13. CREDITORS ---------
1997 1996 ---- ---- Group Company Group Company ----- ------- ----- ------- Amounts falling due after more than one year: --------------------------------------------- Other Creditors (Pounds)2,279 (Pounds)2,279 (Pounds)3,581 (Pounds)3,581 ` ============= ============= ============= =============
14. SHARE CAPITAL -------------
Authorized 1997 1996 ---------- ---- ---- 1,000 Ordinary Shares of (Pounds)1 each (Pounds)1,000 (Pounds)1,000 ============= ============= Issued ------ 500 Ordinary Shares (Pounds)500 (Pounds)500 =========== ===========
15. RESERVES --------
Capital Redemption Profit & Loss Reserve Total ------------- ------- ----- Group ----- As at 1/st/ May 1996 (Pounds)701,189 (Pounds)500 (Pounds)701,689 Transfer from Profit & Loss A/c 348,642 --- 348,642 ------- --- ------- As at 30/th/ April 1997 (Pounds)1,049,831 (Pounds)500 (Pounds)1,050,331 ================= =========== ================ Company ------- As at 1/st/ May 1996 (Pounds)269,941 (Pounds)500 (Pounds)270,441 Transfer from Profit & Loss A/c 142,607 --- 142,607 ------- --- ------- As at 30/th/ April 1997 (Pounds)412,548 (Pounds)500 (Pounds)413,048 =============== =========== ===============
16. CONTINGENT LIABILITY AND GUARANTEES ----------------------------------- The Company has guaranteed the Bank by way of a fixed and floating charge over the undertaking and assets of the Company to a maximum of (Pounds)200,000. 13 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1997 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 17. COMMITMENTS UNDER HIRE PURCHASE AGREEMENTS ------------------------------------------ Future commitments under hire purchase agreements are as follows:
1997 1996 ---- ---- Amounts payable within 1 year (Pounds)1,998 (Pounds)1,998 Amounts payable between 2 to 5 years 3,497 5,495 ----- ----- 5,495 7,493 Interest and finance charges relating to future periods (1,914) (2,570) ------- ------- (Pounds)3,581 (Pounds)4,923 ============== ==============
18. COMMITMENTS UNDER OPERATING LEASES ---------------------------------- At 30/th/ April 1997 the Company had annual commitments under non- cancellable operating leases as set out below.
1997 1996 ---- ---- ASSETS OTHER THAN LAND AND BUILDINGS Operating leases (Pounds)17,850 (Pounds)17,495 ============== ==============
19. POST BALANCE SHEET EVENTS ------------------------- Several events having significant impact on an understanding of the accounts have occurred between the year end and the date of the auditor's signature. These are: OFFER FOR THE COMPANY An offer has been made for the entire share capital of the Company. Amounts stated for provisions are calculated on the basis that neither party will seek to restructure the Company in the short to medium term. CHANGE IN SHARE OWNERSHIP The majority of the issued share capital of the Company has been transferred to a trust. DIVIDENDS On 19 June 1997 a dividend of (Pounds)280,000 was declared and paid. 14 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES (Unaudited) The Historical Daxbourne Limited Financial Statements are presented using generally accepted accounting principles of the United Kingdom. In management's opinion, there are no material variations in the accounting principles, practices and methods used in preparing these financial statements from the principles, practices and methods accepted in the United States. 15 EX-99.2 4 DAXBOURNE LIMITED FINANCIAL STATEMENTS 04-30-96 EXHIBIT 99.2 DAXBOURNE LIMITED FINANCIAL STATEMENTS 30/TH/ APRIL 1996 Company Registration Number 1320298 F.L.R. LININGTON FAPA, ATII ---------------------------- Registered Auditor 83 High Street Caterham Surrey CR3 5UF DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES FINANCIAL ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996 CONTENTS 1. & 2. Report of the Director Statement of Director's Responsibilities 3. Report of the Auditor to the Shareholders 4. Consolidated Profit and Loss Account 5. Consolidated Balance Sheet 6. Balance Sheet 7. Consolidated Cash Flow Statement 8. Notes to the Accounts DAXBOURNE LIMITED DIRECTOR'S REPORT FOR THE YEAR ENDED 30/TH/ APRIL 1996 The Director has pleasure in submitting the Annual Report and Financial Statements for the year ended 30/th/ April 1996. RESULTS AND DIVIDEND - -------------------- The Results of the year are stated in the Financial