<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended Commission File
October 31, 1998 Number 1-5674
ANGELICA CORPORATION
(Exact name of Registrant as specified in its charter)
MISSOURI 43-0905260
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
424 South Woods Mill Road
CHESTERFIELD, MISSOURI 63017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(314) 854-3800
----------------------------------------------------
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
to be filed by Section 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
--- ---
The number of shares outstanding of Registrant's Common Stock, par value
$1.00 per share, at November 25, 1998 was 8,749,188 shares.
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<TABLE>
ANGELICA CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES
FOR OCTOBER 31, 1998 FORM 10-Q QUARTERLY REPORT
<CAPTION>
Page Number Reference
------------------------------------
Quarterly Report
to
Form 10-Q Shareholders
--------- ----------------
<S> <C> <C>
PART I. FINANCIAL INFORMATION:
Consolidated Statements of Income -
Third quarter and Three Quarters Ended
October 31, 1998 and October 25, 1997 3
Consolidated Balance Sheets -
October 31, 1998 and January 31, 1998 4
Consolidated Statements of Cash Flows -
Three Quarters Ended October 31, 1998
and October 25, 1997 5
Notes to Consolidated Financial
Statements 2
Management's Discussion and Analysis
of Operations and Financial Condition 3-5
Exhibit A - Quarterly Report to
Shareholders 6
PART II. OTHER INFORMATION 7-13
</TABLE>
1<PAGE>
<PAGE>
ANGELICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED OCTOBER 31, 1998
(1) The accompanying consolidated condensed financial statements are
unaudited, and it is suggested that these consolidated statements
be read in conjunction with the fiscal 1998 Annual Report,
including Notes to Financial Statements. However, it is the
opinion of the Company that all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of
the results during the interim period have been included.
(2) See Index to Financial Statements and Supporting Schedules on page
1. Those pages of the Angelica Corporation and Subsidiaries
Quarterly Report to Shareholders for the quarter ended October 31,
1998, listed in such index are incorporated herein by reference.
The pages of the Quarterly Report to Shareholders which are not
listed on the index and therefore not incorporated herein by
reference are furnished for the information of the Commission but
are not to be deemed "filed" as a part of this report. The
Quarterly Report to Shareholders referred to herein is located
immediately following page 5 of this report.
(3) For purposes of the Consolidated Statements of Cash Flows, the
Company considers short-term, highly liquid investments which are
readily convertible into cash, as cash equivalents.
2
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
AND FINANCIAL CONDITION
QUARTER ENDED OCTOBER 31, 1998
Analysis of Operations
- ----------------------
Combined sales and textile service revenues were down 8.4 percent and
down 4.1 percent in the third quarter and three quarters ended October
31, 1998, respectively, compared with prior year periods. Textile
Service third quarter revenues decreased 11.0 percent compared with the
prior year, with the decline largely due to the divestiture of the Las
Vegas casino laundry business in November last year. Earnings of this
segment rose 7.9 percent (excluding restructuring from prior period) due
to improvements in the previously reported underperforming plants and to
lower workers' compensation costs. One of those underperforming plants
was closed during the quarter. Third quarter sales of the Manufacturing
and Marketing segment decreased 10.5 percent compared with the same
quarter last year, and third quarter operating earnings were $371,000
compared with $679,000 (excluding restructuring). Sales and earnings of
the U.S. operations of this segment were adversely affected by
difficulties experienced in the installation of a new distribution
software system which was not fully operational at the end of the
quarter, causing a backlog of unshipped orders at quarter end. This
backlog is expected to be shipped before the end of the fourth quarter.
Sales were also lower due to the sale of the Marlin/Prestige unit in the
second quarter. Improved results in the Sally Fourmy division in Canada
partially offset the difficulties experienced at the U.S. operations.
Operating earnings of the Manufacturing and Marketing segment for the
three quarters ended October 31, 1998 were $2,959,000 compared with
$409,000 (excluding restructuring) in the same period last year. In the
Life Retail Store segment, third quarter sales increased 4.5 percent, as
a result of acquisitions made in the past year and a 0.5 percent
increase in same-store sales. The same-store sale improvement resulted
in lower gross margins due to aggressive pricing actions taken against
discount competitors. Third quarter earnings decreased 17.1 percent,
reflecting start-up costs from additional stores and the lower margins.
Financial Condition
- -------------------
The Company had working capital of $137,894,000 and a current ratio of
3.4 to 1 at October 31, 1998, compared with $141,999,000 and 2.6 to 1 at
the beginning of the year. The ratio of long-term debt to debt-plus-
equity was 36.1 percent at the close of the third quarter, compared with
35.7 percent at the beginning of the year.
Operating activities provided a total cash flow of $46,943,000 in the
first three quarters compared with $19,995,000 in the same period last
year, with most of the difference being due to reductions in accounts
receivable and inventory balances since the beginning of the year. Cash
used in investing activities decreased from $39,295,000 a year ago to
$7,414,000 in the current quarter. Last year included capital
expenditures for two new laundry facilities and the acquisition of two
laundry facilities in the western United States. Cash used in financing
activities in this year's three quarters ended October 31, 1998 reflects
the normal sinking fund
3<PAGE>
<PAGE>
payments of long-term debt, $26,200,000 reduction of short-term debt,
payment of dividends and the purchase of 447,550 shares of treasury
stock for $7,421,000. No material change in the Company's future
aggregate cash requirements is foreseen at the present time.
Based on the Company's cash generation from operations, as well as its
strong working capital position, current ratio and ratio of long-term
debt to debt-plus-equity, Management believes that internal funds
available from operations plus external funds available from the
issuance of additional debt and/or equity as needed in the future, will
be sufficient for all planned operating and capital requirements,
including acquisitions.
