<PAGE>   1
                    U.S. Securities and Exchange Commission
                            Washington, D.C. 20549


                                 FORM 10 - QSB



        (MARK ONE)

 X   Quarterly Report pursuant to Section 13 or 15 (d) of the
---  Securities Exchange Act of 1934

For the Quarterly Period Ended November 30, 1996 or
                               -----------------

     Transition Report pursuant to Section 13 or 15 (d) of the
---  Securities Exchange Act of 1934

For the Transition Period From                to
                               --------------    -------------

COMMISSION FILE NUMBER 0-18091

                               RSI HOLDINGS, INC.
--------------------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

        NORTH CAROLINA                               56-1200363
-------------------------------              --------------------------
(State or other jurisdiction of                   (I.R.S. Employer
 incorporation or organization)                  Identification No.)

245 E. Broad Street, Suite A, P.O. Box 6847
Greenville, South Carolina                                        29606
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (864) 271-7171
--------------------------------------------------------------------------------
                           Issuer's telephone number


                                 Not Applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.  
Yes   X    No
    -----     -----
<PAGE>   2
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:

Common Stock, $.01 Par Value - 7,895,822 shares outstanding as of January 9, 
1997

         Transitional Small Business Disclosure Format (check one):
         Yes       No   X
             -----    -----




                                       2
<PAGE>   3
                                     INDEX


                               RSI HOLDINGS, INC.




<TABLE>
<CAPTION>
PART I.          FINANCIAL INFORMATION                                                  PAGE
<S>                                                                                      <C>
Item 1.          Financial Statements (Unaudited)                                     
                                                                                      
   Condensed consolidated balance sheet -- November 30, 1996                              4
                                                                                      
   Condensed consolidated statement of operations -- Three                            
   months ended November 30, 1996                                                         5
                                                                                      
   Condensed consolidated statement of cash flows -- Three                            
   months ended November 30, 1996                                                         6
                                                                                      
   Condensed consolidated statement of changes in net assets in                       
   liquidation -- Three months ended November 30, 1995                                    7
                                                                                      
   Notes to condensed consolidated financial statements --                            
   November 30, 1996                                                                      8
                                                                                      
Item 2.          Plan of Operation                                                       11
                                                                                      
PART II.         OTHER INFORMATION                                                       15
                                                                                      
Item 1.  Legal Proceedings                                                               15
                                                                                      
Item 2.  Changes in Securities                                                           19
                                                                                      
Item 3.  Default                                                                         19
                                                                                      
Item 4.  Submission of Matters to a Vote of Security Holders                             19
                                                                                      
Item 5.  Other Information                                                               19
                                                                                      
Item 6.  Exhibits and Reports on Form 8-K                                                19
                                                                                      
                                                                                      
SIGNATURES                                                                               21
</TABLE>





                                       3
<PAGE>   4
                               RSI Holdings, Inc.
                Condensed Consolidated Balance Sheet (Unaudited)
                               November 30, 1996





<TABLE>
<S>                                                                      <C>
Assets

Current Assets:
    Cash                                                                 $ 1,791,000
    Prepaid expenses                                                          22,000
    Other current assets                                                      43,000
                                                                         -----------
Total current assets                                                       1,856,000

Property and equipment
    Cost                                                                      37,000
    Less accumulated depreciation                                             22,000
                                                                         -----------
                                                                              15,000

Other assets
    Land and building held for sale, net of
      accumulated depreciation of $293,000                                   255,000
    Other                                                                     13,000
                                                                         -----------
                                                                             268,000
                                                                         -----------
                                                                         $ 2,139,000
                                                                         ===========

Liabilities and shareholders' equity
Current liabilities:
    Trade accounts payable                                               $     9,000
    Accrued expenses                                                         123,000
                                                                         -----------
                                                                             132,000

Deferred compensation                                                        155,000

Shareholders' equity:
    Common Stock, $.01 par value-authorized
      25,000,000 shares, issued and outstanding   
      7,895,822 shares at November 30, 1996                                   79,000
    Excess of paid-in capital over par value                               3,775,000
    Deficit                                                               (2,002,000)
                                                                         -----------
                                                                           1,852,000
                                                                         -----------
                                                                         $ 2,139,000
                                                                         ===========
</TABLE>

See accompanying notes.

                                       4
<PAGE>   5
                               RSI Holdings, Inc.
           Condensed Consolidated Statement of Operations (Unaudited)
                      Three Months ended November 30, 1996


<TABLE>
<S>                                                                      <C>
Expenses
    Selling, general and administrative                                  $   145,000
                                                                         -----------
       Loss from operations                                                 (145,000)

Other income (expense)
    Interest income                                                           34,000
    Rental income on asset held for sale                                       7,000
    Interest expense                                                          (4,000)
    Cost to settle lawsuit                                                  (300,000)
                                                                         -----------
       Total other income (expense)                                         (263,000)
                                                                         -----------
Net loss                                                                 $  (408,000)
                                                                         ===========
Net loss per share                                                       $      (.05)
                                                                         ===========
Weighted average number of shares outstanding                              7,973,019
                                                                         ===========
</TABLE>



See accompanying notes.