Statements. ACTIVITIES - ---------- The activities of the Group are of importing and distributing a range of products. FIXED ASSETS - ------------ Information relating to changes in Tangible Fixed Assets is given in Note 7 to the Financial Statements. CHARITABLE AND POLITICAL CONTRIBUTIONS - -------------------------------------- During the year the Company made no political contributions (1995 - (Pounds)nil). Donations to the U.K. Charities amounted to (Pounds)350 (1995 - (Pounds)1,375). DIRECTOR - -------- The Director of the Company during the year, together with his shareholdings, was as follows: 30.4.96 30.4.95 ------- ------- M.J. STANNARD 500 500 AUDITOR - ------- The Auditor, F.L.R. Linnington, is willing to continue in Office and a Resolution concerning his re-appointment will be submitted to the Annual General Meeting. TAX STATUS - ---------- The Director is of the Opinion that the Company is a close Company as defined by the S414 Income and Corporation Taxes Act 1988. BY ORDER OF THE BOARD Secretary --------- 1 DAXBOURNE LIMITED STATEMENT OF DIRECTOR'S RESPONSIBILITIES I am required under company law to prepare financial accounts for each financial year which give a true and fair view of the state of the affairs of the company and of the profit and loss of the company for that period. In preparing those financial accounts I am required to: - select suitable accounting policies and then apply them consistently: - make judgements and estimates that are reasonable and prudent: - prepare the financial accounts on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The director is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable him to ensure that the financial accounts comply with the Companies Act 1985. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. By Order of the Board 30/th/ August 1996 2 REPORT OF THE AUDITOR TO THE MEMBERS OF DAXBOURNE LIMITED I have audited the Financial Statements on pages 4 to 13 in accordance with approved auditing standards. RESPECTIVE RESPONSIBILITIES OF DIRECTOR AND AUDITOR As described in the director's report, the director of the company is responsible for the preparation of financial accounts. It is my responsibility to form an independent opinion, based on my audit, on those statements and to report my opinion to you. BASIS OF OPINION I conducted my audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial accounts. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial accounts, and of whether the accounting policies are appropriate to the company's circumstances, consistently applied and adequately disclosed. I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial accounts are free from material misstatement, whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements. In my opinion the Financial Statements, which have been prepared under the historical cost convention, give a true and fair view of the state of affairs of the Company and the Group at the 30/th/ April 1996 and of its Profit and Loss results and Cash Flows for the year then ended and have been properly prepared in accordance with the Companies Act 1985 applicable to small companies. /s/ F.L.R. Linington ----------------------------------- F.L.R. LININGTON, F.A.P.A., A.T.I.I. Registered Auditor ------------------ 83 High Street Caterham Surry CR3 5UF 22/nd/ October 1997 3 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996
NOTES 1996 1995 ----- ---- ---- Turnover 2 (Pounds)3,345,291 (Pounds)2,706,177 Cost of sales (1,191,592) (1,535,795) --------- --------- Gross profit 2,153,699 1,170,382 Non-operating expenses - ---------------------- Distribution costs (128,156) (104,769) Administration costs (1,717,677) (580,039) --------- ------- Operating profit 3 307,866 485,574 Other operating income - ---------------------- Leasing --- 138 Interest receivable 4 10,220 7,517 ------ ----- 318,086 493,229 Interest payable 5 (30,703) (182) ------ --- Profit on ordinary activities before taxation 287,383 493,047 Taxation 6 (139,553) (182,312) ------- ------- (Pounds)147,830 (Pounds)310,735 ============== ============== Profit in the year in - - ----------------------- The Company 50,841 73,663 Subsidiaries 96,989 237,072 ------ ------- (Pounds)147,830 (Pounds)310,735 ============== ==============
4 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEET AS AT 30/TH/ APRIL 1996
