<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934
For the fiscal year ended August 26, 1995
Commission File 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of Class which shares are traded
Common Stock,
$.10 par value per share New York Stock Exchange
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 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definintive proxy or information incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
/X/
The number of outstanding shares of UniFirst Corporation Common Stock and
Class B Common Stock at November 13, 1995 were 7,886,644 and 12,623,964,
respectively, and the aggregate market value of these shares held by
non-affiliates of the Company on said date was $145,014,202 (based upon the
closing price of the Company's Common Stock on the New York Stock Exchange on
said date and assuming the market value of a share of Class B Common Stock
(which is generally non-transferable, but is convertible at any time into one
share of Common Stock) is identical to the market value of the Common Stock).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's 1995 Annual Report to Shareholders and the
Company's Proxy Statement for its 1996 Annual Meeting of Shareholders (which
will be filed with the Securities and Exchange Commission within 120 days after
the close of the 1995 fiscal year) are incorporated by reference into Parts II,
III and IV hereof.
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ITEM 1. BUSINESS
UniFirst is a leading company in the garment rental industry. The Company's
services consist principally of renting, cleaning, and delivering a variety of
industrial employment garments on a periodic basis, usually weekly. The Company
also decontaminates and cleans garments which may have been exposed to
radioactive materials. Customer billings are rendered and recorded as revenues
when services are performed.
The Company's principal business, since its inception, has been the rental
and servicing of industrial employment uniforms and protective clothing (such as
shirts, pants, jackets, coveralls, jumpsuits, lab coats, smocks and aprons) as
well as industrial wiper towels, floor mats and other non-garment items. The
Company services its customers by picking up the soiled items on a periodic
basis, usually weekly, and delivering at the same time cleaned and processed
items.
Through the Company's services, customers are provided with uniforms and
protective work clothing for their employees without the necessity of investing
working capital, which is particularly advantageous to customers whose worker
turnover is high. The Company's centralized services, specialized equipment and
economies of scale generally allow it to be more cost effective in providing
garment services than the customers could be by themselves. In order to better
service its customers, the Company maintains a relatively higher level of
inventory of garments in stock than it believes customary in the industry.
Customers are given a broad selection of styles, colors, sizes, fabrics and
personalized emblems from which to choose. The Company's uniform program is
intended not only to upgrade the image of the customers, but also to improve the
effectiveness, morale, safety and satisfaction of their employees.
The Company services a wide variety of manufacturers, retailers and service
companies, including automobile dealers and service stations, bakeries,
transportation companies and agricultural processors. Substantially all of the
Company's rental services are provided pursuant to written contracts, primarily
for a term of three years. The Company services over 100,000 customer locations
in 44 states and Canada from 105 service locations and distribution centers. For
fiscal 1993, 1994 and 1995, the Company's garment rental operations produced
approximately 65%, 66% and 67%, respectively, of its revenues, and non-garment
rental items accounted for another 25% of its revenues in each of those years,
with no single customer accounting for more than 1% of total revenues in any
year.
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The Company manufactures work pants and shirts for its garment rental
operations in its plants in Luquillo, Puerto Rico, and Cave City, Arkansas,
respectively. These plants produced approximately 49% of all employment garments
which the Company placed in service during fiscal 1995. In 1994, these
manufacturing plant's production level was approximately 43%.
The Company is also in the specialized business of decontaminating and
cleaning work clothes which may have been exposed to radioactive materials. The
Company's customers in this market include the federal government, research and
development laboratories and utilities operating nuclear reactors. The Company
maintains decontamination facilities at the site of a conventional cleaning
plant in Massachusetts and has specialized facilities exclusively for its
nuclear decontamination operations in Mississippi, New Mexico, California,
Washington, Hawaii, Pennsylvania, South Carolina, Virginia, Georgia, Illinois
and Iowa.
MARKETING
The Company markets its services to potential customers through
approximately 245 trained sales representatives whose sole function is to
develop new sales by adding new accounts and who have no direct responsibility
for servicing customer accounts. Potential customers are contacted by telephone
and also through sales appointments. The Company has a separately-staffed
telemarketing program designed to provide broader and more efficient coverage by
screening prospects for the sales representatives.
The Company believes that customer service is the most important element in
developing and maintaining its market position. As of August 26, 1995, existing
accounts were serviced by approximately 755 route salespersons and 430 service
support people who together are responsible for providing prompt delivery
service and ensuring expeditious handling of customer requirements regarding
billings, adjustments, garment repairs and other matters. The Company's policy
is to resolve all customer inquiries and problems within 24 hours.
The Company believes that its distinction between sales and service
personnel, which allows the route salespersons to monitor and maximize existing
customer satisfaction while others promote an ongoing new business effort, is an
important part of its competitive strategy.
Customer service is enhanced by the Company's management information
systems, which provide instantaneous access to information on the customer
employees serviced by the Company. Available data includes the status of
customer orders, inventory availability, shipping information and personal data
regarding individual customer employees, including names, sizes, uniform styles
and colors.
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The Company's emphasis on customer service is reflected throughout the
Company's business. The Company believes that ownership of its own manufacturing
facilities increases its ability to control the quality of its garments. The
Company believes its industrial cleaning facilities are among the most modern in
the industry.
Expansion by the Company into new market areas is achieved through an
acquisition program and internal growth. Internal expansion normally results
from extending sales routes into new market areas and then servicing the new
accounts from one of the Company's existing facilities. Since internal expansion
is thus limited to contiguous areas, the Company also has an acquisition program
to permit it to expand more widely into new market areas. The Company believes
that acquisitions are an effective manner of expanding its customer base and
foresees this avenue as an important source of growth.
COMPETITION
The markets serviced by the Company are highly competitive. Although the
Company is one of the larger companies engaged in the business of renting and
cleaning employment garments, there are other firms in the industry which are
larger and have greater financial resources than the Company. The principal
methods of competition in the industry are quality of service and price. The
Company believes that its ability to compete effectively is due primarily to the
superior service and support systems which it provides to its customers.
RAW MATERIALS
The Company obtained through its manufacturing operations approximately 49%
of all garments which it placed in service during fiscal 1995, with other items
and the balance of garments being purchased from a variety of suppliers. The
Company has experienced no significant difficulty in obtaining any of its raw
materials or supplies.
