-----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, EWq/9TOJT/zGvdijwmqqLDI55uZaJaNX4vbZfDS7ZNzm2uFanR4jXZU9u+O14EVn XgBXsmRoRNCstIilHeskUA== 0000354611-97-000022.txt : 19970801 0000354611-97-000022.hdr.sgml : 19970801 ACCESSION NUMBER: 0000354611-97-000022 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970728 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 19970731 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: VSI HOLDINGS INC CENTRAL INDEX KEY: 0000354611 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-WOMEN'S CLOTHING STORES [5621] IRS NUMBER: 222135522 STATE OF INCORPORATION: GA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12942 FILM NUMBER: 97648717 BUSINESS ADDRESS: STREET 1: 4900 HIGHLANDS PKWY CITY: SMYRNA STATE: GA ZIP: 30082 BUSINESS PHONE: 7704320636 MAIL ADDRESS: STREET 2: 4900 HIGHLAND PKWY CITY: SMYRNA STATE: GA ZIP: 30082 FORMER COMPANY: FORMER CONFORMED NAME: BANKERS NOTE INC DATE OF NAME CHANGE: 19920703 8-K 1 8-K FILING SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) July 28, 1997 VSI HOLDINGS, INC. (Exact name of Registrant as specified in its charter) Georgia 1-12942 22-2135522 (State or other jurisdic- (Commission File (I.R.S. Employer tion of organization) Number) Identification No.) 4900 Highlands Parkway Smyrna, Georgia 30082 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (770) 432-0636 -1- Item 1. Changes in Control of Registrant. None. Item 2. Acquisition or Disposition of Assets. The Board of Directors of VSI Holdings and Vispac, Inc. approved the business combination of the respective companies on June 29, 1997. VSI Holdings will issue 6,200,000 shares of its common stock in a tax-free exchange for all the outstanding shares of Vispac. The transaction, effective July 1, 1997, will be accounted for on a "pooling of interest" basis. Vispac is controlled by a related party, who is an officer and director of the registrant, and will join Advanced Animations, Inc. and BKNT Retail Stores, Inc. as a wholly-owned subsidiary of VSI Holdings, Inc. Subsequent to the transaction, total shares outstanding of the registrant are 18,321,287 net of 1,091,122 shares of treasury stock. Vispac is a leading-edge fulfillment company. It offers a portfolio of integrated logistics services to clients in the automotive industry keyed to the "just-in-time" process for materials delivery, consolidation, and distribution. Vispac had revenues of $16,575,000 and EBITD of $2,116,000 for the year ended September 30, 1996. Advanced Animations is a manufacturer of animatronic figures and BKNT Retail Stores operates a chain of women's apparel stores under the name Dress Code. Item 3. Bankruptcy or Receivership. None. Item 4. Changes in Registrant's Certifying Accountant. 8-K filed July 23, 1997 incorporate by reference. Item 5. Other Events. None. -2- Item 6. Resignations of Registrant's Directors. None. Item 7. Financial Statements and Exhibits. Exhibit 7.1. Consent of Independent Public Accountants. 7.2. Vispac, Inc. Financial Report for Fiscal Years Ended September 30, 1996 and September 30, 1995. 7.3 Pro Forma Financial Data. The following pro forma financial statements for the years ended September 30, 1996 and September 30, 1995 indicate how the transaction might have affected historical financial statements if the transaction had been consummated at an earlier time. The pro forma financial statements have been adjusted to reflect a provision for taxes and the utilization of tax loss carryforwards available to the combined entities. The statements also include Advanced Animations, Inc. acquired on February 1, 1997. Item 8. Change in Fiscal Year. None. -3- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. VSI Holdings, Inc. Registrant July 28, 1997 /S/Thomas W. Marquis Thomas W. Marquis, Chief Accounting and Financial Officer -4- CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the inclusion of our review report dated December 3, 1996 on the