NOTES 1996 1995 ----- ---- ---- Fixed Assets - ------------ Tangible assets 7 (Pounds)304,268 (Pounds)305,042 Intangible assets 8 --- 135,000 ------- ------- 304,268 440,042 ------- ------- Current Assets - -------------- Stocks 10 399,854 453,710 Debtors 11 279,035 247,619 Cash at bank and in hand 330,995 163,908 ------- ------- 1,009,884 865,237 Current Liabilities - ------------------- Amounts falling due within one year 12 (608,382) (533,420) ------- ------- Net Current Assets (Pounds)401,502 (Pounds)331,817 ============== ============== Total Assets Less Liabilities 705,770 771,859 Creditors due after more than one year 13 (3,581) (217,500) ----- ------- (Pounds)702,189 (Pounds)554,359 ============== ============== Capital Reserves - ---------------- Share capital 14 500 500 Reserves 15 701,689 553,859 ------- ------- (Pounds)702,189 (Pounds)554,359 ============== ==============
5 DAXBOURNE LIMITED BALANCE SHEET AS AT 30/TH/ APRIL 1996
NOTES 1996 1995 ----- ---- ---- Fixed Assets - ------------ Tangible assets 7 (Pounds)291,494 (Pounds)301,177 Intangible assets 8 --- 135,000 Investments 70,500 70,500 ------ ------ (Pounds)361,994 (Pounds)506,677 ============== ============== Current Assets - -------------- Stocks 9 399,854 453,710 Debtors 10 296,727 214,651 Cash at bank and in hand 309,966 154,677 ------- ------- 1,006,547 823,038 Current Liabilities - ------------------- Amounts falling due within one year 11 (1,094,019) (825,617) --------- ------- Net Current Assets (Pounds)(87,472) (Pounds)(2,579) ============== ============= Total Assets Less Liabilities 274,522 504,098 Creditors due after more than one year 12 (3,581) (217,500) ----- ------- (Pounds)270,941 (Pounds)286,598 ============== ============== Capital Reserves - ---------------- Share capital 13 500 500 Reserves 14 270,441 286,098 ------- ------- (Pounds)270,941 (Pounds)286,598 ============== ==============
6 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30/TH/ APRIL 1996
1996 1995 ---- ---- NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)387,199 (Pounds)433,139 TAXATION Corporation tax paid (182,351) (186,811) Investing activities Receipts from sale of fixed assets 5,585 21,168 Short term loan --- 17,500 --- ------ 5,585 38,668 ----- ------ NET CASH INFLOW BEFORE FINANCING 210,433 284,996 FINANCING Purchase of fixed assets (35,083) (77,816) Purchase of Trade --- (202,500) --- ------- NET CASH OUTFLOW FROM FINANCING (35,083) (280,316) ------ ------- INCREASE IN CASH AND CASH EQUIVALENTS (Pounds)175,350 (Pounds)4,680 ============== ============ RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES: Operating profit (Pounds)287,383 (Pounds)493,047 Depreciation 165,271 101,324 (Increase)/decrease in debtors (31,416) (18,145) Increase/(decrease) in creditors (87,895) 27,823 (Increase)/decrease in stocks 53,856 (170,910) ------ ------- NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)387,199 (Pounds)433,139 ============== ============== ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS DURING THE YEAR Balance brought forward (Pounds)155,645 Net cash inflow 175,350 ------- Balance carried forward (Pounds)330,995 ==============
7 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996 FORMING PART OF THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES ------------------- BASIS OF ACCOUNTING The accounts have been prepared under the historical cost convention as modified to incorporate the revaluation of certain fixed assets. CONSOLIDATION The Consolidated Financial Statements incorporate the Accounts of the Company and all its subsidiaries being made up to 30/th/ April 1996 in accordance with the Companies Act 1985. A separate Profit and Loss Account for Daxbourne Limited is not presented as the result of the Company are disclosed in the consolidated Profit and Loss Account. The effect of events related to the year ended 30/th/ April 1996 which occurred before 30/th/ August 1996, the date of approval of the Financial Statements by the Board of Directors have been included in the Statements to the extent required to show a true and fair view of the state of affairs at 30/th/ April 1996 and the results for the year ended on that date. TAXATION The charge for taxation is based on the Profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. No provision for deferred taxation is made if there is reasonable evidence