                                       5
<PAGE>   6
                               RSI Holdings, Inc.
           Condensed Consolidated Statement of Cash Flows (Unaudited)
                      Three Months ended November 30, 1996


<TABLE>
<S>                                                                      <C>
Cash used in operating activities                                        $  (412,000)

Investing activities
    Acquisition of outstanding stock of
       CambridgeBanc, Inc. - Note B                                          (15,000)
    Purchase of common stock                                                 (25,000)
    Organization expense                                                     (13,000)
                                                                         -----------
                                                                             (53,000)
                                                                         -----------
Net decrease in cash and cash equivalents                                   (465,000)
Cash and cash equivalents, beginning of year                               2,256,000
                                                                         -----------
Cash and cash equivalents, end of quarter                                $ 1,791,000
                                                                         ===========
</TABLE>


See accompanying notes

                                       6
<PAGE>   7
                               RSI Holdings, Inc.
                  Condensed Consolidated Statement of Changes
                    in Net Assets in Liquidation (Unaudited)
                      Three months ended November 30, 1995


<TABLE>
<S>                                                                      <C>
Net assets in liquidation at beginning of period                         $ 2,143,000

Changes in net assets in liquidation attributed to:
    Decrease in cash and cash equivalents                                   (115,000)
    Decrease in accrued expenses                                              31,000
    Decrease in estimated costs during remaining period
       of liquidation                                                        102,000
    Increase in estimated net realizable
       value of accounts receivable                                            1,000
                                                                         -----------
Increase in net assets in liquidation                                         19,000
                                                                         -----------
Net assets in liquidation at end of period                               $ 2,162,000
                                                                         ===========
</TABLE>




See accompanying notes


                                       7
<PAGE>   8
RSI Holdings, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Note A - Basis of Presentation

         The Company ceased all of its former business operations during August
of 1994 and since that time has been actively seeking to sell substantially all
of the assets of its former business.  Concurrent with the decision to cease
all of its former business operations, the Company adopted the liquidation
basis of accounting.  Generally accepted accounting principles for the
liquidation basis of accounting required that assets be valued at their
estimated net realizable value and liabilities be presented at their estimated
settlement amounts and also include estimated costs associated with carrying
out the liquidation.  The Company's financial statements were prepared under
the liquidation basis of accounting through August 31, 1996.

         During fiscal 1996, the Company substantially completed the sale of
its assets and during November of 1996 acquired the outstanding common stock of
a consumer finance company. Accordingly, effective September 1, 1996 the Company
adopted the going concern basis of accounting.

         The accompanying unaudited condensed consolidated financial statements
at November 30, 1996 have been prepared in accordance with generally accepted
accounting principles for interim financial information under the going concern
basis of accounting and with the instructions to Form 10 - QSB and Item 310(b)
of Regulation S-B.  Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments including
normal recurring accruals considered necessary for a fair presentation on the
going concern basis have been included.  Operating results for the three months
ended November 30, 1996 are not necessarily indicative of the results that may
be expected for the year ended August 31, 1997.  For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10 - KSB for the year ended August 31, 1996.

Note B - Acquisition

         On November 4, 1996, the Company purchased for cash all of the
outstanding common stock of CambridgeBanc, Inc. from Emergent Group, Inc. for
the total purchase price of $15,000.  The assets that were owned by
CambridgeBanc, Inc. consist of furniture and equipment that the Company
believes had a fair value of $15,000.  Through CambridgeBanc, Inc., the Company
has begun to engage in the business of originating and selling home improvement
and other loans secured by liens on improved property.

         In addition to the purchase agreement to acquire the common stock, the
Company executed a lease agreement with Emergent Group, Inc. in which the
Company paid $18,000 for the use of additional furniture and equipment for one
year.  These assets were used by CambridgeBanc, Inc. in its previous
operations.  The newly acquired subsidiary, CambridgeBanc, Inc. executed a
sublease agreement to rent for one year from Emergent Group, Inc. the office
space that CambridgeBanc, Inc. occupies at $1,757 per month.





                                       8
<PAGE>   9
         Mr. Buck Mickel, Chairman of the Board and Chief Executive Officer of
the Company and beneficial owner of more than 5% of its outstanding common
stock, also serves on the board of directors of Emergent Group, Inc. and
beneficially owns less than 5% of its outstanding common stock and C. Thomas
Wyche, Secretary of the Company and the beneficial owner of less than 5% of its
outstanding common stock, also serves as Secretary of Emergent Group, Inc. and
is a shareholder of Emergent Group, Inc., owning less than 5% of its
outstanding common stock.  In addition, each of Minor H. Mickel, Buck A.
Mickel, Charles C. Mickel and Minor Mickel Shaw, beneficial owners of more than
5% of the Company's outstanding common stock, are shareholders of Emergent
Group, Inc., each owning less than 5% of its outstanding common stock.  Each of
Buck A. Mickel, Charles C. Mickel and Minor Mickel Shaw are the adult children
of Buck Mickel and Minor H. Mickel is the spouse of Buck Mickel.