financial statements of VISPAC, Inc. in the form 10Q of VSI Holdings, Inc. for the quarterly period ended June 30, 1997. Ann Arbor, Michigan July 23, 1997 -5- VISPAC, INC. FINANCIAL REPORT WITH ADDITIONAL INFORMATION SEPTEMBER 30, 1996 VISPAC, INC. CONTENTS REPORT LETTER 1 FINANCIAL STATEMENTS Balance Sheet 2 Statement of Income 3 Statement of Changes in Stockholders? Equity 4 Statement of Cash Flows 5 Notes to Financial Statements 6-11 REPORT LETTER 12 ADDITIONAL INFORMATION Comparative Summary 13 Combining Divisional Detail of Balance Sheet 14 Divisional Detail of Statement of Income 15 -6- To the Board of Directors and Stockholders VISPAC, Inc. We have reviewed the accompanying balance sheet of VISPAC, Inc. as of September 30, 1996 and 1995, and the related statements of income, changes in stockholders? equity and cash flows for the years then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of VISPAC, Inc. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. December 3, 1996 -7- VISPAC, INC. BALANCE SHEET ASSETS SEPTEMBER 30 1996 1995 CURRENT ASSETS Cash $6,950 $193,566 Accounts receivable (no allowance for uncollectible accounts considered necessary): Trade 6,972,500 5,497,623 Amounts due from affiliates (Note 2) 707,908 581,161 Note receivable (Note 3) 353,006 138,559 Paper and shipping supplies inventory 167,315 246,778 Accumulated costs of uncompleted programs 167,205 79,604 Prepaid expenses 518,026 442,561 Total current assets 8,892,910 7,179,852 PROPERTY, PLANT AND EQUIPMENT (Note 4) 2,408,461 2,198,430 RECEIVABLE - Stockholder 345,233 201,233 Total assets $11,646,604 $9,579,515 -8- VISPAC, INC. BALANCE SHEET (con't) LIABILITIES AND STOCKHOLDERS' EQUITY SEPTEMBER 30 1996 1995 CURRENT LIABILITIES Current portion of mortgage payable(Note 5) $ 38,644 $ 38,644 Note payable - Other (Note 6) 3,480,000 2,843,000 Bank Overdraft 1,053,727 - Accounts Payable 2,139,717 1,863,221 Customer Deposits 17,650 - Accrued salaries, wages and bonuses 181,976 140,741 Accrued expenses 142,566 78,730 Declared distribution to stockholders - 250,000 Total current liabilities 7,077,773 5,242,426 MORTGAGE PAYABLE (Note 5) 479,014 517,676 STOCKHOLDERS' EQUITY Common stock (Note 9) 11,770 11,770 Additional paid-in capital 797,236 797,236 Retained earnings: Retained earnings prior to S Corporation election 1,792,785 1,792,785 Earnings undistributed to stockholders 1,488,026 1,217,622 Total stockholders? Equity 4,089,817 3,819,413 Total liabilities and stockholders? Equity $11,646,604 $9,579,515 -9- VISPAC, INC. STATEMENT OF INCOME YEAR ENDED SEPTEMBER 30 1996 1995 NET SALES $ 16,574,969 $14,534,210 PROGRAM COSTS 3,828,940 3,108,402 NET REVENUE 12,746,029 11,425,808 EXPENSES Salaries and wages 4,644,874 4,371,144 Temporary labor 2,119,318 1,913,481 Office and equipment rental 1,102,411 1,001,577 Payroll and other taxes 638,920 589,458 Employee benefits 398,290 312,666 Depreciation and amortization 428,819 369,396 Selling, general and administrative 1,945,921 1,894,743 Total expenses 11,278,553 10,452,465 OPERATING INCOME 1,467,476 973,343 OTHER INCOME (EXPENSE) Gain (loss) on sale of property, plant and equipment 173,210 (2,100) Interest income 46,385 12,946 Interest expense (296,666) (222,183) NET INCOME $1,390,405 $ 762,006 -10- VISPAC, INC. STATEMENT OF CHANGES IN STOCKHOLDERS? EQUITY COMMON STOCK ADDITIONAL STOCK PRIOR TO S UNDISTRIBUTED TOTAL PAID-IN SUBS. CORP. TO STKHLDRS SHARES AMOUNT CAPITAL REC'BLE ELECTION STKHLDRS' EQUITY BALANCE- October 1, 1994 58,850 $11,770 $797,236 (220,560) $2,192,785 $1,005,616 $3,786,847 Net Income - - - - - 762,006 762,006 Distributions to stockholders - - - - - (550,000) (550,000) Redemption of stock (Note 9) - - - - (400,000) - (400,000) Receipts on stock subscriptions - - - 220,560 - - 220,560 BALANCE- September 30, 1995 58,850 $11,770 $797,236 - $1,792,785 $1,217,622 $3,786,847 Net Income - - - - - 1,390,405 1,390,405 Distributions to stockholders - - - - - 1,120,001)(1,120.001) BALANCE- September 