unf20141021_8k.htm

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)

October 22, 2014

 

 

UNIFIRST CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

 

Massachusetts

 

001-08504

 

04-2103460

(State or Other Jurisdiction of Incorporation)

 

(Commission File Number)

 

(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:

 

 

[ ]

Written communications pursuant to Rule 425 under the Securities Act

(17 CFR 230.425)

   

[ ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

(17 CFR 240.14a-12)

   

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

(17 CFR 240.14d-2(b))

   

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

(17 CFR 240.13e-4(c))

 

 
 

 

 

Item 2.02.

Results of Operations and Financial Condition.

 

On October 22, 2014, UniFirst Corporation (the “Company”) issued a press release ("Press Release") announcing financial results for the fourth quarter and full year of fiscal 2014, which ended on August 30, 2014. 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.

 

Item 9.01.

Financial Statements and Exhibits.

   

(d) Exhibits

 
   

EXHIBIT NO.

DESCRIPTION

   

99

Press release of the Company dated October 22, 2014

 

 
 

 

 

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

 

 

Date: October 22, 2014

By:

/s/ Ronald D. Croatti

 
 

Name:

Ronald D. Croatti

 
 

Title:

Chairman of the Board, Chief

Executive Officer and President

 
       
 

By:

/s/ Steven S. Sintros

 
 

Name:

Steven S. Sintros

 
 

Title:

Vice President and Chief Financial Officer

 

 

 
 

 

 

EXHIBIT INDEX

 

 

EXHIBIT NO.

DESCRIPTION

   

99

Press release of the Company dated October 22, 2014

 

 

 

 

 

ex99.htm

Exhibit 99

 

   
   
 

For Immediate Release

 

UniFirst Corporation

 

68 Jonspin Road

 

Wilmington, MA 01887

 

Phone: 978- 658-8888

October 22, 2014

Fax: 978-988-0659

CONTACT: Steven S. Sintros, Senior Vice President & CFO

Email: ssintros@UniFirst.com

 

 

UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR OF FISCAL 2014

 

 

Wilmington, MA (October 22, 2014) -- UniFirst Corporation (NYSE: UNF) today announced results for its fourth quarter and full year ended August 30, 2014. Fourth quarter revenues were $352.0 million, down 0.3% from $352.9 million in the year ago period. Net income for the quarter was $28.9 million ($1.43 per diluted share), down 5.5% from $30.6 million ($1.52 per diluted share) reported a year earlier. Full year revenues were $1.395 billion, up 2.9% from fiscal 2013. Full year net income was $119.9 million ($5.95 per diluted share), up 2.8% from $116.7 million ($5.81 per diluted share) reported in the prior year.

 

As a reminder, fiscal 2014 was a 52 week year compared to fiscal 2013, which included 53 weeks. The extra week a year ago was included in fiscal 2013’s fourth quarter. Excluding the estimated impact of the extra week, fourth quarter revenues and income from operations both increased 7.4% and full year revenues and income from operations increased 4.8% and 5.7%, respectively.

 

Net income, excluding the estimated impact of the extra week, increased in the quarter and full year by 1.7% and 4.7%, respectively. The comparison of net income in the quarter was impacted by a higher effective income tax rate of 39.4% compared to 36.5% in the fourth quarter of fiscal 2013. This increase was due to a change in the mix of jurisdictional earnings as well as the impact of certain refunds and credits recognized in the fourth quarter of fiscal 2013.

 

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “We are very pleased to be reporting another record year of revenues and profits. Our Core Laundry Operations had a strong year, setting a new level of achievement for sales as well as improving customer retention. These accomplishments are the direct result of the teamwork and dedication of our thousands of employees across North America, Central America and Europe.”

 

Revenues in the Core Laundry Operations for the fourth quarter of fiscal 2014 were $321.0 million, up 0.2% from those reported in the prior year’s fourth quarter. Excluding the negative impact of the weaker Canadian dollar and the extra week, as well as the positive contributions from acquisitions, the Core Laundry Operations’ revenues grew 7.5% for the quarter. During the quarter, income from operations for this segment, excluding the effect of the extra week, increased 8.9% and operating profit margins increased slightly to 14.3% from 14.2% a year ago. The positive impact on margins from the quarter’s strong revenue growth, excluding the extra week, was partially offset by higher legal costs compared to a year ago.

 

 
 

 

 

Revenues for the Specialty Garments segment for the fourth quarter, which consists of nuclear decontamination and cleanroom operations, were $19.0 million, down 4.4% from $19.9 million in the fourth quarter of fiscal 2013. This segment’s income from operations for the quarter was $0.1 million compared to $1.0 million in the fourth quarter of fiscal 2013. Less project-based revenues from this segment’s U.S. and Canadian nuclear business was responsible for these shortfalls compared to the prior year.

 

UniFirst continues to maintain a solid balance sheet and financial position. We ended the fiscal year with essentially no long-term debt and cash and cash equivalents of $191.8 million, down from $197.5 million at the end of fiscal 2013. The change in cash levels during the year was affected by the Company’s repayment of $100.0 million in private placement notes that came due in September 2013.

