<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 26, 1997.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ______________________.
Commission file number: 0-6643
UNITOG COMPANY
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 44-0529828
- ---------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 Washington Street, Kansas City, MO 64105
- ---------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
(816) 474-7000
- ----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- ----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of October 26, 1997, the registrant had 9,655,645 shares of common
stock, par value $.01 per share, outstanding.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page Number
<S> <C>
ITEM 1. Financial Statements
(1) Condensed Consolidated Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of October 26, 1997
and January 26, 1997. 3
Condensed Consolidated Statements of Earnings for the Three
Months ended October 26, 1997 and October 27, 1996. 4
Condensed Consolidated Statements of Earnings for the Nine
Months ended October 26, 1997 and October 27, 1996. 5
Condensed Consolidated Statements of Cash Flows for the Nine
Months ended October 26, 1997 and October 27, 1996. 6
(2) Notes to Condensed Consolidated Financial Statements. 7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 12
ITEM 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
UNITOG COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
October 26, 1997 and January 26, 1997
(unaudited)
<TABLE>
<CAPTION>
ASSETS October 26, 1997 January 26, 1997
---------------- ----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 17,430 $ 31,307
Accounts receivable, less allowance for doubtful
receivables of $1,161,000 and $1,240,000, respectively 34,218,377 28,090,702
Inventories (note 2) 19,264,434 17,525,175
Rental garments in service, net 41,231,694 40,329,880
Prepaid expenses 1,238,128 1,375,210
---------------- ----------------
Total current assets 95,970,063 87,352,274
---------------- ----------------
Property, plant and equipment, at cost 181,492,744 161,351,786
Less accumulated depreciation 72,385,171 66,554,486
---------------- ----------------
Net property, plant and equipment 109,107,573 94,797,300
---------------- ----------------
Other assets, net 31,021,906 35,120,442
Excess cost over net assets of businesses acquired, net 37,159,418 37,294,970
---------------- ----------------
$ 273,258,960 $ 254,564,986
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 3,582,477 $ 2,046,821
Accounts payable 15,513,703 13,820,339
Accrued expenses 13,848,708 11,369,557
Accrued and deferred income taxes payable 13,486,245 10,880,382
---------------- ----------------
Total current liabilities 46,431,133 38,117,099
---------------- ----------------
Long-term debt, less current installments 103,916,758 103,524,014
Deferred income taxes and other liabilities 14,339,507 13,819,237
Stockholders' equity:
Common stock of $.01 par value. Authorized
30,000,000 shares; issued and outstanding 9,655,645 shares 96,556 96,439
Additional paid-in capital 41,438,762 41,202,740
Retained earnings 67,036,244 57,805,457
---------------- ----------------
Total stockholders' equity 108,571,562 99,104,636
---------------- ----------------
$ 273,258,960 $ 254,564,986
================ ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
UNITOG COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended October 26, 1997 and October 27, 1996
(unaudited)
<TABLE>
<CAPTION>
October 26, 1997 October 27, 1996
--------------------- ---------------------
<S> <C> <C>
Revenues:
Rental operations $ 56,082,575 $ 51,479,639
Direct sales 14,005,264 14,600,207
--------------------- ---------------------
Total revenues 70,087,839 66,079,846
--------------------- ---------------------
Operating costs and expenses:
Cost of rental operations 44,591,869 40,779,417
Cost of direct sales 11,064,583 12,059,734
Depreciation and amortization 4,483,717 4,008,594
General and administrative 2,149,381 1,903,401
--------------------- ---------------------
Total costs and expenses 62,289,550 58,751,146
--------------------- ---------------------
Operating income 7,798,289 7,328,700
Interest expense 1,546,704 1,489,272
Other expense, net (17,015) (10,351)
--------------------- ---------------------
Earnings before income taxes 6,268,600 5,849,779
Income taxes 2,382,000 2,223,500
--------------------- ---------------------
Net earnings $ 3,886,600 $ 3,626,279
===================== =====================
Net earnings per common share $ .40 $ .37
===================== =====================
Weighted average common and common equivalent
shares outstanding 9,737,879 9,734,740
===================== =====================
Dividends per common share (note 3) $ .075 $ .06
===================== ======================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
UNITOG COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Nine Months Ended October 26, 1997 and October 27, 1996
(unaudited)
<TABLE>
<CAPTION>
October 26, 1997 October 27, 1996
---------------- ----------------
<S> <C> <C>
Revenues:
