-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LHGq27pc0UlLCveu1eZJZ3toJb3NwocNTjo+FJcGxJAESLMtwRQMmze4hyEzBYvB 53PEbuN4HeqyV2cghf1gyw== 0000950131-96-002624.txt : 19960605 0000950131-96-002624.hdr.sgml : 19960605 ACCESSION NUMBER: 0000950131-96-002624 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960428 FILED AS OF DATE: 19960604 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITOG CO CENTRAL INDEX KEY: 0000101909 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 440529828 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06643 FILM NUMBER: 96576571 BUSINESS ADDRESS: STREET 1: 101 WEST 11TH STREET CITY: KANSAS CITY STATE: MO ZIP: 64105 BUSINESS PHONE: 8164747000 MAIL ADDRESS: STREET 1: 101 W 11TH STREET CITY: KANSAS CITY STATE: MO ZIP: 64105 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 28, 1996. OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to _______________________. Commission file number: 0-6643 UNITOG COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 44-0529828 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 101 W. 11th Street, Kansas City, MO 64105 - ---------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (816) 474-7000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. As of April 28, 1996, the registrant had 9,572,724 shares of common stock, par value $.01 per share, outstanding. TABLE OF CONTENTS
Page PART I. FINANCIAL INFORMATION Number ITEM 1. Financial Statements (1) Condensed Consolidated Financial Statements (unaudited): Condensed Consolidated Balance Sheets as of April 28, 1996 and January 28, 1996. 3 Condensed Consolidated Statements of Earnings for the Three Months ended April 28, 1996 and April 30, 1995. 4 Condensed Consolidated Statements of Cash Flows for the Three Months ended April 28, 1996 and April 30, 1995. 5 (2) Notes to Condensed Consolidated Financial Statements. 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 8 PART II. - OTHER INFORMATION ITEM I. Legal Proceedings 10 ITEM 6. Exhibits and Reports on Form 8-K 10
2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. UNITOG COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS APRIL 28, 1996 AND JANUARY 28, 1996 (UNAUDITED)
April 28, January 28, ASSETS 1996 1996 ------------ ------------ Current assets: Cash and cash equivalents $ 931,962 $ 28,321 Accounts receivable, less allowance for doubtful receivables of $863,000 and $760,000, respectively 25,716,782 25,012,073 Inventories (note 2) 16,805,871 15,333,981 Rental garments in service, net 39,201,335 36,774,298 Prepaid expenses 2,115,498 1,233,948 ------------ ------------ Total current assets 84,771,448 78,382,621 ------------ ------------ Property, plant and equipment, at cost 147,735,203 140,834,624 Less accumulated depreciation 61,308,166 58,542,615 ------------ ------------ Net property, plant and equipment 86,427,037 82,292,009 ------------ ------------ Other assets, net 39,063,758 30,848,817 Excess cost over net assets of businesses acquired, net 36,316,795 32,045,645 ------------ ------------ $246,579,038 $223,569,092 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $ 484,056 $ 481,087 Accounts payable 13,324,820 15,300,599 Accrued expenses 12,996,479 13,399,851 Income taxes payable 819,046 498,860 Deferred income taxes 11,908,000 10,788,000 ------------ ------------ Total current liabilities 39,532,401 40,468,397 ------------ ------------ Long-term debt, less current installments 104,127,582 83,731,099 Other liabilities, noncurrent 1,081,831 1,200,878 Deferred income taxes, noncurrent 12,104,011 12,044,011 Stockholders' equity: Common stock of $.01 par value. Authorized 30,000,000 shares; issued and outstanding 9,572,724 shares 95,727 92,793 Additional paid-in capital 40,045,170 39,200,675 Retained earnings 49,592,316 46,831,239 ------------ ------------ Total stockholders' equity 89,733,213 86,124,707 ------------ ------------ $246,579,038 $223,569,092 ============ ============
See accompanying notes to condensed consolidated financial statements. 3 UNITOG COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS THREE MONTHS ENDED APRIL 28, 1996 AND APRIL 30, 1995 (UNAUDITED)
April 28, April 30, 1996 1995 -------------- -------------- Revenues: Rental operations $48,430,562 $35,970,814 Direct sales 15,504,301 14,622,146 ----------- ----------- Total revenues 63,934,863 50,592,960 ----------- ----------- Operating costs and expenses: Cost of rental operations 39,893,480 29,170,113 Cost of direct sales 12,440,956 11,918,033 Depreciation and amortization 3,650,384 2,524,691 General and administrative 2,176,447 2,023,361 ----------- ----------- Total costs and expenses 58,161,267 45,636,198 ----------- ----------- Operating income 5,773,596 4,956,762 Interest expense 1,343,596 630,563 Other expense (income), net (23,077) 4,560 ----------- ----------- Earnings before income taxes 4,453,077 4,321,639 Income taxes 1,692,000 1,685,000 ----------- ----------- Net earnings $ 2,761,077 $ 2,636,639 =========== =========== Net earnings per common share $ .29 $ .28 =========== =========== Weighted average common and common equivalent shares outstanding 9,435,093 9,336,026 =========== =========== Dividends per common share (note 3) $ -- $ -- =========== ===========
See accompanying notes to condensed consolidated financial statements. 4 UNITOG COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED APRIL 28, 1996 AND APRIL 30, 1995 (UNAUDITED)