Year 2000 Compliance
- --------------------
The Company is working to resolve the effect that the Year 2000 ("Y2K")
issue has on its business and information systems. This process began
in 1996 with a comprehensive impact analysis to determine the scope,
requirements and cost of this effort. All significant systems requiring
modification or replacement have been identified and are in the latter
stages of being completed. The Company expects to have all systems Y2K
compliant by August, 1999.
Currently, the Company is in various stages of completion on different
systems. All in-house developed software has been modified, tested, and
is currently in production and compliant. Third party software,
including packages, is being made Y2K compliant using internal resources
(50%), contractors and vendors (50%). We have received compliancy
letters from all software vendors stating that they are, or will be Y2K
compliant. It is estimated that this effort is 85% complete. The
Company is also in the midst of addressing its non-IT Y2K issues,
including contingencies to address unforeseen problems.
The testing and verification process includes modifying or replacing
each program identified during the inventory phase, performing
appropriate unit testing on such program and placing the program into
production. The Company is currently working on an integrated systems
testing plan that will be conducted in the first quarter of 1999, which
includes simulating a January, 2000 date for the purpose of integrated
testing of all systems in a production environment.
The Company has engaged in a fairly aggressive process to gain
commitments from major suppliers to ensure that their systems are Y2K
compliant. We have received statements from 100 percent of our major
suppliers and 35% from all suppliers. While the Company currently
believes it will complete its Y2K effort in adequate time, failure to do
so, or the failure of the Company's major suppliers to modify or replace
their systems, could have a material adverse effect on the Company's
operations.
The most reasonably likely worst case scenario of failure, by the
Company or its suppliers, to resolve the Y2K issue, would be a
temporary slowdown of operations at one or more of the Company's
facilities. The Company is currently reviewing contingency options
including manual alternatives to systems operation, which would minimize
the risks of any unresolved Y2K problem.
The cost of the Y2K effort is estimated at $2.6 million, of which
approximately $2.0 million has been expended as of October 31, 1998.
The Y2K costs are expensed as incurred and amounts associated with newly
purchased software are capitalized. These costs are being funded
through operating cash flows.
4<PAGE>
<PAGE>
Forward-Looking Disclosure
- --------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe-
harbor" for forward-looking statements. This Form 10-Q contains
forward-looking statements that reflect the Company's current views with
respect to future events, financial resources and Year 2000 issues.
These forward-looking statements are subject to certain risks and
uncertainties, including delays in the shipment of backlogs or unusual
or unexpected cash needs for operations or capital transactions, that
could cause actual results to differ materially from historical results
or those anticipated. 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, competitive and
general economic conditions, the achievement of operating efficiencies
and optimizing costs without deterioration in customer service and the
timely resolution of the Year 2000 issue by the Company and its
customers and suppliers. Unanticipated events related to Y2K
compliance, including work being performed by the Company and/or its
suppliers, vendors, governmental entities and other third parties with
which the Company has business dealings to bring the Company's and these
other parties' systems into compliance, could impact the Company's
operations in unforeseen ways and, thus, affect the Company's future
financial condition and operating results.
5
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<PAGE>
EXHIBIT A
TEXTILE SERVICES IMAGE APPAREL INNOVATION VALUE
Angelica Corporation
424 South Woods Mill Road
[Angelica logo] Chesterfield, Missouri 63017-3406
Tel: 314.854.3800
November 19, 1998
Dear Shareholder:
I am pleased to report that third quarter earnings continue the double-
digit percentage gains over prior year quarterly periods being
experienced this year. Net income per share in the third quarter was
$.31 compared with $.28 last year (excluding restructuring), an increase
of 10.7 percent.
Third quarter combined sales and textile service revenues were
$121,586,000, down 8.4 percent from $132,790,000 in the same quarter
last year. On an operating basis, income increased to $2,822,000
compared with $2,595,000 in the third quarter last year. (Last year's
third quarter results do not reflect the one-time restructuring and
other charges taken at the end of that quarter, amounting to $14,413,000
or $1.57 per share after tax.) For the first three quarters of this
year, combined sales and textile service revenues were $373,460,000
versus $389,367,000 in the same period last year, a decrease of 4.1
percent. Excluding the restructuring, net income of $7,050,000 this
year compared with $5,871,000 last year. Income per share of $.77 in
the first three quarters this year increased 20.3 percent over the $.64
per share earned in the prior year period.
In the Textile Services segment, third quarter revenues were $63,840,000
compared with $71,737,000 in the prior year period, and operating
earnings rose 7.9 percent to $5,483,000 from $5,081,000 (excluding
restructuring) in the comparable prior year period. A large part of the
revenue decline was due to the sale of the Las Vegas casino laundry
business early in the fourth quarter last year. Margins and earnings
were up due to improvements made at underperforming plants which had
adversely affected second quarter results and to lower workers'
compensation costs. Further plant consolidation took place as the
Scranton, Pennsylvania plant was closed, and the volume from this plant
was transferred to two other nearby facilities. This action will
positively affect earnings in the future. The Textile Services segment
management was reorganized in the quarter, with five Area Vice
Presidents being named and a new Vice President of Sales and Marketing
being hired from the outside. The segment management team is making a
renewed commitment to revenue growth in its primary market segment
(acute care hospitals) and in the clinic, emergency care centers and
other non-hospital providers of health care services.
