-----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, Df9m29FoQAt4i6SsnlObu6p55jesdh5qiXLVxvwW3vBLVNzUOpDWiq9b+uOfZ05N 1LqgOat22av2QwZy2o8y9g== 0001021408-01-502013.txt : 20010614 0001021408-01-502013.hdr.sgml : 20010614 ACCESSION NUMBER: 0001021408-01-502013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010430 FILED AS OF DATE: 20010613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COYNE INTERNATIONAL ENTERPRISES CORP CENTRAL INDEX KEY: 0001066242 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [5040] STATE OF INCORPORATION: NY FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-60247 FILM NUMBER: 1660091 BUSINESS ADDRESS: STREET 1: 140 CORTLAND AVENUE CITY: SYRACUSE STATE: NY ZIP: 13221 BUSINESS PHONE: 3154759978 10-Q 1 d10q.txt COYNE INTERNATIONAL ENTERPRISES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended April 30, 2001 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 No. 0-11399 ------- COYNE INTERNATIONAL ENTERPRISES CORP. BLUE RIDGE TEXTILE MANUFACTURING, INC. OHIO GARMENT RENTAL, INC. - -------------------------------------------------------------------------------- (Exact name of Registrants as specified in their respective charters) New York 16-6040758 Georgia 58-2018333 Ohio 34-1261376 - ----------------------------------------- ------------------------------------- (State or Other Jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 140 Cortland Avenue, Syracuse, New York 13221 - ----------------------------------------- ------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (315) 475-1626 -------------- Securities Registered Pursuant to Section 12(b) of the Act: NONE ---- Securities Registered Pursuant to Section 12(g) of the Act: NONE ---- 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 1 TABLE OF CONTENTS
Page ---- PART I. Financial Information: Item 1. Financial Statements Consolidated Balance Sheets ................................................................. 3 Consolidated Statements of Operations ....................................................... 5 Consolidated Statements of Cash Flows........................................................ 6 Notes to Consolidated Financial Statements................................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........ 16 PART II. Other Information Item 1. Legal Proceedings............................................................................ 17 Item 2. Changes in Securities and Use of Proceeds.................................................... 17 Item 3. Defaults Upon Senior Securities.............................................................. 17 Item 4. Submission of Matters to a Vote of Security Holders.......................................... 17 Item 5. Other Information............................................................................ 17 Item 6. Exhibits and Reports on Form 8-K............................................................. 17 Signatures
2 Item 1. Financial Statements Coyne International Enterprises Corp. and Subsidiaries Consolidated Balance Sheets
- --------------------------------------------------------------------------------------------------------------------------------- April 30, October 31, Assets 2001 2000 ------ ------------------ ------------------ (unaudited) Current Assets: Cash and cash equivalents $ 923,756 $ 909,340 Accounts receivable, less allowance for doubtful accounts of $467,000 in April and $341,000 in October 16,295,280 16,929,975 Inventories 9,266,458 12,725,141 Rental merchandise in service 33,166,256 32,712,967 Prepaid expenses and other assets 707,966 698,768 ------------------ ------------------ Total current assets 60,359,716 63,976,191 Property, plant and equipment, at cost: Land 2,432,180 2,432,180 Buildings and improvements 41,879,123 39,829,930 Machinery and equipment 41,986,828 42,729,434 Vehicles 11,820,652 11,420,295 Construction in process 1,258,113 1,505,965 ------------------ ------------------ 99,376,896 97,917,804 Less: Accumulated depreciation (56,815,483) (54,100,700) ------------------ ------------------ Total property, plant and equipment 42,561,413 43,817,104 Other assets: Purchased routes and acquisition intangibles, net 16,813,482 17,239,942 Deferred financing costs, net 2,193,387 2,322,568 Deferred income taxes 4,893,623 3,724,623 Other 150,059 202,521 ------------------ ------------------ Total other assets 24,050,551 23,489,654 ------------------ ------------------ $ 126,971,680 $ 131,282,949 ================== ==================
