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recruit experienced managers, petitioner was the only new
manager hired as of June 30, 1989. SWI was generally
financially healthy at this time, but it had some fiscal
concerns, including the significant amount of debt assumed
to finance the buyout and expansion. As of June 30, 1989,
SWI had long term debt of approximately $8.3 million and
current liabilities of approximately $13.2 million. SWI's
balance sheet as of June 30, 1989 was as follows:
Assets Liabilities
Current liabilities
Accounts payable $11,290,720
Current assets Accrued liabilities 1,502,966
Cash and equivalents $1,745,901 Income taxes payable 259,550
Net accounts receivable6,730,874 Current portion of
Inventory 9,554,926 capital lease obligations158,040
Prepaid Expenses 555,899 Total 13,211,276
Total 18,587,600
Capital lease obligations326,255
Property and equipment,
at cost Bank credit agreement 3,070,462
Furniture, fixtures and
equipment 738,733 Senior subordinated notes4,912,341
Leasehold improvements392,462
Property under capital Total long-term
lease 634,268 liabilities 8,309,058
Capital projects in Total liabilities 99.81%21,520,334
progress 35,633
Less accumulated depreciation (367,558)
Net property & equipment1,433,538 Shareholders' Equity
Net intangible assets &
deferred charges, net1,432,104 Warrants 125,526
Common stock 71
Deposits and other 108,583 Additional paid in capital430,693
total assets 21,561,825 Retained Earnings 109,674
Total 666,054
Carryover basis adjustment(624,563)
Total shareholders' equity 0.19%
41,491
Liabilities + 21,561,825
Shareholders' equity
In the 5-month period ending on June 30, 1989, SWI
experienced total sales of $64 million, gross profit of
$16.9 million, and net income of $125,526. During this
same period, SWI's gross profit margin decreased from 12.8
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