1
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 quarter ended Commission File
May 27, 1995 Number 1-8504
UNIFIRST CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-2103460
(State of Incorporation) (IRS Employer ID Number)
68 Jonspin Road
Wilmington, Massachusetts 01887
(Address of principal executive offices)
Registrant's telephone number: (508) 658-8888
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 preceeding 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.
Yes [X] No [ ]
The number of outstanding shares of the registrant's Common
Stock and Class B Common Stock as of June 30, 1995 were
7,886,644 and 12,623,964 respectively.
2
PART 1 - FINANCIAL INFORMATION
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(unaudited)
May 27, August 27, May 28,
1995 1994* 1994
- ---------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 4,270,000 $ 4,120,000 $ 2,085,000
Receivables 35,283,000 30,044,000 31,716,000
Inventories 17,255,000 15,409,000 14,232,000
Rental merchandise in service 32,696,000 30,577,000 30,075,000
Prepaid expenses 114,000 109,000 116,000
- ---------------------------------------------------------------------------------------------------
Total current assets 89,618,000 80,259,000 78,224,000
- ---------------------------------------------------------------------------------------------------
Property and equipment:
Land, buildings and leasehold improvements 108,186,000 101,374,000 98,730,000
Machinery and equipment 109,522,000 99,955,000 96,608,000
Motor vehicles 27,369,000 26,237,000 25,798,000
- ---------------------------------------------------------------------------------------------------
245,077,000 227,566,000 221,136,000
Less - accumulated depreciation 101,560,000 89,554,000 85,737,000
- ---------------------------------------------------------------------------------------------------
143,517,000 138,012,000 135,399,000
- ---------------------------------------------------------------------------------------------------
Other assets 36,876,000 31,889,000 29,224,000
- ---------------------------------------------------------------------------------------------------
$270,011,000 $250,160,000 $242,847,000
===================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term obligations $ 6,959,000 $ 6,874,000 $ 6,285,000
Notes payable 66,000 448,000 345,000
Accounts payable 11,025,000 12,246,000 10,488,000
Accrued liabilities 34,301,000 27,265,000 29,064,000
Accrued and deferred income taxes 3,977,000 5,469,000 4,396,000
- ---------------------------------------------------------------------------------------------------
Total current liabilities 56,328,000 52,302,000 50,578,000
- ---------------------------------------------------------------------------------------------------
Long-term obligations, net of current maturities 35,257,000 34,728,000 32,898,000
Deferred income taxes 15,076,000 13,658,000 14,099,000
- ---------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock, $1.00 par value; 2,000,000
shares authorized; none issued --- --- ---
Common stock, $.10 par value; 30,000,000
shares authorized; issued and outstanding
7,886,644 shares 789,000 788,000 788,000
Class B Common stock, $.10 par value; 20,000,000
shares authorized; issued and outstanding
12,623,964 shares 1,262,000 1,263,000 1,263,000
Capital surplus 7,042,000 7,042,000 7,039,000
Retained earnings 154,694,000 140,866,000 136,792,000
Cumulative translation adjustment (437,000) (487,000) (610,000)
- ---------------------------------------------------------------------------------------------------
Total shareholders' equity 163,350,000 149,472,000 145,272,000
- ---------------------------------------------------------------------------------------------------
$270,011,000 $250,160,000 $242,847,000
===================================================================================================
* Condensed from audited financial statements
The accompanying notes are an integral part of these condensed financial
statements.
3
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME
(unaudited)
Thirty-nine Thirty-nine Thirteen Thirteen
weeks ended weeks ended weeks ended weeks ended
May 27, May 28, May 27, May 28,
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
Revenues $265,043,000 $237,307,000 $92,600,000 $83,106,000
- -------------------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Operating costs 165,437,000 145,365,000 57,189,000 51,029,000
Selling and administrative expenses 59,776,000 54,157,000 21,020,000 19,353,000
Depreciation and amortization 14,380,000 13,191,000 4,852,000 4,503,000
- -------------------------------------------------------------------------------------------------------------------------------
239,593,000 212,713,000 83,061,000 74,885,000
- -------------------------------------------------------------------------------------------------------------------------------
Income from operations 25,450,000 24,594,000 9,539,000 8,221,000
- -------------------------------------------------------------------------------------------------------------------------------
Interest expense (income):
Interest expense 2,277,000 1,982,000 742,000 673,000
Interest income (176,000) (162,000) (75,000) (23,000)
- -------------------------------------------------------------------------------------------------------------------------------
2,101,000 1,820,000 667,000 650,000
- -------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 23,349,000 22,774,000 8,872,000 7,571,000
Provision for income taxes 8,172,000 8,426,000 3,105,000 2,801,000
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 15,177,000 $ 14,348,000 $ 5,767,000 $ 4,770,000
===============================================================================================================================
Weighted average number of shares outstanding 20,510,608 20,504,246 20,510,608 20,509,122
===============================================================================================================================
Net income per share $0.74 $0.70 $0.28 $0.23
===============================================================================================================================
The accompanying notes are an integral part of these condensed financial
statements.