See notes to unaudited consolidated financial statements. 3 Coyne International Enterprises Corp. and Subsidiaries Consolidated Balance Sheets ================================================================================
April 30, October 31, Liabilities and Shareholders' Equity (Deficit) 2001 2000 ---------------------------------------------- ----------------- ---------------- (unaudited) Current Liabilities: Current maturities of long-term obligations $ 3,243,076 $ 3,385,619 Accounts payable 9,026,365 8,934,685 Accrued expenses: Salaries and employee benefits 3,276,206 4,714,396 Accrued interest 3,570,879 3,655,175 Other 3,996,215 2,268,201 Deferred income taxes 12,108,370 12,032,060 ----------------- ---------------- Total current liabilities 35,221,111 34,990,136 Long-term obligations, net of current maturities 100,389,031 102,811,292 Other liabilities 2,050,817 2,170,095 ----------------- ---------------- Total liabilities 137,660,959 139,971,523 ----------------- ---------------- Shareholders' equity (deficit): Preferred stock - 5% non-cumulative, non-voting, callable at par: Class A - $100 par value; 30,000 shares authorized, 23,107 shares issued and outstanding 2,310,700 2,310,700 Class B - $500 par value; 5,000 shares authorized, 4,991 shares issued, 2,991 shares outstanding 2,495,500 2,495,500 Common stock - $.01 par value: Class A - voting; 100,000 shares authorized, 2,923 shares issued and outstanding 29 29 Class B - non-voting; 99,000 shares authorized, 74,030 shares issued and outstanding 740 740 Additional paid-in capital 849,512 849,512 Retained earnings (deficit) (13,977,100) (12,212,139) Accumulated other comprehensive loss (135,569) ----------------- ---------------- (8,456,188) (6,555,658) Less: Treasury stock, 2,000 shares of Class B preferred stock at cost (166,667) (166,667) Shareholder receivables (2,066,424) (1,966,249) ----------------- ---------------- Total shareholders' equity (deficit) (10,689,279) (8,688,574) ----------------- ---------------- $ 126,971,680 $ 131,282,949 ================= ================
See notes to unaudited consolidated financial statements. 4 Coyne International Enterprises Corp. and Subsidiaries Consolidated Statements of Operations and Retained Earnings (Deficit)
Three Months Ended Six Months Ended April 30, April 30, ---------------------------- ---------------------------- 2001 2000 2001 2000 ------------- ------------- ------------- ------------- Unaudited Unaudited Revenue: Rental Operations 36,161,153 35,321,515 71,682,457 70,111,227 Direct Sales 2,142,832 2,226,473 4,765,031 4,575,769 ------------ ------------ ------------ ------------ Total Revenue 38,303,985 37,547,988 76,447,488 74,686,996 ------------ ------------ ------------ ------------ Operating Expenses: Cost of rental operations 27,343,987 25,644,680 54,279,430 50,875,981 Cost of direct sales 1,331,971 1,322,079 2,968,992 2,898,121 Selling, general and administrative 6,511,352 6,178,302 12,919,902 12,038,189 Depreciation and amortization 1,551,639 1,561,836 3,109,711 3,095,921 ------------ ------------ ------------ ------------ Total Operating Expenses 36,738,949 34,706,897 73,278,035 68,908,212 ------------ ------------ ------------ ------------ Income from operations 1,565,036 2,841,091 3,169,453 5,778,784 Interest Expense 2,929,159 2,870,855 5,924,414 5,664,168 ------------ ------------ ------------ ------------ Income (loss) before income taxes (1,364,123) (29,764) (2,754,961) 114,616 Income tax expense (489,000) 73,000 (990,000) 223,000 ------------ ------------ ------------ ------------ Net Loss (875,123) (102,764) (1,764,961) (108,384) ============ ============ ============ ============
See notes to unaudited consolidated financial statements 5 Coyne International Enterprises Corp. and Subsidiaries Consolidated Statements of Cash Flows - --------------------------------------------------------------------------------
Six Months Ended April 30, ----------------------------------- 2001 2000 ---------------- --------------- (unaudited) (unaudited) Cash flows from operating activities: Net loss $ (1,764,961) $ (108,384) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation of property, plant and equipment 2,178,082 2,163,920 Amortization of capitalized leases 536,701 536,701 Amortization of acquisition intangibles 387,792 372,798 Amortization of deferred financing costs 172,434 176,040 Provision for deferred income taxes (1,092,690) 155,000 Changes in operating assets and operating liabilities: Accounts receivable 634,695 (558,884) Inventories 3,458,682 (2,955,214) Rental merchandise in service (453,289) (943,936) Prepaid expenses and other assets 43,264 388,755 Accounts payable, accrued expenses, and