The Manufacturing and Marketing segment had lower earnings on lower
sales in the third quarter. Sales (before intersegment sales) of
$40,368,000 in the quarter were 10.5 percent lower than the $45,087,000
recorded last year. Third quarter operating earnings were $371,000
compared with $679,000 last year (excluding restructuring). Results for
the quarter for Angelica Image Apparel, the U.S. operations of this
segment, were adversely affected to some extent by difficulties
experienced in the installation of an improved distribution software
system at its main distribution center in Alamo, Tennessee. The new
system, which ultimately will improve distribution efficiency and permit
faster service and better information for customers, was not fully
operational at the end of the third quarter, resulting in a modest
backlog of customer orders which will be shipped in the fourth quarter.
Lower third quarter sales at Image Apparel also reflected the
divestiture of the Marlin/Prestige business unit at the end of the
second quarter. Since Marlin/Prestige had been experiencing operating
losses, this divestiture will positively affect earnings going forward.
Partially offsetting the poor results at Image Apparel were better
results in the foreign operations -- especially in the Sally Fourmy
division in Canada, where sales and margins improved over the third
quarter last year.
<PAGE>
<PAGE>
Third quarter sales of Life Retail Stores increased 4.5 percent to
$23,149,000 from $22,156,000 in the same quarter last year due to
acquisitions, new store openings and a small increase in same-store
sales. As in the prior two quarters, however, earnings trailed the
prior year, with Life reporting operating income of $2,262,000 versus
$2,728,000 last year, a decrease of 17.1 percent. Responding to the
implementation of a number of initiatives to halt the same-store sales
declines experienced in the first and second quarters this year, same-
store sales of Life Retail Stores increased by 0.5 percent in the third
quarter. This compares with a same-store sales decline of 2.6 percent
in the second quarter this year. The third-quarter improvement,
however, came at the cost of lower gross margins resulting from
aggressive pricing actions taken against competitors selling at
discounted prices. Life Retail acquired five stores, opened five new
stores and closed four in the third quarter, ending the quarter with 310
stores. While same-store sales are still not at expectations, new
pricing and merchandising initiatives coupled with increased sales
associate training are expected to reverse that trend in the fourth
quarter.
We continue to make improvements in asset use efficiency. By lowering
working capital -- including reductions in inventories, receivables and
linens in service -- and adding our usual strong cash flow, we have been
able to reduce short-term debt from $27,100,000 at the beginning of this
year to $900,000 at the end of the third quarter. This sizable
reduction has been possible despite an unplanned use of $7,423,000 for
stock repurchases in the third quarter. The reduction of short-term
debt also is helping to lower our interest expense, which was $518,000
lower in the third quarter compared with last year. During the third
quarter, we repurchased on the open market 447,550 shares of our stock
for treasury stock purposes. Approximately 100,000 shares remain in the
outstanding repurchase authorization under which these shares have been
bought.
The segment forecasts for the fourth quarter remain bullish. This,
coupled with improvements in workers' compensation and other operating
costs, reduction in interest payments due to lower short-term debt, and
fewer operations which are losing money, should allow us to achieve our
plans for the year. More importantly, the actions which have been, and
are being, taken during this fiscal year, encourage us to look forward
to the next fiscal year with enthusiasm.
Respectfully submitted,
/s/ Don W. Hubble
Don W. Hubble
Chairman, President and
Chief Executive Officer
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Angelica Corporation and Subsidiaries
Unaudited (Dollars in thousands, except per share amounts)
<CAPTION>
Third Quarter Ended Three Quarters Ended
------------------------ ------------------------
October 31, October 25, October 31, October 25,
1998 1997 1998 1997
----------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Textile service revenues $ 63,840 $ 71,737 $193,654 $215,476
Net sales 57,746 61,053 179,806 173,891
-------- -------- -------- --------
121,586 132,790 373,460 389,367
-------- -------- -------- --------
Cost of textile services 52,031 59,705<F*> 155,491 176,703<F*>
Cost of goods sold 37,460 46,950<F*> 119,069 122,156<F*>
-------- -------- -------- --------
89,491 106,655 274,560 298,859
-------- -------- -------- --------
Gross profit 32,095 26,135 98,900 90,508
-------- -------- -------- --------
Selling, general and
administrative expenses 24,730 26,841 78,181 79,565
Restructuring charge -- 14,684<F*> -- 14,684<F*>
Interest expense 2,320 2,838 7,468 7,957
Other expense, net 495 834 1,881 2,080
-------- -------- -------- --------
27,545 45,197 87,530 104,286
-------- -------- -------- --------
Income (loss) before income taxes 4,550 (19,062) 11,370 (13,778)
Provision (benefit) for income taxes 1,728 (7,244) 4,320 (5,236)
-------- -------- -------- --------
Net income (loss) $ 2,822 $(11,818) $ 7,050 $ (8,542)
======== ======== ======== ========
Basic and diluted earnings (loss)
per share<F+> $ 0.31 $ (1.29)<F*> $ 0.77 $ (0.93)<F*>
======== ======== ======== ========
Dividends per common share $ 0.24 $ 0.24 $ 0.72 $ 0.72
======== ======== ======== ========
<FN>
Comprehensive income consists of net income and foreign currency
translation adjustments, totalling $2,796 and $(11,967) for the quarters
ended October 31, 1998 and October 25, 1997, respectively; and $6,843
and $(8,659) for the three quarters ended October 31,1998 and October
25, 1997, respectively.
<F+> Based upon weighted average number of common and common equivalent
shares outstanding of 9,122,454 and 9,154,564 for fiscal periods of 1999
and 1998, respectively.
<F*> Restructuring and other charges of $23,247 pretax consist of (i)
inventory writedowns of $1,063 included in cost of textile services and
$7,500 included in cost of goods sold, and (ii) $14,684 in restructuring
charge. Effect on net income per share is a reduction of $1.57.