EMPLOYEES
The Company employs approximately 6,000 persons, about 6% of whom are
represented by unions pursuant to 6 separate collective bargaining agreements.
The Company considers its employee relations to be satisfactory.
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EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Aldo A. Croatti 77 Chairman of the Board
Ronald D. Croatti 52 Vice Chairman of the Board,
President and Chief Executive
Officer
Robert L. Croatti 59 Executive Vice President
John B. Bartlett 54 Senior Vice President and
Chief Financial Officer
Cynthia Croatti Inello 40 Treasurer
Bruce P. Boynton 47 Vice President,
Canadian Operations
Dennis G. Assad 50 Vice President,
Sales and Marketing
</TABLE>
Aldo A. Croatti has been Chairman of the Board since the Company's incorporation
in 1950 and of certain of its predecessors since 1940.
Ronald D. Croatti has been Vice Chairman of the Board for more than the past
five years, President since August 31, 1995 and Chief Executive Officer since
September 1, 1991. Prior to becoming President he was CEO for four years, and
prior to becoming CEO he was Chief Operating Officer for more than five years.
Robert L. Croatti has been Executive Vice President for more than the past five
years.
John B. Bartlett has been Senior Vice President and Chief Financial Officer for
more than the past five years.
Cynthia Croatti Inello has been Treasurer for more than the past five years.
Bruce P. Boynton has been Vice President, Canadian Operations for more than the
past five years.
Dennis G. Assad has been Vice President, Sales and Marketing since August 31,
1995. Prior to that he was a Regional General Manager of the Company for more
than five years.
Ronald D. Croatti, Robert L. Croatti and Cynthia Croatti Inello are a son,
nephew and daughter, respectively, of Aldo A. Croatti.
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ENVIRONMENTAL MATTERS
All industrial laundries use and have to dispose of detergent waste water
and/or dry cleaning residues. The Company is aware of the environmental concerns
surrounding the disposal of these materials and has taken steps to avoid their
improper disposal. Although from time to time the Company is subject to
administrative and judicial proceedings involving environmental matters, the
Company does not foresee a material effect on its earnings or competitive
position in connection with such proceedings or its compliance with federal,
state and local provisions regulating the environment. The Company's nuclear
garment decontamination facilities are licensed by the Nuclear Regulatory
Commission or, in certain instances, by the applicable state agency.
The Company and several other unaffiliated parties have been identified by
the United States Environmental Protection Agency ("EPA") as having contributed
to the presence of hazardous substances in the ground water in Woburn,
Massachusetts. The Company has not incurred, and does not currently anticipate
incurring, expenses in connection therewith which would have a material adverse
effect on its financial position as a result thereof.
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ITEM 2. PROPERTIES
At August 26, 1995 the Company owned or occupied 119 facilities containing
an aggregate of approximately 2.9 million square feet located in the United
States, Canada and Puerto Rico. The Company owns 70 of these facilities
containing approximately 2.4 million square feet.
The following chart summarizes certain information with respect to the
principal properties currently owned or leased by the Company.
<TABLE>
<CAPTION>
LOCATION APPROXIMATE SQUARE FEET
-------- -----------------------
<S> <C>
Executive Office & Distribution Center
Wilmington, MA 132,000
Rental Garment Servicing Facilities
Pittsburgh, PA 96,000
Ontario, CA 90,000
Springfield, MA 68,000
Washington, DC 57,000
Dallas, TX 55,000
Nashua, NH 54,000
Stratford, CT 54,000
Boston, MA 48,000
Houston, TX 48,000
Corpus Christi, TX 46,000
Tampa, FL 46,000
Columbus, OH 45,000
Odessa, TX 45,000
Richmond, VA 45,000
Portland, ME 44,000
Harlingen, TX 42,000
Toronto, Ontario, Canada 41,000
Buffalo, NY 40,000
Lubbock, TX 40,000
Portland, OR 40,000
Tulsa, OK 40,000
Ocala, FL 38,000
Los Angeles, CA 37,000
Lebanon, NH 36,000
Uvalde, TX 36,000
Charlotte, NC 34,000
Philadelphia, PA 34,000
San Antonio, TX 34,000
Albuquerque, NM 33,000
Amarillo, TX 33,000
Norfolk, VA 33,000
Vancouver, British Columbia, Canada 33,000
Cincinnati, OH 32,000
McAllen, TX 32,000
Baltimore, MD 30,000
Bangor, ME 30,000
</TABLE>
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<TABLE>
<S> <C>
Garment Manufacturing Facilities
Cave City, AR 62,000
Luquillo, PR 44,000
Distribution Center & Emblem Mfg. Facility
Macon, GA 39,000
Nuclear Garment Decontamination Facilities
Royersford, PA 39,000
Richland, WA 37,000
</TABLE>
The Company owns all the machinery and equipment used in its operations. In
the opinion of the Company, all of its facilities and its production, cleaning
and decontamination equipment have been well maintained, are in good condition
and are adequate for the Company's present needs.
The Company owns and leases a fleet of approximately 1,400 delivery vans,
trucks and other vehicles. The Company believes that these vehicles are in good
repair and are adequate for the Company's present needs.
ITEM 3. LEGAL PROCEEDINGS
From time to time the Company is subject to legal proceedings and claims
arising from the conduct of its business operations, including personal injury,
customer contract, employment claims and environmental matters as described in
Item 1 above. The Company maintains insurance coverage providing indemnification
against the majority of such claims and management does not expect that any
material loss to the Company will be sustained as a result thereof.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
See the section entitled "Common Stock Prices and Dividends Per Share"
which is incorporated herein by reference, as part of the Company's 1995 Annual
Report to Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
See the section entitled "Ten Year Financial Summary" which is incorporated
herein by reference, as part of the Company's 1995 Annual Report to
Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
See the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" which is incorporated herein by reference,
as part of the Company's 1995 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and the accompanying notes, which are incorporated
herein by reference to the Company's 1995 Annual Report to Shareholders, are
indexed herein under Items 14(a)(1) and (2) of Part IV.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
Not applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Incorporated by reference to the information provided under the caption
"Election of Directors" in the Company's Proxy Statement for its 1996 Annual
Meeting of Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference to the information provided under the caption
"Summary Compensation Table" in the Company's Proxy Statement for its 1996
Annual Meeting of Shareholders.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to the information provided under the captions
"Election of Directors" and "Principal Shareholders" in the Company's Proxy
Statement for its 1996 Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to the information provided under the caption
"Certain Transactions" in the Company's Proxy Statement for its 1996 Annual
Meeting of Shareholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The financial statements listed below are filed as part of this
report:
1.and 2. Financial Statements and Financial Statement Schedules.
