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Previous: MERITAGE HOSPITALITY GROUP INC /MI/, 8-A12B, 1996-10-15 |
Next: TWI CABLE INC, 8-K, 1996-10-15 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A1
____________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of Earliest Event Reported): Commission File Number:
JULY 30, 1996 0-21282
____________________
SWISHER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 56-1541396
(State of incorporation) (I.R.S. Employer
Identification Number)
6849 FAIRVIEW ROAD
CHARLOTTE, NORTH CAROLINA 28210
704/364-7707
-------------------------------
(Address of principal executive
offices and telephone number)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
On July 30, 1996, Swisher International, Inc. (the "Company")
completed the purchase of certain assets (such assets are referred to herein as
"Surface Doctor") from Professional Carpet Systems, Inc. and Old Dixie Supply
Company. On or about August 9, 1996, the Company filed a Current Report on
Form 8-K describing the asset purchase transaction. Such report did not
contain separate financial statements for Surface Doctor or pro forma financial
information giving effect to the purchase of Surface Doctor. The financial
statements and pro forma financial information required by Item 7 of Form 8-K
are therefore filed with this report.
(a) In accordance with Item 7(a)(1), the Company hereby
files the required financial statements of Surface
Doctor as an amendment to the initial report on Form
8-K.
(b) In accordance with Item 7(b)(2), the Company hereby
files the required pro forma financial statements as
an amendment to the initial report on Form 8-K.
(c) The following exhibits are furnished herewith in
accordance with the provisions of Item 601 of
Regulation S-K:
<TABLE>
<CAPTION>
Reg. S-K
Exhibit No. Description Item No.
----------- ----------- --------
<S> <C> <C>
* 2.1 Asset Purchase Agreement by and among the Company, 2
Professional Carpet Systems, Inc. and Old Dixie Supply Company, dated July 30,
1996, including the Option and Registration Rights Agreements attached thereto as
Exhibits 2.1(b), 3.1 and 3.2, respectively. (Pursuant to Item 601(b)(2) of
Regulation S-K, the remaining exhibits and schedules are listed in the Asset
Purchase Agreement and will be furnished supplementally upon request by the
Commission.)
o 99.3 Financial Statements of Surface Doctor 99
o 99.4 Pro Forma Financial Statements 99
</TABLE>
- ----------------
* Previously filed.
o Filed herewith.
<PAGE> 3
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
undersigned hereunto duly authorized.
SWISHER INTERNATIONAL, INC.
Date: October 11, 1996 By: /s/ W. TOM REEDER
----------------------------------
W. Tom Reeder, Vice President
-3-
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
* 2.1 Asset Purchase Agreement by and among the Company,
Professional Carpet Systems, Inc. and Old Dixie Supply
Company, dated July 30, 1996, including the Option and
Registration Rights Agreements attached thereto as
Exhibits 2.1(b), 3.1 and 3.2, respectively. (Pursuant to
Item 601(b)(2) of Regulation S-K, the remaining exhibits and
schedules are listed in the Asset Purchase Agreement and
will be furnished supplementally upon request by the
Commission.)
o 99.3 Financial Statements of Surface Doctor
o 99.4 Pro Forma Financial Statements
- ----------------
* Previously filed.
o Filed herewith.
<PAGE> 1
FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following financial statements, pro forma financial information
and exhibits are filed as an amendment to Form 8-K filed on or about October
14, 1996.
(a) Financial statements of the business acquired, prepared pursuant to
Rule 3.05 of Regulation S-X and provided to Swisher International, Inc. by
Professional Carpet Systems, Inc.
