UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
April 2, 2014
UNIFIRST CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Massachusetts |
001-08504 |
04-2103460 | ||
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
68 Jonspin Road, Wilmington, Massachusetts 01887
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (978) 658-8888
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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[ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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[ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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[ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02. |
Results of Operations and Financial Condition. |
On April 2, 2014, UniFirst Corporation (the “Company”) issued a press release ("Press Release") announcing financial results for the second quarter and first half of fiscal 2014, which ended on March 1, 2014. A copy of the Press Release is attached as Exhibit 99 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in this Item 2.02, including the exhibit attached hereto, shall not be deemed “filed” for any purpose, including for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
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Item 9.01. |
Financial Statements and Exhibits. |
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(d) Exhibits |
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EXHIBIT NO. |
DESCRIPTION |
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99 |
Press release of the Company dated April 2, 2014 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
UNIFIRST CORPORATION
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Date: April 2, 2014 |
By: |
/s/ Ronald D. Croatti |
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Name: |
Ronald D. Croatti | |
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Title: |
Chairman of the Board, Chief Executive Officer and President | |
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By: |
/s/ Steven S. Sintros | |
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Name: |
Steven S. Sintros | |
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Title: |
Vice President and Chief Financial Officer |
EXHIBIT INDEX
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EXHIBIT NO. |
DESCRIPTION |
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99 |
Press release of the Company dated April 2, 2014 |
Exhibit 99
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April 2, 2014 CONTACT: Steven S. Sintros, Vice President & CFO |
For Immediate Release UniFirst Corporation 68 Jonspin Road Wilmington, MA 01887 Phone: 978- 658-8888 Fax: 978-988-0659 Email: ssintros@UniFirst.com |
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UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER AND FIRST HALF OF FISCAL 2014
Wilmington, MA (April 2, 2014) -- UniFirst Corporation (NYSE: UNF) today announced results for its fiscal 2014 second quarter, which ended March 1, 2014. Revenues were $344.0 million, up 2.9% from $334.3 million in the year ago period. Net income of $25.6 million ($1.27 per diluted share), was down from $26.6 million ($1.33 per diluted share) reported in the year ago period. Revenue and profit comparisons were affected by a customer related specialty merchandise buyout in the year ago second quarter. Excluding the effect of this buyout, overall revenues would have increased 3.6% and fully diluted earnings per share would have been $1.27 for both quarterly periods.
Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “We were pleased that our core laundry business continued to produce solid results despite being challenged by several external factors during the quarter. These items included a weaker Canadian exchange rate, higher energy prices and a difficult winter season.”
Revenues in the Core Laundry Operations were $313.2 million, up 3.8% from those reported in the prior year’s second quarter. Excluding the negative impact of the weaker Canadian dollar and the specialty merchandise buyout, as well as the positive effect of acquisitions, the Core Laundry Operations’ revenues grew 4.3%.
This segment’s operating income grew 2.1% compared to adjusted operating income from the second quarter of fiscal 2013 and its operating margin was 12.6% compared to an adjusted operating margin of 12.9% a year ago. Adjusted operating income and operating margin for the second quarter of fiscal 2013 exclude the impact of the customer related specialty merchandise buyout. Narrower operating margins were primarily due to higher costs related to our plant operations, energy, depreciation and bad debt expense as a percentage of revenues. In addition, the quarter was also impacted by higher legal and environmental costs compared to the prior year. These higher costs were partially offset by lower health care claims expense during the quarter.
Revenues for the Specialty Garments’ segment, which consists of nuclear decontamination and cleanroom operations, were $20.4 million, down 9.7% from $22.6 million in the second quarter of fiscal 2013. This decrease was primarily the result of fewer power reactor outage projects in the United States and Canada compared to a year ago. This segment’s income from operations for the quarter fell to $0.3 million from $1.3 million in the comparable period in fiscal 2013.
UniFirst continues to maintain a solid balance sheet and financial position. Cash provided by operating activities year to date was $109.1 million, up 17.9% compared to $92.5 million for the first half of fiscal 2013. The improved cash flows were primarily the result of higher earnings as well as the timing of income tax payments compared to the prior year. We ended the period with essentially no long term debt and cash and cash equivalent balances of $157.2 million, down from $197.5 million at the end of fiscal 2013. This decrease was due to the Company’s repayment of $100.0 million in private placement notes that came due in September 2013.
Outlook
Mr. Croatti concluded, “Despite the negative impact of the weaker Canadian dollar, we continue to believe that our full year revenues will be between $1.372 billion and $1.385 billion. We currently expect full year EPS to be between $5.60 and $5.75 per share. Our revised outlook for the remainder of the year reflects lower expectations for our Specialty Garments and First Aid segments as well as an assumption that the recent decline in the value of the Canadian dollar and higher energy prices will continue to influence our results.”