The financial statements and financial statement schedules listed below are
incorporated herein by reference to the Company's 1995 Annual Report to
Shareholders.
Consolidated balance sheets as of August 26, 1995 and August 27, 1994
Consolidated statements of income for each of the three years in the period
ended August 26, 1995
Consolidated statements of shareholders' equity for each of the three years in
the period ended August 26, 1995
Consolidated statements of cash flows for each of the three years in the period
ended August 26, 1995
Notes to consolidated financial statements
Report of independent public accountants
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The following additional schedules are filed herewith:
Report of independent public accountants on supplemental schedule to the
consolidated financial statements.
Schedule II -
Valuation and qualifying accounts and reserves for each of the three years
in the period ended August 26, 1995.
Separate financial statements of the Company have been omitted because the
Company is primarily an operating company and all subsidiaries included in the
consolidated financial statements are totally held.
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements or the notes thereto.
3. Exhibits. The exhibits listed the accompanying Exhibit Index are filed
as part of this report.
(b) During the three months ended August 26, 1995 the Company did not file
any reports on Form 8-K with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
UniFirst Corporation
By: Aldo A. Croatti
------------------------
Aldo A. Croatti
Chairman
Date: November 22, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
Aldo A. Croatti Chairman and Director November 22, 1995
- ---------------------------
Aldo A. Croatti
Principal Executive
Ronald D. Croatti Officer and Director November 22, 1995
- ---------------------------
Ronald D. Croatti
Principal Financial
Officer and Principal
John B. Bartlett Accounting Officer November 22, 1995
- ---------------------------
John B. Bartlett
Cynthia Croatti Inello Director November 22, 1995
- ---------------------------
Cynthia Croatti Inello
Donald J. Evans Director November 22, 1995
- ---------------------------
Donald J. Evans
Reynold L. Hoover Director November 22, 1995
- ---------------------------
Reynold L. Hoover
Albert Cohen Director November 22, 1995
- ---------------------------
Albert Cohen
</TABLE>
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL
SCHEDULE TO THE CONSOLIDATED FINANCIAL STATEMENTS
To UniFirst Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in this Form 10-K, and have
issued our report thereon dated October 31, 1995. Our audit was made for the
purpose of forming an opinion on the basic consolidated financial statements
taken as a whole. The supplemental schedule to the consolidated financial
statements listed as Item 14(a)(2) in the Form 10-K is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This supplemental schedule has been subjected
to the auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly states, in all material
respects, the financial data required to be set forth therein, in relation to
the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 31, 1995
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Page 14
UNIFIRST CORPORATION AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR EACH
OF THE THREE YEARS IN THE PERIOD ENDED AUGUST 26, 1995
<TABLE>
<CAPTION>
Balance, Charged to Charges for Balance,
Beginning Costs and Which Reserves End of
Description of Period Expenses Were Created Period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
For the year ended August 26, 1995
- ----------------------------------
Allowance for
doubtful accounts $ 582,000 $ 1,335,000 $(1,183,000) $ 734,000
===============================================================
For the year ended August 27, 1994
- ----------------------------------
Allowance for
doubtful accounts $ 440,000 $ 1,179,000 $(1,037,000) $ 582,000
===============================================================
For the year ended August 28, 1993
- ----------------------------------
Allowance for
doubtful accounts $ 348,000 $ 1,030,000 $ (938,000) $ 440,000
===============================================================
</TABLE>
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EXHIBIT INDEX
Description
3-A Restated Articles of Organization -- incorporated by reference to
Exhibit 3-A to the Company's Registration Statement on Form S-1 (No.
2-83051) -- and the Articles of Amendment dated January 12, 1988, a
copy of which was filed on an exhibit to the Company's Annual Report
on Form 10-K for fiscal year ended August 27, 1988 -- and the Articles
of Amendment dated January 21, 1993, a copy of which was filed on an
exhibit to the Company's Quarterly Report on Form 10-Q for fiscal
quarter ended February 27, 1993.
3-B By-laws -- incorporated by reference to Exhibit 3-B to the Company's
Annual Report on Form 10-K for fiscal year ended August 31, 1991.
10-A UniFirst Corporation Profit Sharing Plan -- incorporated by reference
to Exhibit 4.3 to the Company's Registration Statement on Form S-8
(number 33-60781).
10-C Metropolitan Life Insurance Company Loan Agreement covering issuance
of $15,000,000 9-1/4% Senior Notes -- incorporated by reference to
Exhibit 10-F to the Company's Annual Report on Form 10-K for fiscal
year ended August 29, 1987.
13 The Company's 1995 Annual Report to Shareholders (filed herewith to
the extent expressly incorporated by reference herein).
22 List of subsidiaries of the Company:
Interstate Nuclear Services Corp.
Interstate Uniform Manufacturing of Puerto Rico, Inc.
Superior Products & Equipment Co., Inc.
UniFirst Canada Ltd.
Texas Industrial Services, Inc.
U Two Corporation
UR Corporation
Modern Coverall - Uniform Supply, Inc.
Tennessee Uniform and Towel Service, Inc.
23 Consent of Arthur Andersen LLP
27 Financial Data Schedule
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Exhibit 13
Management's Discussion and Analysis of Financial Condition and Results of
Operations
UniFirst Corporation and Subsidiaries
Fiscal 1995 Compared with Fiscal 1994
In 1995 revenues increased $37.0 million or 11.6% over 1994. This increase can
be attributed to acquisitions (2.3%), price increases (1.0%) and growth from
existing operations (8.3%).
Income from operations increased to $34.5 million in 1995 from $32.5 million in
1994. As a percent of revenues, income from operations decreased to 9.7% in 1995
from 10.2% in 1994. The primary reason for the decrease is the impact of higher
uniform merchandise costs, which as a percent of revenues increased .8% over the
prior year. This increase is due to additional new garments placed in service
for new customers as well as higher replacement costs for existing customers.