30, 1996 58,850 $11,770 $797,236 - $1,792,785 $1,488,026 $4,089,817 -11- VISPAC, INC. STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net income $1,390,405 $ 762,006 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 428,819 369,396 (Gain) loss on sale of property, plant and equipment (173,210) 2,100 Changes in assets and liabilities: Increase in accounts receivable (1,601,624) (97,525) (Increase) decrease in paper and shipping supplies inventory 79,463 (160,820) (Increase) decrease in accumulated costs of uncompleted programs (87,601) 39,996 Increase in prepaid expenses (188,979) (157,675) Increase in accounts payable 276,496 443,267 Increase (decrease) in accrued liabilities 118,124 (129,866) Net cash provided by operating activities 241,893 1,070,879 CASH FLOWS FROM INVESTING ACTIVITIES Additions to notes receivable (645,194) (11,428) Payments on notes receivable 560,747 - Purchase of property, plant and equipment (600,062) (416,771) Proceeds from sale of property, plant and equipment 117,936 351 Receivable - Stockholder (144,000) (101,233) Net cash used in investing activities (710,573) (529,081) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds of short-term notes payable 637,000 1,182,000 Mortgage principal payments (38,662) (68,610) Distributions to stockholders (1,370,001) (1,500,000) Redemption of stock - (400,000) Payments received on stock subscription - 220,560 Increased in bank overdraft 1,053,727 - Net cash provided by (used in) financing activities 282,064 (566,050) NET DECREASE IN CASH (186,616) (24,252) CASH - Beginning of year 193,566 217,818 CASH - End of year $ 6,950 $ 193,566 -12- VISPAC, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30,1996 AND 1995 NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES VISPAC, Inc. (the Company) provides administrative and promotional services, warehousing and packaging operations, predominantly to North American automobile manufacturers. Paper and Shipping Supplies Inventory and Accumulated Costs of Uncompleted Programs - Paper and shipping supplies inventory is stated at cost on a first-in, first-out basis. Accumulated costs of uncompleted programs are stated at cost, which is not in excess of the net realizable amount. Property, Plant and Equipment - Property, plant and equipment are stated at cost. These assets are depreciated or amortized by accelerated methods over the estimated useful lives of the assets. Costs of maintenance and repairs are charged to expense when incurred. Revenue Recognition - Revenue is recognized as individual jobs are completed, as all jobs are performed for a specified amount on the basis of a customer request or purchase order. Program freight and transportation expenses incurred by the Company are not included in sales or program costs but are passed through directly to the customer. Income Taxes - VISPAC, Inc. has elected S Corporation status effective April 1, 1986, under which income will be taxed to its stockholders. Accordingly, no provision for income taxes has been made for the years ended September 30, 1996 and 1995, respectively. Retirement Plan - The Company has a voluntary retirement savings plan designed in accordance with Section 401(k) of the Internal Revenue Code that covers all eligible employees. Employer contributions are discretionary and determined annually by management. Employer contributions amounted to approximately $53,000 and $49,000, respectively, for the years ended September 30, 1996 and 1995. Use of Estimates - 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - AFFILIATES AND RELATED PARTY TRANSACTIONS The majority stockholder of the Company is the majority stockholder in two other companies (see below) which have dealings with the Company.The Company received revenue aggregating approximately $1,598,000 and $1,103,000 for the years ended September 30, 1996 and 1995, respectively, for services performed for the affiliated entities. -13- NOTE 