-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, icLPlV3RXi4ofPMszss9D6R3wuXAyO9htae3RwkIJZAKR5IVBZw8HhY+RBjwN6wO XdafdtAuiCW2o+8Hulg7OA== 0000897101-95-000030.txt : 19950517 0000897101-95-000030.hdr.sgml : 19950517 ACCESSION NUMBER: 0000897101-95-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: G&K SERVICES INC CENTRAL INDEX KEY: 0000039648 STANDARD INDUSTRIAL CLASSIFICATION: 7200 IRS NUMBER: 410449530 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04063 FILM NUMBER: 95510470 BUSINESS ADDRESS: STREET 1: 505 WATERFORD PARK STREET 2: STE 455 CITY: MINNEAPOLIS STATE: MN ZIP: 55441 BUSINESS PHONE: 6125467440 MAIL ADDRESS: STREET 1: 505 WATERFORD PARK STREET 2: STE 455 CITY: MINNEAPOLIS STATE: MN ZIP: 55441 FORMER COMPANY: FORMER CONFORMED NAME: NORTHWEST LINEN CO DATE OF NAME CHANGE: 19681227 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 F O R M 10 - Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 31, 1994, Commission file number 0-4063 G&K SERVICES, INC. (Exact name of registrant as specified in its charter) MINNESOTA 41-0449530 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 505 WATERFORD PARK, STE. 455 MINNEAPOLIS, MINNESOTA 55441 (Address of principal executive offices and zip code) (612) 546-7440 (Registrant's telephone number, including zip code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES _X_ NO ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. CLASS A Outstanding February 3, 1995 Common Stock, par value $.50 per share 18,498,504 CLASS B Outstanding February 3, 1995 Common Stock, par value $.50 per share 1,865,089 G&K SERVICES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) December 31, 1994 (Unaudited)
Dec. 31, July 2, Jan. 1, 1994 1994 1994 ASSETS CURRENT ASSETS Cash $ 1,518 $ 5,131 $ 3,591 Accounts receivable, net 29,484 26,326 25,162 Inventories- New goods 13,545 6,904 7,569 Goods in service 26,775 22,774 21,652 Prepaid expenses 3,085 2,395 3,012 Total current assets 74,407 63,530 60,986 PROPERTY, PLANT AND EQUIPMENT Land 17,366 14,495 12,452 Buildings and improvements 42,149 40,984 40,681 Machinery and equipment 104,132 93,440 87,468 Automobiles and trucks 18,126 15,812 14,843 Less accumulated depreciation (81,764) (75,147) (70,694) 100,009 89,584 84,750 OTHER ASSETS Goodwill 36,346 35,188 37,052 Restrictive covenants, customer lists and other assets arising from acquisitions 9,519 9,408 10,705 Other assets 7,720 7,354 6,759 Total other assets 53,585 51,950 54,516 $ 228,001 $ 205,064 $ 200,252 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 10,738 $ 8,879 $ 8,222 Accrued expenses - Salaries and employee benefits 6,446 6,257 4,722 Other 5,690 4,744 5,589 Reserve for income taxes 8,641 8,747 7,097 Current maturities of debt 5,552 5,552 10,751 Total current liabilities 37,067 34,179 36,381 LONG TERM DEBT, NET OF CURRENT MATURITIES 66,723 54,676 53,373 DEFERRED INCOME TAXES 10,791 11,014 11,542 OTHER NONCURRENT LIABILITIES 4,788 4,338 3,497 STOCKHOLDERS' EQUITY Common stock, $0.50 par Class A, 50,000,000 shares authorized, 18,498,504, 18,498,504 and 18,457,189 shares issued and outstanding 9,249 9,249 9,229 Class B, 10,000,000 shares authorized, 1,865,089 shares issued and outstanding 933 933 933 Additional paid-in capital 18,879 18,853 18,630 Retained earnings 86,530 78,237 71,309 Cumulative translation adjustment (6,959) (6,415) (4,642) Total stockholders' equity 108,632 100,857 95,459 $ 228,001 $ 205,064 $ 200,252
The accompanying notes are an integral part of these statements. G&K SERVICES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) DECEMBER 31, 1994 (Unaudited)