/TABLE
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Angelica Corporation and Subsidiaries
Unaudited (Dollars in thousands)
<CAPTION>
October 31, 1998 January 31, 1998
---------------- ----------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and short-term investments $ 287 $ 2,833
Receivables, less reserve of $3,819 and $2,510 61,945 69,465
Inventories:
Raw material 18,031 25,577
Work in progress 5,724 6,811
Finished goods 64,830 71,703
-------- --------
88,585 104,091
Linens in service 38,960 42,622
Prepaid expenses 4,435 4,634
Income taxes 2,043 5,766
-------- --------
Total Current Assets 196,255 229,411
-------- --------
Property and Equipment 217,409 219,831
Less -- reserve for depreciation 113,473 111,638
-------- --------
103,936 108,193
-------- --------
Goodwill 7,209 7,533
Other acquired assets 7,511 9,082
Cash surrender value of life insurance 17,199 16,485
Miscellaneous 7,594 8,005
-------- --------
39,513 41,105
-------- --------
Total Assets $339,704 $378,709
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Short-term debt $ 900 $ 27,100
Current maturities of long-term debt 3,284 3,287
Accounts payable 23,096 21,980
Accrued expenses 31,081 35,045
-------- --------
Total Current Liabilities 58,361 87,412
-------- --------
Long-Term Debt, less current maturities 94,658 96,742
Other Long-Term Obligations 19,350 20,447
Shareholders' Equity:
Preferred Stock:
Class A, Series 1, $1 stated value,
authorized 100,000 shares, outstanding: None -- --
Class B, authorized 2,500,000 shares, outstanding: None -- --
Common stock, $1 par value, authorized 20,000,000
shares, issued: 9,471,538 9,472 9,472
Capital surplus 4,196 4,196
Retained earnings 170,365 170,098
Accumulated other comprehensive income (2,369) (2,162)
Common Stock in treasury, at cost: 722,248 and 293,482 (14,329) (7,496)
-------- --------
167,335 174,108
-------- --------
Total Liabilities and Shareholders' Equity $339,704 $378,709
======== ========
</TABLE>
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<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Angelica Corporation and Subsidiaries
Unaudited (Dollars in thousands)
<CAPTION>
Three Quarters Ended
----------------------------------
October 31, 1998 October 25,1997
---------------- ---------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 7,050 $ (8,542)
Non-cash items included in net income:
Depreciation 10,411 10,225
Amortization of acquisition costs 2,586 2,771
Restructuring and other charges -- 23,247
Change in working capital components,
net of businesses acquired 28,275 (5,228)
Other, net (1,379) (2,478)
-------- --------
Net cash provided by operating activities 46,943 19,995
-------- --------
Cash Flows from Investing Activities:
Expenditures for property and equipment, net (5,379) (16,170)
Cost of businesses acquired (2,035) (23,125)
-------- --------
Net cash used in investing activities (7,414) (39,295)
-------- --------
Cash Flows from Financing Activities:
Debt assumed in acquisition -- 3,000
Proceeds from issuance of short-term debt -- 24,400
Long-term and short-term debt repayments (28,252) (1,877)
Dividends paid (6,618) (6,589)
Treasury stock purchased (7,423) --
Other, net 218 264
-------- --------
Net cash (used in) provided by financing activities (42,075) 19,198
-------- --------
Net increase (decrease) in cash and
short-term investments (2,546) (102)
Balance at beginning of year 2,833 2,122
-------- --------
Balance at end of period $ 287 $ 2,020
======== ========
Supplemental cash flow information:
Income taxes paid $ 1,872 $ 1,306
======== ========
Interest paid $ 6,669 $ 6,801
======== ========
/TABLE
<PAGE>
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<TABLE>
BUSINESS SEGMENT INFORMATION
Angelica Corporation and Subsidiaries
Unaudited (Dollars in thousands)
<CAPTION>
Third Quarter Ended Three Quarters Ended
----------------------------- --------------------------
October 31, October 25, October 31, October 25,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales and textile service revenues:
Textile Services $ 63,840 $ 71,737 $193,654 $215,476
Manufacturing and Marketing 40,368 45,087 133,051 131,017
Retail Sales 23,149 22,156 64,100 62,438
Intersegment sales (5,771) (6,190) (17,345) (19,564)
-------- -------- -------- --------
$121,586 $132,790 $373,460 $389,367
======== ======== ======== ========
Earnings (including restructuring):
Textile Services $ 5,483 $ 4,018 $ 15,067 $ 13,453
Manufacturing and Marketing 371 (6,821) 2,959 (7,091)
Retail Sales 2,262 2,728 4,920 6,319
Restructuring charge -- (14,684) -- (14,684)
Interest, corporate expenses and other, net (3,541) (4,258) (11,501) (11,730)
Eliminations (25) (45) (75) (45)
-------- -------- -------- --------
$ 4,550 $(19,062) $ 11,370 $(13,778)
======== ======== ======== ========
Earnings (excluding restructuring):
Textile Services $ 5,483 $ 5,081 $ 15,067 $ 14,516
Manufacturing and Marketing 371 679 2,959 409
Retail Sales 2,262 2,728 4,920 6,319
Interest, corporate expenses and other, net (3,541) (4,258) (11,501) (11,730)
Eliminations (25) (45) (75) (45)
-------- -------- -------- --------
$ 4,550 $ 4,185 $ 11,370 $ 9,469
======== ======== ======== ========
</TABLE>
<TABLE>
SUMMARY FINANCIAL POSITION DATA
Angelica Corporation and Subsidiaries
Unaudited (Dollars in thousands, except ratios, shares and per share amounts)
<CAPTION>
Third Quarter Ended
---------------------------
October 31, October 25,
1998 1997
----------- -----------
<S> <C> <C>
Working capital $ 137,894 $ 127,490
Current ratio 3.4 to 1 2.2 to 1
Long-term debt $ 94,658 $ 97,940
Shareholders' equity $ 167,335 $ 174,374
Percent long-term debt to debt and equity 36.1% 36.0%
Equity per common share $ 19.13 $ 19.05
Common shares outstanding 8,749,290 9,151,938
/TABLE
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) See Exhibit Index included herein on page 8.