2 - AFFILIATES AND RELATED PARTY TRANSACTIONS (Continued) Amounts due from affiliated companies as of September 30 consist of the following: 1996 1995 Trade accounts receivable under normal customer terms from Visual Services, Inc. and subsidiaries $ 776,603 $ 594,073 Less trade accounts payable under normal vendor terms to Visual Services, Inc. (68,695) (12,912) Net amount due from affiliated companies $ 707,908 $ 581,161 Certain administrative and management support has been provided to the Company by Visual Services, Inc. During each of the years ended September 30, 1996 and 1995, the Company was charged approximately $132,000 for these services. The Company also rents one of its operating facilities from an affiliated entity (Note 7). NOTE 3 - NOTES RECEIVABLE 1996 1995 Note receivable from stockholder, payable upon demand and bearing interest at bank prime rate (8.25 percent and 8.75 percent at September 30, 1996 and 1995, respectively) $ 223,006 $ 138,559 Land contract receivable, collateralized by land, bearing interest at 11 percent per annum with monthly interest only, payment of $1,192 through July 1997. The principal balance is due in August 1997 130,000 - Total $ 353,006 $ 138,559 Interest income amounted to $45,193 and $11,428 for the years ended September 30, 1996 and 1995, respectively. -14- NOTE 4 - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following: 1996 1995 Land $ 369,775 $ 444,500 Land improvements 40,800 40,800 Building 1,602,034 1,602,034 Equipment 4,505,066 3,841,755 Automobile and trucks 142,661 116,161 Furniture and fixtures 349,576 349,046 Leasehold improvements 602,637 579,903 Total 7,612,549 6,974,199 Less accumulated depreciation and amortization (5,204,088) (4,775,769) Net carrying amount $ 2,408,461 $2,198,430 NOTE 5 - MORTGAGE PAYABLE The mortgage payable is collateralized by a first mortgage on the land and building with a net book value of $961,866 at September 30, 1996. The loan is payable in monthly principal installments of $3,222 plus interest, with a final principal payment due on March 1, 2002. The mortgage bears interest at prime(8.25 percent and 8.75 percent at September 30, 1996 and 1995, respectively). NOTE 6 - LINE OF CREDIT VISPAC, Inc. has an available line of credit with a bank of $6,000,000. The line of credit bears interest at prime (8.25 percent and 8.75 percent at September 30, 1996 and 1995, respectively). The loan agreement contains certain covenants that provide, among other things, that the Company maintain certain levels of net worth and working capital and that the ratio of total liabilities to net worth, debt service ratio and current ratio do not exceed certain amounts. -15- NOTE 7 - LEASES AND LEASE COMMITMENTS The Company rents its principal operating facility from a partnership in which the majority stockholder of the Company is a 100 percent partner in the partnership through direct and indirect ownership. The lease provides for monthly rental payments of approximately $46,000, plus real estate taxes. The term of the lease runs through November 30, 2001. The Company also leases a warehouse facility under a long-term operating lease agreement expiring August 31, 2000. The lease provides for monthly rental payments of approximately $29,700, plus real estate taxes. The Company also has an option to extend the lease through August 2005. The minimum lease payments for the remaining years under the above leases are as follows (excluding options): YEARS ENDING RELATED SEPTEMBER 30 PARTY OTHER TOTAL 1997 $551,000 $356,000 $907,000 1998 551,000 356,000 907,000 1999 551,000 356,000 907,000 2000 551,000 327,000 878,000 2001 551,000 - 551,000 2002 and thereafter 92,000 - 92,000 Total $2,847,000 $1,395,000 $4,242,000 Total rent expense was approximately $978,000 for 1996 and $707,000 for 1995. NOTE 8 - NET EARNINGS The statement of income contains certain expenses which may not be deductible by the stockholders of the Company in their