 

Outlook

Mr. Croatti continued, “We believe that we will continue producing solid results for our shareholders in fiscal 2015, despite anticipated increases in merchandise amortization and costs related to healthcare. We expect fiscal 2015 revenues to be between $1.450 billion and $1.470 billion and full year EPS to be in the range of $5.75 and $6.00.” This guidance assumes no deterioration of current economic conditions in the geographies that we service.

 

Conference Call Information

UniFirst will hold a conference call today at 10:00 a.m. (ET) 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 12,000 Team Partners who serve more than 260,000 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 contains forward looking statements that reflect the Company’s current views with respect to future events and financial performance, including projected revenues and earnings per share. 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, any adverse outcome of pending or future contingencies or claims, including suits relating to the New England Compounding Center matter, 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 turbulent 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, including the ultimate impact of the Affordable Care Act, demand and prices for our products and services, rampant criminal activity and instability in Mexico where our principal garment manufacturing plants are located, our ability to properly and efficiently design, construct, implement and operate our new CRM computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, additional professional and internal costs necessary for compliance with recent and proposed future changes in Securities and Exchange Commission, 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 31, 2013 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 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

 

   

Thirteen

weeks ended

August 30,

   

Fourteen

weeks ended

August 31,

   

Fifty-two

weeks ended

August 30,

   

Fifty-three weeks ended

August 31,

 

(In thousands, except per share data)

 

2014 (2)

   

2013 (2)

   

2014 (2)

   

2013

 
                                 

Revenues

  $ 351,988     $ 352,876     $ 1,394,897     $ 1,355,515  
                                 

Operating expenses:

                               

Cost of revenues (1)

    217,965       218,136       858,306       836,174  

Selling and administrative expenses (1)

    68,086       68,640       271,564       263,531  

Depreciation and amortization

    18,515       18,542       71,752       69,607  

Total operating expenses

    304,566       305,318       1,201,622       1,169,312  
                                 

Income from operations

    47,422       47,558       193,275       186,203  
                                 

Other (income) expense:

                               

Interest expense

    239       327       772       1,651  

Interest income

    (716

)

    (729

)

    (3,131

)

    (3,201

)

Foreign exchange loss (gain)

    242       (177

)

    283       144  

Total other (income) expense

    (235

)

    (579

)

    (2,076

)

    (1,406

)

                                 

Income before income taxes

    47,657       48,137       195,351       187,609  

Provision for income taxes

    18,785       17,576       75,426       70,924  
                                 

Net income

  $ 28,872     $ 30,561     $ 119,925     $ 116,685  
                                 

Income per share – Basic

                               

Common Stock

  $ 1.51     $ 1.61     $ 6.29     $ 6.14  

Class B Common Stock

  $ 1.21     $ 1.29     $ 5.03     $ 4.91  
                                 

Income per share – Diluted

                               

Common Stock

  $ 1.43     $ 1.52     $ 5.95     $ 5.81  
                                 

Income allocated to – Basic

                               

Common Stock

  $ 22,876     $ 24,123     $ 94,849     $ 91,916  

Class B Common Stock

  $ 5,742     $ 6,033     $ 23,705     $ 22,913  
                                 

Income allocated to – Diluted

                               

Common Stock

  $ 28,631     $ 30,178     $ 118,626     $ 114,927  
                                 

Weighted average number of shares outstanding – Basic

                               

Common Stock

    15,113       15,017       15,080       14,975  

Class B Common Stock

    4,741       4,694       4,711       4,666  
                                 

Weighted average number of shares outstanding – Diluted

                               

Common Stock

    20,007       19,882       19,939       19,789  

 

(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

 

(In thousands)

 

August 30,

2014 (1)

   

August 31,

2013

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 191,769     $ 197,479  

Receivables, net

    152,523       141,156  

Inventories

    78,858       74,351  

Rental merchandise in service

    146,449       132,630  

Prepaid and deferred income taxes

    13,342       7,099  

Prepaid expenses

    6,349       8,679  
                 

Total current assets

    589,290       561,394  
                 

Property, plant and equipment:

               

Land, buildings and leasehold improvements

    393,584       376,222  

Machinery and equipment

    512,842       474,402  

Motor vehicles

    166,573       153,219  
                 
      1,072,999       1,003,843  

Less - accumulated depreciation

    586,717       546,157  
      486,282       457,686  
                 

Goodwill

    303,648       302,363  

Customer contracts and other intangible assets, net

    41,477       49,344  

Deferred income taxes

    1,403       1,417  

Other assets

    2,061       2,658  
                 
    $ 1,424,161     $ 1,374,862  
                 

Liabilities and shareholders' equity

               

Current liabilities:

               

Loans payable and current maturities of long-term debt

  $ 7,704     $ 111,253  

Accounts payable

    59,177       45,633  

Accrued liabilities

    100,818       95,582  

Accrued and deferred income taxes

    23,342       12,506  
                 

Total current liabilities

    191,041       264,974  
                 

Long-term liabilities:

               

Long-term debt, net of current maturities

    155       155  

Accrued liabilities

    50,235       45,037  

Accrued and deferred income taxes

    48,271       51,298  
                 

Total long-term liabilities

    98,661       96,490  
                 

Shareholders' equity:

               

Common Stock

    1,519       1,513  

Class B Common Stock

    486       487  

Capital surplus

    59,415       51,445  

Retained earnings

    1,075,572       958,508  

Accumulated other comprehensive (loss) income

    (2,533

)

    1,445  
                 

Total shareholders' equity

    1,134,459       1,013,398  
                 
    $ 1,424,161     $ 1,374,862  

 

 

(1) Unaudited

 

 
 

 

 

UniFirst Corporation and Subsidiaries

Detail of Operating Results

 

Revenues

 

   

Thirteen

weeks ended August 30,

   

Fourteen

Weeks ended

August 31,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2014 (1)

   

2013 (1)

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 320,993     $ 320,447     $ 546       0.2

%

Specialty Garments

    19,016       19,884       (868

)

    -4.4  

First Aid

    11,979       12,545       (566

)

    -4.5  

Consolidated total

  $ 351,988     $ 352,876     $ (888

)

    -0.3

%

 

   

Fifty-two

weeks ended

August 30,

   

Fifty-three

Weeks ended

August 31,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2014 (1)

   

2013

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 1,259,485     $ 1,214,365     $ 45,120       3.7

%

Specialty Garments

    91,484       96,688       (5,204

)

    -5.4  

First Aid

    43,928       44,462       (534

)

    -1.2  

Consolidated total

  $ 1,394,897     $ 1,355,515     $ 39,382       2.9

%

 

 

Income from Operations

 

   

Thirteen

weeks ended

August 30,

   

Fourteen

Weeks ended

August 31,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2014 (1)

   

2013 (1)

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 45,937     $ 45,451     $ 486       1.1

%

Specialty Garments

    115       984       (869

)

    -88.4  

First Aid

    1,370       1,123       247       22.0  

Consolidated total

  $ 47,422     $ 47,558     $ (136

)

    -0.3

%

 

   

Fifty-two

weeks ended

August 30,

   

Fifty-three

Weeks ended

August 31,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2014 (1)

   

2013

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 182,250     $ 170,662     $ 11,588       6.8

%

Specialty Garments

    7,178       10,539       (3,361

)

    -31.9  

First Aid

    3,847       5,002       (1,155

)

    -23.1  

Consolidated total

  $ 193,275     $ 186,203     $ 7,072       3.8

%

 

(1) Unaudited

 

 
 

 

 

UniFirst Corporation and Subsidiaries

Consolidated Statements of Cash Flows

 

(In thousands)

 

Fifty-two

weeks ended

August 30,

2014 (1)

   

Fifty-three

weeks ended

August 31,

2013

 

Cash flows from operating activities:

               

Net income

  $ 119,925     $ 116,685  

Adjustments to reconcile net income to cash provided by operating activities:

               

Depreciation

    62,791       59,810  

Amortization of intangible assets

    8,961       9,797  

Amortization of deferred financing costs

    209       238  

Share-based compensation

    5,601       6,315  

Accretion on environmental contingencies

    716       542  

Accretion on asset retirement obligations

    941       676  

Deferred income taxes

    8,439       20,666  

Changes in assets and liabilities, net of acquisitions:

               

Receivables

    (11,541

)

    (5,605

)

Inventories

    (4,450

)

    1,146  

Rental merchandise in service

    (14,002

)

    7,079  

Prepaid expenses

    2,623       (2,000

)

Accounts payable

    13,646       (6,458

)

Accrued liabilities

    6,890       18,040  

Prepaid and accrued income taxes

    (6,130

)

    (15,360

)

Net cash provided by operating activities

    194,619       211,571  
                 

Cash flows from investing activities:

               

Acquisition of businesses

    (3,635

)

    (30,714

)

Capital expenditures

    (91,808

)

    (103,526

)

Other

    1,269       54  

Net cash used in investing activities

    (94,174

)

    (134,186

)

                 

Cash flows from financing activities:

               

Proceeds from loans payable and long-term debt

    9,388       14,033  

Payments on loans payable and long-term debt

    (113,247

)

    (9,524

)

Proceeds from exercise of Common Stock options, including excess tax benefits

    5,880       5,488  

Taxes withheld and paid related to net share settlement of equity awards

    (3,527

)

    (3,332

)

Payment of cash dividends

    (2,860

)

    (2,851

)

Net cash (used in) provided by financing activities

    (104,366

)

    3,814  
                 

Effect of exchange rate changes

    (1,789

)

    (3,843

)

                 

Net (decrease) increase in cash and cash equivalents

    (5,710

)

    77,356  

Cash and cash equivalents at beginning of period

    197,479       120,123  
                 

Cash and cash equivalents at end of period

  $ 191,769     $ 197,479  

 

(1) Unaudited