4
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Thirty-nine Thirty-nine
weeks ended weeks ended
May 27, May 28,
1995 1994
- --------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $15,177,000 $14,348,000
Adjustments:
Depreciation 11,965,000 11,053,000
Amortization of other assets 2,415,000 2,138,000
Receivables (4,889,000) (6,566,000)
Inventories (1,768,000) (2,727,000)
Rental merchandise in service (1,221,000) (2,592,000)
Prepaid expenses (4,000) --
Accounts payable (1,495,000) (423,000)
Accrued liabilities 6,915,000 3,816,000
Accrued and deferred income taxes (1,601,000) (986,000)
Deferred income taxes 1,389,000 1,433,000
- --------------------------------------------------------------------------------------------
Net cash provided by operating activities 26,883,000 19,494,000
- --------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired (6,614,000) (6,010,000)
Capital expenditures (17,039,000) (19,566,000)
Other assets, net (1,963,000) (972,000)
- --------------------------------------------------------------------------------------------
Net cash used in investing activites (25,616,000) (26,548,000)
- --------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in debt 4,433,000 10,182,000
Reduction of debt (4,201,000) (3,382,000)
Proceeds from exercise of stock options -- 32,000
Cash dividends paid or payable (1,349,000) (1,349,000)
- --------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (1,117,000) 5,483,000
- --------------------------------------------------------------------------------------------
Net increase (decrease) in cash 150,000 (1,571,000)
Cash at beginning of period 4,120,000 3,656,000
- --------------------------------------------------------------------------------------------
Cash at end of period $ 4,270,000 $ 2,085,000
============================================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 2,035,000 $ 1,617,000
Income taxes paid $ 8,249,000 $ 8,015,000
============================================================================================
The accompanying notes are an integral part of these condensed financial
statements.
5
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THIRTY-NINE WEEKS ENDED MAY 27, 1995
1. These condensed financial statements have been prepared by the Company
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations; however, the Company believes that the
information furnished reflects all adjustments which are, in the opinion of
management, necessary to a fair statement of results for the interim
period. It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes, thereto,
included in the Company's latest annual report.
2. From time to time, the Company is subject to legal proceedings and claims
arising from the conduct of their business operations, including personal
injury, customer contract, employment claims and environmental matters. In
the opinion of management, such proceedings and claims are not likely to
result in losses which would have a material adverse effect upon the
Company.
3. On November 18, 1993 the Company's Board of Directors declared a
two-for-one stock split, to be effected in the form of a stock dividend, on
the Company's Common Stock and Class B Common Stock. The stock dividend
was paid on January 19, 1994 to shareholders of record on January 5, 1994.
All references to average number of shares outstanding and per share data
in these financial statements reflect the effect of the two-for-one split.
4. On November 1, 1994 the Company acquired all of the outstanding stock of
Tennessee Uniform & Towel Service, Inc., a garment rental business
located in Nashville, TN.
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FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
FOR THE THIRTY-NINE WEEKS ENDED MAY 27, 1995
RESULTS OF OPERATIONS
- ---------------------
Thirty-nine Weeks of Fiscal 1995 compared to Thirty-nine Weeks of Fiscal 1994
- -----------------------------------------------------------------------------
Fiscal 1995 revenues for the thirty-nine weeks increased $27,736,000
or 11.7% over the thirty-nine weeks in fiscal 1994. This increase can
be attributed to acquisitions (2.4%), price increases (1.0%) and
growth from existing operations (8.3%).
