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
June 1, 1996 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 July 3, 1996 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)
June 1, August 26, May 27,
1996 1995* 1995
- ---------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 5,533,000 $ 5,889,000 $ 4,270,000
Receivables 38,750,000 33,420,000 35,283,000
Inventories 16,350,000 16,484,000 17,255,000
Rental merchandise in service 35,611,000 32,731,000 32,696,000
Prepaid expenses 117,000 118,000 114,000
- ---------------------------------------------------------------------------------------------------------------------
Total current assets 96,361,000 88,642,000 89,618,000
- ---------------------------------------------------------------------------------------------------------------------
Property and equipment:
Land, buildings and leasehold improvements 118,101,000 111,148,000 108,186,000
Machinery and equipment 119,204,000 109,538,000 109,522,000
Motor vehicles 33,379,000 28,816,000 27,369,000
- ---------------------------------------------------------------------------------------------------------------------
270,684,000 249,502,000 245,077,000
Less - accumulated depreciation 111,408,000 101,428,000 101,560,000
- ---------------------------------------------------------------------------------------------------------------------
159,276,000 148,074,000 143,517,000
- ---------------------------------------------------------------------------------------------------------------------
Other assets 43,520,000 35,975,000 36,876,000
- ---------------------------------------------------------------------------------------------------------------------
$299,157,000 $272,691,000 $270,011,000
=====================================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term obligations $ 1,050,000 $ 4,015,000 $ 6,959,000
Notes payable -- 882,000 66,000
Accounts payable 13,261,000 12,992,000 11,025,000
Accrued liabilities 38,639,000 35,370,000 34,301,000
Accrued and deferred income taxes 4,380,000 3,882,000 3,977,000
- ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 57,330,000 57,141,000 56,328,000
- ---------------------------------------------------------------------------------------------------------------------
Long-term obligations, net of current maturities 41,287,000 32,361,000 35,257,000
Deferred income taxes 15,201,000 14,593,000 15,076,000
- ---------------------------------------------------------------------------------------------------------------------
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 789,000 789,000 789,000
Class B Common stock, $.10 par value; 20,000,000
shares authorized; issued and outstanding
12,623,964 shares 1,262,000 1,262,000 1,262,000
Capital surplus 7,078,000 7,078,000 7,042,000
Retained earnings 176,568,000 159,701,000 154,694,000
Cumulative translation adjustment (358,000) (234,000) (437,000)
- ---------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 185,339,000 168,596,000 163,350,000
- ---------------------------------------------------------------------------------------------------------------------
$299,157,000 $272,691,000 $270,011,000
=====================================================================================================================
* Condensed from audited financial statements
The accompanying notes are an integral part of these condensed financial
statements.
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FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME
(unaudited)
Forty Thirty-nine Thirteen Thirteen
weeks ended weeks ended weeks ended weeks ended
June 1, May 27, June 1, May 27,
1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
Revenues $294,792,000 $265,043,000 $98,554,000 $92,600,000
- -----------------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Operating costs 180,520,000 165,437,000 59,339,000 57,189,000
Selling and administrative expenses 68,528,000 59,776,000 22,868,000 21,020,000
Depreciation and amortization 15,339,000 14,380,000 5,340,000 4,852,000
- -----------------------------------------------------------------------------------------------------------------------------
264,387,000 239,593,000 87,547,000 83,061,000
- -----------------------------------------------------------------------------------------------------------------------------
Income from operations 30,405,000 25,450,000 11,007,000 9,539,000
- -----------------------------------------------------------------------------------------------------------------------------
Interest expense (income):
Interest expense 1,995,000 2,277,000 755,000 742,000
Interest income (193,000) (176,000) (61,000) (75,000)
- -----------------------------------------------------------------------------------------------------------------------------
1,802,000 2,101,000 694,000 667,000
- -----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 28,603,000 23,349,000 10,313,000 8,872,000
Provision for income taxes 10,297,000 8,172,000 3,713,000 3,105,000
- -----------------------------------------------------------------------------------------------------------------------------
Net income $ 18,306,000 $ 15,177,000 $ 6,600,000 $ 5,767,000
=============================================================================================================================
Weighted average number of shares outstanding 20,510,608 20,510,608 20,510,608 20,510,608
=============================================================================================================================
Net income per share $0.89 $0.74 $0.32 $0.28
=============================================================================================================================
The accompanying notes are an integral part of these condensed financial
statements.