that such deferred taxation will not be payable in the foreseeable future. TURNOVER Turnover represents the net invoiced sale of goods, excluding VAT. TANGIBLE FIXED ASSETS No depreciation is provided on freehold property which is maintained such that its estimated residual value is in excess of the book value in these financial statements. Depreciation is provided on other fixed assets at the following annual rates in order to write off each asset over its estimated useful life: Motor Vehicles 25% on net book value Plant and Equipment 10% on cost Computer Equipment 20% on cost INTANGIBLE FIXED ASSETS Costs have been capitalized and are amortized over the estimated life of the asset as follows: Goodwill: in equal installments over three years STOCKS Stocks and work in progress are valued at the lower of cost and net realizable value after making due allowance for obsolete and slow-moving items. Cost includes all direct expenditures and an appropriate proportion of fixed and variable overheads. 8 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) PENSION COSTS The Company operates a defined contribution pension scheme. Contributions payable for the year are charged in the profit and loss account. The level of contributions is calculated with actuarial advice. Independent actuarial valuations of the scheme are made every three years. 2. TURNOVER -------- The Turnover and Profit (1995 - Profit) before taxation for the year is attributable to the principal activity of the Company which is importing and distributing a range of products. In the opinion of the Director's, 5% of the company's turnover is attributable to geographical markets outside of the UK. (1995 - 5%). 3. OPERATING PROFIT ----------------
1996 1995 ---- ---- Operating profits is stated after charging: Directors Emoluments (Pounds)57,153 (Pounds)56,687 Directors Pension 17,500 17,500 Depreciation of Fixed Tangible Assets 30,271 33,823 Depreciation of Intangible Assets 135,000 67,500 Auditors Renumeration 24,650 23,250
4. INTEREST RECEIVABLE -------------------
1996 1995 ---- ---- Interest from Bank Deposits (Pounds)10,220 (Pounds)7,517 ============== =============
5. INTEREST PAYABLE ----------------
1996 1995 ---- ---- Finance Charges (Pounds)711 (Pounds)--- Other interest and similar charges 29,992 182 ------ --- (Pounds)30,703 (Pounds)182 ============== ===========
9 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 6. TAXATION --------
1996 1995 ---- ---- UK Corporation Tax on profits for the (Pounds)140,700 (Pounds)183,500 year Prior Year's Adjustment (1,147) (1,188) ----- ----- (Pounds)139,553 (Pounds)182,312 =============== ===============
7. FIXED TANGIBLE ASSETS ---------------------
FREEHOLD PLANT & Group PROPERTY MACHINERY TOTAL ----- --------- --------- ----- At 1/st/ May 1995 (Pounds)200,000 (Pounds)250,019 (Pounds)450,019 Additions --- 35,083 35,083 Disposals --- (11,397) (11,397) --- ------- ------- At 30/th/ April 1996 (Pounds)200,000 (Pounds)273,705 (Pounds)473,705 =============== =============== =============== Depreciation ------------ At 1/st/ May 1995 --- (Pounds)144,977 (Pounds)144,977 Charge for year --- 29,738 29,738 Disposals --- (5,278) (5,278) --- ----- ----- At 30/th/ April 1996 --- (Pounds)169,437 (Pounds)169,437 === =============== =============== Net 30/th/ April 1996 (Pounds)200,000 (Pounds)104,268 (Pounds)304,268 =============== =============== =============== Net 30/th/ April 1995 (Pounds)200,000 (Pounds)105,042 (Pounds)305,042 =============== =============== ===============
10 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 8. FIXED TANGIBLE ASSETS(continued) --------------------------------
FREEHOLD PLANT & Company PROPERTY MACHINERY TOTAL ------- -------- --------- ----- At 1/st/ May 1995 (Pounds)200,000 (Pounds)202,169 (Pounds)402,169 Additions --- 23,348 23,348 Disposals --- (11,397) (11,397) --- ------ ------ At 30/th/ April 1996 (Pounds)200,000 (Pounds)214,120 (Pounds)414,120 =============== =============== =============== Depreciation ------------ At 1/st/ May 1995 --- (Pounds)100,992 (Pounds)100,992 Charge for year --- 26,913 26,913 Disposals --- (5,278) (5,278) --- ----- ----- At 30/th/ April 1996 --- (Pounds)122,627 (Pounds)122,627 === =============== =============== Net 30/th/ April 1996 (Pounds)200,000 (Pounds)91,494 (Pounds)291,494 =============== =============== =============== Net 30/th/ April 1995 (Pounds)200,000 (Pounds)101,177 (Pounds)301,177 =============== =============== ===============