Note C - Shareholders' equity

         The financial statements as of August 31, 1996 included a consolidated
statement of net assets in liquidation which presented under the liquidation
basis of accounting the net assets that the Company expected to realize at the
end of its period of liquidation.  The accompanying condensed consolidated
balance sheet presents on the going concern basis of accounting the
shareholders' equity at November 30, 1996.  Below is a reconciliation of the
net asset in liquidation at August 31, 1996 to the shareholders' equity at
November 30, 1996.


<TABLE>
<S>                                                                <C>
Net assets in liquidation at August 31, 1996                       $ 2,285,000

Loss from operations during three months ended
       November 30, 1996                                              (408,000)

Purchase of common stock for the treasury                              (25,000)
                                                                   -----------
Shareholders' equity at November 30, 1996                          $ 1,852,000
                                                                   ===========
</TABLE>


Note D - Contingencies

         On November 18, 1996, Wiegmann & Rose International Corp. ("Wiegmann &
Rose"), a wholly-owned subsidiary of the Company, entered into an agreement to
settle a lawsuit brought by Triple A Machine Shop, Inc. ("Triple A") relating
to environmental contamination on property formerly owned by Wiegmann & Rose
and sold to Triple A in 1987.  Pursuant to the settlement agreement Wiegmann &
Rose paid to Triple A the sum of three hundred thousand ($300,000) dollars in
exchange for settlement of the lawsuit as well as Triple A's release of
Wiegmann & Rose and the Company from any further liability to Triple A in
connection with the property or under the agreement made at the time of sale of
the property.

         Wiegmann & Rose has also been sued, along with several other
defendants, in seven personal injury asbestos suits.  Although, Wiegmann & Rose
has been dismissed without prejudice in each of the seven suits, Wiegmann could
be brought back into the litigation in five of these seven dismissed cases.  As
to the substantive nature of the asbestos claims, the Company believes
substantial defenses would be available and for that reason the Company has
been successful in having all seven of these filed actions dismissed without
prejudice as against Wiegmann & Rose.  No provisions have been made in the
accompanying financial statements for any liability which may result from this
matter.




                                       9
<PAGE>   10

         In addition, the Company is one of several defendants in a lawsuit
filed in July 1993 claiming indemnification with respect to payments due and
the cost of performing certain covenants and obligations under a land lease
agreement allegedly in default.  This agreement relates to a motel property
previously operated by the Company.  The Company intends to defend this matter
vigorously.  The ultimate outcome of this matter is not known.  No provision
has been made in the accompanying financial statements for any liability which
may result from this matter.

         In February 1994, an individual served a complaint against the Company
seeking damages in excess of $15,000 for injuries sustained while operating a
turf care product sold by the Company.  The complaint also named the
manufacturer of the product.  The Company is unable to determine whether any
loss will be incurred and if so, the estimate of any range of loss.  In
addition, the manufacturer and its insurance carrier has accepted defense of
the Company regarding this matter.  The Company believes, based on the
arrangements with the manufacturer and the Company's own insurance, that this
action should not have a material adverse effect on the Company's financial
position.

         In addition, in January 1995, a complaint against the Company seeking
damages in excess of the minimal jurisdictional amount was served.  The
plaintiff in that case alleges that he was injured while operating a vehicle
that was sold by the Company.  The Complaint also named the manufacturer of the
vehicle.  The manufacturer has accepted defense of the Company regarding this
matter.  The Company believes, however, based on the arrangements with the
manufacturer and the Company's own insurance, that this action should not have
a material adverse effect on the Company's financial position.





                                       10
<PAGE>   11

Item 2.  Plan of Operation

                 New Business Plans

         On November 4, 1996, the Company purchased the outstanding common
stock of CambridgeBanc, Inc. ("CambridgeBanc"), a small specialized consumer
finance business that originates and sells consumer finance receivables,
substantially all of which are home improvement loans secured by liens on
improved property.  Through CambridgeBanc, the Company intends to continue this
business as well as to offer conventional loans under Title I "look-alike"
programs that in some cases permit the loan proceeds to be used for purposes
other than home improvements.  See "Planned Fiscal Year 1997 Activities" below.

                 Adjustment from Liquidation Basis to Going Concern Basis

         Because the Company decided in 1994 that it should cease its existing
business operations and sell substantially all of its operating assets, the
Company reported its financial position on the liquidation basis of accounting
during the years ended August 31, 1994 through August 31, 1996.  In the
liquidation basis of accounting, assets are valued at their net realizable
value (rather than at their net historical cost), and liabilities include
estimated costs associated with carrying out the sale of substantially all of
the assets of the Company.

         The Company substantially completed its  plan to sell substantially
all of its assets ("Sale of Assets Plan") during fiscal 1996 and purchased the
common stock of a company in the consumer finance business in November 1996.
Accordingly, on September 1, 1996, the Company adopted the going concern basis
of accounting.  The effect of the change from the liquidation basis of
accounting to the going concern basis of accounting on net assets of the
Company was to reduce the carrying value of the real estate held for sale that
is located in Tampa, Florida from its estimated liquidation value of $430,000
to its depreciated cost of $263,000, a decrease in net assets of $167,000;
increase prepaid expenses by $15,000 and reduce the liabilities of the Company
by the estimated costs during the remaining period of liquidation of $155,000.