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FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Forty Thirty-nine
weeks ended weeks ended
June 1, May 27,
1996 1995
- ---------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $ 18,306,000 $ 15,177,000
Adjustments:
Depreciation 12,767,000 11,965,000
Amortization of other assets 2,572,000 2,415,000
Receivables (4,688,000) (4,889,000)
Inventories 215,000 (1,768,000)
Rental merchandise in service (1,789,000) (1,221,000)
Prepaid expenses -- (4,000)
Accounts payable 280,000 (1,495,000)
Accrued liabilities 3,197,000 6,915,000
Accrued and deferred income taxes 513,000 (1,601,000)
Deferred income taxes 614,000 1,389,000
- ---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 31,987,000 26,883,000
- ---------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired (11,517,000) (6,614,000)
Capital expenditures (22,313,000) (17,039,000)
Other assets, net (2,168,000) (1,963,000)
- ---------------------------------------------------------------------------------------------------
Net cash used in investing activities (35,998,000) (25,616,000)
- ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in debt 12,925,000 4,433,000
Reduction of debt (7,831,000) (4,201,000)
Cash dividends paid or payable (1,439,000) (1,349,000)
- ---------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 3,655,000 (1,117,000)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (356,000) 150,000
Cash at beginning of period 5,889,000 4,120,000
- ---------------------------------------------------------------------------------------------------
Cash at end of period $ 5,533,000 $ 4,270,000
===================================================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 2,007,000 $ 2,035,000
Income taxes paid $ 9,379,000 $ 8,249,000
===================================================================================================
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 FORTY WEEKS ENDED JUNE 1, 1996
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. In February, 1996 the Company acquired two uniform rental plants in
California from National Service Industries, Inc., a garment and linen
rental business headquartered in Atlanta, GA.
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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 FORTY WEEKS ENDED JUNE 1, 1996
RESULTS OF OPERATIONS
- ---------------------
Forty Weeks of Fiscal 1996 compared to Thirty-nine Weeks of Fiscal 1995
- -----------------------------------------------------------------------
Fiscal 1996 revenues for the forty weeks increased $29,749,000 or 11.2% over the
thirty-nine weeks in fiscal 1995. This increase can be attributed to an extra
week of revenue (2.6%), acquisitions (1.4%), price increases (1.0%) and growth
from existing operations (6.2%).
Income from operations as a percentage of revenue increased to 10.3% in fiscal
1996 from 9.6% for the fiscal 1995 period. The main reason for the increase is
improved profit margins in the Company's core uniform rental business,
principally attributable to restructuring of the Company's service management
structure and telemarketing operations.
Net interest expense (interest expense less interest income) was $1,802,000 in
fiscal 1996 as compared to $2,101,000 in fiscal 1995. The decrease is
attributable to lower average debt levels and lower interest rates in fiscal
1996.
The provision for income taxes for the current period was 36.0% as compared to
35.0% for the corresponding 1995 period. The increase in 1996 is due primarily
to higher state income taxes.
Thirteen Weeks ended June 1, 1996 compared to Thirteen Weeks ended May 27, 1995
- -------------------------------------------------------------------------------
Fiscal 1996 third quarter revenues increased $5,954,000 or 6.4% over the fiscal
1995 third quarter. This increase can be attributed to acquisitions (2.1%),
price increases (1.0%) and growth from existing operations (3.3%).
Income from operations as a percentage of revenue increased to 11.2% in fiscal
1996 from 10.3% for the fiscal 1995 period. The primary reason for the increase
is improved profit margins in the Company's core uniform rental business as
discussed above.
Net interest expense (interest expense less interest income) was $694,000 in
fiscal 1996 as compared to $667,000 in fiscal 1995. The increase is attributable
to higher interest rates in the fiscal 1996 quarter.
The provision for income taxes for the current period was 36.0% as compared to
35.0% for the corresponding 1995 period. The increase in 1996 is again due
primarily to higher state income taxes.
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FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(continued)
FOR THE FORTY WEEKS ENDED JUNE 1, 1996
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the forty weeks ended June 1, 1996 net cash provided by operating
activities, $31,987,000, and additional borrowings of $12,925,000 were primarily
used for capital expenditures, $22,313,000, acquisition of businesses,
$11,517,000, debt repayment, $7,831,000 and dividends, $1,439,000.
Shareholders' equity as a percent of total capital was 81.4% at June 1, 1996,
indicating the overall strength of the Company's balance sheet. The Company had
$5,533,000 in cash and $18,750,000 available on its $50,000,000 line of credit
as of June 1, 1996. 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 and
productivity improvements, it has been able to recover increases in costs and
expenses attributable to inflation.
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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
/s/ RONALD D. CROATTI
-----------------------
Ronald D. Croatti
Vice Chairman, President and
Chief Executive Officer
Date: July 12, 1996
/s/ JOHN B. BARTLETT
-----------------------
John B. Bartlett
Senior Vice President
and Chief Financial Officer
5
1,000
U.S. DOLLARS
9-MOS
AUG-31-1996
AUG-27-1995
JUN-01-1996
1
5,533
0
39,350
600
16,350
96,361
270,684
111,408
299,157
57,330
41,287
2,051
0
0
183,288
299,157
294,792
294,792
264,387
264,387
0
0
1,802
28,603
10,297
18,306
0
0
0
18,306
0.89
0