The Company also experienced comparatively higher expenses in the operation of
its distribution centers and in the corporate-owned life insurance program
costs, offset in part by improvements in employee related costs, primarily
health insurance. Also, depreciation expense as a percent of revenues improved
.2% compared to the prior year, and the Company's operating margins in Canada
and in the nuclear garment services business showed improvement.
During 1995, net interest expense (interest expense less interest income) was
$2.8 million as compared to $2.5 million in 1994. The increase is attributable
to higher average debt levels during fiscal 1995.
The Company's provision for income taxes was 35.0% in 1995 and 37.0% in 1994.
The decrease is due primarily to the favorable impact of a corporate-owned life
insurance program.
Fiscal 1994 Compared with Fiscal 1993
In 1994 revenues increased $30.3 million or 10.5% over 1993. This increase can
be attributed to acquisitions (1.3%), price increases (1.0%) and growth from
existing operations (8.2%).
Income from operations increased to $32.5 million in 1994 from $30.7 million in
1993. As a percent of revenues, income from operations decreased to 10.2% in
1994 from 10.7% in 1993. The primary reasons for the decrease were unfavorable
comparative contribution results from the nuclear garment decontamination
business, start-up costs associated with a new emblem image process for our
customers and higher uniform merchandise costs in 1994.
During 1994, net interest expense (interest expense less interest income) was
$2.5 million as compared to $2.7 million in 1993. The decrease is primarily
attributable to lower average interest rates in fiscal 1994.
The Company's provision for income taxes was 37.0% for both years. Although the
rates were the same for both years, in 1994 the favorable impact of a new
corporate-owned life insurance program was offset by higher state income taxes.
1
<PAGE> 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
UniFirst Corporation and Subsidiaries -- (Continued)
Liquidity and Capital Resources
The Company's balance sheet continued to strenghten in 1995. Net cash provided
by operating activities was $42.5 million in 1995 and totaled $110.4 million for
the three years ended August 26, 1995. These cash flows were used primarily to
fund $68.5 million in capital expenditures to expand and update Company
facilities. Additionally, $20.7 million was used for debt repayment and $11.8
million for acquisitions during this three year period.
Shareholders' equity as a percent of total capital has increased from 71.1% at
August 29, 1992 to 82.3% at August 26, 1995, indicating the significant
improvement in the overall strength of the Company's balance sheet.
The Company had $5.9 million in cash and cash equivalents as well as a line of
credit to borrow an additional $28.1 million as of August 26, 1995. The Company
believes 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 and
productivity improvements, it has been able to recover increases in costs and
expenses attributable to inflation.
2
<PAGE> 3
Ten-Year Financial Summary
UniFirst Corporation and Subsidiaries
(Continued on next page)
<TABLE>
<CAPTION>
Fiscal Year Ended August
(in thousands, except ratios
and per share amounts) 1995 1994 1993 1992 1991 1990 1989 1988
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Revenues $355,041 $318,039 $287,728 $268,190 $250,432 $226,682 $212,731 $196,296
Income from
operations, before
depreciation and
amortization 53,725 50,369 47,199 42,010 38,562 38,749 35,768 32,207
Depreciation and
amortization 19,194 17,912 16,454 15,999 14,229 12,422 12,309 12,298
Income from
operations 34,531 32,457 30,745 26,011 24,333 26,327 23,459 19,909
Interest expense
(income), net 2,787 2,513 2,669 4,098 4,320 3,513 4,880 5,965
Other income -- -- -- -- -- -- -- --
Provision for
income taxes 11,110 11,073 10,387 7,570 6,803 8,516 6,968 5,289
Income before extra-
ordinary item and
accounting change 20,634 18,871 17,689 14,343 13,210 14,298 11,611 8,655
Convertible debt
retirement -- -- -- (2,620) -- -- -- --
Accounting change -- -- -- 1,200 -- -- -- --
Net income 20,634 18,871 17,689 12,923 13,210 14,298 11,611 8,655
- -----------------------------------------------------------------------------------------------------------------------------
Financial Position at Year End
Total assets $272,691 $250,160 $219,064 $212,097 $204,398 $189,411 $172,389 $171,010
Long-term obligations and
convertible subordinated debt 36,376 41,602 32,231 47,641 52,032 53,134 53,735 66,476
Shareholders' equity 168,596 149,472 132,723 117,329 105,888 93,739 80,249 69,127
- -----------------------------------------------------------------------------------------------------------------------------
Financial Ratios
Income before extra-
ordinary item and
accounting change
as a % of revenues 5.8% 5.9% 6.1% 5.3% 5.3% 6.3% 5.5% 4.4%
Return on average
shareholders' equity 13.0% 13.4% 14.1% 12.9% 13.2% 16.4% 15.6% 13.3%
- -----------------------------------------------------------------------------------------------------------------------------
Per Share Data
Weighted average number
of shares outstanding 20,511 20,506 20,453 20,451 20,426 20,431 20,353 20,168
Revenues $ 17.31 $ 15.51 $ 14.07 $ 13.11 $ 12.26 $ 11.09 $ 10.45 $ 9.73
Income from
operations, before
depreciation and
amortization 2.62 2.46 2.31 2.05 1.89 1.90 1.76 1.60
Income before extra-
ordinary item and
accounting change
Primary 1.01 0.92 0.86 0.70 0.65 0.70 0.57 0.43
Fully diluted 1.01 0.92 0.86 0.67 0.63 0.67 0.56 0.43
Net income
Primary 1.01 0.92 0.86 0.63 0.65 0.70 0.57 0.43
Fully diluted 1.01 0.92 0.86 0.61 0.63 0.67 0.56 0.43
Shareholders' equity 8.22 7.29 6.49 5.74 5.18 4.59 3.94 3.43
Dividends
Common stock .10 .10 .10 .06 .06 .06 .05 .05
Class B common stock .08 .08 .04 -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Per share amounts for all years have been restated to reflect a 2 for 1 stock
split declared by the Board of Directors on November 18, 1993.