For the Three Months For the Six Months Ended Ended Dec. 31, Jan. 1, Dec. 31, Jan. 1, 1994 1994 1994 1994 REVENUES $ 65,554 $ 55,525 $126,087 $108,879 EXPENSES Operating 35,369 30,379 68,433 59,483 Cost of merchandise sold 3,112 1,741 4,641 3,152 Selling and administrative 13,858 12,133 27,521 24,090 Depreciation 3,613 3,122 6,863 6,220 Amortization of intangibles 657 751 1,331 1,511 56,609 48,126 108,789 94,456 INCOME FROM OPERATIONS 8,945 7,399 17,298 14,423 Interest expense 1,445 1,342 2,733 2,874 Interest income (69) (50) (94) (202) Other (income) expense, net (174) (181) (443) (315) INCOME BEFORE INCOME TAXES 7,743 6,288 15,102 12,066 Provision for income taxes 3,095 2,598 6,096 4,991 NET INCOME 4,648 3,690 9,006 7,075 Weighted average number of shares outstanding 20,364 20,322 20,364 20,322 NET INCOME PER SHARE $ 0.23 $ 0.18 $ 0.44 $ 0.35 Dividends per share 0.0175 0.0175 0.0350 0.0342
The accompanying notes are an integral part of these statements. G&K SERVICES, INC. and SUBSIDARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) December 31, 1994 (Unaudited)
For The Three Months For The Six Months Ended Ended Dec. 31, Jan. 1, Dec. 31, Jan. 1, 1994 1994 1994 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 4,648 $ 3,690 $ 9,006 $ 7,075 Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 4,270 3,873 8,194 7,730 Noncurrent deferred income taxes (109) (117) (219) (526) Changes in current operating items - Inventories (5,630) (2,385) (7,383) (2,173) Accounts receivable and prepaid expences (3,239) (1,258) (3,170) (1,225) Accounts payable and other current liabilities 1,504 (279) 2,953 (123) Other, net (293) (47) (121) 111 Net cash provided by operating activi 1,151 3,477 9,260 10,869 CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (6,792) (2,658) (14,630) (5,549) Acquisition of operating assets (380) 0 (9,480) 0 Net cash used for investment activities (7,172) (2,658) (24,110) (5,549) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt financing 15,000 0 15,000 0 Repayment of debt (8,776) (2,200) (2,698) (5,621) Acquisition payments refundable from escrow (352) 0 (352) 0 Cash dividends paid (713) (354) (713) (693) Net cash provided from (used for) financing activities 5,159 (2,554) 11,237 (6,314) Increase (decrease) in cash (862) (1,735) (3,613) (994) Cash: Beginning of the period 2,380 5,326 5,131 4,585 End of the period $ 1,518 $ 3,591 $ 1,518 $ 3,591
The accompanying notes are an integral part of these statements. ITEM 2. Management's Discussion and Analysis of Operations REVENUES FROM RENTALS AND SERVICES Revenues from rentals and services totaled $126,087,000 and $108,879,000 in the first six months of fiscal 1995 and 1994, respectively. Revenues for G&K's U.S. operations grew at a 15.8% rate for the first six months of fiscal 1995 when compared with the same period last year. Removing the effect of the B.C.P. acquisition in September, revenues increased 14.1%. Intensified marketing and record sales to new accounts, higher customer retention rates, and a stronger economy helped us achieve this result. This 15.8% revenue growth rate is higher than the 13.0% gain reported in the first six months last year. Revenues for Work Wear Canada operations increased at a 6.8% rate for the first six months of fiscal 1995. Revenues in Canadian dollars increased 11.3% as compared to the same period last year. There were no significant changes in product mix or selling prices during the first six months of fiscal 1995. EXPENSES Operating expenses were $68,433,000 and $59,483,000 representing 54.3% and 54.6% of revenues from rentals and services for the first six months of fiscal 1995 and 1994, respectively. Selling and administrative expenses were $27,521,000 and $24,090,000 in the first six months of fiscal 1995 and 1994, an increase of 14.2%. As a percentage of revenues, these expenses were 21.8% and 22.1% in the first six months of fiscal 1995 and 1994. Interest expense of $2,733,000 decreased 4.9% in the first six months of fiscal 1995 because of lower average borrowing levels and the refinancing of approximately $28,000,000 in debt in June 1994 at lower rates. NET INCOME Net income for the first six months of fiscal 1995 totaled $9,006,000 representing a 27.3% increase compared with the same period in 1994. LIQUIDITY AND CAPITAL RESOURCES Cash