-----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, SRlFgF+itR3D2AAu/ywRilXTlBkkYM2Yo/h81QAP50Al/e2PeQGgAhBL9OcTRS1u QC+Z4MWz2qAR05shYqqS5Q== /in/edgar/work/20000912/0001036050-00-001717/0001036050-00-001717.txt : 20000922 0001036050-00-001717.hdr.sgml : 20000922 ACCESSION NUMBER: 0001036050-00-001717 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000731 FILED AS OF DATE: 20000912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COYNE INTERNATIONAL ENTERPRISES CORP CENTRAL INDEX KEY: 0001066242 STANDARD INDUSTRIAL CLASSIFICATION: [5040 ] STATE OF INCORPORATION: NY FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-60247 FILM NUMBER: 721273 BUSINESS ADDRESS: STREET 1: 140 CORTLAND AVENUE CITY: SYRACUSE STATE: NY ZIP: 13221 BUSINESS PHONE: 3154759978 10-Q 1 0001.txt FORM 10-Q 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 July 31, 2000 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 Unaudited Consolidated Statements of Operations and Retained Earnings (Deficit)................. 5 Unaudited Consolidated Statements of Cash Flows................................................. 6 Notes to Consolidated Financial Statements (Unaudited).......................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources................................................................. 9 Results of Operations for the Third Quarter of Fiscal 2000 Compared to the Third Quarter of Fiscal 1999.......................................................... 10 PART II. Other Information Signatures...................................................................................... 11
2 PART I. Financial Information Item 1. Financial Statements Coyne International Enterprises Corp. and Subsidiaries Consolidated Balance Sheets
July 31, October 31, Assets 2000 1999 ---------------------- -------------------- (Unaudited) Current assets: Cash and cash equivalents $ 164,390 $ 213,407 Receivables, principally trade 18,304,944 16,768,958 Inventories 10,702,906 7,371,395 Uniforms and other rental items in service, net 30,634,126 27,838,084 Prepaid expense and other assets 555,532 796,094 ---------------------- -------------------- Total current assets 60,361,898 52,987,938 Property, plant and equipment, net 44,887,860 46,553,709 Purchased routes and acquisition intangibles, net 17,398,251 17,062,547 Deferred financing cost, net 2,358,453 2,606,593 Deferred income taxes 3,411,000 2,190,000 Other assets 533,282 444,795 ---------------------- -------------------- $ 128,950,744 $ 121,845,582 ====================== ====================
See notes to consolidated financial statements 3 Coyne International Enterprises Corp. and Subsidiaries Consolidated Balance Sheets (continued)
July 31, October 31, Liabilities and Shareholder's Equity (Deficit) 2000 1999 -------------------- --------------------- (Unaudited) Current liabilities: Current maturities of long-term debt $ 2,988,150 $ 3,214,908 Accounts payable 4,568,744 5,378,142 Accrued expenses: Salaries and employee benefits 4,069,039 5,297,557 Accrued Interest 1.703,019 3,903,155 Other 7,850,798 5,067,695 Deferred income taxes 11,000,000 10,000,000 ------------------ ------------------- Total current liabilities 32,179,750 32,861,457 Long-term obligations: Capital lease and other loan obligations, net of current maturities 27,749,553 19,332,429 Senior subordinated notes 75,000,000 75,000,000 Other liabilities 2,838,032 3,083,507 ------------------ ------------------- Total liabilities 137,767,335 130,277,393 ------------------ ------------------- 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) (12,401,814) (12,030,087) -------------------- --------------------- (6,745,333) (6,373,606) Treasury stock, 2,000 shares of Class B preferred stock at cost (166,667) (166,667) Shareholder receivable (1,904,591) (1,891,538) -------------------- --------------------- Total shareholders' equity (deficit) (8,816,591) (8,431,811) -------------------- --------------------- Total liabilities and shareholders' equity (deficit) $ 128,950,744 $ 121,845,582 ==================== =====================
See notes to consolidated financial statements 4 Coyne International Enterprises Corp. and Subsidiaries Consolidated Statements of Operations and Retained Earnings (Deficit)