<TABLE>
<CAPTION>
Item Page
- ---- ----
<S> <C>
Audited Financial Statements of Surface Doctor
Report of Blackwell, Poole & Company, Certified Public Accountants 1
Statements of Net Assets - December 31, 1995 and 1994 2-3
Statements of Operations - Years ended December 31, 1995 and 1994 4
Statements of Cash Flows - Years ended December 31, 1995 and 1994 5
Notes to Financial Statements 6-9
Unaudited Interim Financial Statements of Surface Doctor
Statements of Net Assets - July 31, 1996 10
Statements of Income - Seven months ended July 31, 1996 and 1995 11
Statements of Cash Flows - Seven months ended July 31, 1996 and 1995 12
(b) Pro forma financial information required pursuant to Article 11 of Regulation S-X:
Pro Forma Condensed Combined Statement of Income - Year Ended
October 31, 1995 13
Pro Forma Condensed Combined Statement of Income - Nine months
Ended July 31, 1996 14
Notes to Pro Forma Condensed Combined Financial Statements 15
</TABLE>
The Unaudited pro forma condensed combined statements of income for
the year ended October 31, 1995 and nine months ended July 31, 1996, give
the effect the acquisition of Surface Doctor by Swisher International, Inc.
as if the acquisition, accounted for as a purchase, had occurred on November
1, 1994. The pro forma information is based on historical financial
statements Surface Doctor and Swisher International, Inc. after giving
effect to the proposed transactions using the purchase method of accounting
and the assumptions and adjustments in the accompanying notes to the pro
forma financial statements.
<PAGE> 2
The pro forma statements have been prepared by Swisher International,
Inc. based upon the financial statements of Surface Doctor (filed with this
report under Item 7(a)) which have been provided by Professional Carpet
Systems, Inc. These pro forma statements may not be indicative of the
results that actually would have occurred if the combinations had been in
effect on the dates indicated or which may be obtained in the future. The
pro forma financial statements should be read in conjunction with the
audited financial statements and notes of Surface Doctor and the audited
statements of Swisher International, Inc.
<PAGE> 3
[BLACKWELL, POOLE & COMPANY LETTERHEAD]
Independent Auditor's Report
The Board of Directors
Professional Carpet Systems, Inc.
Atlanta, Georgia
We have audited the accompanying statements of net assets of Surface Doctor
(as described in Note 1) as of December 31, 1995 and 1994, and the related
statements of operations and cash flows for the years then ended. These
financial statements are the responsibility of the Surface Doctor's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
As discussed in Note 1, Surface Doctor is a part of Professional Carpet
Systems, Inc. and affiliated companies and has no separate legal status or
existence.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Surface Doctor as of
December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/ BLACKWELL, POOLE & COMPANY
Blackwell, Poole & Company
Certified Public Accountants
October 8, 1996
1
<PAGE> 4
SURFACE DOCTOR
STATEMENTS OF NET ASSETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
December December
31, 1995 31, 1994
----------- -----------
<S> <C> <C>
Current Assets
Accounts Receivable, Less Allowance
for Doubtful Accounts of $22,900
and $16,210 for 1995 and 1994 $ 93,769 $ 85,747
Notes Receivable, Less Allowance for
Doubtful Notes of $20,000 and $6,715
for 1995 and 1994 (Notes 3 and 4) 48,996 98,834
Inventory (Note 2) 74,831 55,005
Prepaid Expenses 20,238 13,203
----------- -----------
Total Current Assets 237,834 252,789
Property and Equipment, net (Notes 2 and 5) 109,246 107,938
Other Assets
Notes Receivable, Less Allowance for
Doubtful Notes of $20,472 and $4,000
for 1995 and 1994 (Notes 3 and 4) 51,248 47,986
Other 12,126 9,710
----------- -----------
Total Other Assets 63,374 57,696
----------- -----------
$ 410,454 $ 418,423
=========== ===========
</TABLE>
See Accompanying Notes to Financial Statements
2
<PAGE> 5
LIABILITIES AND NET ASSETS
<TABLE>
<CAPTION>
December December
31, 1995 31, 1994
------------ -----------
<S> <C> <C>
Current Liabilities
Accounts Payable $ 27,747 $ 106,450
Accrued Expenses 9,131 16,105
Advertising Fund (Note 2) 15,201 1,584
------------ -----------
Total Current Liabilities 52,079 124,139
Deferred Revenue (Note 6) 58,495 54,170
Net Assets 299,880 240,114
------------ -----------
$ 410,454 $ 418,423
