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
November 30, 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 January 8, 1997 were 7,888,864 and 12,621,744 respectively.
2
PART 1 - FINANCIAL INFORMATION
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(unaudited)
November 30, August 31, November 25,
1996 1996* 1995
- -----------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 3,636,000 $ 3,425,000 $ 2,991,000
Receivables 39,792,000 36,634,000 40,072,000
Inventories 17,925,000 17,053,000 16,592,000
Rental merchandise in service 39,746,000 37,973,000 33,364,000
Prepaid expenses 121,000 127,000 128,000
- -----------------------------------------------------------------------------------------------------
Total current assets 101,220,000 95,212,000 93,147,000
- -----------------------------------------------------------------------------------------------------
Property and equipment:
Land, buildings and leasehold improvements 123,730,000 119,346,000 113,567,000
Machinery and equipment 125,081,000 120,671,000 112,583,000
Motor vehicles 33,406,000 33,278,000 29,143,000
- -----------------------------------------------------------------------------------------------------
282,217,000 273,295,000 255,293,000
Less - accumulated depreciation 117,543,000 113,191,000 105,088,000
- -----------------------------------------------------------------------------------------------------
164,674,000 160,104,000 150,205,000
- -----------------------------------------------------------------------------------------------------
Other assets 45,575,000 47,062,000 36,878,000
- -----------------------------------------------------------------------------------------------------
$311,469,000 $302,378,000 $280,230,000
=====================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term obligations $ 1,063,000 $ 1,058,000 $ 4,044,000
Notes payable 2,705,000 2,757,000 695,000
Accounts payable 13,130,000 11,697,000 13,358,000
Accrued liabilities 38,942,000 37,371,000 36,877,000
Accrued and deferred income taxes 6,494,000 3,679,000 7,217,000
- -----------------------------------------------------------------------------------------------------
Total current liabilities 62,334,000 56,562,000 62,191,000
- -----------------------------------------------------------------------------------------------------
Long-term obligations, net of current maturities 33,928,000 38,307,000 28,315,000
Deferred income taxes 16,713,000 16,400,000 14,819,000
- -----------------------------------------------------------------------------------------------------
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
7,888,864 shares 789,000 789,000 789,000
Class B Common stock, $.10 par value; 20,000,000
shares authorized; issued and outstanding
12,621,744 shares 1,262,000 1,262,000 1,262,000
Capital surplus 7,078,000 7,078,000 7,078,000
Retained earnings 189,700,000 182,384,000 166,021,000
Cumulative translation adjustment (335,000) (404,000) (245,000)
- -----------------------------------------------------------------------------------------------------
Total shareholders' equity 198,494,000 191,109,000 174,905,000
- -----------------------------------------------------------------------------------------------------
$311,469,000 $302,378,000 $280,230,000
=====================================================================================================
* 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)
Thirteen Thirteen
weeks ended weeks ended
November 30, November 25,
1996 1995
- -----------------------------------------------------------------------------
Revenues $103,976,000 $95,413,000
- -----------------------------------------------------------------------------
Costs and expenses:
Operating costs 62,120,000 57,577,000
Selling and administrative expenses 23,520,000 21,754,000
Depreciation and amortization 5,547,000 4,905,000
- -----------------------------------------------------------------------------
91,187,000 84,236,000
- -----------------------------------------------------------------------------
Income from operations 12,789,000 11,177,000
- -----------------------------------------------------------------------------
Interest expense (income):
Interest expense 585,000 665,000
Interest income (70,000) (66,000)
- -----------------------------------------------------------------------------
515,000 599,000
- -----------------------------------------------------------------------------
Income before income taxes 12,274,000 10,578,000
Provision for income taxes 4,419,000 3,808,000
- -----------------------------------------------------------------------------
Net income $ 7,855,000 $ 6,770,000
