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 31, 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 July 7, 1997 were 7,893,864 and 12,616,744 respectively.
2
PART 1 - FINANCIAL INFORMATION
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(unaudited)
May 31, August 31, June 1,
1997 1996* 1996
- --------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
Cash $ 5,936,000 $ 3,425,000 $ 5,533,000
Receivables 39,855,000 36,634,000 38,750,000
Inventories 20,192,000 17,053,000 16,350,000
Rental merchandise in service 39,362,000 37,973,000 35,611,000
Prepaid expenses 140,000 127,000 117,000
- --------------------------------------------------------------------------------------------------------------------
Total current assets 105,485,000 95,212,000 96,361,000
- --------------------------------------------------------------------------------------------------------------------
Property and equipment:
Land, buildings and leasehold improvements 133,489,000 119,346,000 118,101,000
Machinery and equipment 136,060,000 120,671,000 119,204,000
Motor vehicles 36,690,000 33,278,000 33,379,000
- --------------------------------------------------------------------------------------------------------------------
306,239,000 273,295,000 270,684,000
Less - accumulated depreciation 124,252,000 113,191,000 111,408,000
- --------------------------------------------------------------------------------------------------------------------
181,987,000 160,104,000 159,276,000
- --------------------------------------------------------------------------------------------------------------------
Other assets 48,767,000 47,062,000 43,520,000
- --------------------------------------------------------------------------------------------------------------------
$336,239,000 $302,378,000 $299,157,000
====================================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term obligations $ 1,037,000 $ 1,058,000 $ 1,050,000
Notes payable 3,340,000 2,757,000 --
Accounts payable 13,075,000 11,697,000 13,261,000
Accrued liabilities 46,167,000 37,371,000 38,639,000
Accrued and deferred income taxes 2,679,000 3,679,000 4,380,000
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 66,298,000 56,562,000 57,330,000
- --------------------------------------------------------------------------------------------------------------------
Long-term obligations, net of current maturities 42,745,000 38,307,000 41,287,000
Deferred income taxes 17,213,000 16,400,000 15,201,000
- --------------------------------------------------------------------------------------------------------------------
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
7,893,864 shares 789,000 789,000 789,000
Class B Common stock, $.10 par value; 20,000,000
shares authorized; issued and outstanding
12,616,744 shares 1,262,000 1,262,000 1,262,000
Capital surplus 7,078,000 7,078,000 7,078,000
Retained earnings 201,531,000 182,384,000 176,568,000
Cumulative translation adjustment (677,000) (404,000) (358,000)
- --------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 209,983,000 191,109,000 185,339,000
- --------------------------------------------------------------------------------------------------------------------
$336,239,000 $302,378,000 $299,157,000
====================================================================================================================
* 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 Forty Thirteen Thirteen
weeks ended weeks ended weeks ended weeks ended
May 31, June 1, May 31, June 1,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Revenues $313,164,000 $294,792,000 $107,124,000 $98,554,000
- ----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Operating costs 192,243,000 180,520,000 65,905,000 59,339,000
Selling and administrative expenses 69,676,000 68,528,000 23,123,000 22,868,000
Depreciation and amortization 17,161,000 15,339,000 5,969,000 5,340,000
- ----------------------------------------------------------------------------------------------------------------------------------
279,080,000 264,387,000 94,997,000 87,547,000
- ----------------------------------------------------------------------------------------------------------------------------------
Income from operations 34,084,000 30,405,000 12,127,000 11,007,000
- ----------------------------------------------------------------------------------------------------------------------------------
Interest expense (income):
Interest expense 1,792,000 1,995,000 641,000 755,000
Interest income (155,000) (193,000) (49,000) (61,000)
- ----------------------------------------------------------------------------------------------------------------------------------
1,637,000 1,802,000 592,000 694,000
- ----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 32,447,000 28,603,000 11,535,000 10,313,000
Provision for income taxes 11,681,000 10,297,000 4,153,000 3,713,000
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 20,766,000 $ 18,306,000 $ 7,382,000 $ 6,600,000
==================================================================================================================================
