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)
January 5, 2011
UNIFIRST CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Massachusetts
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1-8504
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04-2103460
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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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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Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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[ ]
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
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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.
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Results of Operations and Financial Condition.
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On January 5, 2011, UniFirst Corporation (the “Company”) issued a press release ("Press Release") announcing financial results for the first quarter of fiscal 2011, which ended on November 27, 2010. 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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Financial Statements and Exhibits.
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(d) Exhibits
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EXHIBIT NO.
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DESCRIPTION
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99
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Press release of the Company dated January 5, 2011
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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: January 5, 2011
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By:
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/s/ Ronald D. Croatti | |
| Name: |
Ronald D. Croatti
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| Title: |
Chairman of the Board, Chief
Executive Officer and President
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By:
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/s/ Steven S. Sintros | |
| Name: |
Steven S. Sintros
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| Title: | Vice President and Chief Financial Officer | ||
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EXHIBIT NO.
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DESCRIPTION
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99
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Press release of the Company dated January 5, 2011
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Exhibit 99
UNIFIRST ANNOUNCES FINANCIAL RESULTS
FOR THE FIRST QUARTER OF FISCAL 2011
Wilmington, MA (January 5, 2011) -- UniFirst Corporation (NYSE: UNF) today announced results for the first quarter of fiscal 2011, which ended on November 27, 2010.
Revenues for the first quarter were $273.1 million, up 6.6% compared to $256.2 million for the same period in the prior year. First quarter net income was $23.8 million ($1.20 per diluted common share), a slight increase in net income from the first quarter of fiscal 2010 of $23.6 million ($1.21 per diluted common share).
Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “We are pleased with the Company’s overall results for the first quarter. All of our operating segments contributed to stronger than anticipated growth and our profits exceeded our expectations as a result.”
The Company’s core laundry revenues were $238.7 million in the first quarter, up 5.7% from those reported in the same period a year ago. After excluding the positive effect of acquisitions as well as a stronger Canadian dollar, the Company’s core laundry revenues increased 4.2% organically. Core laundry operating income declined 2.8% to $34.4 million in the first quarter from $35.4 million for the same period in the prior year. The core laundry’s operating margin also fell to 14.4% in the first quarter from 15.7% in the first quarter of fiscal 2010. The margin decline primarily relates to a higher cost of revenues, including merchandise, energy and payroll. In addition, higher share-based compensation expense also contributed to the margin decline. These items were partially offset by lower costs associat
ed with healthcare and other insurance as well as a $0.8 million accounting benefit related to the effect of discount rate fluctuations on the fair value of our environmental liabilities.
The Company’s Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, posted revenues of $25.8 million, up 12.8% compared to the first quarter of 2010. However, operating income for this segment decreased to $4.0 million in the first quarter of fiscal 2011 from $4.6 million in the first quarter of fiscal 2010. The decline in operating income was primarily the result of a larger percentage of higher-margin project and ancillary service revenues in the first quarter of fiscal 2010.
The Company’s results for the first quarter benefited from a lower effective income tax rate compared to a year ago. The effective income tax rate for the quarter was 37.0% compared to 39.5% for the first quarter of fiscal 2010. The decrease in rate was primarily the result of the reduction of tax contingency reserves related to the resolution of certain state audits as well as a lower overall provision for state income taxes.
UniFirst continues to generate strong cash flows and maintain a solid balance sheet. Cash produced by operating activities for the first quarter was $27.2 million. Cash and cash equivalents on hand at the end of the quarter was $133.3 million, up from $121.3 million at the end of fiscal 2010. In addition, the quarter ended with total debt as a percentage of capital of 19.7%, down from 20.4% at the end of fiscal 2010.
Mr. Croatti continued, “Although overall unemployment rates remain high, we are encouraged by the modest improvements we are seeing in economic activity and hiring across our customer base. As always, we will continue to remain vigilant in controlling our costs as well as ensuring that we are doing all we can to provide first-class service to our expanding customer base.”