9. FIXED INTANGIBLE ASSETS -----------------------
Group 1996 1995 ----- ---- ---- Goodwill (Pounds)--- (Pounds)135,000 =========== =============== Company ------- Goodwill (Pounds)--- (Pounds)135,000 =========== ===============
10. FIXED ASSET INVESTMENTS -----------------------
1996 1995 ---- ---- Subsidiary Companies Shares at cost (Pounds)70,500 (Pounds)70,500 ============== ============== The Companies in which the Company's interest is more than 10% are as follows: Class and Percentage of Subsidiary Companies Country of Incorporation Shares Held by Company -------------------- ------------------------ ----------------------- Postinstant Limited England Ordinary 100% M.C. Hairways Limited England Ordinary 100%
DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 11. STOCKS ------
1996 1995 ---- ---- Group Company Group Company ----- ------- ----- ------- Goods for resale (Pounds)399,854 (Pounds)399,854 (Pounds)453,710 (Pounds)453,710 =============== =============== =============== ===============
12. DEBTORS -------
1996 1995 ---- ---- Due within one year: Group Company Group Company ----- ------- ----- ------- Trade Debtors (Pounds)221,658 (Pounds)180,113 (Pounds)211,560 (Pounds)174,039 Prepayments & accrued income 57,377 20,100 36,059 16,807 Intergroup --- 96,514 --- 23,805 --- ------ --- ------ (Pounds)279,035 (Pounds)296,727 (Pounds)247,619 (Pounds)214,651 =============== =============== =============== ===============
13. CREDITORS ---------
1996 1995 ---- ---- Group Company Group Company ----- ------- ----- ------- Amounts falling due within one year: ------------------------------------ Due to Subsidiaries (Pounds)--- (Pounds)579,787 (Pounds)--- (Pounds)495,523 Trade Creditors 77,594 69,185 18,567 35,169 Hire Purchases 1,342 1,342 --- --- Other Creditors 529,446 443,705 514,853 286,778 Bank Overdrafts (See note 16) --- --- --- 8,147 --- --- --- ----- (Pounds)608,382 (Pounds)1,094,019 (Pounds)533,420 (Pounds)825,617 =============== ================= =============== ===============
14. CREDITORS ---------
1996 1995 ---- ---- Group Company Group Company Amounts falling due after more than one year: --------------------------------------------- Directors Loan Account (Pounds)--- (Pounds)--- (Pounds)200,000 (Pounds)200,000 Other Creditors 3,581 3,581 17,500 17,500 ----- ----- ------ ------ (Pounds)3,581 (Pounds)3,581 (Pounds)217,500 (Pounds)217,500 ============= ============= =============== ===============
12 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO ACCOUNTS FOR THE YEAR ENDED 30/TH/ APRIL 1996 FORMING PART OF THE FINANCIAL STATEMENTS (CONTINUED) 15. SHARE CAPITAL
Authorized 1996 1995 ---------- ---- ---- 1,000 Ordinary Shares of (Pounds)1 each (Pounds)1,000 (Pounds)1,000 ============= ============= Issued ------ 500 Ordinary Shares (Pounds)500 (Pounds)500 =========== ===========
16. RESERVES --------
Capital Redemption Profit & Loss Reserve Total ------------- ------- ----- Group ----- As at 1/st/ May 1995 (Pounds)553,359 (Pounds)500 (Pounds)553,859 Transfer from Profit & Loss A/c 147,830 --- 147,830 ------- --- ------- As at 30/th/ April 1996 (Pounds)701,189 (Pounds)500 (Pounds)701,689 =============== =========== =============== Company ------- As at 1/st/ May 1995 (Pounds)285,598 (Pounds)500 (Pounds)286,098 Transfer from Profit & Loss A/c (15,657) --- (15,657) -------- --- -------- As at 30/th/ April 1996 (Pounds)269,941 (Pounds)500 (Pounds)270,441 ================ =========== ===============
17. CONTINGENT LIABILITY AND GUARANTEES ----------------------------------- The Company has guaranteed the Bank by way of a fixed and floating charge over the undertaking and assets of the Company to a maximum of (Pounds)200,000. 13 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES (Unaudited) The Historical Daxbourne Limited Financial Statements are presented using generally accepted accounting principles of the United Kingdom. In management's opinion, there are no material variations in the accounting principles, practices and methods used in preparing these financial statements from the principles, practices and methods accepted in the United States. 14 EX-99.3 5 DAXBOURNE LIMITED FIN STATEMENTS 9-27-97 & 9-30-96 EXHIBIT 99.3 DAXBOURNE LIMITED FINANCIAL STATEMENTS NINE MONTHS ENDED 27/TH/ SEPTEMBER 1997 AND 30/TH/ SEPTEMBER 1996 (UNAUDITED) DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED 27/TH/ SEPTEMBER 1997 AND 30/TH/ SEPTEMBER 1996