Weighted average number of shares outstanding 20,510,608 20,510,608 20,510,608 20,510,608
==================================================================================================================================
Net income per share $ 1.01 $ 0.89 $ 0.36 $ 0.32
==================================================================================================================================
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 Forty
weeks ended weeks ended
May 31, June 1,
1997 1996
- --------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net Income $ 20,766,000 $ 18,306,000
Adjustments:
Depreciation 14,303,000 12,767,000
Amortization of other assets 2,858,000 2,572,000
Receivables (2,865,000) (4,688,000)
Inventories (3,172,000) 215,000
Rental merchandise in service (804,000) (1,789,000)
Prepaid expenses (13,000) --
Accounts payable 1,303,000 280,000
Accrued liabilities 8,806,000 3,197,000
Accrued and deferred income taxes (986,000) 513,000
Deferred income taxes 818,000 614,000
- --------------------------------------------------------------------------------------------------
Net cash provided by operating activities 41,014,000 31,987,000
- --------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired (4,971,000) (11,517,000)
Capital expenditures (35,954,000) (22,313,000)
Other assets, net (959,000) (2,168,000)
- --------------------------------------------------------------------------------------------------
Net cash used in investing activities (41,884,000) (35,998,000)
- --------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in debt 6,329,000 12,925,000
Reduction of debt (1,329,000) (7,831,000)
Cash dividends paid or payable (1,619,000) (1,439,000)
- --------------------------------------------------------------------------------------------------
Net cash provided by financing activities 3,381,000 3,655,000
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 2,511,000 (356,000)
Cash at beginning of period 3,425,000 5,889,000
- --------------------------------------------------------------------------------------------------
Cash at end of period $ 5,936,000 $ 5,533,000
==================================================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 1,773,000 $ 2,007,000
Income taxes paid $ 11,868,000 $ 9,379,000
==================================================================================================
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 THIRTY-NINE WEEKS ENDED MAY 31, 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 THIRTY-NINE WEEKS ENDED MAY 31, 1997
RESULTS OF OPERATIONS
- ---------------------
Thirty-nine Weeks of Fiscal 1997 compared to Forty Weeks of Fiscal 1996
- -----------------------------------------------------------------------
Revenues for the first thirty-nine weeks of fiscal 1997 increased $18,372,000 or
6.2% over the first forty weeks of fiscal 1996. This increase can be attributed
to acquisitions (2.5%), price increases (1.0%) and growth from existing
operations (5.2%) offset by one week less of revenue (2.5%) in fiscal 1997.
Income from operations as a percentage of revenue increased to 10.9% in fiscal
1997 from 10.3% 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 $1,637,000 in
fiscal 1997 as compared to $1,802,000 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 May 31, 1997 compared to Thirteen Weeks ended June 1, 1996
- -------------------------------------------------------------------------------
Fiscal 1997 third quarter revenues increased $8,570,000 or 8.7% over the fiscal
1996 third quarter. This increase can be attributed to acquisitions (1.6%),
price increases (1.0%) and growth from existing operations (6.1%).
Income from operations as a percentage of revenue of 11.3% in fiscal 1997 was
comparable to 11.2% for the fiscal 1996 period.
Net interest expense (interest expense less interest income) was $592,000 in
fiscal 1997 as compared to $694,000 in fiscal 1996. The decrease is attributable
to lower interest rates 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 THIRTY-NINE WEEKS ENDED MAY 31, 1997
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
During the thirty-nine weeks ended May 31, 1997 net cash provided by operating
activities, $41,014,000, was primarily used for capital expenditures,
$35,954,000 and acquisition of businesses, $4,971,000.
The Company had $5,936,000 in cash and $23,900,000 available on its $60,000,000
line of credit as of May 31, 1997. The Company believes its ability to generate
cash from operations will adequately cover its foreseeable capital requirements.
Shareholders' equity at May 31, 1997 was $210 million, 83% 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 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 15, 1997
/s/ JOHN B. BARTLETT
--------------------
John B. Bartlett
Senior Vice President
and Chief Financial Officer
5
1,000
U.S. DOLLARS
9-MOS
AUG-30-1997
SEP-01-1996
MAY-31-1997
1
5,936
0
40,705
850
20,192
105,485
306,239
124,252
336,239
66,298
42,745
0
0
2,051
207,932
336,239
313,164
313,164
279,080
279,080
0
0
1,637
32,447
11,681
20,766
0
0
0
20,766
1.01
0