Conference Call Information
UniFirst will hold a conference call today at 10:00 a.m. (EST) 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 approximately 10,000 Team Partners who serve more than 225,000 customer locations in 45 U.S. states, Canada, and Europe from over 200 customer service, distribution, and manufacturing facilities. UniFirst 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, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the effect of currency fluctuations on our results of operations and financial condition, our dependence on third parties to supply us with raw materials, any loss of key management or other personnel, increased costs as a result of any future changes in federal or state laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the impact of adverse economic conditions and the current tight credit markets on our customers and such customers’ workforce, the level and duration of workforce reductions by our customers, the continuing increase in domestic healthcare costs, demand and prices for our products and services, rampant cr
iminal activity and instability in Mexico where our principal garment manufacturing plants are located, 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, general economic conditions and other factors described under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended August 28, 2010 and in other filings with the Securities and Exchange Commission. When used in this public announcement, the words “anticipate,” “optimistic,” “believe,” “estimate,” “expect,” “intend,” and similar expressions as the
y 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
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Thirteen weeks ended
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||||||||
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November 27,
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November 28,
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|||||||
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(In thousands, except per share data)
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2010 (2)
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2009 (2)
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Revenues
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$ | 273,090 | $ | 256,179 | ||||
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Operating expenses:
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Cost of revenues (1)
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163,235 | 149,224 | ||||||
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Selling and administrative expenses (1)
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55,183 | 51,472 | ||||||
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Depreciation and amortization
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15,502 | 15,056 | ||||||
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Total operating expenses
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233,920 | 215,752 | ||||||
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Income from operations
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39,170 | 40,427 | ||||||
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Other expense (income):
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Interest expense
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2,203 | 2,184 | ||||||
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Interest income
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(582 | ) | (524 | ) | ||||
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Exchange rate gain
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(172 | ) | (201 | ) | ||||
| 1,449 | 1,459 | |||||||
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Income before income taxes
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37,721 | 38,968 | ||||||
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Provision for income taxes
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13,957 | 15,392 | ||||||
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Net income
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$ | 23,764 | $ | 23,576 | ||||
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Income per share – Basic
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Common Stock
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$ | 1.26 | $ | 1.28 | ||||
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Class B Common Stock
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$ | 1.01 | $ | 1.03 | ||||
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Income per share – Diluted
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Common Stock
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$ | 1.20 | $ | 1.21 | ||||
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Income allocated to – Basic
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Common Stock
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$ | 18,604 | $ | 18,516 | ||||
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Class B Common Stock
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$ | 4,704 | $ | 5,060 | ||||
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Income allocated to – Diluted
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Common Stock
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$ | 23,330 | $ | 23,576 | ||||
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Weighted average number of shares outstanding – Basic
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Common Stock
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14,753 | 14,440 | ||||||
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Class B Common Stock
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4,663 | 4,932 | ||||||
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Weighted average number of shares outstanding – Diluted
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Common Stock
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19,487 | 19,434 | ||||||
(1) Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets
(2) Unaudited
UniFirst Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
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(In thousands)
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November 27,
2010 (1)
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August 28,
2010
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Assets
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Current assets:
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Cash and cash equivalents
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$ | 133,265 | $ | 121,258 | ||||
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Receivables, net
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122,956 | 105,247 | ||||||
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Inventories
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52,496 | 47,630 | ||||||
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Rental merchandise in service
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92,205 | 86,633 | ||||||
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Prepaid and deferred income taxes
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11,785 | 14,252 | ||||||
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Prepaid expenses
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5,457 | 3,004 | ||||||
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Total current assets
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418,164 | 378,024 | ||||||
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Property, plant and equipment:
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Land, buildings and leasehold improvements
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338,101 | 334,037 | ||||||
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Machinery and equipment
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376,387 | 370,088 | ||||||
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Motor vehicles
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122,933 | 121,135 | ||||||
| 837,421 | 825,260 | |||||||
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Less - accumulated depreciation
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456,052 | 444,061 | ||||||
| 381,369 | 381,199 | |||||||
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Goodwill
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273,316 | 271,857 | ||||||
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Customer contracts and other intangible assets, net
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57,807 | 59,037 | ||||||
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Other assets
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2,508 | 2,178 | ||||||
| $ | 1,133,164 | $ | 1,092,295 | |||||
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Liabilities and shareholders' equity
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Current liabilities:
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Current maturities of long-term debt
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$ | 80,750 | $ | 81,160 | ||||
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Accounts payable
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48,735 | 45,931 | ||||||
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Accrued liabilities
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85,081 | 83,804 | ||||||
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Accrued income taxes
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2,946 | — | ||||||
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Total current liabilities
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217,512 | 210,895 | ||||||