Income from operations as a percentage of revenue decreased to 9.6% in the
fiscal 1995 period from 10.4% for the fiscal 1994 period. The primary reason
for the decrease is the continued impact of higher uniform merchandise
costs. Merchandise cost as a percent of revenues increased 1.3% over
the prior year. This increase is due to additional new garments placed in
service for new customers as well as higher replacement costs for existing
customers. The Company has also experienced comparatively higher
expenses in the operation of its distribution centers and in the new
corporate-owned life insurance program. Offsetting these increases
were improvements in employee related costs, primarily workers'
compensation and health insurance. Depreciation expense as a percent
of revenues improved .2% compared to the prior year, and the Company's
operations in Canada and in the nuclear garment services business also
showed improvement.
Net interest expense (interest expense less interest income) was
$2,101,000 in fiscal 1995 as compared to $1,820,000 in fiscal 1994.
The increase is attributable to increased debt levels in fiscal 1995.
The provision for income taxes for the current period was 35.0% as
compared to 37.0% for the corresponding 1994 period. The decrease in
1995 is due primarily to the favorable impact of a corporate-owned
life insurance program and proportionally more tax-exempt income from
Puerto Rico.
Thirteen Weeks ended May 27, 1995 compared to Thirteen Weeks ended May 28, 1994
- -------------------------------------------------------------------------------
Fiscal 1995 third quarter revenues increased $9,494,000 or 11.4% over
the fiscal 1994 third quarter. This increase can be attributed to
acquisitions (2.3%), price increases (.9%) and growth from existing
operations (8.2%).
Income from operations as a percentage of revenue increased to 10.3%
in fiscal 1995 from 9.9% for the fiscal 1994 period. The primary
reasons for the increase are favorable comparative quarter to quarter
results from the Company's core uniform laundry business and nuclear
garment services business. There were also improvements in employee
related costs and depreciation expense as discussed above. These
improvements were offset somewhat by higher uniform merchandise costs, for the
reasons described above, with merchandise cost as a percent of revenues
increasing .9% compared to the prior year's quarter.
Net interest expense (interest expense less interest income) was
$667,000 in fiscal 1995 as compared to $650,000 in fiscal 1994. The
increase is attributable to increased debt levels in fiscal 1995.
The provision for income taxes for the current period was 35.0% as
compared to 37.0% for the corresponding 1994 period. The decrease in
1995 is due primarily to the favorable impact of a corporate-owned
life insurance program and proportionally more tax-exempt income from
Puerto Rico.
7
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(continued)
FOR THE THIRTY-NINE WEEKS ENDED MAY 27, 1995
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the thirty-nine weeks ended May 27, 1995 net cash provided by
operating activities, $26,883,000, and additional borrowings of
$4,433,000 were primarily used for capital expenditures, $17,039,000,
acquisition of businesses, $6,614,000, debt repayment, $4,201,000 and
dividends, $1,349,000.
Shareholders' equity as a percent of total capital has increased from
71.1% at August 29, 1992 to 79.5% at May 27, 1995, indicating the
improvement in the overall strength of the Company's balance sheet.
The Company had $4,270,000 in cash and $27,875,000 available on its
$50,000,000 line of credit as of May 27, 1995. The Company believes
its ability to generate cash from operations will adequately cover its
foreseeable capital requirements.
EFFECTS OF INFLATION
- --------------------
Inflation has had the effect of increasing the reported amounts of the
Company's revenues and costs. The Company uses the last-in, first-out
(LIFO) method to value a significant portion of inventories. This
method tends to reduce the amount of income due to inflation included
in the Company's results of operations. The Company believes that,
through increases in its prices, it has been able to recover increases
in costs and expenses attributable to inflation.
8
PART II - OTHER INFORMATION
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K: None
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 of the
undersigned thereunto duly authorized.
UNIFIRST CORPORATION
Ronald D. Croatti
---------------------------
Ronald D. Croatti
Vice Chairman and
Chief Executive Officer
Date: July 7, 1995
John B. Bartlett
---------------------------
John B. Bartlett
Senior Vice President
and Chief Financial Officer
5
1,000
U.S. DOLLARS
9-MOS
AUG-26-1995
AUG-28-1994
MAY-27-1995
1.
4,270
0
35,783
500
17,255
89,618
245,077
101,560
270,011
56,328
35,257
2,051
0
0
161,299
270,011
265,043
265,043
239,593
239,593
0
0
2,101
23,349
8,172
15,177
0
0
0
15,177
0.74
0
