-----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, OTGxRUniWfD2KFrcoltx/8rfdfjNWFa4vYSo255rWYPEdLDuNYz7KtE73hIuBBHc J2P0rNMmQh33fysCKoxgDg== 0000950131-98-003741.txt : 19980608 0000950131-98-003741.hdr.sgml : 19980608 ACCESSION NUMBER: 0000950131-98-003741 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980426 FILED AS OF DATE: 19980605 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: SEC FILE NUMBER: 000-06643 FILM NUMBER: 98643369 BUSINESS ADDRESS: STREET 1: 101 W 11TH ST 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 26, 1998. OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ________________________. Commission file number: 0-6643 UNITOG COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 44-0529828 - ------------------------------------------ ----------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1300 Washington Street, Kansas City, MO 64105 - ------------------------------------------ ----------------------------------- (Address of principal executive offices) (Zip Code) (816) 474-7000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 26, 1998, the registrant had 9,392,896 shares of common stock, par value $.01 per share, outstanding. TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page Number ITEM 1. Financial Statements (1) Condensed Consolidated Financial Statements (unaudited): Condensed Consolidated Balance Sheets as of April 26, 1998 and January 25, 1998. 3 Condensed Consolidated Statements of Earnings for the Three Months ended April 26, 1998 and April 27, 1997. 4 Condensed Consolidated Statements of Cash Flows for the Three Months ended April 26, 1998 and April 27, 1997. 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 26, 1998 and January 25, 1998 (unaudited)
ASSETS April 26, 1998 January 25, 1998 -------------- ---------------- Current assets: Cash and cash equivalents $ 705,523 $ 1,492,720 Accounts receivable, less allowance for doubtful receivables of $1,141,000 and $1,009,000, respectively 29,476,081 29,631,566 Inventories (note 2) 21,554,503 18,508,958 Rental garments in service, net 44,756,274 41,862,753 Prepaid expenses 1,471,453 1,102,585 ------------ ------------ Total current assets 97,963,834 92,598,582 ------------ ------------ Property, plant and equipment, at cost 193,631,512 189,231,058 Less accumulated depreciation 71,754,704 71,920,005 ------------ ------------ Net property, plant and equipment 121,876,808 117,311,053 ------------ ------------ Other assets, net 32,579,794 29,592,025 Excess cost over net assets of businesses acquired, net 39,777,166 36,806,869 ------------ ------------ $292,197,602 $276,308,529 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $ 3,624,007 $ 3,502,885 Accounts payable 12,473,727 18,591,196 Accrued expenses 12,851,738 12,144,680 Accrued and deferred income taxes payable 13,156,859 12,262,867 ------------ ------------ Total current liabilities 42,106,331 46,501,628 ------------ ------------ Long-term debt, less current installments 127,625,612 110,268,916 Deferred income taxes and other liabilities 15,702,428 15,340,392 Stockholders' equity: Common stock of $.01 par value. Authorized 30,000,000 shares; issued 9,659,305 shares at April 26, 1998 and 9,657,909 shares at January 25, 1998 96,593 96,579 Treasury stock, 266,409 common shares at April 26, 1998 and 289,425 shares at January 25, 1998, at cost (5,792,575) (6,295,337) Additional paid-in capital 41,373,322 41,470,281 Retained earnings 71,085,891 68,926,070 ------------ ------------ Total stockholders' equity 106,763,231 104,197,593 ------------ ------------ $292,197,602 $276,308,529 ============ ============
See accompanying notes to condensed consolidated financial statements. 3 UNITOG COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended April 26, 1998 and April 27, 1997 (unaudited)
April 26, 1998 April 27, 1997 -------------- -------------- Revenues: Rental operations $ 57,423,559 $ 54,031,073 Direct sales 12,912,627 14,878,908 -------------- -------------- Total revenues 70,336,186 68,909,981 -------------- -------------- Operating costs and expenses: Cost of rental operations 46,988,591 43,822,357 Cost of direct sales 10,923,027 12,236,555 Depreciation and amortization 4,825,553 4,158,348 General and administrative 2,083,867 2,449,048 -------------- -------------- Total costs and expenses 64,821,038 62,666,308 -------------- -------------- Operating income 5,515,148 6,243,673 Interest expense 1,982,213 1,455,375 Other expense (income), net (21,335) (47,974) -------------- -------------- Earnings before income taxes 3,554,270 4,836,272 Income taxes 1,351,900 1,837,000 -------------- -------------- Net earnings $ 2,202,370 $ 2,999,272 ============== ============== Net earnings per common share, basic $ .23 $ .31 ============== ============== Net earnings per common share, assuming dilution $ .23 $ .31 ============== ==============
See accompanying notes to condensed consolidated financial statements. 4 UNITOG COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended April 26, 1998 and April 27, 1997 (unaudited)