Rental operations $ 164,788,068 $ 151,144,902
Direct sales 42,880,394 44,109,627
---------------- ----------------
Total revenues 207,668,462 195,254,529
---------------- ----------------
Operating costs and expenses:
Cost of rental operations 132,417,294 122,485,137
Cost of direct sales 34,990,825 35,830,680
Depreciation and amortization 12,989,761 11,527,764
General and administrative 6,671,254 6,111,000
---------------- ----------------
Total costs and expenses 187,069,134 175,954,581
---------------- ----------------
Operating income 20,599,328 19,299,948
Interest expense 4,627,368 4,332,348
Other expense, net (89,529) (59,625)
---------------- ----------------
Earnings before income taxes 16,061,489 15,027,225
Income taxes 6,103,000 5,710,500
---------------- ----------------
Net earnings $ 9,958,489 $ 9,316,725
================ ================
Net earnings per common share $1.02 $ .97
================ ================
Weighted average common and common equivalent shares outstanding 9,720,940 9,605,010
================ ================
Dividends per common share (note 3) $.075 $ .06
================ ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
UNITOG COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended October 26, 1997 and October 27, 1996
(unaudited)
<TABLE>
<CAPTION>
October 26, 1997 October 27, 1996
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 9,958,489 $ 9,316,725
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 12,989,761 11,527,764
Provision for deferred income taxes 600,000 599,000
Disposal of equipment, net of gains and losses 134,133 (13,931)
Changes in assets and liabilities:
Accounts receivable (6,127,675) (1,082,347)
Inventories (1,628,702) (2,587,978)
Rental garments in service (334,968) 1,077,869
Prepaid expenses 137,082 (542,196)
Other noncurrent assets 1,277,716 (624,718)
Accounts payable 1,693,364 (2,924,847)
Accrued expenses 2,384,151 (2,777,395)
Income taxes payable 2,334,863 294,601
Other noncurrent liabilities 191,270 (308,270)
---------------- ----------------
Net cash provided by operating activities 23,609,484 11,954,277
---------------- ----------------
Cash flows from investing activities:
Acquisition of rental operations (3,102,392) (17,247,582)
Purchase of property, plant and equipment (21,957,806) (11,151,135)
---------------- ----------------
Net cash used by investing activities (25,060,198) (28,398,717)
---------------- ----------------
Cash flows from financing activities:
Proceeds from exercise of stock options, net 232,020 1,956,697
Dividends paid (723,583) (578,171)
Increase in long-term debt 1,928,400 15,601,967
---------------- ----------------
Net cash provided by financing activities 1,436,837 16,980,493
---------------- ----------------
Net increase (decrease) in cash and cash equivalents (13,877) 536,053
Cash and cash equivalents at beginning of period 31,307 28,321
---------------- ----------------
Cash and cash equivalents at end of period $ 17,430 $ 564,374
================ ================
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 5,028,000 $ 4,607,000
================ ================
Income taxes $ 3,119,000 $ 4,264,000
================ ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
UNITOG COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
Nine Months Ended October 26, 1997 and October 27, 1996
Note 1
- ------
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) necessary to present fairly the financial position of the Company as
of October 26, 1997, and the results of its operations and its cash flows for
the nine months ended October 26, 1997 and October 27, 1996 and the results of
its operations for the three months ended October 26, 1997 and October 27, 1996.
The results of operations for the nine months ended October 26, 1997 are not
necessarily indicative of the results to be expected for the full year.
Note 2 Inventories:
- -------------------
The following is a summary of inventories at October 26, 1997 and January 26,
1997:
<TABLE>
<CAPTION>
October 26, 1997 January 26, 1997
---------------- ----------------
<S> <C> <C>
Raw materials $ 4,694,092 $ 3,899,072
Work in progress 2,801,604 1,085,883
Finished goods 15,865,178 16,556,660
----------- -----------
23,360,874 21,541,615
Less LIFO allowance (4,096,440) (4,016,440)
----------- -----------
$19,264,434 $17,525,175
=========== ===========
</TABLE>
Note 3 Cash Dividend:
- --------------------
In November 1997, the Board of Directors declared a $.075 per share cash
dividend payable on December 19, 1997 to stockholders of record on December 5,
1997. The $.075 per share dividend was a 25% increase over the prior year.
Note 4 Acquisitions:
- -------------------
During the second quarter of fiscal 1998, the Company acquired a rental
operation in Tampa, Florida for approximately $600,000 in cash. The acquisition
was accounted for as a purchase. The operating results of the acquisition have
been included in the consolidated results of the Company since acquisition with
an insignificant effect on revenues and net earnings. The acquisition is
expected to add approximately $500,000 in annual rental revenues.
