UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
July 2, 2008
UNIFIRST CORPORATION
(Exact Name of Registrant as Specified in Charter)
|
Massachusetts |
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1-8504 |
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04-2103460 |
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(State or Other Jurisdiction of Incorporation) |
|
(Commission File Number) |
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(IRS Employer Identification No.) |
68 Jonspin Road, Wilmington, Massachusetts 01887
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (978) 658-8888
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02. |
Results of Operations and Financial Condition. |
On July 2, 2008, UniFirst Corporation (the “Company”) issued a press release ("Press Release") announcing financial results for the third quarter and first nine months of fiscal 2008 which ended May 31, 2008. A copy of the Press Release is attached as Exhibit 99 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02, including the exhibit attached hereto, shall not be deemed “filed” for any purpose, including for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
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Item 9.01. |
Financial Statements and Exhibits. |
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(d) Exhibits |
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EXHIBIT NO. |
DESCRIPTION |
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99 |
Press release of the Company dated July 2, 2008 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
UNIFIRST CORPORATION
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Date: July 2, 2008 |
By: |
/s/ Ronald D. Croatti |
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Name: |
Ronald D. Croatti |
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Title: |
Chairman of the Board, Chief Executive Officer and President |
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By: |
/s/ John B. Bartlett |
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Name: |
John B. Bartlett |
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Title: |
Senior Vice President and Chief Financial Officer |
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By: |
/s/ Steven S. Sintros |
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Name: |
Steven S. Sintros |
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Title: |
Corporate Controller |
EXHIBIT INDEX
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EXHIBIT NO. |
DESCRIPTION |
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99 |
Press release of the Company dated July 2, 2008 |
Exhibit 99
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UniFirst Corporation |
News Release |
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68 Jonspin Road |
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Wilmington, MA 01887-1086 |
contact: |
John B. Bartlett |
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Telephone 978-658-8888 Ext 520 |
Senior Vice President |
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Facsimile 978-988-0659 |
jbartlett@unifirst.com |
UNIFIRST ANNOUNCES RECORD FINANCIAL RESULTS
FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 2008
Wilmington, MA (July 2, 2008) -- UniFirst Corporation (NYSE: UNF) today announced record revenues and earnings for its third quarter and first nine months of fiscal 2008 which ended May 31, 2008.
Revenues were a record $254.6 million and $772.2 million for the third quarter and first nine months of fiscal 2008. These revenues represent increases of 10.8% and 14.5%, respectively, over the comparable fiscal 2007 quarterly and nine month periods.
The first nine months of fiscal 2008 includes an extra week compared to fiscal 2007 as fiscal 2008 is a 53 week year for the Company. The extra week occurred in the Company’s second fiscal quarter and accounted for approximately 2.9 percentage points of year to year revenue growth for the first nine months.
Third quarter net income increased 23.8% to $16.9 million, or $0.87 per diluted common share, from last year’s third quarter net income of $13.7 million, or $0.71 per diluted common share. Net income for the first nine months of fiscal 2008 increased 41.6% to $48.7 million, or $2.52 per diluted common share, from $34.4 million, or $1.78 per diluted common share for the comparable period in 2007.
The Company’s nine month earnings in fiscal 2007 were affected by severance expense and increases in the Company’s environmental reserves. These combined to decrease the Company’s income from operations and net income by approximately $2.3 million and $1.4 million, respectively. Without these adjustments, the Company’s diluted earnings per share for the first nine months of fiscal 2007 would have been $1.85.
The increase in earnings continues to be driven by strong revenue growth as well as higher operating margins in the Company’s core laundry business, which represents approximately 90% of the Company’s consolidated revenues. Core laundry revenues increased 11.5% and 15.0% for the quarterly and nine month periods, respectively, compared to fiscal 2007. The core laundries’ organic revenue growth, which excludes the effects of the extra week, acquisitions and fluctuations in the Canadian exchange rate, was 7.8% for both the quarter and nine month periods.
The core laundry business’ operating margin increased significantly from 10.5% in the third quarter of fiscal 2007 to 12.3% for the same period of fiscal 2008. The operating margin year-to-date in fiscal 2008 is 11.9% which is up from a pro forma operating margin of 9.9% in fiscal 2007 after adjusting for the impact of the 2007 severance and environmental charges. The improvement in the third quarter margin is consistent with the first two quarters of fiscal 2008 and is related primarily to lower merchandise amortization as well as lower payroll and related costs as a percentage of revenues. The negative impact of fuel costs associated with our fleet of delivery vehicles continued to accelerate during the third quarter and partially offset these benefits.