April 26, 1998 April 27, 1997 ------------------- ------------------- Cash flows from operating activities: Net earnings $ 2,202,370 $ 2,999,272 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 4,825,553 4,158,348 Provision for deferred income taxes 763,000 154,000 Loss (gain) on disposal of equipment (27,588) (9,321) Changes in assets and liabilities: Accounts receivable 155,485 (408,623) Inventories (2,467,078) (676,492) Rental garments in service (1,185,521) 1,058,456 Prepaid expenses (368,868) (222,709) Other noncurrent assets (17,065) 981,886 Accounts payable (6,117,469) 346,351 Accrued expenses 517,058 486,462 Income taxes payable 369,992 1,473,204 Other noncurrent liabilities 123,036 15,883 ------------------- ------------------- Net cash provided (used) by operating activities (1,227,095) 10,356,717 ------------------- ------------------- Cash flows from investing activities: Acquisition of rental operations (13,026,661) (2,363,600) Purchase of property, plant and equipment (4,413,767) (5,560,791) Proceeds from disposal of equipment 39,241 62,173 ------------------- ------------------- Net cash used by investing activities (17,401,187) (7,862,218) ------------------- ------------------- Cash flows from financing activities: Proceeds from stock issuance 422,898 31,746 Increases in long-term debt 17,477,818 -- Repayment of long-term debt -- (1,288,013) Purchase of treasury stock (59,631) -- ------------------- ------------------- Net cash provided (used) by financing activities 17,841,085 (1,256,267) ------------------- ------------------- Net increase (decrease) in cash and cash equivalents (787,197) 1,238,232 Cash and cash equivalents at beginning of period 1,492,720 31,307 ------------------- ------------------- Cash and cash equivalents at end of period $ 705,523 $ 1,269,539 =================== =================== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 1,970,000 $ 1,647,000 =================== =================== Income taxes $ 128,000 $ 208,000 =================== ===================
See accompanying notes to condensed consolidated financial statements. 5 UNITOG COMPANY AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements Three Months Ended April 26, 1998 and April 27, 1997 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 26, 1998, and the results of its operations and its cash flows for the three months ended April 26, 1998 and April 27, 1997. The results of operations for the three months ended April 26, 1998 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 26, 1998 and January 25, 1998:
April 26, 1998 January 25, 1998 -------------- ---------------- Raw materials $ 4,087,873 $ 3,977,563 Work in progress 4,072,402 2,683,273 Finished goods 17,845,457 16,250,295 ----------- ----------- 26,005,732 22,911,131 Less LIFO allowance (4,451,229) (4,402,173) ----------- ----------- $21,554,503 $18,508,958 =========== ===========
Note 3 Cash Dividend - -------------------- At its May 21, 1998 Board of Directors meeting the Board declared a $.09 per share cash dividend payable on June 23, 1998 to stockholders of record on June 5, 1998. The $.09 per share dividend was 20% greater than the semi-annual dividend paid in the second quarter of last year. Note 4 Acquisitions - ------------------- During the first quarter of fiscal 1999, the Company acquired certain uniform rental operations in Minnesota, Nebraska and Pennsylvania for approximately $13 million in cash. The assets acquired were primarily industrial uniform routes in Minnesota and Omaha, Nebraska and industrial uniform and linen routes and production facilities in Bethlehem and Harrisburg, Pennsylvania. These acquisitions are expected to add over $10.5 million in annual rental revenues. These acquisitions will be accounted for using the purchase method. 6 Note 5 Other Comprehensive Income - --------------------------------- During the first quarter of fiscal 1999 the Company adopted Financial Accounting Standard No. 130, Reporting Comprehensive Income (FAS 130). FAS 130 establishes standards for the reporting and display of items that affect stockholders' equity but are not components of reported net earnings. The Company's only component of comprehensive income is foreign currency translation adjustments. For the quarters ended April 26, 1998 and April 27, 1997 comprehensive income differed from net earnings as follows:
April 26, 1998 April 27, 1997 -------------- -------------- Net earnings $2,202,370 $2,999,272 Other comprehensive income, net of tax: Foreign currency translation adjustments (17,681) 16,639 ---------- ---------- Comprehensive income $2,184,689 $3,015,911 ========== ==========
Accumulated other comprehensive income consisted entirely of foreign currency translation adjustments at April 26, 1998 and January 25, 1998. Accumulated other comprehensive income of $34,062 and $51,743 is included in retained earnings at April 26, 1998 and January 25, 1998, respectively. Note 6 Net Earnings Per Common Share - ------------------------------------ Net earnings per common share and net earnings per common share assuming dilution have been computed in accordance with FASB No. 128, Earnings Per Share. Weighted average common shares outstanding and weighted average common shares outstanding, assuming dilution, were as follows:
April 26, 1998 April 27, 1997 -------------- -------------- Weighted average common shares outstanding 9,380,502 9,644,290 Dilutive effect of in-the-money share options 53,993 61,697 --------- --------- Weighted average common shares outstanding, assuming dilution 9,434,495 9,705,987 ========= =========