As a reminder, fiscal 2014 will be a 52 week year for the Company compared to fiscal 2013, which was a 53 week year. The negative comparison of one less week of operations will have the impact of reducing our year over year revenues by approximately 2.0% and our fourth quarter revenues by approximately 7.1%.
Conference Call Information
UniFirst will hold a conference call today at 10:00 a.m. (ET) to discuss its quarterly financial results, business highlights and outlook. A simultaneous live webcast of the call will be available over the Internet and can be accessed at www.unifirst.com.
About UniFirst Corporation
UniFirst Corporation is one of the largest providers of workplace uniforms, protective clothing, and facility services products in North America. The Company employs approximately 11,500 Team Partners who serve more than 250,000 customer locations in 45 U.S. states, Canada, and Europe from over 200 customer service, distribution, and manufacturing facilities. UniFirst is a publicly held company traded on the New York Stock Exchange under the symbol UNF and is a component of the Standard & Poor's 600 Small Cap Index.
Forward Looking Statements
This public announcement may contain forward looking statements that reflect the Company’s current views with respect to future events and financial performance. Forward looking statements contained in this public announcement are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and are highly dependent upon a variety of important factors that could cause actual results to differ materially from those reflected in such forward looking statements. Such factors include, but are not limited to, uncertainties regarding the Company’s ability to consummate and successfully integrate acquired businesses, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, any adverse outcome of pending or future contingencies or claims, the Company’s ability to compete successfully without any significant degradation in its margin rates, seasonal fluctuations in business levels, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the effect of currency fluctuations on our results of operations and financial condition, our dependence on third parties to supply us with raw materials, any loss of key management or other personnel, increased costs as a result of any future changes in federal or state laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the impact of turbulent economic conditions and the current tight credit markets on our customers and such customers’ workforce, the level and duration of workforce reductions by our customers, the continuing increase in domestic healthcare costs, including the ultimate impact of the Affordable Care Act, demand and prices for our products and services, rampant criminal activity and instability in Mexico where our principal garment manufacturing plants are located, our ability to properly and efficiently design, construct, implement and operate our new CRM computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, additional professional and internal costs necessary for compliance with recent and proposed future changes in Securities and Exchange Commission, New York Stock Exchange and accounting rules, strikes and unemployment levels, the Company’s efforts to evaluate and potentially reduce internal costs, economic and other developments associated with the war on terrorism and its impact on the economy, general economic conditions and other factors described under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended August 31, 2013 and in other filings with the Securities and Exchange Commission. When used in this public announcement, the words “anticipate,” “optimistic,” “believe,” “estimate,” “expect,” “intend,” and similar expressions as they relate to the Company are included to identify such forward looking statements. The Company undertakes no obligation to update any forward looking statements to reflect events or circumstances arising after the date on which such statements are made.
UniFirst Corporation and Subsidiaries
Consolidated Statements of Income
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Thirteen weeks ended |
Twenty-six weeks ended |
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March 1, |
February 23, |
March 1, |
February 23, |
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(In thousands, except per share data) |
2014 (2) | 2013 (2) | 2014 (2) | 2013 (2) | ||||||||||||
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Revenues |
$ | 343,967 | $ | 334,306 | $ | 690,671 | $ | 666,875 | ||||||||
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Operating expenses: |
||||||||||||||||
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Cost of revenues (1) |
215,560 | 208,421 | 423,697 | 409,972 | ||||||||||||
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Selling and administrative expenses (1) |
69,853 | 65,817 | 135,482 | 130,105 | ||||||||||||
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Depreciation and amortization |
17,830 | 17,179 | 35,128 | 33,950 | ||||||||||||
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Total operating expenses |
303,243 | 291,417 | 594,307 | 574,027 | ||||||||||||
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Income from operations |
40,724 | 42,889 | 96,364 | 92,848 | ||||||||||||
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Other (income) expense: |
||||||||||||||||
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Interest expense |
216 | 400 | 424 | 860 | ||||||||||||
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Interest income |
(877 |
) |
(924 |
) |
(1,642 |
) |
(1,691 |
) | ||||||||
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Exchange rate loss |
161 | 198 | 2 | 38 | ||||||||||||
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Total other (income) expense |
(500 |
) |
(326 |
) |
(1,216 |
) |
(793 |
) | ||||||||
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Income before income taxes |
41,224 | 43,215 | 97,580 | 93,641 | ||||||||||||
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Provision for income taxes |
15,577 | 16,573 | 37,471 | 36,239 | ||||||||||||
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Net income |
$ | 25,647 | $ | 26,642 | $ | 60,109 | $ | 57,402 | ||||||||
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Income per share – Basic |
||||||||||||||||
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Common Stock |
$ | 1.34 | $ | 1.40 | $ | 3.15 | $ | 3.02 | ||||||||
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Class B Common Stock |
$ | 1.08 | $ | 1.12 | $ | 2.52 | $ | 2.42 | ||||||||