============= ===========
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE> 6
SURFACE DOCTOR
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
December December
31, 1995 31, 1994
------------ ------------
<S> <C> <C>
Revenues
Franchise Fees (Note 2) $ 920,603 $ 695,175
Royalties 133,490 21,283
Supply Sales 507,739 101,091
Service Revenues 335,373 465,977
------------ -------------
Total Revenues 1,897,205 1,283,526
Costs and Expenses
Costs of Revenues (Note 2) 645,093 466,011
Selling, General and Administrative
Expenses (Note 2) 1,034,864 951,393
------------ -------------
Total Costs and Expenses 1,679,957 1,417,404
------------ -------------
Operating Income (Loss) 217,248 (133,878)
Other Income 11,072 1,247
------------ -------------
Net Income (Loss) $ 228,320 $ (132,631)
============ =============
</TABLE>
See Accompanying Notes to Financial Statements
4
<PAGE> 7
SURFACE DOCTOR
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
December December
31, 1995 31, 1994
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $ 228,320 $ (132,631)
Adjustment to Reconcile Net Income
to Cash Provided by Operating
Activities:
Depreciation and Amortization 29,203 15,719
Provision for Bad Debts 68,080 28,628
Changes in Current Assets and
Current Liabilities:
Accounts Receivable (41,345) (103,660)
Inventories (19,826) (55,005)
Prepaid Expenses (7,035) 1,025
Accounts Payable (78,703) 106,301
Advertising Fund 13,617 1,584
Accrued Expenses (6,974) 16,105
Deferred Revenue 4,325 53,170
------------ -------------
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES 189,662 (68,764)
------------ -------------
INVESTING ACTIVITIES:
Capital Expenditures (30,218) (123,565)
Increase in Other Assets (2,709) (9,239)
Net Decrease (Increase) in
Notes Receivable 11,819 (157,535)
------------ -------------
CASH USED FOR INVESTING ACTIVITIES (21,108) (290,339)
------------ -------------
FINANCING ACTIVITIES
Net Increase (Decrease) in Net Assets (168,554) 359,103
------------ -------------
CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES (168,554) 359,103
------------ -------------
NET CHANGE IN CASH - -
CASH, BEGINNING OF YEAR - -
------------ -------------
CASH, END OF YEAR $ - $ -
============ =============
</TABLE>
See Accompanying Notes to Financial Statements
5
<PAGE> 8
SURFACE DOCTOR
NOTES TO FINANCIAL STATEMENTS
1. Business
Surface Doctor ("SD") is a division of the affiliated companies
Professional Carpet Systems, Inc. ("PCS"), First American Operations,
Inc. ("FAO") and Old Dixie Supply Company ("ODS"). SD has no separate
legal status or existence. SD operates and franchises a resurfacing
process. SD specializes in resurfacing appliances, counter tops and
fixtures. The SD franchisees may market these services, based on
designated marketing areas throughout the world, to the apartment
industry, hotels, homeowners and commercial customers.
Management uses estimates and assumptions in preparing these
financial statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosures of contingent
assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that were used.
SD was sold to Swisher International, Inc. effective July 1, 1996.
2. Summary of Significant Accounting Policies
BASIS OF PRESENTATION
The accompanying financial statements include the accounts of SD as
described above. Revenues and direct costs are recorded based on
actual amounts. Selling, general and administrative expenses were
allocated based on best estimates available.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out)
or market.
PROPERTY, EQUIPMENT, DEPRECIATION AND AMORTIZATION
Property and equipment are stated at cost. Depreciation and
amortization are computed over the estimated useful lives of the
assets on a straight-line basis for financial reporting and
accelerated methods for income tax purposes. Expenditures for
maintenance, repairs, renewals, and betterments that do not materially
prolong the useful lives of the assets are expensed as incurred during
the year.
The estimated useful lives for each class of property and equipment
are as follows:
Vehicles 5 years
Equipment 7 years
Leasehold Improvements Term of Lease
6
<PAGE> 9
SURFACE DOCTOR
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued)
REVENUE RECOGNITION
Franchise sales are recognized when SD has performed all material
services and obligations of the franchise contract, which generally
coincides with the completion of all training by the franchisee.
