UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended - April 30, 1996
Commission File Number: 000-21282
SWISHER INTERNATIONAL, INC.
NEVADA 56-1541396
(State of Incorporation) (I.R.S. Employer Identification No.)
6849 Fairview Road
Charlotte, North Carolina 28210
(Address of principal executive offices) (Zip Code)
(704) 364-7707
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 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.
[ X ] Yes [ ] No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Information
Financial Statements and Supplementary Data
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Item 2. Management's Discussion and Analysis
<PAGE>
<TABLE>
SWISHER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
April 30,
1996 October 31,
(Unaudited) 1995
----------- -----------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and Cash Equivalents $ 775,476 $ 930,492
Restricted Cash 700,000 700,000
Accounts Receivable:
Franchisees 1,439,230 1,183,623
Other 337,323 217,716
Less Allowance for
Doubtful Accounts (82,644) (40,644)
----------- -----------
Net Accounts Receivable 1,693,909 1,360,695
Notes receivable (current year) 614,890 807,646
Inventory 96,769 75,327
Prepaid Expenses 168,188 147,125
Deferred Franchise cost 170,821 110,073
----------- -----------
TOTAL CURRENT ASSETS 4,220,053 4,131,358
PROPERTY AND EQUIPMENT:
Furniture & Equipment 953,135 923,219
Land & Building 339,499
Less Accumulated Depreciation (349,515) (281,440)
----------- -----------
NET PROPERTY AND EQUIPMENT 603,620 981,278
OTHER ASSETS:
Notes Receivable 2,113,281 1,978,759
Intangible Assets, less amortization 1,016,096 866,952
----------- -----------
NET OTHER ASSETS 3,129,377 2,845,711
----------- -----------
TOTAL ASSETS $ 7,953,050 $ 7,958,347
=========== ===========
(continued)
</TABLE>
<PAGE>
<TABLE>
SWISHER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(continued)
<CAPTION>
April 30,
1996 October 31,
(Unaudited) 1995
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Long-Term Debt, Current Portion $ 1,113,316 $ 1,094,158
Accounts Payable 678,671 488,180
Accrued Expenses 120,946 123,851
Deferred Revenue 175,986 240,986
Income Taxes Payable 99,195 40,000
----------- -----------
TOTAL CURRENT LIABILITIES 2,188,114 1,987,175
LONG-TERM DEBT 969,052 1,437,651
DEFERRED INCOME TAXES 85,124 49,000
----------- -----------
TOTAL LIABILITIES 3,242,290 3,473,826
STOCKHOLDERS' EQUITY:
Preferred Stock, $.10 par value;
1,500,000 shares authorized; none
issued - -
Common Stock, $.01 par value; 15,000,000
shares authorized; 1,735,799 shares
issued and outstanding at April 30,
1996 and 1,719,299 outstanding at
October 31, 1995 17,357 17,194
Additional Paid-In Capital 3,039,599 3,002,637
Retained Earnings 1,653,804 1,464,690
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 4,710,760 4,484,521
----------- -----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 7,953,050 $ 7,958,347
=========== ===========
</TABLE>
<PAGE>
<TABLE>
SWISHER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
------------------------- ------------------------
1996 1995 1996 1995
------------------------- ------------------------
<S> <C> <C> <C> <C>
REVENUES:
Annuity Revenues:
Product Sales to Franchisees $ 676,474 $ 569,723 $ 1,380,094 $ 1,038,664
Service Fees 400,626 333,590 806,803 637,139
Royalties 382,534 282,326 749,024 538,447
Marketing Fees 11,623 8,907 22,594 15,977
----------- ----------- ------------- -----------
Total Annuity Revenues 1,471,257 1,194,546 2,958,515 2,230,227
Revenue from Company
Owned Subsidiaries 684,859 492,988 1,280,709 707,123
Initial Franchise Sales:
Swisher Hygiene 152,500 175,000 287,161 231,096
Swisher Maids 139,604 502,389
Other Income 100,781 101,948 150,124 131,682
----------- ----------- ----------- -----------
TOTAL REVENUES 2,409,397 2,104,086 4,676,509 3,802,517
----------- ----------- ----------- -----------
EXPENSES:
Selling, G & A Expenses:
Corporate & Hygiene Franchising 811,148 753,856 1,640,803 1,368,405
Swisher Maid Franchising 110,930 281,339 222,311 597,871
Cost of Product Sales 572,776 508,415 1,161,595 918,550
Expenses of Company
Owned Subsidiaries 658,504 423,881 1,189,180 674,392
Interest Expense 66,751 14,878 124,882 18,785
