SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) MARCH 15, 1999
TRISTAR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-13099 13-3129318
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
12500 San Pedro Avenue, Suite 500, San Antonio, Texas 78216
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code (210) 402-2200
Not Applicable
(Former name or former address, if changed since last report)
Item 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
a(i) On March 15, 1999, pursuant to a stock purchase
agreement entered into by and among the Registrant,
Transvit Holding Corporation ("THC"), a wholly-owned
affiliate of the Core Sheth Family ("Sheth Group"), the
majority stockholder of the Registrant, and Nevell
Investments, S.A ("Nevell"), another affiliate of the
Sheth Group, the Registrant sold to THC for $2,686,000
all of the issued and outstanding capital stock ("Trimex
Stock") and certain distribution rights of its wholly
owned subsidiary, Tristar de Mexico, S.A. de C.V.
("Trimex"), a distributor of fragrance and cosmetic
products into the formal retail market in the United
Mexican States. The transaction was effective as of
November 29, 1998. Jay Sheth, a director of the
Registrant, although not a member of the Sheth Group, is
the son of a member of the Sheth Group. Viren S. Sheth,
a director of the Registrant, although not a member of
the Sheth Group, is the brother of three members of the
Sheth Group. Both Jay Sheth and Viren S. Sheth disclaim
beneficial ownership of any shares of capital stock of
the Registrant, THC or Nevell. B.J Harid, a director of
the Registrant, also serves as a director of another
Sheth Group affiliate but is not a director of THC or
Nevell. B.J. Harid disclaims beneficial ownership of any
shares of capital stock of the Registrant, THC or
Nevell.
(ii) The transaction provides for a non-compete restriction
and a supply agreement whereby the Registrant agreed to
continue selling certain products to Trimex. The
Registrant also received an option to repurchase at a
fair value the Trimex Stock and distribution rights from
THC at anytime prior to March 15, 2004. The Registrant
currently has no plans to exercise such option but may
do so in the future.
(iii) The $2,686,000 consideration which the Registrant
received was negotiated by the parties and related to
the amount of cash invested by the Registrant in
developing Trimex's distribution channel coupled with
the anticipated future revenue stream of Trimex. The
Registrant engaged a third party to review the
transaction and render an opinion on its fairness.
(iv) The Registrant received payment in the form of a
reduction of debt due Nevell, and redemption of shares
of the Registrant's Series A Convertible Preferred
Stock, $.O5 par value ("Series A Preferred"), issued to
Nevell at a redemption price of $7.62 per share. Of the
total
purchase price of $2,686,000, an amount equal to
$1,700,000 was applied to a reduction of debt due Nevell
with the remaining $986,000 attributed to redeemed
shares of the Series A Preferred at a total redemption
price of $905,709 plus $80,291 of dividends in arrears.
Warrant valuation costs of $99,000 associated with the
subordinated debt reduction were written-off in
connection with the sale. The excess proceeds over the
carrying value of the Registrant's investment in Trimex
was recorded as an increase in additional
paid-in-capital.
Item 3.BANKRUPTCY OR RECEIVERSHIP
Not Applicable
Item 4.CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not Applicable
Item 5. OTHER EVENTS
Not Applicable
Item 6.RESIGNATION OF REGISTRANT'S DIRECTORS
Not Applicable
Item 7.FINANCIAL STATEMENTS AND EXHIBITS
a Financial Statements of Businesses Acquired
Not applicable
b. Pro Forma Financial Information:
Pro forma Consolidated Balance Sheet as of November 28, 1998 and
Statements of Operations for the thirteen week period ended
November 28, 1998 and the fiscal year ended August 29, 1998 are
attached hereto.
c. Exhibit Index:
Exhibit 2.1 Stock Purchase Agreement dated effective as of
November 29, 1998, by and among Tristar Corporation and Transvit
Holding Corporation
Item 8.CHANGE IN FISCAL YEAR
Not Applicable
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 under
signed thereunto duly authorized.
TRISTAR CORPORATION
By /s/ ROBERT M. VIOLA
Robert M. Viola, Executive
Vice President, Chief
Financial Officer,
Assistant Secretary and
Principal Financial and
Accounting Officer
Date: March 25, 1999
TRISTAR CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS
The unaudited pro forma consolidated statements are provided to demonstrate the
effect of the sale of Tristar de Mexico, S.A. de C.V. ("Trimex") to Transvit
Holding Corporation ("THC") on the consolidated balance sheet at November 28,
1998 and results of operations of Tristar Corporation ("Tristar") as of and for
the thirteen week period ended November 28, 1998 and the year ended August 29,
1998. The unaudited pro forma balance sheet assumes the transaction occurred as
of November 28, 1998, the latest balance sheet date. The unaudited pro forma
statement of operations assumes the transfer occurred at the beginning of the
most recent periods presented (August 30, 1998 for the thirteen weeks ended
November 28, 1998 and August 31, 1997 for the year ended August 30, 1998). Due
to the common interest which exists between Tristar and THC, the Company
recorded the excess of the consideration received over the related carrying
value of its Mexican subsidiary as an increase in additional paid-in-capital.