During the first quarter of fiscal 1998, the Company acquired certain uniform
rental routes in Detroit, Michigan for approximately $2.2 million in cash. The
acquisition was accounted for as a purchase. The operating results of the
acquisition have been included in the consolidated results of the Company since
acquisition with an insignificant effect on revenues and net earnings. The
acquisition is expected to add approximately $2 million in annual rental
revenues.
7
<PAGE>
Note 5 Legal Recovery:
- ---------------------
During the third quarter of fiscal 1998 Unitog Company recovered $2 million from
the settlement of a breach of contract lawsuit with a former customer. The
settlement was included in the operations of the business segments that supplied
this customer.
Note 6 Share Repurchase Plan:
- ----------------------------
In November 1997, the Board of Directors approved a share repurchase program.
The program provides for the repurchase of up to 750,000 shares of Unitog common
stock in public market or private transactions at prevailing prices. The shares
will be reacquired for use in employee benefit plans and other general corporate
purposes.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Liquidity and Capital Resources
Cash provided by operating activities was $23.6 million for the nine months
ended October 26, 1997, an increase of $11.7 million over the comparable period
last year. The increase was principally due to higher earnings before interest,
taxes, depreciation and amortization and due to lower acquisition related
activity. Working capital was $49.5 million at October 26, 1997 compared to
$49.2 million at January 26, 1997. Cash and cash equivalents were $17,000 at
October 26, 1997. At October 26, 1997, the Company had $37.3 million in
borrowings outstanding under its bank credit facilities. The amount of
borrowings available under the Company's bank credit facilities were $29.7
million at October 26, 1997. The Company's capitalization ratio was 49% at
October 26, 1997 compared to 51% at January 26, 1997. Capital expenditures were
$22 million through October 26, 1997 compared to $11 million last year. Capital
expenditures for fiscal 1998 are expected to approximate $28 million.
During the second quarter of fiscal 1998, the Company acquired a rental
operation in Tampa, Florida for approximately $600,000 in cash. The acquisition
was accounted for as a purchase. The operating results of the acquisition have
been included in the consolidated results of the Company since acquisition with
an insignificant effect on revenues and net earnings. The acquisition is
expected to add approximately $500,000 in annual rental revenues.
During the first quarter of fiscal 1998, the Company acquired certain uniform
rental routes in Detroit, Michigan for approximately $2.2 million in cash. The
acquisition was accounted for as a purchase. The operating results of the
acquisition have been included in the consolidated results of the Company since
acquisition with an insignificant effect on revenues and net earnings. The
acquisition is expected to add approximately $2 million in annual rental
revenues.
In November 1997, the Board of Directors declared a $.075 per share cash
dividend payable on December 19, 1997 to stockholders of record on December 5,
1997. The $.075 per share dividend was 25% greater than the semi-annual dividend
paid last year and follows a $.075 per share cash dividend paid in June 1997.
In November 1997, the Board of Directors approved a share repurchase program.
The program provides for the repurchase of up to 750,000 shares of Unitog common
stock in public market or private transactions at prevailing prices. The shares
will be reacquired for use in employee benefit plans and other general corporate
purposes.
Management believes that cash generated from operations and its bank credit
facility will be sufficient to meet its cash requirements for acquisitions and
capital expenditures for the foreseeable future.
9
<PAGE>
Results of Operations
Third quarter fiscal 1998 compared to third quarter fiscal 1997
- ---------------------------------------------------------------
Revenues for the third quarter of fiscal 1998 were $70 million, an increase of
$4 million or 6% over the comparable period last year. Rental revenues for the
quarter were $56 million, an increase of $5 million or 9% over last year.
Customer growth at existing locations produced most of the increase. Direct
sales for the third quarter of fiscal 1998 were $14 million, a decrease of
$600,000 or 4% less than the comparable period last year. The decrease in Direct
sales was due to softness across most of our customer base. This softness was
partially attributable to warmer fall weather, causing a number of customers to
postpone their seasonal orders for winter-weight garments.