April 28, April 30, 1996 1995 ------------ ------------ Cash flows from operating activities: Net earnings $ 2,761,077 $ 2,636,639 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,650,383 2,524,691 Provision for deferred income taxes 1,180,000 970,000 Disposal of equipment, net of gains and losses 12,798 14,128 Changes in assets and liabilities: Accounts receivable 278,219 (225,514) Inventories (1,471,890) (550,689) Rental garments in service 481,963 (729,968) Prepaid expenses (881,550) (227,342) Other noncurrent assets 254,805 (12,142) Accounts payable (1,975,779) 2,243,173 Accrued expenses (1,362,943) 870,945 Income taxes payable 320,186 639,657 Other noncurrent liabilities (119,047) 229,634 ------------ ------------ Net cash provided by operating activities 3,128,222 8,383,212 ------------ ------------ Cash flows from investing activities: Acquisition of rental operations (17,052,357) (9,789,141) Purchase of property, plant and equipment (5,302,973) (3,586,758) ------------ ------------ Net cash used by investing activities (22,355,330) (13,375,899) ------------ ------------ Cash flows from financing activities: Proceeds from stock issuance 847,429 -- Increases in long-term debt 19,283,320 900,000 Repayments of long-term debt -- (24,413) ------------ ------------ Net cash provided by financing activities 20,130,749 875,587 ------------ ------------ Net increase (decrease) in cash and cash equivalents 903,641 (4,117,100) Cash and cash equivalents at beginning of period 28,321 7,717,999 ------------ ------------ Cash and cash equivalents at end of period $ 931,962 $ 3,600,899 ============ ============ Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 1,438,000 $ 711,000 ============ ============ Income taxes $ 185,000 $ 75,000 ============ ============
See accompanying notes to condensed consolidated financial statements. 5 UNITOG COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED APRIL 28, 1996 AND APRIL 30, 1995 Note 1 - ------ In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position of the Company as of April 28, 1996, and the results of its operations and its cash flows for the three months ended April 28, 1996 and April 30, 1995. The results of operations for the three months ended April 28, 1996 are not necessarily indicative of the results to be expected for the full year. Note 2 Inventories - ------------------ The following is a summary of inventories at April 28, 1996 and January 28, 1996:
April 28, 1996 January 28, 1996 -------------- ---------------- Raw materials $ 4,092,678 $ 4,135,131 Work in progress 2,867,655 2,503,558 Finished goods 13,726,978 12,501,732 ----------- ----------- 20,687,311 19,140,421 Less LIFO allowance (3,881,440) (3,806,440) ----------- ----------- $16,805,871 $15,333,981 =========== ===========
Note 3 Cash Dividend - -------------------- At its May 23, 1996 Board of Directors meeting the Board declared a $.06 per share cash dividend payable on June 24, 1996 to stockholders of record on June 7, 1996. The $.06 per share dividend was a 20% increase over the prior year. 6 Note 4 Acquisitions: - -------------------- During the first quarter of fiscal 1997 the Company acquired a portion of the assets of Central Quality Services Corporation headquartered in Farmington Hills, Michigan for approximately $17 million in cash. The assets acquired were primarily industrial uniform routes and production facilities in central and northern Michigan and eastern Illinois. The acquisition was accounted for as a purchase. During the first quarter of fiscal 1997 the Company also acquired American Dust Control Co., Inc. in Philadelphia, Pennsylvania in exchange for Unitog common stock. The acquisition was accounted for as a pooling-of-interests. Prior period financial statements were not restated due to immateriality. The operating results of these acquisitions have been included in the consolidated results of the Company since their acquisition with an insignificant effect on revenues and net earnings. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities was $3.1 million for the quarter ended April 28, 1996, a decrease of $5.3 million or 62% below last year. The decrease was principally due to an increase in inventories and reductions in trade accounts payable and accrued expenses resulting from the timing of certain acquisition related liabilities and vendor payments. Cash and cash equivalents were $932,000 at April 28, 1996. At April 28, 1996, the Company had $32.5 million in borrowings outstanding under its bank credit facility. The amount of borrowings available under the Company's bank credit facility was $17 million at April 28, 1996. The Company's capitalization ratio was 54% at April 28, 1996 compared to 49% at January 28, 1996. Working capital was $45.2 million at April 28, 1996 compared to $37.9 million at January 28, 1996. Purchased working capital from rental acquisitions coupled with reduced acquisition related liabilities and trade payables created the increase in working capital. Capital expenditures were $5.3 million through April 28, 1996, 48% greater than last year. Capital expenditures for fiscal 1996 are expected to approximate $20 million. During the first quarter of fiscal 1997, the Company issued $4.5 million in variable rate tax-exempt Industrial Revenue Bonds which mature in 2020. The bonds bear interest at floating rates based upon market conditions for tax- exempt issues. The bond proceeds were used to repay bank debt which had