flows from operating activities were $8,464,000 in the first six months of fiscal 1995 compared with $10,913,000 in the same period last year. The decrease is the result of higher inventory costs relating to the B.C.P. acquisition. In November, the Company borrowed $15,000,000 in fixed rate debt and the U.S. revolver was increased to $50,000,000. Management believes that funds generated from operations and existing lines of credit should provide adequate funding for current business operations and should enable G&K to service its debt related to the Work Wear Corporation of Canada acquisition in a timely manner. G&K SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated financial statements included herein, except for the July 2, 1994, balance sheet which was extracted from the audited financial statements of July 2, 1994, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report. 2. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of December 31, 1994, January 1, 1994, and July 2, 1994, and the results of operations for the six months ended December 31, 1994 and January 1, 1994, and the changes in financial position for the periods then ended. The accounting policies followed by the Company are set forth in Note 1 to the Company's Annual Consolidated Financial Statements. In addition, the Company's policy regarding foreign currency translation is to translate balance sheet accounts at the current period-end exchange rate and income statement items at the average exchange rate for the period for its foreign operations. Resulting translation adjustments are made directly to a separate component of stockholders' equity. The results of operations for the six month period ended December 31, 1994, and January 1, 1994, are not necessarily indicative of the results to be expected for the full year. 3. Net income per share is based on the weighted average number of shares of common stock outstanding. PART II OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders a. The Company held its Annual Meeting of Stockholders on October 26, 1994. b. The following seven persons were elected directors: Bruce G. Allbright, Paul Baszucki, Richard Fink, Wayne Fortun, Donald W. Goldfus, William Hope and Bernard Sweet. c. Stockholders also approved an amendment to G&K's Restated Articles of Incorporation that increased the number of shares of Class A Common Stock authorized for issuance thereunder from 20,000,000 shares to 50,000,000 shares. The proposal was approved by a vote of 25,858,659 shares in favor, 3,026,251 shares voting against and 22,888 shares abstaining. Additionally, each director nominee received the following votes: Allbright, 28,864,370 shares in favor, 0 shares voting against and 43,428 shares abstaining, Baszucki, 28,861,063 shares in favor, 0 shares voting against and 46,735 shares abstaining, Fink, 28,863,339 shares in favor, 0 shares voting against and 44,459 shares abstaining, Fortun, 28,861,523 shares in favor, 0 shares voting against and 46,275 shares abstaining, Goldfus, 28,864,370 shares in favor, 0 shares voting against and 43,428 shares abstaining, Hope, 28,863,715 shares in favor, 0 shares voting against and 44,083 shares abstaining and Sweet, 28,863,610 shares in favor, 0 shares voting against and 44,188 shares abstaining. ITEM 6. Exhibits and Reports on Form 8-K a. Exhibits 27-Financial Data Schedule (For SEC use only) b. Reports on Form 8-K. No reports on Form 8-K were filed during the quarter-ended December 31, 1994. 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. G&K SERVICES, INC. (Registrant) Date: February 10, 1995 /s/Stephen F. LaBelle Stephen F. LaBelle Secretary and Treasurer (Chief Financial Officer) EX-27 2
5 1000 6-MOS JUL-01-1995 DEC-31-1994 1518 0 30,534 (698) 40,320 74,407 181,773 (81,764) 228,001 37,067 0 10,182 0 0 98,450 228,001 126,087 126,087 4,641 103,804 (537) 344 2,733 15,102 6096 9006 0 0 0 9006 .44 .44
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