Certain franchise sales have been deferred until SD has substantially
performed all of its obligations under the franchise agreement.
Royalty fees are recognized as revenue as the fees are earned.
Service revenues from SD owned operations are recognized when the
services are performed.
SD recognizes interest income when payments are received. SD
reports change in present value of the expected future cash flows
related to impaired notes receivable as an increase or decrease in bad
debt expense.
ADVERTISING FUND
SD franchises are required to contribute a fixed monthly amount for
local, regional and national advertising to a fund that is maintained
and accounted for by SD. The funds are disbursed by SD at its
discretion.
INCOME TAXES
PCS and FAO elected to be taxed under Subchapter S of the Internal
Revenue Code. Accordingly, taxable income of the SD divisions of PCS
and FAO are taxable to the stockholder who is responsible for payment
of taxes thereon.
Effective January 1, 1995, ODS elected to be taxed under Subchapter
S of the Internal Revenue Code. The election was approved by the
Internal Revenue Service in 1994; therefore, no deferred income taxes
were provided for the year ended December 31, 1994. Taxable income of
the SD division of ODS for the year ended December 31, 1995, is
taxable to the stockholder who is responsible for payment of taxes
thereon.
MANAGEMENT ALLOCATIONS
Included in selling, general and administrative expenses for the
years ended December 31, 1995 and 1994 are management charges from
PCS, FAO and ODS. These charges represent allocation of corporate
expenses which are based on various allocation methods.
Management believes that the above allocations are reasonable and
result in costs that are not materially different from those which
would have been incurred on a stand alone basis.
7
<PAGE> 10
SURFACE DOCTOR
NOTES TO FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies (continued)
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject SD to
concentrations of credit risk consist principally of accounts
receivable and notes receivable. Accounts receivable credit risks are
limited due to the large number of customers comprising SD's customer
base and their dispersion across many different geographic areas.
Notes receivable credit risks are limited due to SD requiring
collateral and substantial down payments.
3. Notes Receivable
SD has notes receivable from its franchises that were issued in
conjunction with the sales of the individual franchises. These notes
are due in years ranging from 1996 to 2002 and bear interest at rates
ranging from 8% to 12%. The notes are primarily collateralized by all
right, title, and interest in the franchise granted, the proceeds upon
any sale of the franchise and all accounts receivable of the franchise
company. Notes receivable amounted to $140,716 and $157,535, less an
allowance for doubtful notes of $40,472 and $10,715 at December 31,
1995 and 1994, respectively.
4. Impaired Notes Receivable
As of December 31, 1995 and 1994, the recorded investment in
impaired notes receivable was $29,700, and $5,000 (with allowances for
doubtful notes of $29,700 and $5,000) respectively. Following is a
summary of the activity in the allowance for doubtful notes accounts:
<TABLE>
<CAPTION>
December December
31, 1995 31, 1994
--------------- ---------------
<S> <C> <C>
Balance Beginning of Year $ 10,715 $ -
Additions Charged to Operations 34,757 10,715
Write-Offs (5,000) -
--------------- ---------------
Balance End of Year $ 40,472 $ 10,715
=============== ===============
</TABLE>
8
<PAGE> 11
SURFACE DOCTOR
NOTES TO FINANCIAL STATEMENTS
5. Property and Equipment
Property and equipment consisted of the following
<TABLE>
<CAPTION>
December December
31, 1995 31, 1994
-------------- --------------
<S> <C> <C>
Vehicles $ 74,678 $ 74,678
Equipment 64,926 48,588
Leasehold Improvements 23,029 9,149
Less accumulated depreciation
and amortization (53,387) (24,477)
-------------- --------------
$ 109,246 $ 107,938
============== ==============
</TABLE>
6. Deferred Revenue
Deferred revenue at December 31, 1995 and 1994 represents certain
franchise sales that have been deferred until SD has substantially
performed all of its obligations under the franchise agreement.