Additionally, other necessary adjustments reflected in the pro forma balance
sheet are the elimination of Trimex's local assets and liabilities, the
reduction of subordinated debt due to Nevell, the redemption in Series A
Preferred Stock, the write-off of deferred warrant valuation costs associated
with the subordinated debt, the elimination of the foreign currency translation
adjustment and a charge to accumulated deficit for the preferred stock dividends
pertaining to the Series A Preferred shares redeemed.
Accordingly, adjustments necessary in the pro forma statement of operations are
the elimination of Trimex's operating income and reductions of warrant
amortization resulting from the decrease in subordinated debt and preferred
stock dividends relating to The Series A Preferred stock.
NOVEMBER 28, PRO FORMA
1998 PRO FORMA NOVEMBER 28,
ASSETS (UNAUDITED) ADJUSTMENTS 1998
----------- ----------- -----------
Current assets:
Cash ........................................... $ 41,000 $ (18,000) $ 23,000
Accounts receivable, less
allowance for doubtful accounts of
$966,000 and $814,000, respectively ........... 16,061,000 (2,079,000) 13,982,000
Accounts receivable - related parties - net .... 3,521,000 -- 3,521,000
Inventories - net .............................. 13,215,000 (137,000) 13,078,000
Prepaid expenses ............................... 257,000 (32,000) 225,000
Other current assets ........................... 117,000 -- 117,000
----------- ----------- -----------
Total current assets .......................... 33,212,000 (2,266,000) 30,946,000
----------- ----------- -----------
Property, plant and equipment, less accumulated
depreciation of $9,239,000 .................... 8,031,000 -- 8,031,000
----------- ----------- -----------
Other assets:
Warrant valuation, less accumulated amortization
of $1,809,000 and $1,908,000 respectively ..... 99,000 (99,000) --
Other assets ................................... 760,000 (8,000) 752,000
----------- ----------- -----------
Total other assets ............................. 859,000 (107,000) 752,000
----------- ----------- -----------
Total assets .................................... $42,102,000 $(2,373,000) $39,729,000
=========== =========== ===========
TRISTAR CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEETS (CONTINUED)
NOVEMBER 28, PRO FORMA
1998 PRO FORMA NOVEMBER 28,
LIABILITIES AND SHAREHOLDERS' EQUITY (UNAUDITED) ADJUSTMENTS 1998
------------ ------------ ------------
Current liabilities:
Book overdraft ..................................... $ 392,000 $ -- $ 392,000
Revolving credit agreement borrowings, current ..... 6,662,000 -- 6,662,000
Accounts payable-trade ............................. 8,855,000 (102,000) 8,753,000
Accounts payable-related parties - net ............. 5,118,000 -- 5,118,000
Accrued bonuses .................................... 82,000 -- 82,000
Accrued interest expense-subordinated debt ......... 1,731,000 -- 1,731,000
Other accrued expenses ............................. 1,698,000 (1,000) 1,697,000
Current portion of capital lease obligations ....... 140,000 -- 140,000
Current portion of long term obligations ........... 900,000 -- 900,000
------------ ------------ ------------
Total current liabilities ......................... 25,578,000 (103,000) 25,475,000
Long-term debt, less current portion ............... 2,878,000 -- 2,878,000
Obligations under capital leases, less current
portion ........................................... 102,000 -- 102,000
Subordinated long term debt - related parties ...... 1,700,000 (1,700,000) --
------------ ------------ ------------
Total liabilities ................................. 30,258,000 (1,803,000) 28,455,000
------------ ------------ ------------
Commitments and contingencies
Shareholders' equity (deficit):
Preferred stock, $.05 par value; authorized
1,000,000 shares; Series A, 666,529 and 537,142
shares, respectively, issued and outstanding ...... 4,666,000 (906,000) 3,760,000
Series B, 120,690 shares issued and outstanding ... 4,511,000 -- 4,511,000
Series C, 78,333 shares issued and outstanding .... 4,699,000 -- 4,699,000
Common stock, $.01 par value; authorized
30,000,000 shares; issued and outstanding
16,761,493 shares ................................. 168,000 -- 168,000
Additional paid-in-capital ......................... 12,790,000 64,000 12,854,000
Foreign currency translation ....................... (376,000) 376,000 --
Accumulated deficit ................................ (14,614,000) (104,000) (14,718,000)
------------ ------------ ------------
Total shareholders' equity ........................ 11,844,000 (570,000) 11,274,000
------------ ------------ ------------
Total liabilities and shareholders' equity ......... $ 42,102,000 $ (2,373,000) $ 39,729,000
============ ============ ============
TRISTAR CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THIRTEEN WEEK PERIOD ENDED
NOVEMBER 28, PRO FORMA PRO FORMA
1998 ADJUSTMENTS NOVEMBER 28,
(UNAUDITED) (SEE NOTE A) 1998