Operating income for the third quarter of fiscal 1998 was $7.8 million an
increase of $470,000 or 6.4% over the comparable period last year. During the
quarter the Company recovered $2 million from the settlement of a breach of
contract lawsuit with a former customer. The settlement was included in the
operations of the business segments that supplied this customer. During the
quarter the Company charged to operations approximately $1 million of additional
cost resulting from recent developments involving environmental and other
matters. Exclusive of the legal recovery and the additional environmental costs,
operating income declined by 7% from the comparable period last year. The
operating profit contribution of our Rental business continued to improve.
Without the legal recovery, the operating profit contribution of the Direct
sales segment declined in comparison to last year due to lower sales and higher
costs.
Net earnings for the third quarter of fiscal 1998 were $3.9 million, an increase
of $260,000 or 7% over the comparable period last year. Net earnings per common
share for the third quarter of fiscal 1998 were $.40 per share, an increase of
$.03 per share or 7% over the comparable period last year.
Nine months fiscal 1998 compared to nine months fiscal 1997
- -----------------------------------------------------------
Revenues for the nine months ended October 26, 1997 were $208 million, an
increase of $12 million or 6% over the comparable period last year. Rental
revenues for the nine months ended October 26, 1997 were $165 million. Internal
growth from existing rental locations and acquired revenues created the $14
million or 9% increase in Rental revenues over last year. Direct sales for the
first nine months of fiscal 1998 were $43 million, $1 million or 3% less than
the comparable period last year.
Operating income for the nine months ended October 26, 1997 was $20.6 million,
an increase of $1.3 million or 6.7% over last year. Improved operating profit
contribution from our Rental business segment produced the increase.
Net earnings for the nine months ended October 26, 1997 were $10.0 million, an
increase of $642,000 or 6.9% higher than the comparable period last year.
Increased profitability from Rental operations created the earnings improvement.
Net earnings per share were $1.02 for the nine months ended October 26, 1997, an
increase of $.05 per share or 5.6% over the comparable period last year.
10
<PAGE>
Environmental
As discussed in the Company's Form 10-K for the fiscal year ended January 26,
1997, two of the Company's rental plants are located within federal Superfund
sites.
Volatile organic compound contamination has been detected in the soil and
groundwater at the Company's Whittier, California rental plant. The plant is
located in the Suburban Operable Unit of the San Gabriel Valley Federal
Superfund site. The Company has cleaned up the soil at the plant and, based on
groundwater testing done to date, does not believe groundwater cleanup will be
required at the Company's plant. The Company received correspondence from the
United States Department of Justice, Environment and Natural Resources Division
(Justice Department) and from the state of California stating that the Company
and three other unrelated entities are potentially responsible parties and are
jointly and severally liable under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) for all costs incurred by the government
with respect to the Suburban Operable Unit. The government is claiming that the
total amount of costs incurred to date (primarily for site investigation and
remediation planning) plus the present value of future monitoring costs at the
site is approximately $4.2 million. At this point, based on groundwater test
results in the Suburban Operable Unit, EPA does not believe groundwater
remediation is required with respect to the Suburban Operable Unit. EPA is
continuing to monitor groundwater conditions in the area and will reevaluate its
decision concerning remedial action if future conditions warrant. The Company
has entered into tolling agreements with the Justice Department and the state of
California that stop the running of any statute of limitations to give the
parties time to discuss issues related to the claims. To date, however, the
parties have been unable to resolve their differences and it is possible that
lawsuits will be filed against Unitog and the three other companies by the
Justice Department seeking reimbursement of these funds.
The Company's Tempe, Arizona rental plant is located in the South Indian Bend
Wash Federal Superfund site (the "SIBW site"). The Company, along with unrelated
parties, has been designated by the United States Environmental Protection
Agency (EPA) as a potentially responsible party under CERCLA with respect to the
Tempe site. The Company entered into a Consent Order with EPA requiring a soil
and groundwater investigation at the Tempe plant. As a result of the soil
testing, the Company has begun cleaning up the soil at its plant. Recently, EPA
proposed a multi-million dollar plan to clean up contaminated groundwater at the
SIBW site. EPA is currently considering comments from several potentially
responsible parties questioning the need for the cleanup. At this point, it is
not possible to determine whether the proposed plan will be implemented and, if
implemented, whether the Company will have any liability with respect to funding
any portion of the plan.