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Long-term liabilities:
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Long-term debt, net of current maturities
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100,251 | 100,304 | ||||||
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Accrued liabilities
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30,755 | 30,290 | ||||||
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Accrued and deferred income taxes
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48,353 | 42,756 | ||||||
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Total long-term liabilities
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179,359 | 173,350 | ||||||
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Shareholders' equity:
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Common Stock
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1,492 | 1,491 | ||||||
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Class B Common Stock
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491 | 491 | ||||||
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Capital surplus
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27,166 | 25,329 | ||||||
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Retained earnings
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701,934 | 678,876 | ||||||
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Accumulated other comprehensive income
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5,210 | 1,863 | ||||||
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Total shareholders' equity
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736,293 | 708,050 | ||||||
| $ | 1,133,164 | $ | 1,092,295 | |||||
(1) Unaudited
UniFirst Corporation and Subsidiaries
Detail of Operating Results
Revenues
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Thirteen weeks ended
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November 27,
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November 28,
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Dollar
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Percent
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(In thousands, except percentages)
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2010 (1)
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2009 (1)
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Change
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Change
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Core Laundry Operations
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$ | 238,691 | $ | 225,786 | $ | 12,905 | 5.7 | % | ||||||||
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Specialty Garments
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25,811 | 22,877 | 2,934 | 12.8 | ||||||||||||
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First Aid
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8,588 | 7,516 | 1,072 | 14.3 | ||||||||||||
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Consolidated total
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$ | 273,090 | $ | 256,179 | $ | 16,911 | 6.6 | % | ||||||||
Income from Operations
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Thirteen weeks ended
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November 27,
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November 28,
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Dollar
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Percent
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(In thousands, except percentages)
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2010 (1)
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2009 (1)
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Change
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Change
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Core Laundry Operations
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$ | 34,414 | $ | 35,392 | $ | (978 | ) | -2.8 | % | |||||||
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Specialty Garments
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4,029 | 4,613 | (584 | ) | -12.7 | |||||||||||
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First Aid
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727 | 422 | 305 | 72.3 | ||||||||||||
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Consolidated total
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$ | 39,170 | $ | 40,427 | $ | (1,257 | ) | -3.1 | % | |||||||
(1) Unaudited
UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
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Thirteen weeks ended
(In thousands)
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November 27,
2010 (1)
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November 28,
2009 (1)
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Cash flows from operating activities:
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Net income
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$ | 23,764 | $ | 23,576 | ||||
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Adjustments to reconcile net income to cash provided by operating activities:
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Depreciation
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13,125 | 12,839 | ||||||
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Amortization of intangible assets
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2,377 | 2,217 | ||||||
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Amortization of deferred financing costs
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67 | 67 | ||||||
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Share-based compensation
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1,684 | 359 | ||||||
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Accretion on environmental contingencies
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170 | 198 | ||||||
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Accretion on asset retirement obligations
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147 | 142 | ||||||
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Deferred income taxes
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5,433 | (35 | ) | |||||
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Changes in assets and liabilities, net of acquisitions:
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Receivables
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(17,274 | ) | (11,741 | ) | ||||
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Inventories
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(4,759 | ) | 4,510 | |||||
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Rental merchandise in service
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(5,133 | ) | (1,534 | ) | ||||
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Prepaid expenses
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(2,443 | ) | (2,088 | ) | ||||
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Accounts payable
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2,677 | 5,229 | ||||||
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Accrued liabilities
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2,077 | 1,779 | ||||||
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Prepaid and accrued income taxes
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5,254 | 11,992 | ||||||
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Net cash provided by operating activities
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27,166 | 47,510 | ||||||
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Cash flows from investing activities:
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Acquisition of businesses
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(2,220 | ) | (12,206 | ) | ||||
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Capital expenditures
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(12,250 | ) | (15,796 | ) | ||||
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Other
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(776 | ) | (31 | ) | ||||
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Net cash used in investing activities
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(15,246 | ) | (28,033 | ) | ||||
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Cash flows from financing activities:
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Payments on long-term obligations
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(496 | ) | (103 | ) | ||||
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Proceeds from exercise of Common Stock options
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153 | 241 | ||||||
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Payment of cash dividends
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(707 | ) | (689 | ) | ||||
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Net cash used in financing activities
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(1,050 | ) | (551 | ) | ||||
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Effect of exchange rate changes
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1,137 | 631 | ||||||
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Net increase in cash and cash equivalents
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12,007 | 19,557 | ||||||
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Cash and cash equivalents at beginning of period
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121,258 | 60,151 | ||||||
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Cash and cash equivalents at end of period
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$ | 133,265 | $ | 79,708 | ||||
(1) Unaudited