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
March 1, 1997 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 April 7, 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)
March 1, August 31, March 2,
1997 1996* 1996
- ---------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 7,186,000 $ 3,425,000 $ 5,942,000
Receivables 38,419,000 36,634,000 38,312,000
Inventories 19,454,000 17,053,000 17,431,000
Rental merchandise in service 38,833,000 37,973,000 33,516,000
Prepaid expenses 130,000 127,000 102,000
- ---------------------------------------------------------------------------------------------------------
Total current assets 104,022,000 95,212,000 95,303,000
- ---------------------------------------------------------------------------------------------------------
Property and equipment:
Land, buildings and leasehold improvements 129,005,000 119,346,000 116,152,000
Machinery and equipment 130,402,000 120,671,000 115,860,000
Motor vehicles 33,814,000 33,278,000 31,072,000
- ---------------------------------------------------------------------------------------------------------
293,221,000 273,295,000 263,084,000
Less - accumulated depreciation 120,947,000 113,191,000 108,618,000
- ---------------------------------------------------------------------------------------------------------
172,274,000 160,104,000 154,466,000
- ---------------------------------------------------------------------------------------------------------
Other assets 46,006,000 47,062,000 44,015,000
- ---------------------------------------------------------------------------------------------------------
$322,302,000 $302,378,000 $293,784,000
=========================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term obligations $ 1,032,000 $ 1,058,000 $ 1,046,000
Notes payable 3,144,000 2,757,000 353,000
Accounts payable 14,423,000 11,697,000 13,144,000
Accrued liabilities 41,065,000 37,371,000 40,131,000
Accrued and deferred income taxes 3,916,000 3,679,000 3,909,000
- ---------------------------------------------------------------------------------------------------------
Total current liabilities 63,580,000 56,562,000 58,583,000
- ---------------------------------------------------------------------------------------------------------
Long-term obligations, net of current maturities 38,517,000 38,307,000 41,014,000
Deferred income taxes 16,925,000 16,400,000 14,981,000
- ---------------------------------------------------------------------------------------------------------
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 194,689,000 182,384,000 170,507,000
Cumulative translation adjustment (538,000) (404,000) (430,000)
- ---------------------------------------------------------------------------------------------------------
Total shareholders' equity 203,280,000 191,109,000 179,206,000
- ---------------------------------------------------------------------------------------------------------
$322,302,000 $302,378,000 $293,784,000
=========================================================================================================
* 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)
Twenty-six Twenty-seven Thirteen Fourteen
weeks ended weeks ended weeks ended weeks ended
March 1, March 2, March 1, March 2,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
Revenues $206,040,000 $196,238,000 $102,064,000 $100,825,000
- ----------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Operating costs 126,338,000 121,181,000 64,218,000 63,604,000
Selling and administrative expenses 46,553,000 45,660,000 23,033,000 23,907,000
Depreciation and amortization 11,192,000 9,999,000 5,645,000 5,093,000
- ----------------------------------------------------------------------------------------------------------------------
184,083,000 176,840,000 92,896,000 92,604,000
- ----------------------------------------------------------------------------------------------------------------------
Income from operations 21,957,000 19,398,000 9,168,000 8,221,000
- ----------------------------------------------------------------------------------------------------------------------
Interest expense (income):
Interest expense 1,151,000 1,240,000 566,000 574,000
Interest income (106,000) (132,000) (36,000) (65,000)
- ----------------------------------------------------------------------------------------------------------------------
1,045,000 1,108,000 530,000 509,000
- ----------------------------------------------------------------------------------------------------------------------
Income before income taxes 20,912,000 18,290,000 8,638,000 7,712,000
Provision for income taxes 7,528,000 6,584,000 3,109,000 2,776,000
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 13,384,000 $ 11,706,000 $ 5,529,000 $ 4,936,000
======================================================================================================================
Weighted average number of shares outstanding 20,510,608 20,510,608 20,510,608 20,510,608
======================================================================================================================
Net income per share $0.65 $0.57 $0.27 $0.24
======================================================================================================================
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)
Twenty-six Twenty-seven
weeks ended weeks ended
March 1, March 2,
1997 1996
- -----------------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $ 13,384,000 $ 11,706,000
Adjustments:
Depreciation 9,351,000 8,338,000
Amortization of other assets 1,841,000 1,661,000
Receivables (1,680,000) (4,254,000)
Inventories (2,437,000) (899,000)
Rental merchandise in service (623,000) 303,000
Prepaid expenses (3,000) 16,000