FORWARD LOOKING STATEMENTS
--------------------------
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
certain forward-looking statements. This Form 10-Q contains forward-looking
statements that reflect the Company's current views with respect to future
events and financial performance. These forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from historical results or those anticipated. The words "should,"
"believe," "expect," "anticipate," "intend," "estimate," and other expressions
that indicate future events and trends identify forward-looking statements.
Actual future results and trends may differ materially from historical results
or those anticipated depending on a variety of factors, including, but not
limited to, performance of acquisitions; economic and business changes;
fluctuations in the cost of materials; strikes and unemployment levels; demand
and price for the Company's products and services; and the outcome of pending
and future litigation and environmental matters
11
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
See the discussion of certain environmental matters in Part I, Item 1 of
the Company's Annual Report on Form 10-K for the fiscal year ended
January 26, 1997 and in Management's Discussion and Analysis of
Financial Conditions and Results of Operations in this Form 10-Q.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
4(a) Amendment No. 5 to Loan and Letter of Credit Reimbursement
Agreement, dated October 6, 1997, among Unitog Company, Unitog
Rental Services, Inc., UMB Bank, N.A., Harris Trust and
Savings Bank and NBD Bank, N.A.
27 Financial Data Schedule for the nine months ended October 26,
1997.
(b) Reports on Form 8-K.
Unitog Company has not filed any reports on Form 8-K during the
quarter ended October 26, 1997.
12
<PAGE>
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 by the
undersigned thereunto duly authorized.
Unitog Company
Dated: December 8, 1997 By: /s/ J. Craig Peterson
----------------------
J. Craig Peterson
Executive Vice President
Chief Administrative and Financial Officer
(Duly Authorized Officer)
13
<PAGE>
EXHIBIT 4(a)
AMENDMENT NO. 5
TO LOAN AND LETTER OF CREDIT
REIMBURSEMENT AGREEMENT
THIS AMENDMENT NO. 5 ("Amendment") is made effective as of the 6th day of
October, 1997, among UNITOG COMPANY, a Delaware corporation (the "Company"),
UNITOG RENTAL SERVICES, INC., a California corporation ("Rental") (Company and
Rental being sometimes collectively referred to herein as the "Borrowers" or
individually as a "Borrower"), UMB BANK, N.A., f/k/a United Missouri Bank, N.A.,
Kansas City, Missouri, a national banking association ("UMB"), HARRIS TRUST AND
SAVINGS BANK, Chicago, Illinois, an Illinois banking corporation ("Harris"), NBD
BANK, Detroit, Michigan, a Michigan banking corporation ("NBD") (UMB, Harris and
NBD being sometimes collectively referred to herein as the "Banks" or
individually as a "Bank") and UMB Bank, N.A., f/k/a United Missouri Bank, N.A.,
Kansas City, Missouri, a national banking association, as agent for the Banks
herein (in such capacity, the "Agent").
RECITALS
WHEREAS, the Borrowers, the Banks and the Agent entered into a Loan and
Letter of Credit Reimbursement Agreement (the "Agreement") dated September 10,
1993, the terms of which were modified and amended by Amendment No. 1 to Loan
and Letter of Credit Reimbursement Agreement ("Amendment No. 1") dated December
29, 1994, and further modified and amended by Amendment No. 2 to Loan and Letter
of Credit Reimbursement Agreement ("Amendment No. 2") dated November 9, 1995,
Amendment No. 3 to Loan and Letter of Credit Reimbursement Agreement ("Amendment
No. 3") dated effective February 1, 1996, and Amendment No. 4 to Loan and Letter
of Credit Reimbursement Agreement ("Amendment No. 4") dated effective November
25, 1996, each executed by the Borrowers, the Banks and the Agent (the
Agreement, as modified and amended by Amendment No. 1, Amendment No. 2,
Amendment No. 3, and Amendment No. 4, herein the "Loan Agreement"); and
WHEREAS, pursuant to the Loan Agreement the Banks agreed to provide
revolving loans to the Borrowers of up to Sixty-Four Million Five Hundred Sixty-
One Thousand Six Hundred Forty-Four Dollars ($64,561,644); and
WHEREAS, the parties desire to modify and amend the Loan Agreement to allow
the Borrower to request more than two extensions of the Revolving Credit
Maturity Date, which is now September 8, 2000.