The Company’s Specialty Garments segment produced strong top line results in the third quarter but operating income was down compared to the high profitability levels achieved in the third quarter of fiscal 2007. In addition, our First Aid segment also generated operating income at levels lower than the comparable fiscal 2007 periods.
The Company’s overall results were also impacted by the positive effect of lower interest rates on the Company’s variable rate debt. The lower interest expense, however, was offset by a slightly higher effective tax rate in the third quarter of fiscal 2008 compared to 2007.
"We continue to be pleased with what is shaping up to be a record year for the Company" said UniFirst President and Chief Executive Officer, Ron Croatti. “A primary goal has been to increase our operating margins and we have made solid strides in this area despite challenging economic conditions.”
The Company will hold a conference call today at 4:00 PM (EDT) to discuss its quarterly financial results, business highlights and outlook. A simultaneous live webcast of the call will be available over the Internet and can be accessed at www.unifirst.com.
About UniFirst Corporation
UniFirst Corporation is one of the largest providers of workplace uniforms, protective clothing and facility services products in North America. The Company employs over 10,000 team partners who serve over 200,000 customer locations in 46 U.S. states, Canada and Europe from 200 customer service, distribution, and manufacturing facilities. UniFirst Corporation is a publicly held company traded on the New York Stock Exchange under the symbol UNF and is a component of the Standard & Poor's 600 Small Cap Index.
Forward Looking Statements
This public announcement may contain forward looking statements that reflect the Company’s current views with respect to future events and financial performance. Forward looking statements contained in this public announcement are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and are highly dependent upon a variety of important factors that could cause actual results to differ materially from those reflected in such forward looking statements. Such factors include, but are not limited to, uncertainties regarding the Company’s ability to consummate and successfully integrate acquired businesses, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, the Company’s ability to compete successfully without any significant degradation in its margin rates, seasonal fluctuations in business levels, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the impact of negative economic conditions on the Company’s customers and such customers’ workforce, the continuing increase in domestic healthcare costs, demand and prices for the Company’s products and services, additional professional and internal costs necessary for compliance with recent and proposed future changes in Securities and Exchange Commission (including the Sarbanes-Oxley Act of 2002), New York Stock Exchange and accounting rules, strikes and unemployment levels, the Company’s efforts to evaluate and potentially reduce internal costs, economic and other developments associated with the war on terrorism and its impact on the economy and general economic conditions. When used in this public announcement, the words “anticipate,” “optimistic,” “believe,” “estimate,” “expect,” “intend,” and similar expressions as they relate to the Company are included to identify such forward looking statements. The Company undertakes no obligation to update any forward looking statements to reflect events or circumstances arising after the date on which such statements are made.
UniFirst Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)
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Thirteen |
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Thirteen |
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Forty |
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Thirty-nine |
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weeks ended |
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weeks ended |
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weeks ended |
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weeks ended |
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May 31, |
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May 26, |
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May 31, |
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May 26, |
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(In thousands, except share and per share data) |
|
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2008 |
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2007 |
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2008 |
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2007 |
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Revenues |
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$ |
254,617 |
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$ |
229,849 |
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$ |
772,165 |
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$ |
674,593 |
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Costs and expenses: |
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Operating costs (1) |
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157,169 |
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144,257 |
