<PAGE> 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
February 26, 1994 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 April 4, 1994 were 7,883,154 and 12,627,454 respectively.
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
<TABLE>
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED BALANCE SHEETS
(unaudited)
<CAPTION>
February 26, August 28, February 27,
1994 1993* 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Current assets:
Cash $ 4,862,000 $ 3,656,000 $ 2,946,000
Receivables 28,378,000 24,849,000 25,462,000
Inventories 12,987,000 11,536,000 11,755,000
Rental merchandise in service 28,101,000 26,565,000 24,370,000
Prepaid expenses 106,000 115,000 268,000
- ----------------------------------------------------------------------------------------
Total current assets 74,434,000 66,721,000 64,801,000
- ----------------------------------------------------------------------------------------
Property and equipment:
Land, buildings and leasehold
improvements 97,454,000 93,347,000 90,406,000
Machinery and equipment 92,530,000 86,165,000 84,538,000
Motor vehicles 22,564,000 21,899,000 20,417,000
- ----------------------------------------------------------------------------------------
212,548,000 201,411,000 195,361,000
Less - accumulated depreciation 81,769,000 75,617,000 76,099,000
- ----------------------------------------------------------------------------------------
130,779,000 125,794,000 119,262,000
- ----------------------------------------------------------------------------------------
Other assets 29,154,000 26,549,000 27,878,000
- ----------------------------------------------------------------------------------------
$234,367,000 $219,064,000 $211,941,000
========================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term
obligations $ 6,116,000 $ 6,055,000 $ 6,038,000
Notes payable 428,000 177,000 195,000
Accounts payable 7,792,000 10,624,000 8,555,000
Accrued liabilities 25,078,000 25,225,000 20,119,000
Accrued and deferred income taxes 4,498,000 5,399,000 6,213,000
- ----------------------------------------------------------------------------------------
Total current liabilities 43,912,000 47,480,000 41,120,000
- ----------------------------------------------------------------------------------------
Long-term obligations, net of current
maturities 35,653,000 26,176,000 32,785,000
Deferred income taxes 13,633,000 12,685,000 13,512,000
- ----------------------------------------------------------------------------------------
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 7,874,354 shares 787,000 787,000 2,048,000
Class B Common stock, $.10 par value;
20,000,000 shares authorized, issued
and outstanding 12,627,454 shares 1,263,000 1,263,000 --
Capital surplus 7,008,000 7,008,000 6,714,000
Retained earnings 132,472,000 123,793,000 115,379,000
Cumulative translation adjustment (361,000) (128,000) 383,000
- ----------------------------------------------------------------------------------------
Total shareholders' equity 141,169,000 132,723,000 124,524,000
- ----------------------------------------------------------------------------------------
$234,367,000 $219,064,000 $211,941,000
========================================================================================
<FN>
* Condensed from audited financial statements
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 3
<TABLE>
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF INCOME
(unaudited)
<CAPTION>
Twenty-six Twenty-six Thirteen Thirteen
weeks ended weeks ended weeks ended weeks ended
February 26, February 27, February 26, February 27,
1994 1993 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $154,201,000 $141,346,000 $76,094,000 $69,637,000
- ---------------------------------------------------------------------------------------------------
Costs and expenses:
Operating costs 94,337,000 85,931,000 48,265,000 43,237,000
Selling and administrative
expenses 34,804,000 32,874,000 16,708,000 16,318,000
Depreciation and amortization 8,687,000 8,143,000 4,428,000 4,057,000
- ---------------------------------------------------------------------------------------------------
137,828,000 126,948,000 69,401,000 63,612,000
- ---------------------------------------------------------------------------------------------------
Income from operations 16,373,000 14,398,000 6,693,000 6,025,000
- ---------------------------------------------------------------------------------------------------
Interest expense (income):
Interest expense 1,308,000 1,608,000 674,000 787,000
Interest income (138,000) (98,000) (70,000) (33,000)
- ---------------------------------------------------------------------------------------------------
1,170,000 1,510,000 604,000 754,000
- ---------------------------------------------------------------------------------------------------
Income before income taxes 15,203,000 12,888,000 6,089,000 5,271,000
Provision for income taxes 5,625,000 4,511,000 2,253,000 1,845,000
- ---------------------------------------------------------------------------------------------------
Net income $ 9,578,000 $ 8,377,000 $ 3,836,000 $ 3,426,000
===================================================================================================
Weighted average number of shares
outstanding 20,508,646 20,424,632 20,508,650 20,441,612
===================================================================================================
Net income per share $0.47 $0.41 $0.19 $0.17
===================================================================================================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 4
<TABLE>
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Twenty-six Twenty-six
weeks ended weeks ended
February 26, February 27,