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for
the third quarter ended October 31, 1998.
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.
Angelica Corporation
--------------------
(Registrant)
Date: December 3, 1998 /s/ T. M. Armstrong
-------------------------------
T. M. Armstrong
Senior Vice President -
Finance and Administration
Chief Financial Officer
(Principal Financial Officer)
/s/ L. Linden Mann
-------------------------------
L. Linden Mann
Controller
(Principal Accounting Officer)
7
<PAGE>
<PAGE>
EXHIBIT INDEX
- -------------
Exhibit
Number Exhibit
- ------ -------
<F*>Asterisk indicates exhibits filed herewith.
<F**>Management contract or compensatory plan
incorporated by reference from the document listed.
3.1 Restated Articles of Incorporation of the Company, as currently
in effect. Said Articles were last filed as and are
incorporated herein by reference to Exhibit 3.1 to the Form
10-K for the fiscal year ended 1/26/91.
3.2 Current By-Laws of the Company, as last amended August 25,
1998.
4.1 Shareholder Protection Rights Plan dated August 25, 1998.
Filed as Registration Statement on Form 8-A on August 28, 1998
and incorporated herein by reference.
4.2 10.3% and 9.76% Senior Notes to insurance company due annually
to 2004, together with Note Facility Agreement. Filed as and
incorporated herein by reference to Exhibit 4.2 to the Form
10-K for the fiscal year ended 1/27/90.
4.3 9.15% Senior Notes to insurance companies due December 31,
2001, together with Note Agreements and First Amendment
thereto. Filed as and incorporated herein by reference to
Exhibit 4.3 to the Form 10-K for the fiscal year ended 2/1/92.
4.4 8.225% Senior Notes to Nationwide Life Insurance Company,
American United Life Insurance Company, Aid Association for
Lutherans (reissued to Nimer & Co. as of August 1, 1998), and
Modern Woodmen of America due May 1, 2006, together with Note
Agreement. Filed as and incorporated herein by reference to
Exhibit 4.4 to the Form 10-Q for the fiscal quarter ended July
29, 1995.
4.5 Uncommitted Shelf Agreement dated March 1, 1996 for Senior
Notes to insurance company, together with Amendment Agreement
8
<PAGE>
<PAGE>
No. 1 to Note Facility Agreement referred to in Exhibit 4.2
above. Filed as and incorporated herein by reference to Exhibit
4.5 to the Form 10-K for the fiscal year ended 1/27/96.
4.6 Term Loan Agreement between Angelica Corporation and The First
National Bank of Boston dated as of October 2, 1995. Filed as
and incorporated hereby by reference to Exhibit 4.6 to the Form
10-K for the fiscal year ended 1/27/96.
Note: No other long-term debt instrument issued by the
Registrant exceeds 10% of the consolidated total assets
of the Registrant and its subsidiaries. In accordance
with Item 601(b) (4) (iii) (A) of Regulation S-K, the
Registrant will furnish to the Commission upon request
copies of long-term debt instruments and related
agreements.
10.1 Angelica Corporation 1994 Performance Plan (as amended 1/31/95)
- Form 10-K for fiscal year ended 1/28/95, Exhibit 10.1.<F**>
10.2 Retirement Benefit Agreement between the Company and Alan D.
Wilson dated August 25, 1987 - Form 10-K for fiscal year ended
1/28/95, Exhibit 10.2.<F**>
10.3 Form of Participation Agreement for the Angelica Corporation
Management Retention and Incentive Plan (filed as Exhibit 10.3
to the Form 10-K for fiscal year ended 1/30/93 and incorporated
herein by reference) with revised schedule setting out
executive officers covered under such agreements and the
"Benefit Multiple" listed for each - Form 10-K for fiscal year
ended 1/25/97, Exhibit 10.3.<F**>
10.4 Angelica Corporation Stock Option Plan (As amended November 29,
1994)- Form 10-K for fiscal year ended 1/28/95, Exhibit
10.7.<F**>
10.5 Angelica Corporation Stock Award Plan - Form 10-K for fiscal
year ended 2/1/92, Exhibit 10.<F**>
10.6 Angelica Corporation Retirement Savings Plan, as amended and
restated - Form 10-K for fiscal year ended 1/27/90, Exhibit
9
<PAGE>
<PAGE>
19.3, incorporating all amendments thereto through the date of
this filing.<F**>
10.7 Supplemental Plan - Form 10-K for fiscal year ended 1/27/90,
Exhibit 19.10, incorporating all amendments thereto through the
date of this filing. The last amendment thereto was filed as
Exhibit 10.31 to Form 10-K for fiscal year ended 1/25/97.<F**>
10.8 Incentive Compensation Plan (restated) - Form 10-K for fiscal
year ended 1/27/90, Exhibit 19.11.<F**>
10.9 Deferred Compensation Option Plan for Selected Management
Employees - Form 10-K for fiscal year ended 1/26/91, Exhibit
19.9, incorporating all amendments thereto filed through the
date of this filing. The last amendment thereto was filed as
Exhibit 10.34 to Form 10-K for fiscal year ended 1/25/97.<F**>
10.10 Deferred Compensation Option Plan for Directors - Form 10-K for
fiscal year ended 1/26/91, Exhibit 19.8, incorporating all
amendments thereto filed through the date of this filing.<F**>
10.11 Supplemental and Deferred Compensation Trust - Form 10-K for
fiscal year ended 2/1/92, Exhibit 19.5.<F**>