----------- ----------- ----------- -----------
TOTAL EXPENSES 2,220,109 1,982,369 4,338,771 3,578,003
----------- ----------- ----------- -----------
INCOME BEFORE TAXES AND
NON-RECURRING ITEMS 189,288 121,717 337,738 224,514
NON-RECURRING ITEMS
Loss on sale of assets 17,206 17,206
PROVISION FOR INCOME TAXES 70,637 47,500 131,418 87,910
----------- ----------- ----------- -----------
NET INCOME $ 101,445 $ 74,217 $ 189,114 $ 136,604
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE $ 0.06 $ 0.04 $ 0.11 $ 0.07
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARE OUTSTANDING 1,794,649 1,991,998 1,794,649 2,000,911
=========== =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
SWISHER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
April 30,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 189,114 $ 136,604
Adjustments to reconcile net income
to net cash provided (used) by
operating activities-
Depreciation and Amortization 70,639 56,366
Loss on assets held for sale - -
Change in Assets and Liabilities-
(Increase) decrease in assets-
Accounts receivable (333,214) (178,332)
Inventory (21,442) (39,824)
Prepaid expenses (21,063) (38,543)
Deferred franchise cost (60,748) 40,769
Notes receivable 58,234 (374,349)
Increase (decrease) in liabilities-
Accounts payable 190,491 34,490
Accrued expenses (2,905) 8,438
Income taxes payable 95,319 (34,090)
Deferred revenue (65,000) (104,200)
------------ ------------
Total adjustments (89,689) (629,275)
------------ ------------
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES 99,425 (492,671)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets (29,916) (177,855)
Sale of Fixed Asset 336,935
Decrease (increase) in intangible
& other assets (149,144) (103,048)
------------ ------------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES 157,875 (280,903)
------------ ------------
(continued)
</TABLE)
<PAGE>
</TABLE>
<TABLE>
SWISHER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
<CAPTION>
Six Months Ended
April 30,
------------------------------
1996 1995
----------- ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock transactions $ 37,125 $ -
Net principal payments under capital
lease and long-term debt obligations (449,441) (22,833)
Purchase of treasury stock - (103,173)
------------ ------------
NET CASH (USED) PROVIDED BY
FINANCING ACTIVITIES (412,316) (126,006)
------------ ------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (155,016) (899,580)
CASH AND CASH EQUIVALENTS,
Beginning of year 930,492 1,454,033
------------ ------------
CASH AND CASH EQUIVALENTS,
End of 2nd quarter $ 775,476 $ 554,453
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid year to date for -
Interest $ 133,420 $ 14,878
============ ============
Income taxes $ 36,100 $ 121,500
============ ============
During the first half of 1995, the
Company increased long-term debt to
acquire an office building $ - $ 272,500
============ ============
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
GENERAL :
The financial information for the periods ended April 30, 1996 and 1995
included herein is unaudited but includes all adjustments which, in the
opinion of management of the Company, are necessary to present fairly the
financial position of the Company at April 30, 1996 and 1995, and the
results of its operations and its cash flows for the three month periods then
ended.
The Company operates in two principal business segments: "Franchise
Operations", which includes Initial Franchise Sales and Annuity Revenues
(Service Fees, Product Sales, Royalties, and Marketing Fees), and "Company
Operations", which includes the Company's Hygiene operations located in
Charlotte, N.C., Jacksonville, FL., Space Coast, FL., Tulsa, OK., and
Houston, TX. and the Company's residential maids operations located in the
Charlotte, N.C. and Scottsdale, AZ. areas. Subsidiaries are actively engaged
in providing hygiene services and maid services directly to customers in the
same manner as franchisees.
REVENUE :
Revenues in the second quarter increased 14% to $2,409,397 as compared to
prior year second quarter of $2,104,086. The major factors in the overall
increase are the continued growth in Annuity Revenues and the increase in
Revenues from Company Owned Subsidiaries.