                 Planned Fiscal Year 1997 Activities

         The remaining step in the implementation of the Sale of Assets Plan is
the sale of the Company's Tampa real estate.  During fiscal 1997, the Company
plans to continue with its efforts to sell its office and warehouse facility in
Tampa, Florida and to continue with its efforts to collect its remaining
accounts receivable.  During December of 1996, the Company collected a past due
account receivable with a face amount of $37,000.  The net proceeds after
payment of collection fees were $26,000.  Proceeds from these activities will
be applied first to the payment of expenses related to the realization of these
proceeds, next to pay or make provisions for the payment of contingent
liabilities of the Company as they are quantified, and any remaining proceeds
will be used for working capital.  Since the amount required to settle the
contingent liabilities cannot be determined, there is no assurance that the
Company's proceeds from the sale of its remaining assets will be sufficient to
cover these expenses.





                                       11
<PAGE>   12

         The Company currently intends to use the assets, if any, remaining
after the payment or provision for payment of the foregoing items to provide
the operating capital necessary for the operations of CambridgeBanc.  The
Company expects that CambridgeBanc will operate at a loss during the first two
years, but based on the information now available to it, expects CambridgeBanc
to operate at a modest profit by the third year.  There can be no assurance
that these goals can be achieved.  As of January 6, 1997, CambridgeBanc has
five employees.  If the Company is successful with the origination of consumer
loans, the Company plans to open two sales offices to target certain major
metropolitan areas of the Carolinas during fiscal 1997.  The initial office in
Greenville, South Carolina will house sales, underwriting and administrative
personnel.  Each sales office would be staffed by a loan closer.  Additional
personnel will be added when and if the volume of loans increases.  If
CambridgeBanc achieves its budgeted operating results, the Company estimates
that the new business would have approximately 8 employees by August 31, 1997.

         CambridgeBanc is now offering Title I home improvement loans ("Title I
Loans") under the Title I program administrated by the Federal Housing
Administration ("FHA").  CambridgeBanc was approved by FHA as a Title I lender
during 1995.  The Title I program was established by Title I of the National
Housing Act of 1934.  Loans made under the Title I program are 90% guaranteed
by the United States Department of Housing and Urban Development ("HUD").  In
addition, CambridgeBanc offers conventional loans to certain qualified
borrowers under Title I "look-alike" programs that in some case permit the loan
proceeds to be used for purposes other than home improvements.  In addition to
the FHA Title I license, CambridgeBanc will have to apply for licenses to
operate under the banking laws of each State in which this business chooses to
operate.  CambridgeBanc is currently authorized to operate under the banking
laws of South Carolina and North Carolina.  There can be no assurance that any
such additional licenses may be obtained on a timely basis or at all.  In
addition, the new business would be subject to ongoing monitoring by regulatory
authorities and the failure to comply with applicable regulations could result
in the forfeiture of licenses on which the business is dependent.

         The consumer finance market is highly competitive and fragmented.
CambridgeBanc competes with a number of finance companies that provide
financing to individuals who may not qualify for traditional financing, as well
as established home improvement lenders, other Title I lenders, existing
mortgage brokers and bankers that offer multi-purpose second mortgages.  To a
lesser extent, CambridgeBanc competes with commercial banks, savings and loan
associations, credit unions, insurance companies, and captive finance arms of
major manufacturing companies that may apply more traditional lending criteria.
Many of these competitors or potential competitors are substantially larger and
have significantly greater capital, experience and other resources than the
Company.

         Home improvement loan volume tracks the seasonality of home
improvement contract work.  Volume tends to build during the spring and early
summer months.  A decline is typically experienced in late summer and early
fall until temperatures begin to drop.  This change in seasons precipitates the
need for new siding, window and insulation contracts.  Peak volume is
experienced in November and early December and declines dramatically from the
holiday season through the winter months.  Debt consolidation and home equity
loan volume are not impacted by seasonal climate changes and, with the
exclusion of the holiday season, tend to be stable throughout the year.





                                       12
<PAGE>   13

         CambridgeBanc will attempt to sell, without recourse, all of its loans
on the secondary market to a licensed Title I wholesale buyer.  CambridgeBanc
does not have the capital that would be necessary to make a significant volume
of loans unless it is able promptly to sell its loans on the secondary market.
There can be no assurance that the secondary market for loans will be
available.  Adverse changes in the secondary market could impair the
CambridgeBanc's ability to originate and sell loans on a favorable or timely
basis.  Delays in the sale of a loan pool beyond a quarter-end could result in
losses for such quarter.  If CambridgeBanc is unable to sell its loans on the
secondary market, its growth could be materially impaired and its results of
operations and financial condition could be materially adversely affected.  See
Liquidity and Capital Resources - Capital Requirements for New Business.