10.12 Management Retention Trust - Form 10-K for fiscal year ended
2/1/92, Exhibit 19.4.<F**>
10.13 Performance Shares Plan for Selected Senior Management
(restated) - Form 10-K for fiscal year ended 1/26/91, Exhibit
19.3.<F**>
10.14 Management Retention and Incentive Plan (restated) - Form 10-K
for fiscal year ended 1/26/91, Exhibit 19.1.<F**>
10.15 Non-Employee Directors Stock Plan - Form 10-K for fiscal year
ended 1/27/90, Exhibit 10.3, incorporating all amendments
thereto through the date of this filing.<F**>
10.16 Restated Deferred Compensation Plan for Non-Employee Directors
- Form 10-K for fiscal year ended 1/28/84, Exhibit
10<PAGE>
<PAGE>
10 (v), incorporating all amendments thereto through the date
of this filing. The last amendment thereto was filed as
Exhibit 10.25 to Form 10-K for the fiscal year ended
1/28/95.<F**>
10.17 Restated Angelica Corporation Stock Bonus and Incentive Plan
(Incorporating Amendments Adopted Through October 25, 1994)-
Form 10-K for fiscal year ended 1/28/95, Exhibit 10.20,
incorporating all amendments thereto through the date of this
filing.<F**>
10.18 Angelica Corporation Pension Plan as Amended and Restated -
Form 10-K for fiscal year ended 1/26/91, Exhibit 19.7,
incorporating all amendments thereto through the date of this
filing. The last amendment thereto was filed as Exhibit 10.23
to Form 10-Q for fiscal quarter ended 7/27/96.<F**>
10.19 Angelica Corporation 1994 Non-Employee Directors Stock Plan,
incorporated by reference to Appendix A of the Company's Proxy
Statement for the Annual Meeting of Shareholders held on May
23, 1995, and incorporating all amendments thereto through the
date of this filing. The last amendment thereto was filed as
Exhibit 10.35 to Form 10-K for fiscal year ended 1/31/98.<F**>
10.20 Specimen form of Stock Option Agreement under the Angelica
Corporation Stock Option Plan - Form 10-K for fiscal year ended
1/27/96, Exhibit 10.20.<F**>
10.21 Form of Stock Option Agreement under the Angelica Corporation
1994 Performance Plan (filed as Exhibit 10.21 to Form 10-K for
fiscal year ended 1/27/96 and incorporated herein by reference)
with four of the Company's executive officers, together with
schedule identifying the officers and setting forth the
material details in which the agreements differ from the form
of agreement that is filed - Form 10-K for fiscal year ended
1/25/97, Exhibit 10.21.<F**>
10.22 Form of Indemnification Agreement between the Company and each
of its directors and executive officers, together with a
schedule identifying the directors and executive officers
executing such agreements - Form 10-K for fiscal year ended
1/31/98, Exhibit 10.22.<F**>
11<PAGE>
<PAGE>
10.23 Employment Agreement between the Company and Lawrence J. Young,
dated September 29, 1997 - Form 10-Q for fiscal quarter ended
10/25/97, Exhibit 10.23.<F**>
10.24 Employment Agreement between the Company and Theodore M.
Armstrong, dated November 27, 1996 - Form 10-K for fiscal year
ended 1/25/97, Exhibit 10.24.<F**>
10.25 Employment Agreement between the Company and Jill Witter, dated
November 27, 1996 - Form 10-K for fiscal year ended 1/25/97,
Exhibit 10.25.<F**>
10.26 Employment Agreement between the Company and L. Linden Mann,
dated November 27, 1996 - Form 10-K for fiscal year ended
1/25/97, Exhibit 10.26.<F**>
10.27 Employment Agreement between the Company and Alan D. Wilson,
dated April 2, 1997 - Form 10-K for fiscal year ended 1/25/97,
Exhibit 10.27.<F**>
10.28 Employment Agreement between the Company and Michael E.
Burnham, dated April 8, 1997 - Form 10-K for fiscal year ended
1/25/97, Exhibit 10.28.<F**>
10.29 Employment Agreement between the Company and Thomas M. Degnan,
dated May 1, 1997 - Form 10-Q for fiscal quarter ended 4/26/97,
Exhibit 10.29.<F**>
10.30 Employment Agreement between the Company and Don W. Hubble,
dated December 12, 1997 - Form 10-K for fiscal year ended
1/31/98, Exhibit 10.30.<F**>
10.31 Retirement Benefit Agreement between the Company and Don W.
Hubble dated January 1, 1998 - Form 10-K for fiscal year ended
1/31/98, Exhibit 10.31.<F**>
10.32 Non-Qualified Stock Option Agreement between the Company and
Don W. Hubble dated January 2, 1998 - Form 10-K for fiscal year
ended 1/31/98, Exhibit 10.32.<F**>
10.33 Description of restricted stock granted to Don W. Hubble
effective January 2, 1998 - Form 10-K for fiscal year ended
1/31/98, Exhibit 10.33.<F**>
12
<PAGE>
<PAGE>
10.34 Sixteenth Amendment to Angelica corporation Retirement Savings
Plan, dated August 28, 1998.<F*>
10.35 Second Amendment to Angelica Corporation Stock Bonus and
Incentive Plan, dated August 25, 1998.<F*>
27 Financial Data Schedule<F*>
13
<PAGE>
SIXTEENTH AMENDMENT
TO
ANGELICA CORPORATION
RETIREMENT SAVINGS PLAN
WHEREAS, Angelica Corporation, a corporation duly organized and
existing under the laws of the State of Missouri ("Company"),
established and continues to maintain the Angelica Corporation
Retirement Savings Plan ("Plan"); and
WHEREAS, effective September 1, 1998, the Company desires to amend
the Plan.