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, the parties mutually agree as follows:
1. Amendment to Section 2.2.11 of the Loan Agreement. Section 2.2.11 of
the Loan Agreement is amended by deleting the first sentence thereof and
inserting in its place the following:
The Borrowers shall have the right to request one (1) year extensions
of the Revolving Credit Maturity Date.
2. No Other Modifications. Except as hereby modified and amended, all
<PAGE>
of the terms, conditions and covenants contained in the Loan Agreement,
including expressly the terms of Section 2.2.11, shall remain in full force and
effect.
3. Representations and Warranties. The Borrowers hereby represent and
warrant that:
a. The representations and warranties contained in the Loan
Agreement and in each certificate or document furnished by the Borrowers and
delivered therewith are true and correct in all material respects on and as of
the date hereof as though made on and as of the date hereof;
b. No Event of Default, and to the Borrowers' knowledge no event
which with the passage of time or the giving of notice or both could become an
Event of Default, exists on the date hereof, and no offsets or defenses exist
against their obligations under the Loan Agreement or the documents delivered in
connection therewith;
c. This Amendment has been duly authorized, executed and delivered
so as to constitute the legal, valid and binding obligation of the Borrowers,
enforceable in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditor's rights generally and general principles of equity;
d. The execution, delivery and performance of this Amendment will
not violate any applicable provision of law or judgment, order or regulation of
any court or of any public or governmental agency or authority nor conflict with
or constitute a breach of or a default under any instrument to which the
Borrowers are a party or by which the Borrowers' or the Borrower's properties is
bound nor result in the creation of any lien, charge or encumbrance upon any
assets of the Borrowers.
4. Miscellaneous.
a. The laws of the State of Missouri shall govern this Amendment.
b. This Amendment shall be binding on the parties hereto and their
respective successors and assigns, and shall inure to the benefits of the
parties hereto.
c. This Amendment may be executed in any number of counterparts, all
of which when taken together shall constitute but one agreement and any of the
parties hereto may execute this Amendment by signing any such counterpart.
d. Section captions used in this Amendment are for convenience only
and shall not affect the construction of this Amendment.
e. Capitalized terms used herein and not specifically herein defined
shall have the meanings ascribed in the Loan Agreement.
5. Statutory Statement. (MO. Rev. Stat. Section 432.045)
<PAGE>
a. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING PAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT BORROWERS AND BANKS FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING AND THE DOCUMENTS REFERRED TO HEREIN,
WHICH ARE THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Borrowers, the Banks and the Agent have caused this
Amendment No. 5 to be executed by their respective officers duly authorized as
of the dates written beside their respective names below.
DATE: 10/15/97 UNITOG COMPANY
By: /s/ J. Craig Peterson
Name: J. Craig Peterson
Title: Chief Financial Officer
DATE: 10/15/97 UNITOG RENTAL SERVICES, INC.
By: /s/ J. Craig Peterson
Name: J. Craig Peterson
Title: Chief Financial Officer
DATE: 10/6/97 UMB BANK, n.a.
Individually and as Agent
By: /s/ David A. Proffitt
Name: David A. Proffitt
Title: Sr. Vice President
DATE: 10/23/97 NBD BANK
By: /s/ Thomas A. Levasseur
Name: Thomas A. Levasseur
Title: Vice President
DATE: 10/23/97 HARRIS TRUST AND SAVINGS BANK
By: /s/ Len E. Meyer
Name: Len E. Meyer
Title: Vice President
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-25-1998
<PERIOD-END> OCT-26-1997
<CASH> 17,430
<SECURITIES> 0
<RECEIVABLES> 34,218,377
<ALLOWANCES> 1,161,000
<INVENTORY> 19,264,434
<CURRENT-ASSETS> 95,970,063
<PP&E> 181,492,744
<DEPRECIATION> 72,385,171
<TOTAL-ASSETS> 273,258,960
<CURRENT-LIABILITIES> 46,431,133
<BONDS> 103,916,758
0
0
<COMMON> 96,556
<OTHER-SE> 108,475,006
<TOTAL-LIABILITY-AND-EQUITY> 273,258,960
<SALES> 42,880,394
<TOTAL-REVENUES> 164,788,068
<CGS> 34,990,825
<TOTAL-COSTS> 180,397,880
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 4,627,368
<INCOME-PRETAX> 16,061,489
<INCOME-TAX> 6,103,000
<INCOME-CONTINUING> 9,958,489
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<CHANGES> 0
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