3
<PAGE> 4
Ten-Year Financial Summary (Continued)
UniFirst Corporation and Subsidiaries
<TABLE>
<CAPTION>
Fiscal Year Ended August
(in thousands, except ratios
and per share amounts) 1987 1986
- ------------------------------------------------------
<S> <C> <C>
Summary of Operations
Revenues $159,900 $114,235
Income from
operations, before
depreciation and
amortization 28,161 21,425
Depreciation and
amortization 10,494 5,890
Income from
operations 17,667 15,535
Interest expense
(income), net 4,622 225
Other income 1,300 --
Provision for
income taxes 6,530 6,990
Income before extra-
ordinary item and
accounting change 7,815 8,320
Convertible debt
retirement -- --
Accounting change -- --
Net income 7,815 8,320
- ------------------------------------------------------
Financial Position at Year End
Total assets $166,304 $ 97,145
Long-term obligations and
convertible subordinated debt 69,505 22,209
Shareholders' equity 60,681 53,637
- ------------------------------------------------------
Financial Ratios
Income before extra-
ordinary item and
accounting change
as a % of revenues 4.9% 7.3%
Return on average
shareholders' equity 13.7% 16.6%
- ------------------------------------------------------
Per Share Data
Weighted average number
of shares outstanding 20,158 20,158
Revenues $ 7.93 $ 5.67
Income from
operations, before
depreciation and
amortization 1.40 1.07
Income before extra-
ordinary item and
accounting change
Primary 0.39 0.42
Fully diluted 0.39 --
Net income
Primary 0.39 0.42
Fully diluted 0.39 --
Shareholders' equity 3.01 2.66
Dividends
Common stock .05 .05
Class B common stock -- --
- ------------------------------------------------------
</TABLE>
Per share amounts for all years have been restated to reflect a 2 for 1 stock
split declared by the Board of Directors on November 18, 1993.
4
<PAGE> 5
Consolidated Balance Sheets
UniFirst Corporation and Subsidiaries
<TABLE>
<CAPTION>
August 26, August 27,
1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 5,889,000 $ 4,120,000
Receivables, less reserves of $734,000 in 1995
and $582,000 in 1994 33,420,000 30,044,000
Inventories 16,484,000 15,409,000
Rental merchandise in service 32,731,000 30,577,000
Prepaid expenses 118,000 109,000
- ------------------------------------------------------------------------------------------------
Total current assets 88,642,000 80,259,000
- ------------------------------------------------------------------------------------------------
Property and equipment:
Land, buildings and leasehold improvements 111,148,000 101,374,000
Machinery and equipment 109,538,000 99,955,000
Motor vehicles 28,816,000 26,237,000
- ------------------------------------------------------------------------------------------------
249,502,000 227,566,000
Less - accumulated depreciation 101,428,000 89,554,000
- ------------------------------------------------------------------------------------------------
148,074,000 138,012,000
- ------------------------------------------------------------------------------------------------
Other assets 35,975,000 31,889,000
- ------------------------------------------------------------------------------------------------
$ 272,691,000 $ 250,160,000
================================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities of long-term obligations $ 4,015,000 $ 6,874,000
Notes payable 882,000 448,000
Accounts payable 12,992,000 12,246,000
Accrued liabilities 35,370,000 27,265,000
Accrued and deferred income taxes 3,882,000 5,469,000
- ------------------------------------------------------------------------------------------------
Total current liabilities 57,141,000 52,302,000
- ------------------------------------------------------------------------------------------------
Long-term obligations, net of current maturities 32,361,000 34,728,000
Deferred income taxes 14,593,000 13,658,000
- ------------------------------------------------------------------------------------------------
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 7,886,644
shares in 1995 and 7,884,644 shares in 1994 789,000 788,000
Class B Common stock, $.10 par value; 20,000,000
shares authorized; issued and outstanding 12,623,964
shares in 1995 and 12,625,964 shares in 1994 1,262,000 1,263,000
Capital surplus 7,078,000 7,042,000
Retained earnings 159,701,000 140,866,000
Cumulative translation adjustment (234,000) (487,000)
- ------------------------------------------------------------------------------------------------
Total shareholders' equity 168,596,000 149,472,000
- ------------------------------------------------------------------------------------------------
$ 272,691,000 $ 250,160,000
================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
Consolidated Statements of Income
UniFirst Corporation and Subsidiaries
<TABLE>
<CAPTION>
Year Ended August 26, August 27, August 28,
1995 1994 1993
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 355,041,000 $ 318,039,000 $ 287,728,000
- --------------------------------------------------------------------------------------------------
Cost and expenses:
Operating costs 222,205,000 196,511,000 173,772,000
Selling and administrative expenses 79,111,000 71,159,000 66,757,000
Depreciation and amortization 19,194,000 17,912,000 16,454,000
- --------------------------------------------------------------------------------------------------
320,510,000 285,582,000 256,983,000
- --------------------------------------------------------------------------------------------------
Income from operations 34,531,000 32,457,000 30,745,000
- --------------------------------------------------------------------------------------------------
Interest expense (income):
Interest expense 2,963,000 2,726,000 2,889,000
Interest income (176,000) (213,000) (220,000)
- --------------------------------------------------------------------------------------------------
2,787,000 2,513,000 2,669,000
- --------------------------------------------------------------------------------------------------
Income before income taxes 31,744,000 29,944,000 28,076,000
Provision for income taxes 11,110,000 11,073,000 10,387,000
- --------------------------------------------------------------------------------------------------
Net income $ 20,634,000 $ 18,871,000 $ 17,689,000
==================================================================================================
Weighted average number of shares outstanding 20,510,608 20,505,837 20,453,414
==================================================================================================
Net income per share $ 1.01 $ 0.92 $ 0.86
==================================================================================================
Dividends per share:
Common stock $ 0.10 $ 0.10 $ 0.10
Class B common stock $ 0.08 $ 0.08 $ 0.04
==================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
Consolidated Statements of Shareholders' Equity
UniFirst Corporation and Subsidiaries
<TABLE>
<CAPTION>
Class B Class B Cumulative
Common Common Common Common Capital Retained Translation