         A substantial portion of CambridgeBanc's business is dependent on the
continuation of the Title I Loan program, which is federally funded.  The Title
I Loan program provides that qualifying loans are eligible for FHA insurance.
In August of 1995, bills were introduced in both houses of the United States
Congress that would, among other things, abolish HUD, reduce federal spending
for housing and community development activities and eliminate the Title I Loan
program.  Other changes to HUD have been proposed, which, if adopted, could
adversely affect the operation of the Title I Loan program.  Discontinuation of
or a significant reduction in the Title I Loan program or CambridgeBanc's
authority to originate loans under the Title I Loan program would have a
material adverse effect on CambridgeBanc's planned new business.

                 Payment of Dissenting shareholders

         At the annual meeting of the Company's shareholders held on January
17, 1995, the Company received shareholder approval of its plan to sell
substantially all its assets.  The holders of an aggregate of 100,823 shares of
Common Stock dissented from the Sale of Assets Plan, endorsed and returned
their shares of the Company's common stock to the Company and demanded payment
of the "fair value" of their shares of the Company's common stock, plus
interest pursuant to  North Carolina law.  The Company determined the "fair
value" of these shares to be $.21 per share and accordingly made an offer of
$.21 per share plus 8% interest from July 29, 1994, (the date of the
announcement of the Sale of Assets Plan) to the dissenting shareholders.
Shareholders holding an aggregate of 98,470 shares of the Company's common
stock accepted the Company's offer.  The Company paid the dissenting
shareholders who accepted its offer for their shares of the Company's common
stock in accordance with North Carolina law.  The time for accepting the offer
under North Carolina law has now expired.

Liquidity and Capital Resources

                 Anticipated Liquidity Requirements

         As discussed below under "Cash and Cash Equivalents" and "Debt
Arrangements," the Company has substantial cash liquidity and, although there
can be no assurance in this regard, anticipates that such capital resources
will be sufficient to enable the Company to pay ordinary expenses expected to
arise for the remainder of fiscal 1997.

          In addition, the Company will continue to incur legal expenses
relating to its contingent liabilities.  The Company plans to continue to
attempt to settle its contingent liabilities during fiscal 1997, but it cannot
estimate when these will be settled or the ultimate outcome of





                                       13
<PAGE>   14

the lawsuits described above under Item 1 of Part II, "Legal Proceedings" or of
any unknown contingencies.  There can be no assurance that the Company's cash
balances will be sufficient to allow it to meet its recorded liabilities and
any known or unknown contingent liabilities.  The ultimate outcome of these
contingencies is not known.  No provision has been made in the accompanying
financial statements for any liability which may result from these matters.

                 Cash and Cash Equivalents

         Cash and cash equivalents in the amount of $1,791,000 as of November
30, 1996 included United States treasury bills with a maturity of three months
when purchased and having a market value of $1,533,000.  Cash in excess of the
amounts invested in United States treasury bills is invested as available in a
money market account, which may be liquidated by the Company to meet its cash
needs on a daily basis.  The Company earned $34,000 on its investments during
the three months ended November 30, 1996.

                 Debt Arrangements

         During December of 1996, CambridgeBanc executed a warehouse line of
credit with a bank in the amount of $500,000 to be used to finance loans made
to third parties in connection with its consumer finance business.  The loans
made are collateral for this line of credit.  This line of credit bears
interest at the bank's prime rate plus one percent.  Under the terms of the
loan agreement and an agreement that the Company has executed with
CambridgeBanc, CambridgeBanc is required to maintain tangible net worth of at
least $500,000.  The bank also requires that this tangible net worth include
certain specified assets with maturity of five years or less in the amount of
$500,000.

                 Capital Requirements for New Business

         During the three months ended November 30, 1996, the Company  invested
$615,000 in CambridgeBanc, Inc. its newly acquired wholly-owned subsidiary.
The investment was used as follows: acquisition of common stock - $15,000,
equipment rental for first year - $18,000, purchase of U. S. Treasury bill -
$500,000, purchase of money market account - $25,000 and operating capital of
$57,000.  The Company also plans to attempt to arrange an additional borrowing
facility of up to an additional $500,000 that will be necessary to finance the
operations of this business if the finance business grows as planned.  Given
its cash and cash equivalents position, the Company believes that it has the
borrowing capacity to obtain such loans.  There can be no assurance, however,
that the Company will be able to obtain such loans on satisfactory terms.
Failure to obtain such financing could materially and adversely affect the
ability of this business to grow.





                                       14
<PAGE>   15

PART II.  Other information

ITEM 1. Legal Proceedings

         Wiegmann & Rose

                 Environmental Litigation

         On November 18, 1996, Wiegmann & Rose International Corp. ("Wiegmann &
Rose"), a wholly-owned subsidiary of the Company, entered into an agreement to
settle a lawsuit brought by Triple A Machine Shop, Inc. ("Triple A") relating
to environmental contamination on property formerly owned by Wiegmann & Rose
and sold to Triple A in 1987.  Pursuant to the settlement agreement Wiegmann &
Rose paid to Triple A the sum of three hundred thousand ($300,000) dollars in
exchange for settlement of the lawsuit as well as Triple A's release of
Wiegmann & Rose and the Company from any further liability to Triple A in
connection with the property or under the agreement made at the time of sale of
the property.