1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 9,578,000 $ 8,377,000
Adjustments:
Depreciation 7,282,000 6,718,000
Amortization of other assets 1,405,000 1,425,000
Receivables (3,562,000) (3,097,000)
Inventories (1,439,000) 589,000
Rental merchandise in service (1,568,000) (687,000)
Prepaid expenses 10,000 (89,000)
Accounts payable (3,130,000) (375,000)
Accrued liabilities (124,000) 2,834,000
Accrued and deferred income taxes (893,000) (877,000)
Deferred income taxes 956,000 767,000
- -----------------------------------------------------------------------------
Net cash provided by operating activities 8,515,000 15,585,000
- -----------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses, net of working
capital acquired (4,000,000) --
Capital expenditures (11,702,000) (5,712,000)
Other assets, net (501,000) 81,000
- -----------------------------------------------------------------------------
Net cash used in investing activites (16,203,000) (5,631,000)
- -----------------------------------------------------------------------------
Cash flows from financing activities:
Increase (reduction) in debt 9,793,000 (9,573,000)
Proceeds from exercise of stock options -- 311,000
Cash dividends paid or payable (899,000) (1,022,000)
- -----------------------------------------------------------------------------
Net cash provided by (used in) financing
activities 8,894,000 (10,284,000)
- -----------------------------------------------------------------------------
Net increase (decrease) in cash 1,206,000 (330,000)
Cash at beginning of period 3,656,000 3,276,000
- -----------------------------------------------------------------------------
Cash at end of period $ 4,862,000 $ 2,946,000
=============================================================================
Supplemental disclosure of cash flow
information:
Interest paid $ 1,335,000 $ 1,663,000
Income taxes paid $ 5,579,000 $ 4,652,000
=============================================================================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 5
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE TWENTY-SIX WEEKS ENDED FEBRUARY 26, 1994
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 Company offered to exchange, on a share-for-share basis,
shares of Class B common stock for shares of common stock.
4. 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 was paid 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.
5. 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.
6. On February 28, 1994 the Company acquired the assets of
Clean Services, Inc., a garment rental business located in
Enid, OK.
<PAGE> 6
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
FOR THE TWENTY-SIX WEEKS ENDED FEBRUARY 26, 1994
RESULTS OF OPERATIONS
---------------------
Twenty-six Weeks of Fiscal 1994 compared to Twenty-six Weeks of
---------------------------------------------------------------
Fiscal 1993
-----------
Fiscal 1994 revenues for the twenty-six weeks increased $12,855,000
or 9.1% over the twenty-six weeks in fiscal 1993. This increase
can be attributed to an acquisition (.7%) and internal growth and
modest price increases (8.4%). Income from operations as a
percentage of revenue increased to 10.6% in fiscal 1994 from 10.2%
in the fiscal 1993 period. The primary reason for the increase is
the net result of a favorable contribution improvement from the
core industrial rental business, offset by a less favorable
comparative period result from the nuclear business.
Net interest expense (interest expense less interest income) was
$1,170,000 in fiscal 1994 as compared to $1,510,000 in fiscal 1993.
The decrease is attributable to 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 affecting fiscal 1994.
Thirteen Weeks ended February 26, 1994 compared to Thirteen Weeks
-----------------------------------------------------------------
ended February 27, 1993
-----------------------
Fiscal 1994 second quarter revenues increased $6,457,000 or 9.3%
over the fiscal 1993 second quarter. This increase can be
attributed to an acquisition (1.1%) and internal growth and modest
price increases (8.2%). Income from operations as a percentage of
revenue was 8.8% in fiscal 1994, comparable to 8.7% for the fiscal
1993 period. Improvement of 1.4% in selling and administrative
expenses, primarily attributable to lower employee insurance
related costs, was offset by a 1.3% increase in operating costs.
The operating cost increase was due primarily to the nuclear
business quarter-to-quarter results shortfall and the general
severe weather conditions in the 1994 quarter.
Net interest expense was $604,000 in fiscal 1994 as compared to
$754,000 in fiscal 1993. The decrease is again attributable to
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 affecting fiscal 1994.
<PAGE> 7
FORM 10-Q
UNIFIRST CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(continued)
FOR THE TWENTY-SIX WEEKS ENDED FEBRUARY 26, 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.
<PAGE> 8
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 4. Submission of Matters to a Vote of Secured Holders
- -----------------------------------------------------------
Registrant's Annual Meeting of Shareholders was held on January 11, 1994. Aldo
A. Croatti and Albert Cohen were reelected to the Board of Directors. With
respect to Mr. Croatti, 3,542,407 shares of Common Stock and 6,311,302 shares
of Class B Common Stock were voted for his election and 63,016 shares of Common
Stock were voted against his election. With respect to Mr. Cohen, 3,542,207
shares of Common Stock were voted for his election and 63,216 shares of Common
Stock were voted against his election.
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: April 12, 1994
John B. Bartlett
----------------
John B. Bartlett
Senior Vice President
and Chief Financial Officer