other liabilities 42,362 (206,055) ---------------- --------------- Net cash provided by operating activities 4,143,072 (979,259) ---------------- --------------- Cash flows from investing activities: Purchase of property, plant and equipment (1,459,092) (1,994,322) Acquisition of business, net of cash acquired 38,668 (251,506) ---------------- --------------- Net cash used in investing activities (1,420,424) (2,245,828) ---------------- --------------- Cash flows from financing activities: Proceeds from long-term borrowings 20,259,269 21,247,993 Payments under long-term obligations (22,824,073) (17,942,278) Increase in shareholder receivables (100,175) (20,144) Deferred financing costs incurred (43,253) 0 ---------------- --------------- Net cash provided by (used in) financing activities (2,708,232) 3,285,571 ---------------- --------------- Net increase in cash 14,416 60,484 Cash and cash equivalents: Beginning of period 909,340 213,407 ---------------- --------------- End of period $ 923,756 $ 273,891 ================ =============== Supplemental disclosure of cash flow information: Interest paid $ 5,836,255 $ 5,479,597 Income taxes paid 51,732 11,734
See notes to unaudited consolidated financial statements. 6 Coyne International Enterprises Corp. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements of Coyne International Enterprises Corp. and Subsidiaries, (the Company), have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, quarterly results include all adjustments, (consisting of normal recurring accruals), considered necessary for a fair presentation. For further information, refer to the consolidated financial statements and notes included in the Company's annual report on Form 10-K for the year ended October 31, 2000. The Company uses a fifty-two/fifty-three week fiscal year ending on the last Saturday of October, with quarterly interim periods of thirteen weeks. For convenience, the dating of the accompanying financial statements, and notes, herein, have been labeled as of and for the periods ending April 30, 2001, October 31, 2000 and April 30, 2000 rather than the actual period-end dates. Operating results for the three and six month period, ended April 30, 2001 are not necessarily indicative of the results that may be expected for the year ended October 31, 2001. 2. Long-term Obligations At April 30, 2001 the Company was not in compliance with certain financial covenants of the Company's existing credit facility, (the Agreement). Subsequent to April 30, 2001 the Company obtained waivers of such non-compliance. In addition, in June 2001, the Company amended certain terms and financial covenants of the Agreement. Under the terms of the amendment the maximum credit available under the Company's revolving credit facility has been decreased by $8,198,000 to $30,000,000, subject to certain collateral limitations. In addition, credit available under the capital expenditure facility has been reduced to $4,942,000. As of April 30, 2001, after giving consideration to the June 12 2001, amendment, the Company had approximately $2,883,000 available under its revolving credit facility and $1,000,000 in the capital expenditure facility. 3. Income Taxes The Company's effective tax rate differs from the federal statutory rate of 34% due to state taxes and certain expenses that are not deductible for tax purposes. These non-deductible items include the amortization of certain intangible assets and a portion of certain meals and entertainment expenses. 7 4. Derivative Instruments and Hedging Activities The Company maintains an interest-rate risk-management strategy that uses interest rate swaps to minimize significant, unanticipated earnings fluctuations caused by interest-rate volatility. The Company's specific goals are (1) to manage interest-rate sensitivity by modifying the repricing or maturity characteristics of certain of its debt and (2) to lower, (where possible), the cost of its borrowed funds. The Company uses interest-rate swaps to convert a portion of its variable-rate debt to fixed rates. At April 30, 2001, the notional amount of such debt was $4,915,600. The Company adopted Statement of Financial Accounting Standards No. 133, (SFAS 133), Accounting for Derivative Instruments and Hedging Activities, on November 1, 2000. Under SFAS 133, the Company's existing interest rate swaps have been designated as highly effective cash flow hedges. In accordance with the transition provisions of SFAS 133, the Company recorded a net-of-tax cumulative-effect-type adjustment of $9,934 in other comprehensive income to recognize this cash flow hedge at fair value. 5. Reclassification Certain amounts have been reclassified to conform with the fiscal 2001 presentation. 6. Comprehensive Income The components of comprehensive income (loss) were as follows:
Six Months Six Months ended ended April 30, 2001 April 30, 2000 -------------- -------------- Net loss ($1,764,961) ($108,384) Other comprehensive income (loss): Changes in fair value of interest rate swap (145,502) 0 ------------ ------------- Comprehensive loss ($1,910,463) ($108,384) ============= =============
8 Coyne International Enterprises Corp. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 7. Consolidating Financial Statements On June 26, 1998, the Company sold $75,000,000 of 11-1/4% Senior Subordinated Notes due 2008, (the Notes). The Notes are jointly and severally guaranteed by the following wholly-owned subsidiaries of the Company, (the Subsidiary Guarantors): Blue Ridge Textile Manufacturing, Inc. and Ohio Garment Rental, Inc. The following consolidating financial statements for the Company segregate the financial information of Coyne International Enterprises Corp. (the Parent Company) and the Subsidiary Guarantors. 9 Coyne International Enterprises Corp. And Subsidiaries
Consolidating Balance Sheets April 30, 2001 ------------------------------------------------------------------- Parent Subsidiary Consolidating Consolidated Assets Company Guarantors Adjustments Totals ------ -------------- --------------- -------------- ---------------- Current Assets: Cash and cash equivalents $ 1,149,233 $ (225,477) $ 923,756 Accounts receivable 14,459,640 1,835,640 16,295,280 Inventories 7,107,234 2,159,224 9,266,458 Rental merchandise in service 30,617,895 2,548,361 33,166,256 Prepaid expenses and other assets 8,581,423 76,815 (7,950,272) 707,966 --------------- --------------- -------------- ---------------- Total current assets 61,915,425 6,394,563 (7,950,272) 60,359,716 Property, plant and equipment, at cost: 90,469,262 8,907,634 99,376,896 Less: Accumulated depreciation (51,074,449) (5,741,034) (56,815,483) -------------- --------------- -------------- ---------------- Total property, plant and equipment 39,751,508 3,166,600 0 42,561,413 Other assets: Purchased routes and acquisition intangibles, net 16,547,738 265,744 16,813,482 Deferred financing costs, net 2,193,387 0 2,193,387 Deferred income taxes 4,893,623 0 4,893,623 Other 149,570 489 150,059 -------------- --------------- -------------- ---------------- Total other assets 23,784,318 266,233 0 24,050,551 -------------- --------------- -------------- ---------------- $ 125,094,556 $ 9,827,396 $ (7,950,272) $ 126,971,680 ============== =============== ============== ================ Liabilities and Shareholders' Equity (Deficit) ---------------------------------------------- Current Liabilities: Current maturities of long-term obligations $ 3,243,076 $ 3,243,076 Accounts payable 8,425,709 600,656 9,026,365 Accrued expenses: Salaries and employee benefits 3,188,161 88,045 3,276,206 Accrued interest 3,570,879 0 3,570,879 Other 2,807,792 1,188,423 3,996,215 Deferred income taxes 12,108,370 0 12,108,370 -------------- ---------------- -------------- ---------------- Total current liabilities 33,343,987 1,877,124 0 35,221,111 Long-term obligations, net of current maturities 100,389,031 100,389,031 Other liabilities 2,050,817 1,979,802 (1,979,802) 2,050,817 --------------- --------------- -------------- ---------------- Total liabilities 135,783,835 3,856,926 (1,979,802) 137,660,959 --------------- --------------- -------------- ---------------- Shareholders' equity (deficit): Preferred stock 4,806,200 4,806,200 Common stock 769 1,250,019 (1,250,019) 769 Additional paid-in capital 849,512 298,981 (298,981) 849,512 Retained earnings (deficit) (13,977,100) 4,421,470 (4,421,470) (13,977,100) Accumulated other comprehensive loss (135,569) (135,569) -------------- --------------- -------------- ---------------- (8,456,188) 5,970,470 (5,970,470) (8,456,188) Less: Treasury stock, 2,000 shares of Class B preferred stock at cost (166,667) (166,667) Shareholder receivables (2,066,424) (2,066,424) -------------- --------------- -------------- ---------------- Total shareholders' equity (deficit) (10,689,279) 6,247,298 (6,247,298) (10,689,279) -------------- --------------- -------------- ---------------- 125,094,556 $ 9,827,396 $ (7,950,272) $ 126,971,680 ============== =============== ============== ================
10 Coyne International Enterprises Corp. and Subsidiaries
