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consolidated income statements, which were part of those years'
financial statements which were audited and discussed without
qualification by Sterling's independent auditor, listed the
following information:
1990 1991 1992
Net sales $21,801,718 $20,528,033 $21,777,553
Cost of sales 10,714,187 10,901,822 11,023,910
Gross profit 11,087,531 9,626,211 10,753,643
Selling, general &
administrative expenses 5,111,078 4,782,155 4,639,865
Amortization of goodwill &
other intangible assets 3,493,354 16,089,709 1,798,837
Operating income (loss) 2,483,099 (1,245,653) 4,314,941
Other income (expense):
Amortization of deferred
financing costs: (448,855) (448,855) (460,522)
interest expense (4,089,050) (3,557,997) (3,003,309)
interest and other income 157,973 45,661 26,360
Total other expense (4,379,932) (3,961,191) (3,437,471)
Income (loss) before income taxes(1,896,833) (5,206,844) 877,470
Provision for income taxes - 0 - - 0 - - 0 -
Net income (loss) (1,896,833) (5,206,844) 877,470
1Includes $2,953,646 of amortization for a noncompetition agreement that
was writtenoff on account of the death of a party thereto.
No dividends were paid on the Sterling preferred stock from
its issuance through September 18, 1992, and no shares were
redeemed during that time. Sterling had a positive cash-flow and
was timely paying interest and principal on its senior debt.
Sterling also was paying its monthly operating expenses.
Sterling had postponed paying interest and/or principal on some
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