Three Months Ended Nine Months Ended July 31, July 31, -------------------------------------- ----------------------------------- 2000 1999 2000 1999 ----------------- ----------------- ---------------- -------------- (Unaudited) (Unaudited) Revenue: Rental operations $ 35,033,398 33,714,740 105,144,625 101,387,834 Direct sales 2,929,139 2,708,631 7,504,908 7,654,136 ---------------- ---------------- --------------- -------------- 37,962,537 36,423,371 112,649,533 109,041,970 ---------------- ---------------- --------------- -------------- Operating expenses: Cost of rental operations 27,051,592 26,184,849 80,646,974 78,172,598 Cost of direct sales 1,941,785 1,791,930 4,839,907 5,042,707 Selling, general and administrative 6,495,897 6,649,462 18,910,606 19,501,556 ---------------- ---------------- --------------- -------------- 35,489,274 34,626,241 104,397,487 102,716,861 ---------------- ---------------- --------------- -------------- Income from operations 2,473,263 1,797,130 8,252,046 6,325,109 Interest expense 2,786,605 2,689,992 8,450,773 7,889,405 ---------------- ---------------- --------------- -------------- Loss before income taxes (313,342) (892,862) (198,727) (1,564,296) Income tax expense (benefit) (50,000) (282,000) 173,000 (368,000) ---------------- ---------------- --------------- -------------- Net loss (263,342) (610,862) (371,727) (1,196,296) Retained earnings (deficit), beginning of the period (12,138,472) (11,664,257) (12,030,087) (11,078,823) ---------------- ---------------- --------------- -------------- Retained Earnings (deficit), End of Period $ (12,401,814) (12,275,119) (12,401,814) (12,275,119) ================ ================ =============== ==============
See notes to consolidated financial statements 5 Coyne International Enterprises Corp. and Subsidiaries Consolidated Statements of Cash Flows For the Nine Months Ended July 31, 2000 and 1999
2000 1999 ------------------- ------------------- (Unaudited) (Unaudited) Cash flows from operating activities: Net loss $ (371,727) $ (1,196,296) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization of plant and equipment 4,128,955 3,781,485 Amortization of acquisition intangibles 561,311 508,243 Amortization of deferred financing 263,140 266,437 Provision for deferred income taxes (221,000) (376,000) Changes in operating assets and operating liabilities: Accounts receivable (1,535,986) (1,137,895) Inventories (3,331,511) (1,009,505) Uniforms and other rental items in service (2,796,042) 769,608 Prepaid expenses and other assets 152,075 211,372 Accounts payable and other liabilities (1,700,424) (2,359,619) ------------------- ------------------- Net cash used in operating activities (4,851,209) (542,170) ------------------- ------------------- Cash flows used in investing activities: Purchases of property, plant and equipment (2,463,106) (6,330,171) Acquisition of business, net of cash acquired (897,015) (1,582,451) ------------------- ------------------- Net cash used in investing activities (3,360,120) (7,912,622) ------------------- ------------------- Cash flows from financing activities: Proceeds from long-term borrowings 35,287,411 34,651,471 Payments under long-term borrowings (27,097,045) (26,452,615) Increase in shareholder receivable (13,053) (188,510) Deferred financing costs incurred (15,000) (50,675) ------------------- ------------------- Net cash provided by financing activities 8,162,313 7,959,671 ------------------- ------------------- Net decrease in cash (49,017) (495,121) Cash and cash equivalents: Beginning of period 213,407 1,073,496 ------------------- ------------------- End of the period $ 164,390 $ 578,375 =================== =================== Supplemental disclosure of cash flow information: Interest paid $ 10,385,173 $ 9,016,491 Income taxes paid (refunded) 55,317 (239,274)
See notes to 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 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, 1999. 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 July 31, 1999, October 31, 1999 and July 31, 2000 rather than the actual period-end dates. Operating results for the nine-month period ended July 31, 2000 are not necessarily indicative of the results that may be expected for the year ended October 31, 2000. 2. Long-term Obligations At July 31, 2000 the Company was not in compliance with certain bank financial covenants. Subsequent to July 31, 2000 the Company obtained waivers of such non- compliance. In addition, in August 2000, the Company amended a certain financial covenant. 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. 4. Reclassification Certain amounts have been reclassified to conform with the fiscal 2000 presentation. 7 Coyne International Enterprises Corp. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 5. Summarized Financial Information for Subsidiaries The following table presents summarized financial information for the wholly- owned subsidiaries of Coyne International Enterprises, Corp: Blue Ridge Textile Manufacturing, Inc. and Ohio Garment Rental, Inc., on a combined basis: July 31, October 31, 2000 1999 (Unaudited) Balance sheets: Current assets $ 6,296,193 $ 6,376,826 Noncurrent assets 3,662,192 3,815,243 Current liabilities 3,602,973 3,419,888 Noncurrent liabilities 159,000 175,000