NOW, THEREFORE, the Plan is hereby amended, effective September 1,
1998 unless otherwise noted, in the following respects:
I.
Section 1.11 of the Plan is hereby deleted in its entirety and the
following is substituted in lieu thereof:
"1.11. "Employee" shall mean any person who is
employed by any of the Participating Employers in any capacity who
is normally employed to work a regular full-time work week (as
determined by reference to the employment conditions in effect at
the plant or other location at which such person is employed).
The term "Employee" shall not include any person who is a member
of a collective bargaining unit covered by an agreement between
employee representatives and one or more Participating Employers
if retirement benefits were the subject of good faith bargaining
except to the extent such collective bargaining agreement provides
for participation in the Plan. For purposes of determining an
individual's employment status and position, the job
classification assigned to him by his employer shall be
conclusive. "Employee" shall also not include any individual who
is deemed to be a "leased employee" within the meaning of Code
Section 414(n)."
II.
Section 4.4 of the Plan is hereby deleted in its entirety and the
following is substituted in lieu thereof:
"4.4. Company Matching Contributions. For each Plan Year as
------------------------------
long as the Plan is in existence (but subject to the rights
<PAGE>
<PAGE>
reserved in the Company hereunder to amend or terminate the Plan),
the Participating Employer shall make a Matching Contribution out
of current or accumulated profits to the Trust Fund. For Plan
Years beginning before January 1, 1998, such Matching Contribution
shall be an amount equal to one-fourth (1/4) of one percent (1%)
for each one percent (1%), up to a maximum of six percent (6%), of
the Base Pay of each Participant who had a salary deferral
election in effect; provided, however, that the maximum amount of
Matching Contributions which may be made for any one Plan Year
based on the salary deferral of any one Participant shall be Six
Hundred Dollars ($600.00). For each Plan Year beginning on and
after January 1, 1999, such Matching Contribution shall be an
amount equal to thirty percent (30%) of one percent (1%) for each
one percent (1%), up to a maximum of six percent (6%), of the Base
Pay of each Participant who has a salary deferral election in
effect for each such Plan Year. Anything contained herein to the
contrary notwithstanding, the Matching Contribution, if any, made
on behalf of Participants who are covered by a collective
bargaining agreement entered into with the Participating Employer
may be different from the Matching Contributions for Participants
who are not covered by a collective bargaining agreement and may
be different among such Participants who are covered by the
collective bargaining agreement."
III.
Article X of the Plan is hereby deleted in its entirety and the
following is substituted in lieu thereof:
"ARTICLE X
----------
LOANS
-----
10.1 Upon the application of any Participant who is a Party
in Interest, as defined in Section 3(14) of the Employee
Retirement Income Security Act of 1974, as amended, the
Administrator may direct the Trustee to make a loan or loans to
such Participant. With respect to a Participant who is a member
of a collective bargaining unit, all loans must be in increments
of $50 and must be in an amount not less than $500. With respect
to all other Participants, all loans must be in increments of $100
and must be in an amount not less than $600. In no event shall
the total
- 2 -
<PAGE>
<PAGE>
amount of any such loan or loans to any Participant plus interest
thereon exceed the lesser of:
(a) $50,000, reduced by the excess (if any) of (i) the
highest outstanding balance of loans of such Participant from the
Plan during the one year period ending on the day before the date
on which such loan is made, over (ii) the outstanding balance of
loans of such Participant from the Plan on the date on which such
loan is made, or
(b) The lesser of (i) one-half (1/2) of the aggregate
amount which would be distributable to the Participant from his
Account in the event of the termination of his employment with the
Employing Companies, or (ii) the amount in such Participant's
Account which is invested in the Interest Income Fund.
An application for a loan must be submitted at least fifteen
(15) days prior to the first day of the month during which the
loan is intended to be disbursed and an approved loan shall be
disbursed on or about the last business day of such month. No
Participant may borrow any sum hereunder so long as any previous
loan to such Participant remains unpaid or, if paid, has been
repaid for fewer than thirty (30) days.
10.2 Interest shall be charged thereon at prime plus one-
half percent. Prime means the prime rate of interest being
charged on comparable loans by Bankers Trust Company on the
fifteenth day (or, if the fifteenth day is not a business day the
next succeeding business day) of the month coincident with or next
preceding the date of the loan to the Participant.
10.3 A. All such loans shall be evidenced by the
Participant's promissory note which shall set forth the rate of
interest to be charged thereon and the method and period of time
over which the loan must be repaid. The promissory note may be
prepaid without penalty at any time. In no event shall the
repayment period exceed five (5) years unless the loan proceeds
are used to acquire a dwelling unit which, within a reasonable
time from making of the loan, is to be used as the principal
residence of the Participant. The Administrator shall require
adequate security for any loan which security shall be the
assignment by the Participant of no more than fifty percent (50%)
of his Account which is invested in the Guaranteed Income Fund.