Consolidating Balance Sheets October 31, 2000 -------------------------------------------------------------------- Parent Subsidiary Consolidating Consolidated Assets Company Guarantors Adjustments Totals ------ -------------- --------------- --------------- ----------------- Current Assets: Cash and cash equivalents $ 955,728 $ (46,388) $ 909,340 Accounts receivable 15,243,854 1,686,121 16,929,975 Inventories 9,487,201 3,237,940 12,725,141 Rental merchandise in service 30,643,937 2,069,030 32,712,967 Prepaid expenses and other assets 10,035,907 14,628 (9,351,767) 698,768 --------------- --------------- --------------- ----------------- Total current assets 66,366,627 6,961,331 (9,351,767) 63,976,191 Property, plant and equipment, at cost: 89,059,067 8,858,737 97,917,804 Less: Accumulated depreciation (48,572,337) (5,528,363) (54,100,700) --------------- --------------- --------------- ----------------- Total property, plant and equipment 40,486,730 3,330,374 0 43,817,104 Other assets: Purchased routes and acquisition intangibles, net 16,968,910 271,032 17,239,942 Deferred financing costs, net 2,322,568 0 2,322,568 Deferred income taxes 3,724,623 0 3,724,623 Other 202,521 0 202,521 --------------- --------------- --------------- ----------------- Total other assets 23,218,622 271,032 0 23,489,654 --------------- --------------- --------------- ----------------- $ 130,071,979 $ 10,562,737 $ (9,351,767) $ 131,282,949 =============== =============== =============== ================= Liabilities and Shareholders' Equity (Deficit) --------------------------------------------- Current Liabilities: Current maturities of long-term obligations $ 2,707,503 $ 678,116 $ 3,385,619 Accounts payable 8,934,685 8,934,685 Accrued expenses: Salaries and employee benefits 4,635,123 79,273 4,714,396 Accrued interest 3,655,175 3,655,175 Other 1,814,620 453,581 2,268,201 Deferred income taxes 12,032,060 12,032,060 --------------- --------------- --------------- ----------------- Total current liabilities 33,779,166 1,210,970 0 34,990,136 Long-term obligations, net of current maturities 102,811,292 102,811,292 Other liabilities 2,170,095 3,242,883 (3,242,883) 2,170,095 --------------- --------------- --------------- ----------------- Total liabilities 138,760,553 4,453,853 (3,242,883) 139,971,523 --------------- --------------- --------------- ----------------- Shareholders' equity (deficit): Preferred stock 4,806,200 4,806,200 Common stock 769 1,250,019 (1,250,019) 769 Additional paid-in capital 849,512 298,981 (298,981) 849,512 Retained earnings (deficit) (12,212,139) 4,559,884 (4,559,884) (12,212,139) --------------- --------------- --------------- ----------------- (6,555,658) 6,108,884 (6,108,884) (6,555,658) Less: Treasury stock, 2,000 shares of Class B preferred stock at cost (166,667) (166,667) Shareholder receivables (1,966,249) (1,966,249) --------------- -------------------------------- ----------------- Total shareholders' equity (deficit) (8,688,574) 6,108,884 (6,108,884) (8,688,574) --------------- --------------- --------------- ----------------- $ 130,071,979 $ 10,562,737 $ (9,351,767) $ 131,282,949 =============== =============== =============== =================
11 Coyne International Enterprises Corp. and Subsidiaries Consolidating Statements of Operations
Three Months Ended April 30, 2001 ---------------------------------------------------------------------- Parent Subsidiary Consolidating Consolidated Company Guarantors Adjustments Totals ---------------- --------------------------------------------------- Revenue: Rental Operation 33,652,185 2,508,967 0 36,161,152 Direct Sales 892,631 2,892,938 (1,642,737) 2,142,832 ---------------- ---------------- -------------- -------------- 34,544,816 5,401,905 (1,642,737) 38,303,984 ---------------- ---------------- -------------- -------------- Operating expenses: Cost of rental operations 25,328,575 2,015,412 0 27,343,987 Cost of direct sales 499,018 2,467,690 (1,633,737) 1,332,971 Selling, general and administrative 5,689,246 941,834 (119,728) 6,511,352 Depreciation and amortization 1,463,942 87,697 0 1,551,639 ---------------- ---------------- -------------- -------------- 32,979,781 5,512,633 (1,753,465) 36,738,949 ---------------- ---------------- -------------- -------------- Income (loss) from operations 1,565,036 (110,728) 110,728 1,565,036 Interest expense 2,929,159 0 0 2,929,159 ---------------- ---------------- -------------- -------------- Income (loss) before income tax (1,364,123) (110,728) 110,728 (1,364,123) Income taxes (444,709) (44,291) 0 (489,000) ---------------- ---------------- -------------- -------------- Net income (loss) (919,414) (66,437) 110,728 (875,123) ================ ================ ============== ==============