Accounts payable 2,700,000 99,000
Accrued liabilities 3,698,000 4,690,000
Accrued and deferred income taxes 241,000 44,000
Deferred income taxes 527,000 395,000
- -----------------------------------------------------------------------------------------
Net cash provided by operating activities 26,999,000 22,099,000
- -----------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired (1,677,000) (11,517,000)
Capital expenditures (21,540,000) (13,089,000)
Other assets, net 487,000 (1,712,000)
- -----------------------------------------------------------------------------------------
Net cash used in investing activities (22,730,000) (26,318,000)
- -----------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in debt 1,789,000 12,598,000
Reduction of debt (1,218,000) (7,427,000)
Cash dividends paid or payable (1,079,000) (899,000)
- -----------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (508,000) 4,272,000
- -----------------------------------------------------------------------------------------
Net increase in cash 3,761,000 53,000
Cash at beginning of period 3,425,000 5,889,000
- -----------------------------------------------------------------------------------------
Cash at end of period $ 7,186,000 $ 5,942,000
=========================================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 1,138,000 $ 1,283,000
Income taxes paid $ 6,766,000 $ 6,356,000
=========================================================================================
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 TWENTY-SIX WEEKS ENDED MARCH 1, 1997
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 TWENTY-SIX WEEKS ENDED MARCH 1, 1997
RESULTS OF OPERATIONS
- ---------------------
Twenty-six Weeks of Fiscal 1997 compared to Twenty-seven Weeks of Fiscal 1996
- -----------------------------------------------------------------------------
Revenues for the first twenty-six weeks of fiscal 1997 increased $9,802,000 or
5.0% over the first twenty-seven weeks of fiscal 1996. This increase can be
attributed to acquisitions (3.0%), price increases (1.0%) and growth from
existing operations (4.7%) offset by one week less of revenue (3.7%) in fiscal
1997.
Income from operations as a percentage of revenue increased to 10.7% in fiscal
1997 from 9.9% for the fiscal 1996 period. The main reason for the increase is
improved profit margins in the Company's core uniform rental business.
Net interest expense (interest expense less interest income) was $1,045,000 in
fiscal 1997 as compared to $1,108,000 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.
Thirteen Weeks ended March 1, 1997 Compared to Fourteen Weeks ended March 2,
- ----------------------------------------------------------------------------
1996
- ----
Fiscal 1997 second quarter revenues increased $1,239,000 or 1.2% compared to the
fourteen weeks in fiscal 1996. This increase can be attributed to acquisitions
(2.7%), price increases (1.0%) and growth from existing operations (4.6%) offset
by one week less of revenue (7.1%) in the 1997 second quarter.
Income from operations as a percentage of revenue increased to 9.0% in fiscal
1997 from 8.2% for the fiscal 1996 period. The primary reason for the increase
is improved profit margins in the Company's core uniform rental business.
Net interest expense (interest expense less interest income) was $530,000 in
fiscal 1997 as compared to $509,000 in fiscal 1996. The increase is attributable
to higher average debt levels in the fiscal 1997 quarter.
The Company's effective income tax rate was 36.0% in both periods.
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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 TWENTY-SIX WEEKS ENDED MARCH 1, 1997
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the twenty-six weeks ended March 1, 1997 net cash provided by operating
activities, $26,999,000, was primarily used for capital expenditures,
$21,540,000, acquisition of a business, $1,677,000 and dividends, $1,079,000.
The Company had $7,186,000 in cash and $28,200,000 available on its $60,000,000
line of credit as of March 1, 1997. The Company believes its ability to generate
cash from operations will adequately cover its foreseeable capital requirements.
Shareholders' equity at March 1, 1997 was $203.3 million, 83.7% of total
capitalization, indicating the overall strength of the Company's balance sheet.
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 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
Registrant's Annual Meeting of Shareholders was held on January 14, 1997. Aldo
A. Croatti and Albert Cohen were reelected to the Board of Directors. With
respect to Mr. Croatti, 7,359,449 shares of Common Stock and 12,620,464 shares
of Class B Common Stock were voted for his election and 112,689 shares of Common
Stock were voted against his election. With respect to Mr. Cohen, 7,315,249
shares of Common Stock were voted for his election and 156,889 shares of Common
Stock were voted against his election.
Also at this meeting, the UniFirst 1996 Stock Incentive Plan was approved, with
5,426,541 shares of Common Stock and 12,620,464 shares of Class B Common Stock
voting in favor of the Plan, 1,964,321 shares of Common Stock voting against the
Plan and 81,276 shares of Common Stock abstaining.
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: April 15, 1997
/s/ JOHN B. BARTLETT
------------------------------
John B. Bartlett
Senior Vice President
and Chief Financial Officer
5
1,000
U.S.DOLLARS
6-MOS
AUG-30-1997
SEP-01-1996
MAR-01-1997
1
7,186
0
39,269
850
19,454
104,022
293,221
120,947
322,302
63,580
38,517
0
0
2,051
201,229
322,302
206,040
206,040
184,083
184,083
0
0
1,045
20,912
7,528
13,384
0
0
0
13,384
0.65
0