                 Asbestos Litigation

         Wiegmann & Rose is also one of numerous defendants with respect to
seven claims for exposure to asbestos, arising in the normal course of
business.  All seven of these claims have been dismissed without prejudice with
respect to Wiegmann & Rose, and the applicable statute of limitations has
passed with respect to at least two of the dismissed claims.  The dismissed
claims are made in the following lawsuits, in each case seeking unspecified
damages for injury allegedly due to asbestos exposure: (i) Brophy v. Abex et
al. (filed April 9, 1992), pending in the San Francisco, California Superior
Court, seeks damages for wrongful death allegedly due to asbestos exposure.
Wiegmann & Rose has been dismissed without prejudice in this action and the
applicable statute of limitations has now passed, barring any subsequent action
by the plaintiff against Wiegmann & Rose. (ii) Canga v. Abex et al. (filed
March 18, 1993), pending in the San Francisco Superior Court, seeks damages for
personal injuries allegedly due to asbestos exposure.  Wiegmann & Rose has been
dismissed without prejudice in this action. (iii) Jordison v. Abex et al.
(filed January 21, 1994), pending in the San Francisco Superior Court, seeks
damages for personal injuries allegedly due to asbestos exposure.  The case
against Wiegmann & Rose has been dismissed without prejudice. (iv) Barnes v.
Abex et al. (filed December 3, 1993), pending in the San Francisco Superior
Court, seeks damages for wrongful death allegedly due to asbestos exposure.
The case against Wiegmann & Rose has been dismissed without prejudice, and the
applicable statute of limitation has passed, barring any subsequent action by
plaintiff against Wiegmann & Rose.  (v) Richardson v. Abex et al. (filed August
5, 1993), pending in the San Francisco Superior Court, seeks damages for
personal injuries allegedly due to asbestos exposure.  The case against
Wiegmann & Rose has been dismissed without prejudice.  (vi) Sorensen v. Abex et
al. (filed July 20, 1993), pending in the San Francisco Superior Court, seeks
damages for personal injuries allegedly due to asbestos exposure.  The case
against Wiegmann & Rose has been dismissed without prejudice.  (vii) Hall v.
Abex et al.  (filed February 25, 1994), pending in the San Francisco Superior
Court, seeks damages for personal injuries allegedly due to asbestos exposure.
The case against Wiegmann & Rose has been dismissed without prejudice.





                                       15
<PAGE>   16

         As to the substantive nature of the asbestos claims, the Company
believes valid defenses would be available and for that reason the Company has
been successful in having all seven of these filed actions dismissed without
prejudice against Wiegmann & Rose.

         No actions involving asbestos are currently pending.

                 Insurance

         The Company has contacted its two primary insurance companies relating
to the environmental and asbestos claims against Wiegmann & Rose described
above.  One insurance company has denied coverage with respect to the
environmental claims, but the other insurance company has reimbursed the
Company for a portion of its defense costs related to the environmental matter
under a reservation of rights.  The two insurance companies, under a
reservation of rights, have reimbursed the Company for substantially all of its
defense costs related to the asbestos claims.  The Company is communicating
with its insurance company with respect to reimbursement of defense costs paid
by the Company  relating to the environmental claims.  The Company is seeking
reimbursement of legal fees that have not been previously reimbursed and also
reimbursement of the $300,000 settlement discussed above, but there can be no
assurance that insurance coverage will be available to reimburse the Company
for the remaining legal fees or for the $300,000 settlement.

                 Holiday Inns, Inc. Litigation

         RSI Corporation (now Delta Woodside), the former parent corporation of
the Company, and Sparjax Corporation, RSI Corporation's now-dissolved
subsidiary, are among several defendants in a lawsuit filed on July 29, 1993 by
Holiday Inns, Inc. in the Circuit Court of the Fourth Judicial Circuit for
Duval County, Florida.  In connection with the distribution of the Company's
common stock to the shareholders of RSI Corporation in 1989, the Company
indemnified RSI Corporation against certain types of potential liabilities and
expenses, including those arising in connection with the lawsuit by Holiday
Inns, Inc.

         This suit seeks indemnification for payments made or to be made by
Holiday Inns, Inc., as the guarantor, to the lessor for obligations under a
land lease agreement allegedly in default.  The lease agreement was commenced
in 1967 and has a term of ninety-nine years.  The lessor under the lease
agreement was originally Fernandina Contractors, Inc., and by assignment is
currently Sam Spevak.  Holiday Inns, Inc. was the original lessee under the
lease agreement.  Payments under the lease agreement are the greater of $24,000
annually or the highest average annual payments during any five-year period
during the first twenty (20) years of the lease, using a percentage of income
formula.

         The lessee's interest in the lease agreement has been assigned to a
series of parties including RSI Corporation and Sparjax Corporation.  RSI
Corporation was the lessee under the lease agreement from June, 1979 to August,
1979, and Sparjax Corporation was the lessee thereunder from August, 1979 to
January, 1981.  The current lessee is American Hotel Investors, Inc. ("AHI").
AHI allegedly has failed to make lease payments due under the lease agreement
and otherwise to comply with its obligations under the lease agreement.