In the event a promissory note or any installment thereunder is
not paid when due, the Administrator shall give written notice to
the Participant
- 3 -
<PAGE>
<PAGE>
sent to his last known address and, if the note or such delinquent
installment is not paid within thirty (30) days from the date of
such notice, the Trustee shall have the right to take recourse to
the collateral securing the same, with full right to exercise all
remedies granted a secured party under the applicable laws
(including the Uniform Commercial Code) as if effect in the
various jurisdiction(s) in which the collateral may be located.
If said loan or loans are not entirely discharged as of the date
of the Participant's death, Permanent Disability or other
termination of employment, the Participant or his estate, as the
case may be, shall remain liable for and continue to make payments
on any balance due on said loan or loans.
Any such loan shall be treated as a segregated investment
for the Account of the borrowing Participant, the interest thereon
shall be credited only to such Account (and not to the general
earnings of the Fund), and for the purposes of allocating income
of the Fund or any other appreciation or depreciation of the Fund
for any Valuation Date, the Account of such borrowing Participant
shall be treated as not including the unpaid amount of such
borrowing (but for all other purposes of this Plan, including the
provisions dealing with the allocation of contributions and the
valuation of the corpus of the Trust, the amount of such borrowing
shall continue to be treated as part of the borrowing
Participant's Account, having a fair market value exactly equal to
the unpaid principal balance thereof at any time when it is
necessary to determine its fair market value).
No distribution shall be made to any Participant who has
borrowed from the Trust Fund or to any Beneficiary of any such
Participant until the outstanding balance of the loan, including
interest, has been paid out of the funds otherwise distributable.
B. The Participant shall, in writing, authorize the
Participating Employer to withhold each pay period from the
Participant's salary, an amount determined in accordance with the
terms of the loan application executed by the Participant and
approved by the Administrator.
Payroll deductions shall commence with the first payroll
following the effective date of the loan and the monthly payment
for any month shall be the level monthly amount to fully amortize
the outstanding balance of the loan over the remainder of the
duration of the loan. All payroll deduction payments, and any
other payments received by the Participating Employer from the
- 4 -
<PAGE>
<PAGE>
Participant, shall be remitted by the Participating Employer to
the Trustee for credit to the Participant's Account, as provided
in A. above, as of the last day of the calendar month in which
such payments are deducted by the Company, or received from the
Participant.
10.4 The Administrator shall prescribe rules and procedures
for the administration of a loan program which shall be
administered by the Administrator on a uniform and
nondiscriminatory basis.
10.5 A Participant who is not a member of a collective
bargaining unit may be charged a loan processing fee in such
amount and at such time as determined by the Administrator. A
Participant who is a member of a collective bargaining unit shall
not be charged a loan processing fee."
IN WITNESS WHEREOF, the Company has executed this Sixteenth
Amendment and affixed its corporate seal hereto by its duly authorized
officer on this 28th day of August, 1998.
---- ------
ANGELICA CORPORATION
By /s/ Don W. Hubble
--------------------------------------
Chairman of the Board,
President and Chief Executive Officer
[SEAL]
WITNESSED BY:
/s/ Jill Witter
- --------------------------------------
Secretary
- 5 -
<PAGE>
SECOND AMENDMENT TO THE
ANGELICA CORPORATION
STOCK BONUS AND INCENTIVE PLAN
(AS RESTATED OCTOBER 25, 1994)
WHEREAS, Angelica Corporation (herein referred to as the
"Company") established effective May 25, 1993, the Angelica Corporation
Stock Bonus and Incentive Plan (hereinafter referred to as the "Plan"):
and
WHEREAS, the Company desires to amend said Plan effective as of
the date specified below:
NOW, THEREFORE, the Company does hereby amend the Plan effective
as of August 25, 1998, in the following respects:
1. Section 2.1(e) is hereby deleted in its entirety and the following
is substituted in lieu thereof:
"Section 2.1(e). "Bonus Plan" means the Angelica
Corporation Incentive Compensation Plan, or such other incentive
compensation plan or program as may from time to time be approved
by the Compensation and Organization Committee of the Board."
2. Section 3 is hereby deleted in its entirety and the following is
substituted in lieu thereof:
"Section 3. Eligibility and Participation. Eligibility for
participation in the Plan for each Bonus Year shall be established
by the Administrator by adopting a resolution to that effect and
advising the affected Employees of the adjustment at least six
months before the end of the Bonus Year. Once established, the
eligibility criteria shall remain in effect until next adjusted by
the Administrator."
IN WITNESS WHEREOF, the Company has caused this Second Amendment
to be executed this 25th day of August, 1998.
---- ------
ANGELICA CORPORATION
[SEAL] By /s/ Don W. Hubble
-------------------------
Its Chairman, President and
-----------------------
ATTEST: Chief Executive Officer
-----------------------
/s/ Jill Witter
- --------------------------------------
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements for period ended October 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 287
<SECURITIES> 0
<RECEIVABLES> 65,764
<ALLOWANCES> (3,819)
<INVENTORY> 127,545
<CURRENT-ASSETS> 196,255
<PP&E> 217,409
<DEPRECIATION> (113,473)
<TOTAL-ASSETS> 339,704
<CURRENT-LIABILITIES> 58,361
<BONDS> 94,658
<COMMON> 9,472
0
0
<OTHER-SE> 157,863
<TOTAL-LIABILITY-AND-EQUITY> 339,704
<SALES> 179,806
<TOTAL-REVENUES> 373,460
<CGS> 119,069
<TOTAL-COSTS> 274,560
<OTHER-EXPENSES> 78,661
<LOSS-PROVISION> 1,401
<INTEREST-EXPENSE> 7,468
<INCOME-PRETAX> 11,370
<INCOME-TAX> 4,320
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,050
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
</TABLE>