individual federal income tax returns due to statutory limitations imposed by the Internal Revenue Code. Accordingly, the federal income tax return does not show those items as deductions but has shown them as separately distributable items. The following is a reconciliation of net earnings per the statement of income to ordinary income per the federal tax return for the years ended September 30: -16- NOTE 8 - NET EARNINGS (Continued) 1996 1995 Net income per statement of income $1,390,405 $762,006 Separately distributable items: Charitable contributions 9,005 8,850 Interest income (46,385) (12,946) Section 1231 gain (loss) (85,605) 2,100 Nondeductible business entertainment 9,075 10,140 Deferred gain under installment sale (85,605) - Ordinary income per federal income tax return $1,190,890 $770,150 NOTE 9 - STOCKHOLDERS? EQUITY During the year ended September 30, 1995, a legal settlement of $400,000 was paid to the estate of a former stockholder to fully resolve the value of stock previously redeemed. The Company had a total of 80,000 shares authorized at .20 par value. Of these shares, 15,000 are Class A voting common stock and 65,000 are Class B nonvoting common stock. Issued and outstanding shares at September 30, 1996 and 1995 are as follows: Class A shares 5,885 Class B shares 52,965 Total 58,850 Par value $.20 Common stock balance $11,770 -17- NOTE 10 - SELF-INSURANCE PLAN In cooperation with affiliated companies, the Company is substantially self-insured for employee medical and dental claims. The policy year of the plan is October 1 to September 30. The Company has purchased stop-loss insurance for individual claims that exceed $75,000 annually, up to a maximum of $1,000,000. The approximate amounts of employer contributions paid or accrued for the plan years ended September 30 were as follows: 1996 1995 Visual Services, Inc $1,085,000 $631,000 Vispac, Inc. 96,000 213,000 Advanced Animations 295,000 70,000 Total $1,476,000 $914,000 NOTE 11 - CASH FLOWS The Company paid $296,666 and $222,183 in interest for the years ended September 30, 1996 and 1995, respectively. During the year ended September 30, 1996, the Company sold land in exchange for a land contract receivable of $130,000. There were no other significant noncash transactions during the years ended September 30, 1996 and 1995. NOTE 12 - CHANGE IN ACCOUNTING BASIS During the year ended September 30, 1996, the Company changed its method of accounting from the same basis of accounting used for income tax purposes to the accrual basis under generally accepted accounting principles. The Company believes that the accrual basis under generally accepted accounting principles more accurately reflects financial position and results of operations. There were no significant differences between the method of accounting used for income tax purposes and the accrual basis under generally accepted accounting principles; accordingly, no adjustments were made to retained earnings. -18- ADDITIONAL INFORMATION To the Board of Directors VISPAC, Inc. We have reviewed the financial statements of VISPAC, Inc. for the years ended September 30, 1996 and 1995. The accompanying information is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the inquiry and analytical procedures applied in the reviews of the basic financial statements, and we did not become aware of any material modifications that should be made to such data. December 3, 1996 -19- VISPAC, INC. COMPARATIVE SUMMARY (dollars in thousands) YEAR ENDED SEPTEMBER 30 1996 1995 PERCENT PERCENT OF OF AMOUNT REVENUE AMOUNT REVENUE REVENUE $16,795 100.0 $14,547 100.0 EXPENSES Direct costs 13,047 77.7 11,667 80.2 Interest 297 1.8 222 1.5 Payroll taxes 381 2.3 385 2.7 Depreciation and Amortization 428 2.5 369 2.5 Selling, general and Administrative expenses 1,252 7.4 1,14 7.8 Total 15,405 91.7 13,785 94.7 NET INCOME $1,390 8.3 $ 762 5.3 -20- VISPAC, INC. COMBINING DIVISIONAL DETAIL OF BALANCE SHEET SEPTEMBER 30, 