been incurred to finance facility construction. During the first quarter of fiscal 1997 the Company acquired a portion of the assets of Central Quality Services Corporation headquartered in Farmington Hills, Michigan for approximately $17 million in cash. The assets acquired were primarily industrial uniform routes and production facilities in central and northern Michigan and eastern Illinois. The acquisition was accounted for as a purchase and the operating results of this acquisition have been included in the consolidated results of the Company since its purchase with an insignificant effect on revenues and net earnings. The acquisition will add approximately $15 million in annual rental revenues. During the first quarter of fiscal 1997 the Company acquired American Dust Control Co., Inc. in Philadelphia, Pennsylvania in exchange for Unitog common stock. The acquisition was accounted for as a pooling-of-interests. The operating results of this acquisition have been included in the consolidated results of the Company since its purchase with an insignificant effect on revenues and net earnings. The acquisition will add approximately $3 million in annual rental revenues. Prior period financial statements were not restated due to immateriality. On May 23, 1995 the Company declared a $.06 per share cash dividend payable on June 24, 1996 to stockholders of record on June 7, 1996. The $.06 per share dividend is 20% greater than the semi-annual dividend paid in the second quarter of last year. Management believes that cash generated from operations, and its bank credit facility will be sufficient to meet its cash requirements for acquisitions and capital expenditures in the foreseeable future. 8 RESULTS OF OPERATIONS First quarter fiscal 1997 compared to first quarter fiscal 1996 - --------------------------------------------------------------- Revenues for the first quarter of fiscal 1997 were $63.9 million, an increase of $13.3 million or 26% over the comparable period last year. Rental revenues for the quarter were $48.4 million, an increase of $12.5 million or 35% higher than last year. The increase in rental revenues was due to our fiscal 1996 and fiscal 1997 acquisitions and internal growth within our network of existing locations. Direct sales for the first quarter of fiscal 1997 were $15.5 million, an increase of $882,000 or 6% over the comparable period last year. The increase in Direct sales was due to new image programs with new and existing customers. Operating income for the first quarter of fiscal 1997 was $5.8 million, an increase of $817,000 or 16% over the comparable period last year. Higher operating contribution from both the Rental and Direct sales businesses created the improvement over last year. Depreciation and amortization was $3.7 million, and increase of $1.1 million or 45% over the comparable period last year. Additional depreciation from our acquired rental operations combined with increased amortization of acquisition related intangible assets created the increase. Interest expense for the first quarter of fiscal 1997 was $1.3 million, an increase of $713,000 over the comparable period last year. Higher debt levels related to our fiscal 1996 and fiscal 1997 rental acquisitions created the increase in interest expense. Net earnings for the first quarter of fiscal 1997 were $2.8 million, an increase of $124,000 or 5% over the comparable period last year. Higher revenues and improved operating contribution from both the Rental and Direct sales business segments offset increased depreciation, amortization and interest costs in comparison to last year. Net earnings per common share for the first quarter of fiscal 1997 were $.29 per share, an increase of $.01 per share or 4% over the comparable period last year. FORWARD LOOKING STATEMENTS -------------------------- Forward-looking statements appear in this quarterly report, including in Management's Discussion and Analysis. These statements reflect Management's current expectations for future revenues and expenditures. Actual results may differ materially from those expectations. Factors that could cause results to differ materially include labor-related events, and particularly strikes, labor disputes or increased costs of labor; and changes in the general economy, including unemployment levels. 9 PART II - OTHER INFORMATION --------------------------- Item 1. Legal Proceedings ----------------- See the discussion of certain environmental matters in Part I, Item 1 of the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 1996. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits. 27 Financial Data Schedule for the Quarter ended April 28, 1996. (b) Reports on Form 8-K. Unitog Company has not filed any reports on Form 8-K during the quarter ended April 28, 1996. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Unitog Company Dated: June 3, 1996 By: /s/ J. Craig Peterson ---------------------------- J. Craig Peterson Senior Vice-President of Finance and Administration, Chief Financial Officer (Duly Authorized Officer) 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JAN-26-1997 APR-28-1996 931,962 0 25,716,782 863,000 16,805,871 84,771,448 147,735,203 61,308,166 246,579,038 39,532,401 104,127,582 95,727 0 0 89,637,486 246,579,038 15,504,301 63,934,863 12,440,956 55,984,820 0 0 1,343,596 4,453,077 1,692,000 2,761,077 0 0 0 2,761,077 0.29 0.29
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