9
<PAGE> 12
SURFACE DOCTOR
STATEMENT OF NET ASSETS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Current Assets
Accounts Receivable, Less Allowance for Doubtful
Accounts of $31,747 $ 120,543
Notes Receivable, Less Allowance for Doubtful
Notes of $4,000 21,000
Inventories 83,426
Prepaid Expenses 40,504
-----------------
Total Current Assets 265,473
Property and Equipment, Net 93,243
Other Assets
Notes Receivable, Less Allowance for Doubtful
Notes of $10,903 58,784
Other 15,616
-----------------
Total Other Assets 74,400
-----------------
$ 433,116
=================
Current Liabilities
Accounts Payable $ 159,281
Accrued Expenses 5,877
Advertising Fund 27,468
-----------------
Total Current Liabilities 192,626
Deferred Revenue 116,215
Net Assets 124,275
-----------------
$ 433,116
=================
</TABLE>
10
<PAGE> 13
SURFACE DOCTOR
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Seven Months Ended
June 30, 1996 July 31, 1995
------------------- -------------------
<S> <C> <C>
Revenues
Franchise Fees $ 270,970 $ 575,810
Royalties 88,105 66,608
Supply Sales 318,155 271,491
Service Revenues 159,968 190,096
------------------- -------------------
Total Revenues 837,198 1,104,005
Costs and Expenses
Costs of Revenues 320,683 379,411
Selling, General and Administrative Expenses 402,475 584,362
------------------- -------------------
Total Costs and Expenses 723,158 963,773
------------------- -------------------
Operating Income 114,040 140,232
Other Income 7,963 8,381
------------------- -------------------
Net Income $ 122,003 $ 148,613
=================== ===================
</TABLE>
11
<PAGE> 14
SURFACE DOCTOR
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Seven Months Ended
June 30, 1996 July 31, 1995
------------------- -------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 122,003 $ 148,614
Adjustments to Reconcile Net Income to Cash
Provided by Operating Activities:
Depreciation and Amortization 17,477 14,882
Provision for Bad Debts 23,208 30,629
Changes in Current Assets and Current
Liabilities
Accounts Receivable (44,220) (36,769)
Inventories (8,595) (51,465)
Prepaid Expenses (20,265) (783)
Accounts Payable 131,534 (9,029)
Advertising Fund 12,267 13,837
Accrued Expenses (3,254) (3,617)
Deferred Revenue 57,720 28,515
------------------- -------------------
CASH PROVIDED BY OPERATING ACTIVITIES 287,875 134,814
------------------- -------------------
INVESTING ACTIVITIES
Capital Expenditures (1,300) (1,008)
Increase in Other Assets (3,665) -
Net Decrease in Notes Receivable 14,698 45,369
------------------- -------------------
CASH PROVIDED BY INVESTING ACTIVITIES 9,733 44,361
------------------- -------------------
FINANCING ACTIVITIES
Decrease in Net Assets (297,608) (179,175)
------------------- -------------------
CASH USED FOR FINANCING ACTIVITIES (297,608) (179,175)
------------------- -------------------
DECREASE IN CASH - -
CASH, BEGINNING OF PERIOD - -
------------------- -------------------
CASH, END OF PERIOD $ - $ -
=================== ===================
</TABLE>
12
<PAGE> 1
SWISHER INTERNATIONAL, INC. AND SURFACE DOCTOR
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED) YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Swisher Surface Increase Pro Forma
International, Inc. Doctor (Decrease) Combined
------------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Revenues
Product Sales to Franchisees $ 2,359,461 $ 507,739 $ - $ 2,867,200
Service Fees 1,382,852 - - 1,382,852
Royalties 1,192,336 133,490 - 1,325,826
Marketing Fees 45,864 - - 45,864
Revenue from Company
Owned Operations 1,775,585 335,373 - 2,110,958
Initial franchise sales 934,118 920,603 - 1,854,721
Other Income 272,318 11,072 - 283,390
--------------- ------------- --------------- -------------
Total Revenues 7,962,534 1,908,277 - 9,870,811
Costs and Expenses
Cost of Revenues 4,054,660 645,093 - 4,699,753
Selling, General and
Administrative 3,124,145 1,034,864 19,574 (a) 4,178,583
Interest Expense 162,110 - - 162,110