1996 VISPAC, INC. CCI ELIMINATIONS TOTAL ASSETS CURRENT ASSETS Cash $12,877 $300 $(6,227 $6,950 Accounts receivable: Trade 6,839,162 34,272 99,066 6,972,500 Amounts due from Affiliates 707,908 - - 707,908 Other - 130,721 (130,721) - Note receivable 353,006 - - 353,006 Paper and shipping supplies inventory 163,725 3,590 - 167,315 Accumulated costs of uncompleted programs 165,691 1,514 - 167,205 Prepaid expenses 515,057 2,969 - 518,026 Total current assets 8,757,426 173,366 (37,882) 8,892,910 PROPERTY, PLANT AND EQUIPMENT 2,395,700 12,761 - 2,408,461 RECEIVABLE - Stockholder 345,233 - - 345,233 Total assets $11,498,359 $186,127 $(37,882) $11,646,604 LIABILITIES AND STOCKHOLDERS? EQUITY CURRENT LIABILITIES Current portion of mortgage Payable $38,664 $ - $ - $38,664 Note payable - Other 3,480,000 - - 3,480,000 Bank overdraft 1,053,727 - - 1,053,727 Accounts payable 2,156,359 21,240 (37,882) 2,139,717 Customer deposits 17,650 - - 17,650 Accrued salaries, wages and bonuses 180,988 988 - 181,976 Accrued expenses 140,073 2,493 - 142,566 Accrued payroll taxes And taxes withheld from employees 23,473 - - 23,473 Total current Liabilities 7,090,934 24,721 (37,882) 7,077,773 -21- VISPAC, INC. COMBINING DIVISIONAL DETAIL OF BALANCE SHEET SEPTEMBER 30, 1996 VISPAC, INC. CCI ELIMINATIONS TOTAL MORTGAGE PAYABLE 479,014 - - 479,014 STOCKHOLDERS? EQUITY Common stock 11,770 - - 11,770 Additional paid-in Capital 784,144 13,092 - 797,236 Retained earnings: Retained earnings prior to S Corporation election 1,792,785 - - 1,792,785 Earnings undistributed to Stockholders 1,339,712 148,314 - 1,488,026 Total stockholders? Equity 3,928,411 161,406 - 4,089,817 Total liabilities and stockholders? Equity $11,498,359 $186,127 $(37,882) $11,646,604 -22- VISPAC, INC. DIVISIONAL DETAIL OF STATEMENT OF INCOME SEPTEMBER 30, 1996 VISPAC, INC. CCI ELIMINATIONS TOTAL NET SALES $16,368,693 $251,636 $(45,360) $16,574,969 PROGRAM COSTS 3,828,940 - - 3,828,940 NET REVENUE 12,539,753 251,636 (45,360) 12,746,029 EXPENSES Salaries and wages 4,477,219 167,655 - 4,644,874 Temporary labor 2,119,318 - - 2,119,318 Office and equipment Rental 1,100,971 28,500 (27,060) 1,102,411 Payroll and other taxes 625,407 13,513 - 638,920 Employee benefits 394,235 4,055 - 398,290 Depreciation and Amortization 417,330 11,489 - 428,819 Selling, general and Administrative 1,912,565 51,656 (18,300) 1,945,921 Total expenses 11,047,045 276,868 (45,360) 11,278,553 OPERATING INCOME (LOSS) 1,492,708 (25,232) - 1,467,476 OTHER INCOME (EXPENSE) Gain on sale of property, plant and equipment 173,210 - - 173,210 Interest income 46,385 - - 46,385 Interest expense (296,666) - - (296,666) NET INCOME (LOSS) $1,415,637 $(25,232) $ - $1,390,405 -23- Pro forma Financial Statements Exhibit 7.3 VSI Holdings, Inc. and Vispac, Inc. Year ended September 30, 1995 VSI Holding Vispac CONSOLIDATE SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 ASSETS CURRENT ASSETS Cash 28,000 194,000 222,000 Accounts and Notes Receivable 512,000 6,079,000 6,591,000 less allowance for doubtful accounts (62,000) (62,000) Inventory 6,015,000 247,000 6,262,000 Notes receivable 908,000 139,000 1,047,000 Costs in excess of billings on uncompleted contracts 333,000 79,000 412,000 Prepaid expenses 216,000 443,000 659,000 Total current assets 7,950,000 7,181,000 15,131,000 PROPERTY AND EQUIPMENT 3,000,000 2,198,000 5,198,000 OTHER ASSETS 85,000 85,000 NOTES RECEIVABLE 0 201,000 201,000 11,035,000 9,580,000 20,615,000 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable 2,853,000 1,863,000 4,716,000 Accrued liabilities 595,000 248,000 843,000 Notes payable 876,000 2,843,000 3,719,000 Unpaid distributions 45,000 1,468,000 1,513,000 Customer credits 118,000 0 118,000 Current portion of bond payable 59,000 39,000 98,000 Total current liabilities 4,546,000 6,461,000 11,007,000 NOTES PAYABLE 553,000 553,000 BOND PAYABLE 336,000 517,000 853,000 EQUITY Common stock 55,000 12,000 67,000 Additional paid-in capital 6,724,000 