For for the quarters ended April 26, 1998 and April 27, 1997, stock options were the Company's only potentially dilutive securities. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Liquidity and Capital Resources Cash used by operating activities was $1.2 million for the quarter ended April 26, 1998, a decrease of $11.6 million compared to last year. The decrease was due to reductions in accounts payable related to the timing of payments for our fiscal 1998 capital expenditure and stock repurchase programs and cash used to fund higher levels of inventory and garments in service. At April 26, 1998, the Company had $62 million in borrowings outstanding under its foreign and domestic bank credit facilities. The Company's capitalization ratio was 54.4% at April 26, 1998 compared to 51.4% at January 25, 1998. Working capital was $55.9 million at April 26, 1998 compared to $46.1 million at January 25, 1998. The increase in current assets from our fiscal 1999 rental acquisitions combined with higher inventory levels and reduced accounts payable to produce the $9.8 million increase in working capital. Capital expenditures were $4.4 million through April 26, 1998, $1.1 million less than the comparable period last year. Capital expenditures for fiscal 1999 are expected to approximate $17 to $18 million. The Board of Directors has authorized a future sale-leaseback of the corporate headquarters building should the appropriate circumstances exist. During the first quarter of fiscal 1999, the Company acquired certain uniform rental operations in Minnesota, Nebraska and Pennsylvania for approximately $13 million in cash. The assets acquired were primarily industrial uniform routes in Minnesota and Omaha, Nebraska and industrial uniform and linen routes and production facilities in Bethlehem and Harrisburg, Pennsylvania. These acquisitions are expected to add over $10.5 million in annual rental revenues. These acquisitions were accounted for using the purchase method. On May 21, 1998 the Company declared a $.09 per share cash dividend payable on June 23, 1998 to stockholders of record on June 5, 1998. The $.09 per share dividend was 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 facilities will be sufficient to meet its cash requirements for acquisitions and capital expenditures in the foreseeable future. Results of Operations First quarter fiscal 1999 compared to first quarter fiscal 1998 - --------------------------------------------------------------- Revenues for the first quarter of fiscal 1999 were $70 million, an increase of 2% over the comparable period last year. Rental revenues for the quarter were $57 million, an increase of $3.4 million or 6% higher than last year. The increase in rental revenues was due to our fiscal 1998 and fiscal 1999 acquisitions and internal growth within our network of existing locations. Direct sales for the first quarter of fiscal 1999 were $13 million, a decrease of $2.0 million or 13% below the comparable period last year. The decrease in Direct sales was due to volume declines in four national account programs and fewer implementations of new image programs with national accounts. Depreciation and amortization was $4.8 million, an increase of $667,000 or 16% over the comparable period last year. Amortization of intangible assets from fiscal 1998 and fiscal 1999 rental acquisitions and capital expenditures created the increase over last year. 8 Operating income for the first quarter of fiscal 1999 was $5.5 million, a decrease of $729,000 or 12% below the comparable period last year. Lower operating contribution from the Direct sales business and higher depreciation and amortization offset a modest increase in the operating profitability of the Rental business. Net earnings for the first quarter of fiscal 1999 were $2.2 million, a decrease of $796,000 or 27% below the comparable period last year. Lower profitability of the Direct Sales segment and increased depreciation, amortization and interest costs created the decrease in net earnings in comparison to the comparable period last year. Net earnings for the first quarter of fiscal 1999 were $.23 per diluted share, a decrease of $.08 per diluted share or 26% below the comparable period last year. Weighted average shares outstanding, assuming dilution, decreased by 3% due to stock repurchases initiated under the Company's stock repurchase program. FORWARD LOOKING STATEMENTS -------------------------- The Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements. This Form 10-Q contains forward-looking statements that reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. The words "should," "believe," "expect," "anticipate," "intend," "estimate," and other expressions that indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, performance of acquisitions; economic and business changes; fluctuations in the cost of materials; strikes and unemployment levels; demand and price for the Company's products and services; and the outcome of pending and future litigation and environmental matters. 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 25, 1998. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits. 27 Financial Data Schedule for the Quarter ended April 26, 1998. (b) Reports on Form 8-K. Unitog Company did not file any reports on Form 8-K during the quarter ended April 26, 1998. 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 4, 1997 By: /s/ J. Craig Peterson ---------------------- J. Craig Peterson Executive Vice President Chief Administrative and Financial Officer (Duly Authorized Officer) 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS JAN-31-1999 APR-26-1998 705,523 0 29,476,081 1,141,000 21,554,503 97,963,834 193,631,512 71,754,704 292,197,602 42,106,331 127,625,612 0 0 96,593 106,666,638 292,197,602 12,912,627 70,336,186 10,923,027 62,737,171 0 0 1,982,213 3,554,270 1,351,900 2,202,370 0 0 0 2,202,370 0.23 0.23
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