- 18 -
percent to 11.2 percent. SWI's future financial performance
was expected to be impacted by the approximately $1 million
in capital expenditures necessary to open each new store,
and the annual management fee that SWI was required to pay
Dubin Clark. On June 30, 1989, SWI had 7,100 shares of
capital stock outstanding. As mentioned above, an
additional 1,800 stock purchase warrants were held by two
lending institutions.
SWI's growth is evidenced by its income statements for
the fiscal years 1987, 1988, and 1989, which are set out
below:
Fiscal Year Ending 6/30 1987 1988 1989
Net sales $32,124,000$66,566,000$137,457,598
Cost of sales 29,450,000 58,072,000 122,016,440
Gross profit 2,674,000 8,494,000 15,441,158
Selling, general and administrative expenses
Salaries and employee benefits 11,812,357
Advertising 1,223,000 2,890,000
Rent 488,000 1,503,000
Other expenses 107,000 199,000
Depreciation and amortization 357,000 857,000
Total 8,000 89,000 370,170
2,183,000 5,538,000 12,182,527
Operating income
491,000 2,956,000 3,258,631
Other income/expense
Interest income
Other income 6,000 45,000 53,391
Interest expense 5,000 26,000 33,729
Total (3,000) (11,000) (454,939)
8,000 60,000 (367,819)
Earnings before income taxes
499,000 3,016,000 2,890,812
Income taxes
Current
Deferred 213,000 1,087,000 1,204,472
Total 5,000 (15,000) --
218,000 1,072,000 1,204,472
Net income
281,000 1,944,000 1,686,340
The above figures for 1987 and 1988 are taken from an audited statement attached to a
memorandum prepared by Dubin Clark describing its 1989 purchase of SWI. The figures for 1989
are a combination of old SWI's figures and new SWI's figures.
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