797,000 7,521,000 Retained earnings (deficit) 249,000 1,793,000 2,042,000 7,028,000 2,602,000 9,630,000 Less treasury stock (1,428,000) (1,428,000) Total equity 5,600,000 2,602,000 8,202,000 11,035,000 9,580,000 20,615,000 -24- Pro forma Financial Statements Exhibit 7.3 VSI Holdings, Inc. and Vispac, Inc. Year ended September 30, 1995 VSI Holding Vispac CONSOLIDATE SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 SEPTEMBER 30, 1995 NET SALES 21,426,000 14,534,000 35,960,000 COST OF GOODS SOLD 14.419,000 3,108,000 17,527,000 Gross profits 7,007,000 11,426,000 18,433,000 OPERATING EXPENSES Selling, general, and administrative 6,345,000 10,083,000 16,428,000 Depreciation and amortization 377,000 369,000 746,000 Store closing costs 16,000 - 16,000 Total operating expenses 6,738,000 10,452,000 17,190,000 OPERATING INCOME (LOSS) 269,000 974,000 1,243,000 OTHER EXPENSE (INCOME) Interest and other income (71,000) (11,000) (82,000) Interest expense 101,000 222,000 323,000 Total other expense (income) 30,000 211,000 241,000 Income (loss) before income taxes 239,000 763,000 1,002,000 Provision for taxes (151,000) (250,000) (401,000) Utilization of tax loss carryforwards 151,000 250,000 401,000 NET INCOME 239,000 763,000 1,002,000 Earnings (loss) per share $0.02 $0.05 Shares outstanding 12,121,287 18,321,287 -25- Pro forma Financial Statements Exhibit 7.3 VSI Holdings, Inc. and Vispac, Inc. Year ended September 30, 1996 VSI Holding Vispac CONSOLIDATE SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 ASSETS CURRENT ASSETS Cash 245,000 7,000 252,000 Accounts and Notes Receivable 1,102,000 7,681,000 8,783,000 less allowance for doubtful accounts (100,000) (100,000) Inventory 3,678,000 167,000 3,845,000 Notes receivable 40,000 353,000 393,000 Costs in excess of billings on uncompleted contracts 535,000 167,000 702,000 Prepaid expenses 87,000 518,000 605,000 Total current assets 5,587,000 8,893,000 14,480,000 PROPERTY AND EQUIPMENT 2,952,000 2,408,000 5,360,000 OTHER ASSETS 61,000 61,000 NOTES RECEIVABLE 39,000 345,000 384,000 8,639,000 11,646,000 20,285,000 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable 2,391,000 3,193,000 5,584,000 Accrued liabilities 1,260,000 348,000 1,608,000 Notes payable 1,153,000 3,480,000 4,633,000 Unpaid distributions 580,000 1,488,000 2,068,000 Customer credits 88,000 17,000 105,000 Current portion of bond payable 65,000 39,000 104,000 Total current liabilities 5,537,000 8,565,000 14,102,000 NOTES PAYABLE 1,152,000 1,152,000 BOND PAYABLE 269,000 479,000 748,000 EQUITY Common stock 55,000 12,000 67,000 Additional paid-in capital 6,341,000 797,000 7,138,000 Retained earnings(deficit)(3,287,000)1,793,000(1,494,000) 3,109,000 2,602,000 5,711,000 Less treasury stock (1,428,000) (1,428,000) Total equity 1,681,000 2,602,000 4,283,000 8,639,000 11,646,000 20,285,000 -26- Pro forma Financial Statements Exhibit 7.3 VSI Holdings, Inc. and Vispac, Inc. Year ended September 30, 1996 VSI Holding Vispac CONSOLIDATE SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 SEPTEMBER 30, 1996 NET SALES 28,300,000 16,575,000 44,875,000 COST OF GOODS SOLD 20.455,000 3,829,000 24,284,000 Gross profits 7,845,000 12,746,000 20,591,000 OPERATING EXPENSES Selling, general, and administrative 8,384,000 10,850,000 19,234,000 Depreciation and amortization 597,000 428,000 1,025,000 Store closing costs 754,000 - 754,000 Total operating expenses 9,735,000 11,278,000 21,013,000 OPERATING INCOME (LOSS) (1,890,000) 1,468,000 (422,000) OTHER EXPENSE (INCOME) Interest and other income (101,000) (219,000) (320,000) Interest expense 207,000 297,000 504,000 Total other expense (income) 106,000 78,000 184,000 Income (loss) before income taxes (1,996,000) 1,390,000 (606,000) Provision for taxes 0 0 0 Utilization of tax loss carryforwards 0 0 0 NET INCOME (1,996,000) 1,390,000 (606,000) Earnings (loss) per share ($0.16) ($0.03) Shares outstanding 12,121,287 18,321,287 -27- -----END PRIVACY-ENHANCED MESSAGE-----