NINE MONTHS NINE MONTHS ENDED 27/TH/ ENDED 30/TH/ SEPTEMBER 1997 SEPTEMBER 1996 -------------- -------------- Turnover (Pounds)2,234,813 (Pounds)2,440,716 Cost of sales 687,702 829,362 ------- ------- Gross profit 1,547,111 1,611,354 Selling, general and administrative expenses 1,132,200 1,338,175 --------- --------- Operating profit 414,911 273,179 Interest income (expense), net 16,626 (24,663) ------ ------- Profit on ordinary activities before taxation 431,537 248,516 Taxation 116,440 109,877 ------- ------- 315,097 138,639 Dividends (360,000) --- -------- --- ((Pounds)44,903) (Pounds)138,639 =============== ===============
1 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS AS OF 27/TH/ SEPTEMBER 1997 AND 31/ST/ DECEMBER 1996
27/th/ SEPTEMBER, 31/st/ DECEMBER, 1997 1996 ---- ---- Fixed Assets - ------------ Tangible assets (Pounds)310,144 (Pounds)308,141 =============== =============== Current assets - -------------- Stocks 345,483 609,935 Debtors 262,911 304,154 Cash and cash equivalents 471,674 476,428 ------- ------- 1,080,068 1,390,517 --------- --------- Current liabilities - ------------------- Amounts falling due within one year 315,003 578,546 ------- ------- Net Current Assets 765,065 811,971 ------- ------- Total Assets Less Liabilities (Pounds)1,075,209 (Pounds)1,120,112 ================= ================= Capital Reserves - ---------------- Share capital 500 500 Reserves 1,074,709 1,119,612 --------- --------- (Pounds)1,075,209 (Pounds)1,120,112 ================= =================
2 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENTS FOR THE NINE MONTHS ENDED 27/TH/ SEPTEMBER 1997 AND 30/TH/ SEPTEMBER 1996
NINE MONTHS NINE MONTHS ENDED 27/TH/ ENDED 30/TH/ SEPTEMBER 1997 SEPTEMBER 1996 -------------- -------------- NET CASH INFLOW FROM OPERATING ACTIVITIES (Pounds)533,259 (Pounds)400,515 TAXATION Corporation tax paid (151,586) (182,141) ------- ------- NET CASH INFLOW BEFORE FINANCING 381,673 218,374 FINANCING Purchase of fixed assets (26,427) (44,478) Dividend (360,000) --- ------- --- NET CASH OUTFLOW FROM FINANCING (386,427) (44,478) ------- ------ INCREASE IN CASH AND CASH EQUIVALENTS ((Pounds) 4,754) (Pounds)173,896 =============== =============== RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES: Operating profit (Pounds)431,537 (Pounds)248,516 Depreciation and amortization 17,580 156,318 Loss on disposal of fixed assets 6,844 7,319 (Increase)/decrease in debtors 20,847 (61,101) Increase/(decrease) in creditors (208,001) (114,520) (Increase)/decrease in stocks 264,452 163,983 ------- ------- Net cash inflow from operating activities (Pounds)533,259 (Pounds)400,515 =============== =============== ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS DURING THE YEAR Balance brought forward (Pounds)476,428 (Pounds)300,601 Net cash inflow / (outflow) (4,754) 173,896 ----- ------- Balance carried forward (Pounds)471,674 (Pounds)474,497 =============== ===============
3 DAXBOURNE LIMITED AND SUBSIDIARY COMPANIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation These unaudited condensed consolidated financial statements should be read in conjunction with the Annual Report for the fiscal year ended April 30, 1997. Certain information and footnote disclosures normally included in consolidated financial statements have been condensed or omitted. The financial statements for the nine months ended September 27, 1997 and September 30, 1996 are unaudited but include, in the Company's opinion, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results for the periods presented. 2. Accounting Policies The accounting policies underlying the financial statements are those set forth in Note 1 of the financial statements included in the Company's Annual Report for the year ended April 30, 1997. 3. The Historical Daxbourne Limited Financial Statements are presented using generally accepted accounting principles of the United Kingdom. In management's opinion, there are no material variations in the accounting principles, practices and methods used in preparing these financial statements from the principles, practices and methods accepted in the United States. 4 -----END PRIVACY-ENHANCED MESSAGE-----