         Holiday Inns, Inc. has alleged that Sparjax Corporation, which is the
assignee of the lease agreement from RSI Corporation, is in breach of a written
Indemnification Agreement executed by Sparjax Corporation





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<PAGE>   17

in favor of Holiday Inns, Inc. upon its assumption of the lease agreement in
1979.  All of the outstanding common stock of Sparjax Corporation was acquired
by RSI Corporation during fiscal 1983, and Sparjax Corporation was dissolved by
forfeiture during fiscal 1990.  In connection with such dissolution, no
material assets were distributed from Sparjax Corporation to RSI Corporation.
Other than as described herein, there is no contractual relationship whatsoever
between RSI Corporation and Holiday Inns, Inc.

         On or about September 23, 1992, Sam Spevak filed a lawsuit against
Holiday Inns, Inc. for allegedly failing to pay monthly rent under the lease
agreement.  This lawsuit is pending in the Circuit Court of the Fourth Judicial
Circuit, in and for Duval County, Florida.  On May 4, 1993, Sam Spevak filed a
Second Amended Complaint seeking from Holiday Inns, Inc. unpaid rent, unpaid
taxes, interest, attorney fees and costs.  On November 19, 1993, Sam Spevak
filed a Third Amended Complaint in the Court seeking from Holiday Inns, Inc.
unpaid rent, unpaid taxes, attorneys fees and costs, and seeking a declaratory
judgment against Holiday Inns, Inc. to establish whether or not Holiday Inns,
Inc. is liable for costs of repair and maintenance to the leased premises.
Holiday Inns, Inc. amended its complaint to assert similar claims against all
subsequent lessees (including RSI Corporation and Sparjax Corporation) under
the lease agreement, seeking indemnification against sums paid or to be paid to
Sam Spevak pursuant to his lawsuit.

         The most recent activity in the case has been a cross-claim filed by
Mr. Donald Roberts against all assignees of W. M. R., Inc., including RSI
Corporation and Sparjax Corporation.  Mr. Roberts was an individual guarantor
of W. M. R., Inc.'s obligations under the land lease.  Counsel for RSI
Corporation and Sparjax Corporation have moved to dismiss Mr. Roberts'
cross-claims and the court has granted these motions, without prejudice.
Counsel for Sparjax Corporation and RSI Corporation have informed the Company
that the cross-claims do not raise any new substantive issues, but merely seek
indemnification from all assignees in the event that Mr. Roberts is required to
pay Holiday Inns, Inc. on his individual guaranty.

         With respect to RSI Corporation's maximum exposure in this case,
Holiday Inns has asserted that RSI Corporation and all other lessees are
obligated to reimburse it $259,201 for rent it paid to the landlord as a result
of AHI's failure to pay under the lease.  This amount, however, only represents
delinquent rent through October 13, 1993, because Holiday Inns contends  that
the lessee's obligations under the lease terminated on that date as a result of
James "Duke" Williams evicting AHI on behalf of the landlord.  Mr. Spevak
claims, however, that as of January, 1995, he is entitled to past monthly
rental and interest (from October 13, 1993 through December 20, 1994) of
$82,289 plus future monthly rental through the end of the lease term in 2068 of
$1,834,565 (which sum represents the present value using a 6.5% discount rate).
If Mr. Spevak is successful in proving his claim, RSI Corporation's exposure
includes these latter amounts.  In addition, should the court determine that
Holiday Inns, Inc. has an obligation to pay the cost of repairs and maintenance
incurred to date and throughout the balance of the lease term, the amount of
such costs could be substantial but cannot be quantified with any reasonable
degree of accuracy.  The Company believes the existing motel property is in a
state of disrepair such that it is not commercially usable.  The City of
Jacksonville has recently sent notice, presumably to all parties involved in
this lawsuit, threatening to condemn the property and demolish the entire
structure.  If that occurs, and the Court determines that the lessees





                                       17
<PAGE>   18

have an obligation to maintain the property during the lease term, RSI
Corporation's exposure could also include the costs of demolition and the
expense of rebuilding the hotel.  This liability, of course, cannot be
accurately estimated at this time, but no doubt involves a very substantial
amount.

         RSI Corporation denies any liability to Holiday Inns, Inc. and intends
to defend this matter vigorously.  Upon a motion of counsel for RSI
Corporation, Holiday Inns, Inc.'s claims against RSI Corporation were dismissed
without prejudice, but Holiday Inns, Inc. has filed an Amended Complaint to
reinstate certain of its claims, and to add a claim for equitable subrogation,
against RSI Corporation and Sparjax Corporation.  Counsel for RSI Corporation
and Sparjax Corporation has answered the equitable subrogation claim, and has
moved for dismissal with prejudice with respect to the claims that have
previously been dismissed.

         The deposition of James "Duke" Williams, a critical witness in the
case, has now been taken.  Mr. Williams was involved in a contract to assume
the lease from Holiday Inns, Inc., which contract was later canceled by Holiday
Inns, Inc.  The parties are presently scheduling the depositions of other
important fact witnesses.  These include Mr. Spevak and several of the other
officers of Holiday Inns, Inc. who were involved in the negotiations to cancel
the lease with Mr. Williams.  The mediation conference held in January, 1995
was not successful.  No trial date has been set.