--------------- ------------- --------------- -------------
Total Costs and Expenses 7,340,915 1,679,957 19,574 9,040,446
Income Before Taxes 621,619 228,320 (19,574) 830,365
--------------- ------------- --------------- -------------
Income Tax Expense 246,000 - 82,664 (a) 328,664
--------------- ------------- --------------- -------------
Net Income $ 375,619 $ 228,320 $ (102,238) $ 501,701
=============== ============= =============== =============
Net Income per Common Share $ 0.20 $ 0.24
=============== =============
Weighted Average Number of
Common Shares and Common
Share Equivalents Outstanding 1,904,258 200,000 (b) 2,104,258
=============== =============== =============
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
13
<PAGE> 2
SWISHER INTERNATIONAL, INC. AND SURFACE DOCTOR
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED) NINE MONTHS ENDED JULY 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Adjustments
Swisher Surface Increase Pro Forma
International, Inc. Doctor (Decrease) Combined
------------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Revenues
Product Sales to Franchisees $ 2,325,088 $ 410,569 $ - $ 2,735,657
Service Fees 1,251,738 - - 1,251,738
Royalties 1,169,552 115,950 - 1,285,502
Marketing Fees 34,622 - - 34,622
Revenue from Company
Owned Operations 1,882,225 219,498 - 2,101,723
Initial franchise sales 382,781 396,493 - 779,274
Other income 425,969 7,325 - 433,294
--------------- ------------- --------------- -------------
Total Revenues 7,471,975 1,149,835 - 8,621,810
Costs and Expenses
Cost of Revenues 3,746,761 411,132 - 4,157,893
Selling, General and
Administrative 3,037,387 543,157 14,631 (a) 3,595,175
Interest Expense 184,806 - - 184,806
--------------- ------------- --------------- -------------
Total Costs and Expenses 6,968,954 954,289 14,631 7,937,874
Income Before Income Taxes
and Non-Recurring Items 503,021 195,546 (14,631) 683,936
--------------- ------------- --------------- -------------
Non-Recurring Item 77,466 - - 77,466
--------------- ------------- --------------- -------------
Income Tax Expense 227,487 - 70,899 (a) 298,386
--------------- ------------- --------------- -------------
Net Income $ 353,000 $ 195,546 $ (85,530) $ 463,016
=============== ============= =============== =============
Net Income per Common Share $ 0.19 $ 0.23
=============== =============
Weighted Average Number of
Common Shares and Common
Share Equivalents Outstanding 1,853,015 133,020 (b) 1,986,035
=============== =============== =============
</TABLE>
See notes to unaudited pro forma condensed combined financial statements.
14
<PAGE> 3
SWISHER INTERNATIONAL, INC. AND SURFACE DOCTOR
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENT
(a) The following proforma adjustments are incorporated in the pro forma
condensed combined statements of income:
<TABLE>
<CAPTION>
Year Ended Nine Months
October 31, Ended July 31,
1995 1996
----------- --------------
<S> <C> <C> <C>
1. Increase in amortization expense
resulting from goodwill. $ (17,241) $ (12,931)
2. Increase in amortization expense
resulting from adjustment to
carrying amount of trademarks. (2,333) (1,700)
3. Decrease in income tax expense
associated with 1 and 2 above. 7,751 5,734
4. Increase in income tax expense resulting
from the change of Surface Doctor from
S-Corporation to C-Corporation status. (90,415) (76,633)
----------- ----------
$ (102,238) $ (85,530)
=========== ==========
</TABLE>
(b) Represents the issuance of 200,000 shares of Swisher International,
Inc. stock in exchange for the assets of Surface Doctor.
(c) Operations of Surface Doctor for the period November 1, 1995, through
December 31, 1995, are included in both the pro forma statements of
income for the year ended December 31, 1995, and the nine months ended
July 31, 1996. Revenues and net income for this period, derived from
statements of income provided by Professional Carpet Systems, Inc.,
amounted to $305,312 and $73,543, respectively.
15
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