12 Coyne International Enterprises Corp. and Subsidiaries Consolidating Statements of Operations
Three Months Ended April 30, 2000 ---------------------------------------------------------------------- Parent Subsidiary Consolidating Consolidated Company Guarantors Adjustments Totals ---------------- --------------------------------------------------- Revenue: Rental Operations 32,948,789 2,372,727 35,321,516 Direct Sales 796,928 4,094,821 (2,665,276) 2,226,473 ---------------- ---------------- --------------- -------------- 33,745,717 6,467,548 (2,665,276) 37,547,989 ---------------- ---------------- --------------- -------------- Operating expenses: Cost of rental operations 23,832,124 1,802,776 25,634,900 Cost of direct sales 460,031 3,465,324 (2,603,276) 1,322,079 Selling, general and administrative 5,127,373 1,015,488 36,850 6,179,671 Depreciation and amortization 1,485,138 85,110 1,570,248 ---------------- ---------------- --------------- -------------- 30,904,666 6,368,698 (2,556,426) 34,706,898 ---------------- ---------------- --------------- -------------- Income from operations 2,841,051 98,850 (98,850) 2,841,091 Interest expense 2,870,855 0 0 2,870,855 ---------------- ---------------- --------------- -------------- Income (loss) before income tax (29,804) 98,850 (98,850) (29,764) Income taxes 33,460 39,540 0 73,000 ---------------- ---------------- --------------- -------------- Net income (loss) (63,264) 59,310 (98,850) (102,764) ================ ================ =============== ==============
13 Coyne International Enterprises Corp. and Subsidiaries
------------------------------------------------------------------- Six Months Ended April 30, 2001 ------------------------------------------------------------------- Consolidating Statements of Cash Flows Parent Subsidiary Consolidating Consolidated Company Guarantors Adjustments Totals ------------- ------------ ------------- ------------- Cash flows from operating activities: Net income (loss) $ (1,809,252) $ (138,414) $ 182,705 $ (1,764,961) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation of property, plant and equipment 1,990,373 187,709 2,178,082 Amortization of capitalized leases 536,701 536,701 Amortization of acquisition intangibles 385,147 2,645 387,792 Amortization of deferred financing costs 172,434 0 0 172,434 Provision for deferred income taxes (1,092,690) 0 0 (1,092,690) Changes in operating assets and operating liabilities: Accounts receivable 784,214 (149,519) 0 634,695 Inventories 2,379,967 1,078,716 0 3,458,683 Rental merchandise in service 26,042 (479,331) 0 (453,289) Prepaid expenses and other assets 1,507,436 (62,676) (1,401,496) 43,264 Accounts payable, accrued expenses, and other liabilities (623,793) (596,927) 1,263,081 42,361 ------------- ------------ ------------- ------------- Net cash provided by (used in) operating activities 4,256,579 (157,797) 44,290 4,143,072 Cash flows from investing activities: Purchase of property, plant and equipment (1,410,195) (48,897) (1,459,092) Acquisition of business, net of cash acquired 38,668 38,668 ------------- ------------ ------------- ------------- Net cash used in investing activities (1,371,527) (48,897) 0 (1,420,424) Cash flows from financing activities: Proceeds from long-term borrowings 20,259,269 20,259,269 Payments under long-term obligations (22,824,073) (22,824,073) Other (143,428) (143,428) ------------- ------------ ------------- ------------- Net cash provided by (used in) financing activities (2,708,232) 0 0 (2,708,232) ------------- ------------ ------------- ------------- Net increase in cash 176,820 (206,694) 44,290 14,416 Cash and cash equivalents: Beginning of period 955,728 (46,388) 0 909,340 ------------- ------------ ------------- ------------- End of period $ 1,132,548 $ (253,082) $ 44,290 $ 923,756 ------------- ------------ ------------- -------------
14 Coyne International Enterprises Corp. and Subsidiaries
