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 November 27, 1993 Number 1-8504 UNIFIRST CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 04-2103460 (State of Incorporation) (IRS Employer Identification Number) 68 Jonspin Road Wilmington, Massachusetts 01887 (Address of principal executive offices) Registrant's telephone number, including area code: (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 January 5, 1994 were 7,873,854 and 12,627,954 respectively. 2 PART 1 - FINANCIAL INFORMATION FORM 10-Q UNIFIRST CORPORATION AND SUBSIDIARIES CONDENSED BALANCE SHEETS (unaudited)
* Condensed from audited financial statements The accompanying notes are an integral part of these condensed financial statements.November 27, August 28, November 28, 1993 1993* 1992 ___________________________________________________________________________________________ Assets Current assets: Cash $ 1,780,000 $ 3,656,000 $ 1,854,000 Receivables 28,674,000 24,849,000 25,501,000 Inventories 11,277,000 11,536,000 11,314,000 Rental merchandise in service 28,773,000 26,565,000 24,528,000 Prepaid expenses 109,000 115,000 153,000 ___________________________________________________________________________________________ Total current assets 70,613,000 66,721,000 63,350,000 ___________________________________________________________________________________________ Property and equipment: Land, buildings and leasehold improvements 96,659,000 93,347,000 88,976,000 Machinery and equipment 89,262,000 86,165,000 83,257,000 Motor vehicles 22,332,000 21,899,000 20,308,000 ___________________________________________________________________________________________ 208,253,000 201,411,000 192,541,000 Less - accumulated depreciation 78,289,000 75,617,000 73,254,000 ___________________________________________________________________________________________ 129,964,000 125,794,000 119,287,000 ___________________________________________________________________________________________ Other assets 29,175,000 26,549,000 28,545,000 ___________________________________________________________________________________________ $229,752,000 $219,064,000 $211,182,000 =========================================================================================== Liabilities and Shareholders' Equity Current liabilities: Current maturities of long-term obligations $ 6,570,000 $ 6,055,000 $ 6,037,000 Notes payable 138,000 177,000 198,000 Accounts payable 12,270,000 10,624,000 8,367,000 Accrued liabilities 26,646,000 25,225,000 19,477,000 Accrued and deferred income taxes 6,120,000 5,399,000 9,123,000 ___________________________________________________________________________________________ Total current liabilities 51,744,000 47,480,000 43,202,000 ___________________________________________________________________________________________ Long-term obligations, net of current maturities 26,814,000 26,176,000 33,447,000 Deferred income taxes 13,256,000 12,685,000 13,189,000 ___________________________________________________________________________________________ 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 7,873,854 shares 787,000 787,000 2,040,000 Class B Common stock, $.10 par value; 20,000,000 shares authorized, issued and outstanding 12,627,954 shares 1,263,000 1,263,000 -- Capital surplus 7,008,000 7,008,000 6,516,000 Retained earnings 129,086,000 123,793,000 112,669,000 Cumulative translation adjustment (206,000) (128,000) 119,000 ___________________________________________________________________________________________ Total shareholders' equity 137,938,000 132,723,000 121,344,000 ___________________________________________________________________________________________ $229,752,000 $219,064,000 $211,182,000 =========================================================================================== 3 FORM 10-Q UNIFIRST CORPORATION AND SUBSIDIARIES CONDENSED STATEMENTS OF INCOME (unaudited)
The accompanying notes are an integral part of these condensed financial statements.Thirteen Thirteen weeks ended weeks ended November 27, November 28, 1993 1992 ______________________________________________________________________________ Revenues $78,107,000 $71,708,000 ______________________________________________________________________________ Costs and expenses: Operating costs 46,072,000 42,694,000 Selling and administrative expenses 18,096,000 16,555,000 Depreciation and amortization 4,259,000 4,086,000 ______________________________________________________________________________ 68,427,000 63,335,000 ______________________________________________________________________________ Income from operations 9,680,000 8,373,000 ______________________________________________________________________________ Interest expense (income): Interest expense 634,000 821,000 Interest income (68,000) (65,000) ______________________________________________________________________________ 566,000 756,000 ______________________________________________________________________________ Income before income taxes 9,114,000 7,617,000 Provision for income taxes 3,372,000 2,666,000 ______________________________________________________________________________ Net income $ 5,742,000 $ 4,951,000 ============================================================================== Weighted average number of shares outstanding 20,508,642 20,457,744 ============================================================================== Net income per share $ 0.28 $ 0.24 ============================================================================== 4 FORM 10-Q UNIFIRST CORPORATION AND SUBSIDIARIES CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