=============================================================================
Weighted average number of shares outstanding 20,510,608 20,510,608
=============================================================================
Net income per share $0.38 $0.33
=============================================================================
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)
Thirteen Thirteen
weeks ended weeks ended
November 30, November 25,
1996 1995
- ------------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $ 7,855,000 $ 6,770,000
Adjustments:
Depreciation 4,627,000 4,110,000
Amortization of other assets 920,000 795,000
Receivables (3,138,000) (6,664,000)
Inventories (945,000) (126,000)
Rental merchandise in service (1,756,000) (644,000)
Prepaid expenses 6,000 (11,000)
Accounts payable 1,438,000 450,000
Accrued liabilities 1,561,000 1,513,000
Accrued and deferred income taxes 2,803,000 3,340,000
Deferred income taxes 309,000 229,000
- ------------------------------------------------------------------------------------
Net cash provided by operating activities 13,680,000 9,762,000
- ------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (9,121,000) (6,293,000)
Other assets, net 618,000 (1,719,000)
- ------------------------------------------------------------------------------------
Net cash used in investing activities (8,503,000) (8,012,000)
- ------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in debt -- 1,657,000
Reduction of debt (4,427,000) (5,855,000)
Cash dividends paid or payable (539,000) (450,000)
- ------------------------------------------------------------------------------------
Net cash used in financing activities (4,966,000) (4,648,000)
- ------------------------------------------------------------------------------------
Net increase (decrease) in cash 211,000 (2,898,000)
Cash at beginning of period 3,425,000 5,889,000
- ------------------------------------------------------------------------------------
Cash at end of period $ 3,636,000 $ 2,991,000
====================================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 551,000 $ 518,000
Income taxes paid $ 1,291,000 $ 435,000
====================================================================================
The accompanying notes are an integral part of these condensed financial
statements.
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FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THIRTEEN WEEKS ENDED NOVEMBER 30, 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
financial position or results of operations of the Company.
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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 THIRTEEN WEEKS ENDED NOVEMBER 30, 1996
RESULTS OF OPERATIONS
- ---------------------
Thirteen Weeks of Fiscal 1997 compared to Thirteen Weeks of Fiscal 1996
- -----------------------------------------------------------------------
Fiscal 1997 first quarter revenues increased $8,563,000 or 9.0% over the fiscal
1996 first quarter. This increase can be attributed to acquisitions (3.3%),
price increases (1.0%) and growth from existing operations (4.7%).
Income from operations as a percentage of revenue increased to 12.3% in fiscal
1997 from 11.7% for the fiscal 1996 period. The main reason for the increase is
improved profit margins in the Company's core uniform rental business, primarily
attributable to improved performance from acquisitions made in prior years.
Net interest expense (interest expense less interest income) was $515,000 in
fiscal 1997 as compared to $599,000 in fiscal 1996. The decrease is attributable
to lower interest rates in fiscal 1997.
The Company's effective income tax rate was 36.0% in both periods.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the thirteen weeks ended November 30, 1996 net cash provided by operating
activities, $13,680,000, was primarily used for capital expenditures, $9,121,000
and debt repayment, $4,427,000.
Shareholders' equity at November 30, 1996 was $198.5 milllion, 85.0% of total
capitalization, indicating the overall strength of the Company's balance sheet.
The Company had $3,636,000 in cash and $33,550,000 available on its $60,000,000
line of credit as of November 30, 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.
7
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: January 14, 1997
/s/ JOHN B. BARTLETT
---------------------------
John B. Bartlett
Senior Vice President
and Chief Financial Officer
5
1,000
U.S. DOLLARS
3-MOS
AUG-30-1997
SEP-1-1996
NOV-30-1996
1
3,636
0
40,642
850
17,925
101,220
282,217
117,543
311,469
62,334
33,928
0
0
2,051
196,443
311,469
103,976
103,976
91,187
91,187
0
0
515
12,274
4,419
7,855
0
0
0
7,855
0.38
0