         If found liable for any sum as a result of Holiday Inns, Inc.'s
claims, the Company believes RSI Corporation and Sparjax Corporation would have
a claim in equity against AHI, the current and allegedly defaulting lessee
under the lease agreement, and its principal shareholders, who in the aggregate
guaranteed AHI's obligations under the lease for up to $150,000.  AHI is a
private corporation and the Company has no information regarding the financial
ability of AHI or its principal shareholders to perform AHI's obligations under
the lease or to reimburse any third party for any payments made under the lease
as a result of the lawsuit described above.

         The ultimate outcome of this matter is not known.  No provision has
been made in the accompanying financial statements for any liability which may
result from this matter.

                 Other Litigation

         On January 12, 1995, a Mr. Cesar A. Cuenca served a complaint against
the Company in the 11th Judicial Circuit Court, Dade County, Florida seeking
damages in excess of the minimal jurisdictional amount of the Court, exclusive
of costs and interest, and demanding costs of the action together with such
further relief as the Court shall deem fit.  The Plaintiff alleges that he was
injured while operating a vehicle that was sold by the Company.  The Complaint
also named the manufacturer of the vehicle.  The manufacturer has agreed to
provide full and complete indemnification to the Company based on the facts
known to date.  There has been no suggestion in the litigation that the Company
did anything other than sell what is alleged to have been a defective product.
Accordingly, unless additional allegations are made against the Company, the
Company expects to continue to receive full indemnity and defense from the
manufacturer.  The plaintiff recently amended the complaint to add the School
Board of Dade County as a defendant for negligent maintenance of the subject
premises.  The





                                       18
<PAGE>   19

Company believes, based on the arrangements with the manufacturer of the
vehicle and the Company's own insurance, that there is no known exposure to the
Company from this litigation.

         On February 4, 1994, a Mr. Everette Moncur and Edwina Moncur, his
wife, served a complaint against the Company in the 17th Judicial Circuit
Court, Broward County, Florida seeking damages in excess of $15,000 for
injuries sustained while operating a turf care product sold by the Company.
The complaint also named the manufacturer of the product.  The manufacturer and
its insurance carrier have accepted defense of the Company regarding this
matter.  The Company believes, based on the arrangements with the manufacturer,
the manufacturer's insurance company, and the Company's own insurance, that
this action should not have a material adverse effect on the Company's
financial position.

ITEM 2.   CHANGES IN SECURITIES*

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES*

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS*

ITEM 5.  OTHER INFORMATION*

*Items 2, 3, 4 and 5 are not presented as they are not applicable or the
information required thereunder is substantially the same as information
previously reported.

ITEM 6.          EXHIBITS AND REPORTS ON FORM 8-K

         (a)     Listing of Exhibits

         3.1     Articles of Incorporation of RSI Holdings, Inc., as amended:
                 Incorporated by reference to Exhibits 3.2 and 3.2.2 to the
                 Registration Statement on Form S-4 of RSI Corporation and
                 Porter Brothers, Inc., File No. 33-30247 (the "Form S-4").

         3.1.1   Articles of Amendment and Certificate of Reduction of Capital
                 of Porter Brothers, Inc.: Incorporated by reference to Exhibit
                 4.1 to the Form 8-K of the Registrant filed with the
                 Securities and Exchange Commission on November 28, 1989, File
                 No. 0-7067.

         3.2.1   By-laws of  RSI Holdings, Inc., as amended: Incorporated by
                 reference to Exhibit 3.2.1 to the Form S-4.

         3.2.2   Amendment to By-laws of RSI Holdings, Inc.:  Incorporated by
                 reference to Exhibit 3.2.2 to the Form 10-KSB of the
                 Registrant filed with the Securities and Exchange Commission
                 on October 22, 1996.

         4.1     Specimen of Certificate for RSI Holdings, Inc., common stock:
                 Incorporated by reference to Exhibit 4.1.2 to the Form S-4.

         4.2     See Exhibits 3.1, 3.1.1, 3.2.1, and 3.2.2.

         10.1    Loan Agreement dated December 12 1996 by and among, the
                 Company, CambridgeBanc, Inc. and First Union National Bank,
                 together with related documents (omitting schedules and
                 exhibits).  The Company hereby agrees to furnish upon the
                 request of the Commissioner any omitted schedule or exhibit.





                                       19
<PAGE>   20

         27      Financial Data Schedule (electronic filing only)


         (b)     Reports on Form 8-K

         Registrant filed a Current Report on Form 8-K, dated November 12,
1996, with respect to the purchase of the outstanding common stock of
CambridgeBanc, Inc.

         Registrant filed a Current Report on Form 8-K, dated November 25,
1996, with respect to the Settlement Agreement and Release dated as of November
18, 1996 relating to the settlement of the environmental contingent liability
of Wiegmann & Rose.





                                       20
<PAGE>   21

                                   SIGNATURES





In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




                                           RSI HOLDINGS, INC.
                                    --------------------------------


 January 14, 1997                          /s/ Joe F. Ogburn
------------------                  --------------------------------
     (Date)                                Joe F. Ogburn,
                                    Vice President and Treasurer
                                    (Principal Accounting Officer)





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