The accompanying notes are an integral part of these condensed financial statements.Thirteen Thirteen weeks ended weeks ended November 27, November 28, 1993 1992 _______________________________________________________________________________________ Cash flows from operating activities: Net Income $ 5,742,000 $ 4,951,000 Adjustments: Depreciation 3,592,000 3,389,000 Amortization of other assets 667,000 697,000 Receivables (3,836,000) (3,175,000) Inventories 308,000 964,000 Rental merchandise in service (2,219,000) (869,000) Prepaid expenses 6,000 25,000 Accounts payable 1,337,000 (551,000) Accrued liabilities 1,428,000 2,224,000 Accrued and deferred income taxes 724,000 2,040,000 Deferred income taxes 573,000 453,000 _______________________________________________________________________________________ Net cash provided by operating activities 8,322,000 10,148,000 _______________________________________________________________________________________ Cash flows from investing activities: Acquisition of businesses, net of working capital acquired (4,000,000) -- Capital expenditures (6,822,000) (2,631,000) Other assets, net (43,000) 154,000 _______________________________________________________________________________________ Net cash used in investing activites (10,865,000) (2,477,000) _______________________________________________________________________________________ Cash flows from financing activities: Increase (reduction) in debt 1,116,000 (8,892,000) Proceeds from exercise of stock options -- 105,000 Cash dividends paid or payable (449,000) (306,000) _______________________________________________________________________________________ Net cash provided by (used in) financing activities 667,000 (9,093,000) _______________________________________________________________________________________ Net decrease in cash (1,876,000) (1,422,000) Cash at beginning of period 3,656,000 3,276,000 _______________________________________________________________________________________ Cash at end of period $ 1,780,000 $ 1,854,000 ======================================================================================= Supplemental disclosure of cash flow information: Interest paid $ 160,000 $ 213,000 Income taxes paid $ 2,080,000 $ 221,000 ======================================================================================= 5 FORM 10-Q UNIFIRST CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED FINANCIAL STATEMENTS FOR THE THIRTEEN WEEKS ENDED NOVEMBER 27, 1993 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 Company. 3. During 1993 the Company's shareholders voted to amend its Articles of Organization to increase the number of authorized common shares from 20,000,000 to 30,000,000, and to authorize a new Class B common stock with 20,000,000 authorized shares. The offer to exchange, on a share-for-share basis, shares of Class B common stock for shares of common stock resulted in 12,627,954 shares of common stock being exchanged for shares of Class B common stock. 4. On November 1, 1993 the Company acquired all of the outstanding stock of Modern Coverall and Uniform Supply, Inc., a garment rental business located in Los Angeles, CA. This acquisition is expected to add approximately $3,000,000 in annual revenues. 5. On November 18, 1993 the Company's Board of Directors declared a two-for-one stock split, to be effected in the form of a stock dividend, on the Company's Common Stock and Class B Common Stock. The stock dividend is payable on January 19, 1994 to shareholders of record on January 5, 1994. All references to average number of shares outstanding, per share data and Shareholders' Equity section in these financial statements are after giving retroactive effect to the two-for-one split. 6 FORM 10-Q UNIFIRST CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE THIRTEEN WEEKS ENDED NOVEMBER 27, 1993 RESULTS OF OPERATIONS - --------------------- Thirteen Weeks of Fiscal 1994 compared to Thirteen Weeks of Fiscal 1993 - ----------------------------------------------------------------------- Fiscal 1994 first quarter revenues increased $6,399,000 or 8.9% over the fiscal 1993 first quarter. This increase is primarily attributable to internal growth and modest price increases. Income from operations as a percentage of revenue increased to 12.4% in fiscal 1994 from 11.7% in fiscal 1993. The primary reason for the increase is the result of margin improvements in 1994 from both the primary rental and nuclear businesses. Net interest expense (interest expense less interest income) was $566,000 in fiscal 1994 as compared to $756,000 in fiscal 1993. The decrease is attributable to less debt and lower interest rates in fiscal 1994. The provision for income taxes for the current period was 37.0% as compared to 35.0% for the corresponding 1993 period. The increase is due primarily to an increase in the statutory federal income tax rate in 1994. CAPITAL RESOURCES AND LIQUIDITY - ------------------------------- The Company believes that its ability to generate cash from operations will adequately cover its foreseeable capital requirements. 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, it has been able to recover increases in costs and expenses attributable to inflation. 7 PART II - OTHER INFORMATION FORM 10-Q UNIFIRST CORPORATION AND SUBSIDIARIES Item 1. Legal Proceedings - -------------------------- Reference is made to Note 2 of notes to condensed financial statements and to the discussion under the heading Environmental Matters in the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 1993. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibits: None (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 Ronald D. Croatti _________________ Ronald D. Croatti Vice Chairman and Chief Executive Officer Date: January 10, 1994 John B. Bartlett ________________ John B. Bartlett Senior Vice President and Chief Financial Officer