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480,797 |
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427,366 |
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Selling and administrative expenses (1) |
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54,466 |
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48,659 |
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164,080 |
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147,490 |
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Depreciation and amortization |
|
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13,192 |
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|
|
12,322 |
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|
40,094 |
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|
35,726 |
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|
|
|
|
224,827 |
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|
|
205,238 |
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|
|
684,971 |
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|
|
610,582 |
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
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Income from operations |
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|
29,790 |
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|
24,611 |
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|
|
87,194 |
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|
64,011 |
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Other expense (income): |
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|
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|
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Interest expense |
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2,567 |
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|
3,226 |
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|
9,430 |
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|
|
9,546 |
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Interest income |
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|
(575 |
) |
|
|
(451 |
) |
|
|
(1,668 |
) |
|
|
(1,455 |
) |
|
|
|
|
1,992 |
|
|
|
2,775 |
|
|
|
7,762 |
|
|
|
8,091 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income before income taxes |
|
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27,798 |
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|
|
21,836 |
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|
|
79,432 |
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|
55,920 |
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|
Provision for income taxes |
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|
10,858 |
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|
|
8,153 |
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|
30,737 |
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|
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21,531 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income |
|
$ |
16,940 |
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|
$ |
13,683 |
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|
$ |
48,695 |
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|
$ |
34,389 |
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|
|
|
|
|
|
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|
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|
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Income per share – Basic: |
|
|
|
|
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|
|
|
|
|
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|
|
|
|
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Common Stock |
|
$ |
0.92 |
|
|
$ |
0.75 |
|
|
$ |
2.66 |
|
|
$ |
1.88 |
|
|
Class B Common Stock |
|
$ |
0.74 |
|
|
$ |
0.60 |
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$ |
2.13 |
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|
$ |
1.51 |
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|
|
|
|
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Income per share – Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
0.87 |
|
|
$ |
0.71 |
|
|
$ |
2.52 |
|
|
$ |
1.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
14,366 |
|
|
|
14,333 |
|
|
|
14,358 |
|
|
|
14,320 |
|
|
Class B Common Stock |
|
|
4,937 |
|
|
|
4,937 |
|
|
|
4,937 |
|
|
|
4,939 |
|
|
|
|
|
19,303 |
|
|
|
19,270 |
|
|
|
19,295 |
|
|
|
19,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding – Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
19,363 |
|
|
|
19,371 |
|
|
|
19,340 |
|
|
|
19,347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Dividends per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
0.0375 |
|
|
$ |
0.0375 |
|
|
$ |
0.1125 |
|
|
$ |
0.1125 |
|
|
Class B Common Stock |
|
$ |
0.0300 |
|
|
$ |
0.0300 |
|
|
$ |
0.0900 |
|
|
$ |
0.0900 |
|
(1) Exclusive of depreciation on the Company’s fixed assets and amortization on its intangible assets
UniFirst Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
|
(In thousands, except share data) |
|
|
|
May 31, 2008 |
|
|
August 25, 2007 (a) |
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|
Assets |
|
|
|
|
|
|
|
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Current assets: |
|
|
|
|
|
|
|
|
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Cash and cash equivalents |
|
|
$ |
24,494 |
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$ |
12,698 |
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|