Shares Shares Stock Stock Surplus Earnings Adjustment
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, August 29, 1992 20,375,008 -- $ 2,038,000 -- $6,413,000 $ 108,024,000 $ 854,000
Net income -- -- -- -- -- 17,689,000 --
Dividends -- -- -- -- -- (1,920,000) --
Stock options exercised 126,800 -- 12,000 -- 595,000 -- --
Exchange offer (12,627,954) 12,627,954 (1,263,000) $ 1,263,000 -- -- --
Translation adjustment -- -- -- -- -- -- (982,000)
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 28, 1993 7,873,854 12,627,954 787,000 1,263,000 7,008,000 123,793,000 (128,000)
Net income -- -- -- -- -- 18,871,000 --
Dividends -- -- -- -- -- (1,798,000) --
Stock options exercised 8,800 -- 1,000 -- 34,000 -- --
Shares converted 1,990 (1,990) -- -- -- -- --
Translation adjustment -- -- -- -- -- -- (359,000)
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 27, 1994 7,884,644 12,625,964 788,000 1,263,000 7,042,000 140,866,000 (487,000)
Net income -- -- -- -- -- 20,634,000 --
Dividends -- -- -- -- -- (1,799,000) --
Other -- -- -- -- 36,000 -- --
Shares converted 2,000 (2,000) 1,000 (1,000) -- -- --
Translation adjustment -- -- -- -- -- -- 253,000
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 26, 1995 7,886,644 12,623,964 $ 789,000 $ 1,262,000 $7,078,000 $ 159,701,000 $(234,000)
========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE> 8
Consolidated Statements of Cash Flows
UniFirst Corporation and Subsidiaries
<TABLE>
<CAPTION>
Year ended August 26, August 27, August 28,
1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 20,634,000 $ 18,871,000 $ 17,689,000
Adjustments:
Depreciation 15,960,000 15,038,000 13,598,000
Amortization of other assets 3,234,000 2,874,000 2,856,000
Receivables (2,935,000) (4,502,000) (2,360,000)
Inventories (938,000) (3,781,000) 726,000
Rental merchandise in service (1,198,000) (2,861,000) (2,724,000)
Prepaid expenses 15,000 10,000 62,000
Accounts payable 476,000 1,126,000 1,965,000
Accrued liabilities 7,967,000 1,902,000 8,000,000
Accrued and deferred income taxes (1,572,000) 82,000 (1,677,000)
Deferred income taxes 899,000 987,000 (42,000)
- ---------------------------------------------------------------------------------------------------
Net cash provided by operating activities 42,542,000 29,746,000 38,093,000
- ---------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired (7,226,000) (3,086,000) (1,525,000)
Capital expenditures (24,409,000) (24,729,000) (19,328,000)
Other assets, net (1,575,000) (999,000) 604,000
- ---------------------------------------------------------------------------------------------------
Net cash used in investing activities (33,210,000) (28,814,000) (20,249,000)
- ---------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in debt 4,079,000 7,353,000 --
Reduction of debt (9,879,000) (6,058,000) (16,151,000)
Proceeds from exercise of stock options 36,000 35,000 607,000
Cash dividends paid or payable (1,799,000) (1,798,000) (1,920,000)
- ---------------------------------------------------------------------------------------------------
Net cash used in financing activities (7,563,000) (468,000) (17,464,000)
- ---------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 1,769,000 464,000 380,000
Cash and cash equivalents at beginning of year 4,120,000 3,656,000 3,276,000
- ---------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 5,889,000 $ 4,120,000 $ 3,656,000
===================================================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 3,010,000 $ 2,775,000 $ 2,959,000
Income taxes paid $ 11,712,000 $ 10,030,000 $ 12,168,000
===================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE> 9
Notes to Consolidated Financial Statements
UniFirst Corporation and Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Other
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. Intercompany balances and
transactions are eliminated in consolidation. The Company recognizes revenues
when the actual services are provided to customers.
Inventories
Inventories are stated at the lower of cost or market value. The Company uses
the last-in, first-out (LIFO) method to value a significant portion of its
inventories. Inventory valued on the LIFO method approximates $13,364,000 and
$12,257,000 at August 26, 1995 and August 27, 1994, respectively. The remaining
inventories are priced at the lower of first-in, first-out (FIFO) cost or
market. Had the Company used the FIFO accounting method, inventories would have
been approximately $1,060,000 and $816,000 higher at August 26, 1995 and August
27, 1994, respectively.
Rental Merchandise in Service
Rental merchandise in service, stated at cost less amortization, is being
amortized on a straight-line basis over the estimated service lives (primarily
12 months) of the merchandise.
Property and Equipment
The Company provides for depreciation on the straight-line method based on the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings 30-40 years
Leasehold improvements Term of lease
Machinery and equipment 3-10 years
Motor vehicles 3-7 years
</TABLE>
Other Assets
Covenants are amortized over the terms of the respective non-competition
agreements, which range from five to fifteen years. Customer contracts are
amortized over periods of up to seventeen years. Goodwill is amortized over
periods of up to forty years.
Income Taxes
Deferred income taxes are provided for temporary differences between amounts
recognized for income tax and financial reporting purposes at currently enacted
tax rates.
Net Income Per Common Share
Net income per share is calculated using the weighted average number of common
and common equivalent shares outstanding during the year. Common equivalent
shares include the number of shares issuable under the Company's stock option
plan.
Cash Flow Disclosures
Cash and cash equivalents include cash in banks and bank short-term repurchase
agreements with maturities of less than ninety days.
Presentation
Certain amounts in the prior year's consolidated statements of cash flows have
been reclassified to conform to the current year's presentation.
9
<PAGE> 10
Notes to Consolidated Financial Statements
UniFirst Corporation and Subsidiaries
2. ACQUISITIONS
Information relating to the acquisitions of industrial laundry businesses which
were accounted for as purchases is as follows:
<TABLE>
<CAPTION>
Year ended August 26, August 27, August 28,
1995 1994 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fair market value of assets acquired $8,688,000 $11,904,000 $1,525,000
Liabilities assumed or created 1,462,000 8,818,000 --
---------------------------------------
Acquisition of businesses, net of cash acquired $7,226,000 $ 3,086,000 $1,525,000
=======================================
</TABLE>
The results of operations of these acquisitions have been included on the
Company's consolidated financial statements since their respective acquisition
dates. None of these acquisitions were significant in relation to the Company's
consolidated financial statements and therefore pro forma financial information
has not been presented.
3. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Year ended August 26, August 27, August 28,
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal and Canada $ 10,597,000 $ 8,479,000 $ 10,896,000
State 1,818,000 1,609,000 2,322,000
- -------------------------------------------------------------------------------
12,415,000 10,088,000 13,218,000
- -------------------------------------------------------------------------------
Deferred:
Federal and Canada (1,516,000) 828,000 (1,799,000)
State 211,000 157,000 (1,032,000)
- -------------------------------------------------------------------------------
(1,305,000) 985,000 (2,831,000)
- -------------------------------------------------------------------------------
$ 11,110,000 $ 11,073,000 $ 10,387,000
===============================================================================
</TABLE>
Deferred income tax provisions, resulting from temporary differences
between financial and taxable income, consist of the following:
<TABLE>
<CAPTION>
Year ended August 26, August 27, August 28,
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental merchandise in service $ 973,000 $ 1,743,000 $ 1,150,000
Tax in excess of book depreciation 944,000 757,000 732,000
Accruals and other (3,222,000) (1,515,000) (4,713,000)
- -------------------------------------------------------------------------------
$(1,305,000) $ 985,000 $(2,831,000)
===============================================================================
</TABLE>
10
<PAGE> 11
Notes to Consolidated Financial Statements
UniFirst Corporation and Subsidiaries
3. INCOME TAXES - (Continued)
<TABLE>
The following table reconciles the statutory federal income tax rate
to the effective overall income tax rate:
<CAPTION>
Year ended August 26, August 27, August 28,
1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory federal income tax rate 35.0% 35.0% 34.7%
Increase (decrease) from statutory rate resulting from:
Puerto Rico exempt income (2.1) (1.9) (1.7)
Corporate-Owned Life Insurance (2.6) (1.2) --
State income taxes 3.7 3.5 2.7
Canadian income taxes 0.3 0.4 0.6
Federal income tax rate change on
cumulative temporary differences -- -- 1.5
Other 0.7 1.2 (0.8)
- ----------------------------------------------------------------------------------------
35.0% 37.0% 37.0%
========================================================================================
</TABLE>
The Company has negotiated a tax exemption grant for its Puerto Rico subsidiary
under which the subsidiary is tax-exempt on 90% of its income through 2001. The
Company provides for anticipated tollgate taxes on the repatriation of the
subsidiary's accumulated earnings.
<TABLE>
The tax effect of items giving rise to the Company's net deferred tax
liabilities are as follows:
<CAPTION>
August 26, August 27, August 28,
1995 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental merchandise in service $ 12,626,000 $ 12,274,000 $ 10,766,000
Tax in excess of book depreciation 12,906,000 12,494,000 11,887,000
Accruals and other (7,248,000) (5,654,000) (5,450,000)
- ---------------------------------------------------------------------------------
$ 18,284,000 $ 19,114,000 $ 17,203,000
=================================================================================
</TABLE>
11
<PAGE> 12
Notes to Consolidated Financial Statements
UniFirst Corporation and Subsidiaries
4. LONG-TERM OBLIGATIONS
Long-term obligations outstanding on the accompanying consolidated balance
sheets are shown in the following table:
<TABLE>
<CAPTION>
August 26, August 27,
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Unsecured revolving credit agreement with two banks,
interest rates of 6.25% and 5.25%, respectively $21,875,000 $18,925,000
Unsecured note payable to an insurance company,
interest rate of 9.25%, payments of $3,000,000 due
annually thru February, 1997 6,000,000 15,000,000
Notes payable, interest from 7.0% - 8.75%, payable
in various installments thru 2004 4,095,000 4,286,000
Amounts due for restrictive covenants and other,
payable in various installments thru 2005 4,406,000 3,391,000
- --------------------------------------------------------------------------------
36,376,000 41,602,000
- --------------------------------------------------------------------------------
Less - current maturities 4,015,000 6,874,000
- --------------------------------------------------------------------------------
$32,361,000 $34,728,000
================================================================================
</TABLE>
Aggregate current maturities of long-term obligations for each of the next five
years are $4,015,000, $25,903,000, $1,014,000, $1,037,000, $764,000 and
$3,643,000 thereafter. At August 26, 1995 and at August 27, 1994, the fair
market value of the Company's outstanding debt approximates its carrying value.
The Company's unsecured revolving credit agreement runs through 1997. As of
August 26, 1995, the maximum line of credit was $50,000,000.
Certain of the long-term obligations contain among other things, provisions
regarding net worth, working capital and dividends. Under the most restrictive
of these provisions, the Company was required to maintain minimum consolidated
tangible net worth of $106,664,000 as of August 26, 1995. Certain notes payable
arising from acquisitions are secured by assets of the acquired company.
12
<PAGE> 13
Notes to Consolidated Financial Statements
UniFirst Corporation and Subsidiaries
5. EMPLOYEE BENEFIT PLANS
The Company has a profit sharing plan with a 401(k) feature for all eligible
employees not under collective bargaining agreements. The amount of the
Company's contribution is determined at the discretion of the Company.
Contributions charged to expense under the plan were $3,508,000 in 1995,
$3,200,000 in 1994 and $3,000,000 in 1993.
Some employees under collective bargaining agreements are covered by
union-sponsored multi-employer pension plans. Company contributions, generally
based upon hours worked, are in accordance with negotiated labor contracts.
Payments to the plans amounted to $156,000 in 1995, $176,000 in 1994 and
$280,000 in 1993. Information is not readily available for the Company to
determine its share of unfunded vested benefits, if any, under these plans.
6. OTHER ASSETS
Other assets on the accompanying consolidated balance sheets are shown in the
following table:
<TABLE>
<CAPTION>
August 26, August 27,
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Customer contracts, covenants and other assets arising
from acquisitions, less accumulated amortization
of $15,906,000 and $15,282,000, respectively $19,774,000 $19,705,000
Goodwill, less accumulated amortization
of $2,391,000 and $2,212,000, respectively 14,259,000 10,308,000
Other 1,942,000 1,876,000
- --------------------------------------------------------------------------------
$35,975,000 $31,889,000
================================================================================
</TABLE>
7. ACCRUED LIABILITIES
Accrued liabilities on the accompanying consolidated balance sheets are shown in
the following table:
<TABLE>
<CAPTION>
August 26, August 27,
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Insurance $14,100,000 $11,457,000
Payroll related 12,231,000 10,236,000
Other 9,039,000 5,572,000
- --------------------------------------------------------------------------------
$35,370,000 $27,265,000
================================================================================
</TABLE>
13
<PAGE> 14
Notes to Consolidated Financial Statements
UniFirst Corporation and Subsidiaries
8. COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases certain buildings from independent parties. Total rent
expense on all leases was $1,867,000 in 1995, $1,581,000 in 1994 and $1,637,000
in 1993.