Three Months Ended Nine Months Ended July 31 July 31, ----------------------------------- ---------------------------------- 2000 1999 2000 1999 (Unaudited) (Unaudited) Statement of operations: Revenues $ 3,877,809 $ 4,066,875 11,531,657 $ 12,338,495 Operating expenses 3,656,785 3,884,482 10,870,719 11,374,897 Operating income 221,024 182,393 660,938 963,598 Net income (loss) 27,887 (3,848) 74,451 239,137
The Company has not provided separate financial statements and other disclosures for its wholly-owned subsidiaries because management has determined that such information is not material to investors. 8 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 the 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. Liquidity and Capital Resources Cash used in operating activities for the nine months ended July 31, 2000 increased $4.3 million from the comparable period in 1999. This increase is primarily attributable to inventory purchased for the Company's new contract with its largest customer. The Company's primary source of liquidity has been borrowings under its revolving credit facilities described below. At of the end of July 31, 2000, the Company had approximately $5.4 million available under its revolving credit line and up to an additional $24.3 million available under other revolving bank credit facilities for capital expenditures and acquisitions. At July 31, 2000, the Company was not in compliance with certain financial covenants under these facilities. Subsequent to July 31, 2000, the Company obtained waivers of such noncompliance. In addition, in August 2000, the Company amended certain of its financial covenants. Management believes that its operations and bank credit facilities will provide sufficient cash to meet the requirements for operations, acquisitions and capital expenditure for the next twelve months. Cash used in investing activities was $3.4 million and $7.9 million for the nine months ended July 31, 2000 and 1999, respectively. In fiscal 2000, these expenditures consist primarily of investments in route trucks, information systems, plant construction projects and route acquisitions. The Company anticipates that capital expenditures will be approximately $4.0 million for fiscal 2000, compared with $7.7 million in fiscal 1999. 9 Coyne International Enterprises Corp. and Subsidiaries Results of Operations for the Third Quarter of Fiscal 2000 Compared to the Third Quarter of Fiscal 1999 Revenues for the quarter of $38.0 million are $1.5 million or 4.2% higher than the same period last year. Year-to-date revenues of $112.6 million are $3.6 million or 3.3% higher than the same period last year. This increase is attributable to new business written and increases in revenue at existing accounts. Cost of rental operations increased $0.9 million to $27.1 million for the third quarter of fiscal 2000 from $26.2 million in the third quarter of fiscal 1999. As a percent of rental revenue, cost of rental operations for the quarter decreased to 77.2% in 2000 from 77.7% last year. The decrease is primarily due to lower merchandise costs as a result of improved purchasing and inventory control. Year-to-date cost of rental operations for fiscal years 2000 and 1999 are 76.7% and 77.1%, respectively. Selling, general and administrative expenses decreased 2.3% to $6.5 million in the third quarter of fiscal 2000 from $6.6 million in the third quarter of fiscal 1999. This decrease is primarily a result of lower corporate administrative and payroll expenses. Year-to-date expenses, as a percent of revenue for fiscal years 2000 and 1999, are 16.8% and 17.9%, respectively. Income from operations increased 37.6% to $2.5 million in the third quarter of 2000 from $1.8 million in the same period last year. Year-to-date income from operations has increased 30.5% compared to the same period last year. Interest expense increased 3.6% to $2.8 million in the third quarter of 2000 from $2.7 million in the third quarter of 1999, due to higher average outstanding borrowings for the nine-month period in fiscal 2000. PART II. Other Information 10 None 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: September 12, 2000 By: /s/ Thomas E. Krebbeks ------------------------------------------- Thomas E. Krebbeks VP of Finance and Chief Financial Officer By: /s/ Thomas C. Crowley ------------------------------------------- Thomas C. Crowley Chief Operating Officer 11 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENT OF COYNE INTERNATIONAL ENTERPRISES, CORP. AND SUBSIDIARIES FOR THE QUARTER ENDING JULY 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS OCT-31-2000 MAY-01-2000 JUL-31-2000 164,390 0 18,304,944 0 10,702,906 60,361,898 97,445,080 52,557,220 128,950,744 32,179,750 105,737,703 0 4,806,200 769 (13,623,560) 128,950,744 2,529,139 37,562,537 1,941,785 35,489,274 0 0 2,786,605 (313,342) (50,000) (263,342) 0 0 0 (263,342) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----