Receivables, net |
|
|
|
108,406 |
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|
91,906 |
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|
Inventories |
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|
|
45,209 |
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|
44,282 |
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|
Rental merchandise in service |
|
|
|
91,666 |
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|
86,129 |
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|
Prepaid and deferred income taxes |
|
|
|
12,845 |
|
|
13,399 |
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|
Prepaid expenses |
|
|
|
3,026 |
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|
1,807 |
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|
|
|
|
|
|
|
|
|
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|
Total current assets |
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|
|
285,646 |
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|
250,221 |
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|
|
|
|
|
|
|
|
|
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Property and equipment: |
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|
|
|
|
|
|
|
|
Land, buildings and leasehold improvements |
|
|
|
304,706 |
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|
286,255 |
|
|
Machinery and equipment |
|
|
|
322,696 |
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|
299,831 |
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|
Motor vehicles |
|
|
|
103,474 |
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|
95,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
730,876 |
|
|
681,300 |
|
|
Less - accumulated depreciation |
|
|
|
375,060 |
|
|
347,233 |
|
|
|
|
|
|
355,816 |
|
|
334,067 |
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|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
252,428 |
|
|
224,366 |
|
|
Customer contracts and other intangible assets, net |
|
|
|
69,081 |
|
|
62,064 |
|
|
Other assets |
|
|
|
4,925 |
|
|
3,746 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
967,896 |
|
$ |
874,464 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Current maturities of long-term obligations |
|
|
$ |
90 |
|
$ |
539 |
|
|
Accounts payable |
|
|
|
48,139 |
|
|
45,297 |
|
|
Accrued liabilities |
|
|
|
89,912 |
|
|
86,283 |
|
|
Accrued income taxes |
|
|
|
3,753 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
141,894 |
|
|
132,119 |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term obligations, net of current maturities |
|
|
|
236,315 |
|
|
205,510 |
|
|
Deferred income taxes |
|
|
|
39,764 |
|
|
39,508 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
1,438 |
|
|
1,435 |
|
|
Class B Common Stock |
|
|
|
494 |
|
|
494 |
|
|
Capital surplus |
|
|
|
17,935 |
|
|
16,332 |
|
|
Retained earnings |
|
|
|
520,569 |
|
|
473,934 |
|
|
Accumulated other comprehensive income |
|
|
|
9,487 |
|
|
5,132 |
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
|
|
|
549,923 |
|
|
497,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
967,896 |
|
$ |
874,464 |
|
(a) Derived from fiscal 2007 audited financial statements
UniFirst Corporation and Subsidiaries
Detail of Operating Results
(Unaudited)
Revenues
|
|
|
Thirteen |
|
|
Thirteen |
|
|
|
|
|
|
|
|
|
weeks ended |
|
|
weeks ended |
|
|
|
|
|
|
|
|
|
May 31, |
|
|
May 26, |
|
|
Dollar |
|
Percent |
|
|
(In thousands, except percentages) |
|
2008 |
|
|
2007 |
|
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Laundry Operations |
$ |
226,686 |
|
$ |
203,260 |
|
$ |
23,426 |
|
11.5 |
% |
|
Specialty Garments |
|
20,401 |
|
|
18,272 |
|
|
2,129 |
|
11.7 |
|
|
First Aid |
|
7,530 |
|
|
8,317 |
|
|
(787 |
) |
-9.5 |
|
|
Consolidated total |
$ |
254,617 |
|
$ |
229,849 |
|
$ |
24,768 |
|
10.8 |
% |
|
|
|
Forty |
|
|
Thirty-nine |
|
|
|
|
|
|
|
|
|
weeks ended |
|
|
weeks ended |
|
|
|
|
|
|
|
|
|
May 31, |
|
|
May 26, |
|
|
Dollar |
|
Percent |
|
|
(In thousands, except percentages) |
|
2008 |
|
|
2007 |
|
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Laundry Operations |
$ |
693,343 |
|
$ |
602,774 |
|
$ |
90,569 |
|
15.0 |
% |
|
Specialty Garments |
|
54,783 |
|
|
48,376 |
|
|
6,407 |
|
13.2 |
|
|
First Aid |
|
24,039 |
|
|
23,443 |
|
|
596 |
|
2.5 |
|
|
Consolidated total |
$ |
772,165 |
|
$ |
674,593 |
|
$ |
97,572 |
|
14.5 |
% |
Income from Operations
|
|
|
Thirteen |
|
|
Thirteen |
|
|
|
|
|
|
|
|
|
weeks ended |
|
|
weeks ended |
|
|
|
|
|
|
|
|
|
May 31, |
|
|
May 26, |
|
|
Dollar |
|
Percent |
|
|
(In thousands, except percentages) |
|
2008 |
|
|
2007 |
|
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Laundry Operations |
$ |
27,799 |
|
$ |
21,345 |
|
$ |
6,454 |
|
30.2 |
% |
|
Specialty Garments |
|
1,946 |
|
|
3,006 |
|
|
(1,060 |
) |
-35.3 |
|
|
First Aid |
|
45 |
|
|
260 |
|
|
(215 |
) |
-82.8 |
|
|
Consolidated total |
$ |
29,790 |
|
$ |
24,611 |
|
$ |
5,179 |
|
21.0 |
% |
|
|
|
Forty |
|
|
Thirty-nine |
|
|
|
|
|
|
|
|
|
weeks ended |
|
|
weeks ended |
|
|
|
|
|
|
|
|
|
May 31, |
|
|
May 26, |
|
|
Dollar |
|
Percent |
|
|
(In thousands, except percentages) |
|
2008 |
|
|
2007 |
|
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Laundry Operations |
$ |
82,475 |
|
$ |
57,620 |
|
$ |
24,855 |
|
43.1 |
% |
|
Specialty Garments |
|
4,365 |
|
|
5,501 |
|
|
(1,136 |
) |
-20.6 |
|
|
First Aid |
|
354 |
|
|
890 |
|
|
(536 |
) |
-60.2 |
|
|
Consolidated total |
$ |
87,194 |
|
$ |
64,011 |
|
$ |
23,183 |
|
36.2 |
% |