Six Months Ended March 30, 2000 ----------------------------------------------------------------- Consolidating Statements of Cash Flows Parent Subsidiary Consolidating Consolidated Company Guarantors Adjustments Totals ------------- ------------- -------------- ------------ Cash flows from operating activities: Net income (loss) $ (68,797) $ 95,879 $ (135,379) $ (108,384) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation of property, plant and equipment 1,976,211 187,709 2,163,920 Amortization of capitalized leases 536,701 536,701 Amortization of acquisition intangibles 370,154 2,644 372,798 Amortization of deferred financing costs 176,040 0 0 176,040 Provision for deferred income taxes (110,000) 265,000 0 155,000 Changes in operating assets and operating liabilities: Accounts receivable (2,605,396) 2,046,512 0 (558,884) Inventories (3,057,490) 102,276 0 (2,955,214) Rental merchandise in service (865,697) (78,238) 0 (943,935) Prepaid expenses and other assets 3,877,019 (2,466) (3,485,799) 388,754 Accounts payable, accrued expenses, and other liabilities (31,909) (2,439,066) 2,264,920 (206,055) ------------- ------------- -------------- ------------ Net cash provided by (used in) operating activities 196,789 180,250 (1,356,258) (979,259) ------------- ------------- -------------- ------------ Cash flows from investing activities: Purchase of property, plant and equipment (1,983,296) (11,026) (1,994,322) Acquisition of business, net of cash acquired (251,506) (251,506) ------------- ------------- -------------- ------------ Net cash used in investing activities (2,234,802) (11,026) 0 (2,245,828) ------------- ------------- -------------- ------------ Cash flows from financing activities: Proceeds from long-term borrowings 21,247,993 21,247,993 Payments under long-term obligations (17,942,278) (17,942,278) Other (20,144) 0 0 (20,144) ------------- ------------- -------------- ------------ Net cash provided by (used in) financing activities 3,285,571 0 0 3,285,571 ------------- ------------- -------------- ------------ Net increase in cash 247,558 169,224 (1,356,258) 60,484 Cash and cash equivalents: Beginning of period 309,648 (96,241) 0 213,407 ------------- ------------- -------------- ------------ End of period $ 1,557,206 $ 264,741 $ (1,356,258) $ 273,891 ============= ============= ============== ============
15 ITEM 2. Management's Discussion and Analysis of the Financial Condition and Results of Operations Coyne International Enterprises Corp. and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Certain statements included in this Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q, which are not statements of historical fact, are intended to be, and are hereby identified as, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, the words "believe," "anticipate," "plan," "expect," "estimate," "intend" and other similar expressions are intended to identify forward-looking statements. The Company cautions readers that forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. Such factors include, among others, the following: the success or failure of the Company in implementing its current business and operational strategies; availability, terms and access to capital and customary trade credit; general economic and business conditions; competition; changes in the Company's business strategy; labor relations; the outcome of pending or yet-to-be instituted legal proceedings; labor and employee benefit costs; and availability and terms of necessary or desirable financing or refinancing. Results of Operations for the Second Quarter of Fiscal 2001 Compared to the Second Quarter of Fiscal 2000 Total revenues increased 2.0% and 2.4% for the three and six month period ended April 30, 2001 over the same period in fiscal 2000. Income from operations decreased 45.2% for the six months ended April 30, 2001 versus the same period in fiscal 2000. Factors contributing to this decrease, include increased merchandise and installation costs associated with new business and re-garmenting existing accounts; increases in natural gas and vehicle fuel costs; and increased spending to train and develop the professional sale force and improve the customer service program. Liquidity and Capital Resources Net cash provided by operating activities increased $5.1 million for the six months ended April 30, 2001 over the same period in fiscal 2000. This increase is primarily attributed to decreased purchases of inventory in 2001 and more efficient use of existing inventory in 2001. 16 Item 1. Legal Proceedings The Company is involved in certain claims and litigation arising in the ordinary course of business, which are not considered material to the financial operations or cash flow of the Company. Item 2. Changes in Securities and Use of Proceeds Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K Not applicable. 17 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. COYNE INTERNATIONAL ENTERPRISES CORP. Date: June 12, 2001 By: /S/ Stephen M. Owen ----------------------------------------- Stephen M. Owen VP of Finance and Chief Financial Officer By: /S/ Thomas C. Crowley ----------------------------------------- Thomas C. Crowley Chief Operating Officer 18 -----END PRIVACY-ENHANCED MESSAGE-----