------------ ------------ ------------
Net sales .................................. $ 15,075,000 $ (623,000) $ 14,452,000
Cost of sales .............................. 10,432,000 (261,000) 10,171,000
------------ ------------ ------------
Gross profit ............................... 4,643,000 (362,000) 4,281,000
Selling, general and administrative
expenses .................................. 4,065,000 (258,000) 3,807,000
------------ ------------ ------------
Income (loss) from operations .............. 578,000 (104,000) 474,000
Other income (expense):
Interest expense .......................... (331,000) -- (331,000)
Other income (expense) .................... (23,000) 2,000 (21,000)
------------ ------------ ------------
Income (loss) before provision for
income taxes .............................. 224,000 (102,000) 122,000
Provision for income taxes ................ -- -- --
------------ ------------ ------------
Net income (loss) .......................... 224,000 (102,000) 122,000
------------ ------------ ------------
Less:
Preferred stock dividends ................. (207,000) 10,000 (197,000)
Effect of beneficial conversion feature ... (641,000) -- (641,000)
Warrant valuation adjustment .............. -- -- --
------------ ------------ ------------
Net income (loss) applicable to common stock $ (624,000) $ (92,000) $ (716,000)
============ ============ ============
Earnings per common share:
Basic ..................................... $ (.04) -- $ (.04)
============ ============
Diluted ................................... $ (.04) -- $ (.04)
============ ============
Weighted average shares outstanding
Basic ..................................... 16,761,493 -- 16,761,493
Diluted ................................... 16,761,493 -- 16,761,493
Note a. The column represents the historical results of operations for
the Mexican subsidiary for the thirteen week period ended November
28, 1998, adjustments for warrant amortization associated with the
reduction in debt as a result of the sale of the subsidiary and
preferred stock dividends relating to the reduction in Series A
Preferred Stock:
-Mexican subsidiary operating income ................... $ 106,000
-Warrant amortization expense .......................... (4,000)
-Dividends accumulated on redeemed Preferred Series A
shares ............................................... (10,000)
---------
$ 92,000
=========
TRISTAR CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED
PRO FORMA PRO FORMA
AUGUST 29, ADJUSTMENTS AUGUST 29,
1998* (SEE NOTE A.) 1998
------------ ------------ ------------
Net sales ......................... $ 67,683,000 $ (1,865,000) $ 65,818,000
Cost of sales ..................... 50,432,000 (788,000) 49,644,000
------------ ------------ ------------
Gross profit ...................... 17,251,000 (1,077,000) 16,174,000
Selling general and administrative
expenses ......................... 16,424,000 (1,139,000) 15,285,000
------------ ------------ ------------
Income (loss) from operations ..... 827,000 62,000 889,000
Other income (expense):
Interest expense ................. (1,786,000) 58,000 (1,728,000)
Other expense .................... (470,000) 608,000 138,000
------------ ------------ ------------
Income (loss) before provision for
income taxes ..................... (1,429,000) 728,000 (701,000)
Provision for income taxes ........ 62,000 -- 62,000
------------ ------------ ------------
Net income (loss) ................. (1,491,000) 728,000 (763,000)
------------ ------------ ------------
Less:
Preferred stock dividends ........ (453,000) 41,000 (412,000)
Effect of beneficial conversion
feature ......................... -- -- --
Warrant valuation adjustment ..... -- -- --
------------ ------------ ------------
Net income (loss) applicable to
common stock ..................... $ (1,944,000) $ 769,000 $ (1,175,000)
============ ============ ============
Earnings per common share:
Basic ............................ $ (.12) -- $ (.07)
============ ============
Diluted .......................... $ (.12) -- $ (.07)
============ ============
Weighted average shares outstanding
Basic ............................ 16,748,798 -- 16,748,798
Diluted .......................... 16,748,798 -- 16,748,798
Note a. The column represents the historical results of operations for
the Mexican subsidiary for the year ended August 29, 1998,
adjustments for warrant amortization and interest expense associated
with the reduction in debt as a result of the sale of the subsidiary
and preferred stock dividends relating to the redemption of Series A
Preferred Stock:
-Mexican subsudiary operating loss ................. $(655,000)
-Interest on subordinated debt ..................... (58,000)
-Warrant amortization expense ...................... (15,000)
-Dividends accumulated on redeemed
Preferred Series A shares ........................ (41,000)
---------
$(769,000)
=========
* Prepared from audited financial statements for the year ended August 29, 1998.