Annual minimum lease commitments for all years subsequent to August 26, 1995 are
$1,586,000 in 1996, $1,151,000 in 1997, $800,000 in 1998, $517,000 in 1999,
$146,000 in 2000 and $80,000 thereafter.
Contingencies
The Company and its subsidiaries are 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.
As security for certain agreements, the Company had standby irrevocable bank
commercial letters of credit and mortgages of approximately $15,730,000 and
$12,695,000 outstanding as of August 26, 1995 and August 27, 1994, respectively.
9. COMMON STOCK OPTIONS
The Company adopted an incentive stock option plan in April, 1983 and reserved
800,000 shares of common stock for issue under the plan. Options granted under
the plan were at a price of not less than 100% of the fair market value on the
date of grant and expired ten years after the grant date. During 1993 the plan
expired.
10. SHAREHOLDERS' EQUITY
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 and per share data in these financial statements
reflect the effect of the two-for-one split.
During 1993 the Company's shareholders voted to amend its Articles of
Organization to increase the number of authorized common shares from 20,000,000
to 30,000,000, and to authorize a new Class B common stock with 20,000,000
authorized shares. The offer to exchange, on a share-for-share basis, shares of
Class B common stock for shares of common stock resulted in 12,627,954 shares of
common stock being exchanged for shares of Class B common stock.
The significant attributes of each type of stock are as follows:
Common stock -- Each share is entitled to one vote and is freely transferable.
Each share of common stock is entitled to a cash dividend equal to 125% of any
cash dividend paid on each share of Class B common stock.
Class B common stock -- Each share is entitled to ten votes and can be converted
to common stock on a share-for-share basis. Until converted to common stock,
however, Class B shares are not freely transferable. Substantially all shares of
Class B common stock are held by officers of the Company.
14
<PAGE> 15
Report of Independent Public Accountants
To the Board of Directors and Shareholders of UniFirst Corporation:
We have audited the accompanying consolidated balance sheets of UniFirst
Corporation (a Massachusetts corporation) and subsidiaries as of August 26, 1995
and August 27, 1994 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended August 26, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of UniFirst Corporation and
subsidiaries as of August 26, 1995 and August 27, 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
August 26, 1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 31, 1995
15
<PAGE> 16
Quarterly Financial Data (Unaudited)
UniFirst Corporation and Subsidiaries
The following is a summary of the results of operations for each of the quarters
within the years ended August 26, 1995 and August 27, 1994.
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $86,212 $86,231 $92,600 $89,998
Income before income taxes 8,544 5,933 8,872 8,395
Net income 5,554 3,856 5,767 5,457
Weighted average shares outstanding 20,511 20,511 20,511 20,511
Net income per share $0.27 $0.19 $0.28 $0.27
================================================================================
<CAPTION>
First Second Third Fourth
1994 Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $78,107 $76,094 $83,106 $80,732
Income before income taxes 9,114 6,089 7,571 7,170
Net income 5,742 3,836 4,770 4,523
Weighted average shares outstanding 20,509 20,509 20,509 20,511
Net income per share $0.28 $0.19 $0.23 $0.22
================================================================================
</TABLE>
Common Stock Prices and Dividends Per Share
For the Years Ended August 26, 1995 and August 27, 1994:
<TABLE>
<CAPTION>
Price Per Share Dividends Per Share
Class B
1995 High Low Common Stock Common Stock
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $13-5/8 $11-1/4 $0.020 $0.025
Second Quarter 13-1/8 11-1/8 0.020 0.025
Third Quarter 12-1/4 11-1/4 0.020 0.025
Fourth Quarter 14-3/8 12-1/8 0.020 0.025
================================================================================
<CAPTION>
Price Per Share Dividends Per Share
Class B
1994 High Low Common Stock Common Stock
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $17-1/4 $15-3/8 $0.020 $0.025
Second Quarter 17-3/8 15-1/4 0.020 0.025
Third Quarter 17 14-1/8 0.020 0.025
Fourth Quarter 16-3/8 11-5/8 0.020 0.025
================================================================================
</TABLE>
The Company's common shares are traded on the New York Stock Exchange (NYSE
Symbol: UNF).
The approximate number of shareholders of record of the Company's common stock
and Class B common stock as of October 31, 1995 were 200 and 21 respectively.
16
<PAGE> 1
Page 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports dated October 31, 1995 incorporated by reference or included in this
Form 10-K, into the Company's previously filed Registration Statement File No.
33-60781.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 22, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF UNIFIRST CORPORATION FOR THE FISCAL YEAR ENDED
AUGUST 26, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-26-1995
<PERIOD-START> AUG-28-1994
<PERIOD-END> AUG-26-1995
<EXCHANGE-RATE> 1
<CASH> 5,889
<SECURITIES> 0
<RECEIVABLES> 34,154
<ALLOWANCES> 734
<INVENTORY> 16,484
<CURRENT-ASSETS> 88,642
<PP&E> 249,502
<DEPRECIATION> 101,428
<TOTAL-ASSETS> 272,691
<CURRENT-LIABILITIES> 57,141
<BONDS> 32,361
<COMMON> 2,051
0
0
<OTHER-SE> 166,545
<TOTAL-LIABILITY-AND-EQUITY> 272,691
<SALES> 355,041
<TOTAL-REVENUES> 355,041
<CGS> 320,510
<TOTAL-COSTS> 320,510
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,787
<INCOME-PRETAX> 31,744
<INCOME-TAX> 11,110
<INCOME-CONTINUING> 20,634
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,634
<EPS-PRIMARY> 1.01
<EPS-DILUTED> 0
</TABLE>