SEGMENT REVENUES:
"Franchise Operations". Annuity Revenues for the three month period ended
April 30, 1996 increased 23% to $1,471,257 as compared to prior year
second quarter results of $1,194.546. Revenue derived from Initial
Franchise Sales decreased by 52% as compared to prior year second quarter
sales of $314,604. Three hygiene franchise sales were recorded for the
quarter, bringing the total to 99 hygiene franchises and 19 maids
franchises as of April 30, 1996.
"Company Operations". Revenues increased by 39% for the three month
period ended April 30, 1996 over prior year second quarter. This increase
is attributable to acquisition and operation of the Houston,
Jacksonville/Space Coast, and Tulsa hygiene franchises. Residential maids
operations reported second quarter revenues of $189,000. This is a
substantial increase over the prior year due to the acquisition of the
Scottsdale franchise and increased revenue from the Charlotte operations.
EXPENSES:
Total pre-tax expenses for the second quarter ended April 30, 1996
increased 12%, over second quarter 1995, which represents an increase of
$238,000. Selling, general and administrative expenses decreased by 11% to
$922,078 as compared to prior year second quarter of $1,035,195. Expenses
of Company owned subsidiaries increased $235,000 over the prior year's second
quarter.
<PAGE>
SEGMENT EXPENSES:
"Franchise Operations". Expenses for the second quarter of 1996 decreased
$113,000 as compared with the second quarter of 1995. Expenses of
corporate and hygiene franchising increased by $57,000, while costs of the
Swisher Maids franchising division decreased $170,000. Cost of products
for resale to franchisees increased by $64,000 which is directly related
to the 19% increase in total product sales.
"Company Operations". Expenses for the second quarter ended April 30,
1996 increased by $235,000 or 55% as compared to second quarter 1995.
This increase in expenses is directly related to the start up expenses of
increased Company operations. The Company hygiene and residential maids
operations are operated in the same manner as a franchise operation. The
Company also uses the Charlotte operations for training new franchisees
and to test new programs for later introduction into the franchise system.
INCOME:
Income before taxes for the three months ended April 30, 1996 increased
$50,365 or 41% as compared to the 1995 second quarter. Net income was
$101,445 for the quarter ended April 30, 1996, as compared to second quarter
1995 of $74,217. Earnings per share, for the three months ended April 30,
1996, was $.06 on weighted average shares outstanding of 1,794,649, as
compared to the same period last year of $.04 per share on 1,991,988 shares.
SEGMENT INCOME:
"Franchise Operations". Operating income for the three month period ended
April 30, 1996, increased to $163,000 as compared to the same period last
year of $53,000. Operating income was 9.4% of franchise operating
revenues for the second quarter as compared to prior year second quarter
of 3.3%.
"Company Operations". Operating income for the second quarter 1996
decreased by 62%, with a pre-tax income of $26,000 as compared to second
quarter 1995 of $69,000.
LIQUIDITY AND CAPITAL RESOURCES:
During the first half of fiscal 1996: Working capital decreased $112,000
due principally to the increase of $89,000 in aggregate current assets and
increases of $190,000 and $11,000 in accounts payable and other current
liabilities, respectively. Total assets decreased by $5,000 primarily due to
the sale of $336,000 of fixed assets, increases of $283,000 in other assets
and aggregate increases of $48,000 in the remaining asset categories. Current
liabilities increased by $201,000 while long-term liabilities decreased by
$432,000. Increases in accounts payable and accrued expenses reflect the
increased activity in both Company and franchisee operations.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal proceedings
not applicable
Item 2. Changes in Securities
not applicable
Item 3. Defaults Upon Senior Securities
not applicable
Item 4. Submission of Matters to a Vote of Security Holders
not applicable
Item 5. Other information
not applicable
Item 6. Exhibits and Reports on Form 8-K
(1) Exhibits
none
(2) Reports on Form 8-K
The registrant filed a Form 8-K on June 21, 1995
regarding the repurchase by the Registrant of
246,501 shares of Common Stock.
- - -----------------------------------------------------------------------------
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, thereunto duly authorized.
SWISHER INTERNATIONAL, INC.
Registrant
Date - June 13, 1996 Patrick L. Swisher
Patrick L. Swisher
Chief Executive Officer
Date - June 13, 1996 D. Chris Lazenby, CPA
D. Chris Lazenby, CPA
Chief Accountant