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Income per share – Diluted |
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Common Stock |
$ | 1.27 | $ | 1.33 | $ | 2.98 | $ | 2.86 | ||||||||
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Income allocated to – Basic |
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Common Stock |
$ | 20,267 | $ | 20,963 | $ | 47,479 | $ | 45,155 | ||||||||
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Class B Common Stock |
$ | 5,041 | $ | 5,209 | $ | 11,836 | $ | 11,233 | ||||||||
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Income allocated to – Diluted |
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Common Stock |
$ | 25,326 | $ | 26,196 | $ | 59,357 | $ | 56,440 | ||||||||
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Weighted average number of shares outstanding – Basic |
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Common Stock |
15,077 | 14,962 | 15,053 | 14,943 | ||||||||||||
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Class B Common Stock |
4,687 | 4,647 | 4,690 | 4,647 | ||||||||||||
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Weighted average number of shares outstanding – Diluted |
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Common Stock |
19,924 | 19,747 | 19,897 | 19,714 | ||||||||||||
(1) Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets
(2) Unaudited
UniFirst Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
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(In thousands) |
March 1, 2014 (1) |
August 31, 2013 |
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Assets |
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Current assets: |
||||||||
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Cash and cash equivalents |
$ | 157,242 | $ | 197,479 | ||||
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Receivables, net |
151,344 | 142,217 | ||||||
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Inventories |
69,385 | 74,351 | ||||||
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Rental merchandise in service |
137,031 | 132,630 | ||||||
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Prepaid and deferred income taxes |
— | 7,099 | ||||||
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Prepaid expenses |
9,119 | 7,618 | ||||||
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Total current assets |
524,121 | 561,394 | ||||||
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Property, plant and equipment: |
||||||||
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Land, buildings and leasehold improvements |
386,513 | 376,222 | ||||||
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Machinery and equipment |
494,804 | 474,402 | ||||||
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Motor vehicles |
158,030 | 153,219 | ||||||
| 1,039,347 | 1,003,843 | |||||||
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Less - accumulated depreciation |
568,539 | 546,157 | ||||||
| 470,808 | 457,686 | |||||||
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Goodwill |
302,518 | 302,363 | ||||||
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Customer contracts and other intangible assets, net |
44,908 | 49,344 | ||||||
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Deferred income taxes |
1,362 | 1,417 | ||||||
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Other assets |
2,270 | 2,658 | ||||||
| $ | 1,345,987 | $ | 1,374,862 | |||||
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Liabilities and shareholders' equity |
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Current liabilities: |
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Loans payable and current maturities of long-term debt |
$ | 8,913 | $ | 111,253 | ||||
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Accounts payable |
58,406 | 54,221 | ||||||
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Accrued liabilities |
91,901 | 86,994 | ||||||
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Accrued and deferred income taxes |
14,207 | 12,506 | ||||||
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Total current liabilities |
173,427 | 264,974 | ||||||
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Long-term liabilities: |
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Long-term debt, net of current maturities |
155 | 155 | ||||||
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Accrued liabilities |
46,989 | 45,037 | ||||||
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Accrued and deferred income taxes |
52,361 | 51,298 | ||||||
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Total long-term liabilities |
99,505 | 96,490 | ||||||
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Shareholders' equity: |
||||||||
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Common Stock |
1,521 | 1,513 | ||||||
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Class B Common Stock |
487 | 487 | ||||||
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Capital surplus |
56,831 | 51,445 | ||||||
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Retained earnings |
1,017,186 | 958,508 | ||||||
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Accumulated other comprehensive (loss) income |
(2,970 |
) |
1,445 | |||||
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Total shareholders' equity |
1,073,055 | 1,013,398 | ||||||
| $ | 1,345,987 | $ | 1,374,862 | |||||
(1) Unaudited
UniFirst Corporation and Subsidiaries
Detail of Operating Results
Revenues
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Thirteen weeks ended |
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March 1, |
February 23, |
Dollar |
Percent |
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(In thousands, except percentages) |
2014 (1) | 2013 (1) |
Change |
Change |
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Core Laundry Operations |
$ | 313,181 | $ | 301,629 | $ | 11,552 | 3.8 |
% | ||||||||
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Specialty Garments |
20,406 | 22,593 | (2,187 |
) |
-9.7 | |||||||||||
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First Aid |
10,380 | 10,084 | 296 | 2.9 | ||||||||||||
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Consolidated total |
$ | 343,967 | $ | 334,306 | $ | 9,661 | 2.9 |
% | ||||||||
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Twenty-six weeks ended |
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March 1, |
February 23, |
Dollar |
Percent |
|||||||||||||
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(In thousands, except percentages) |
2014 (1) | 2013 (1) |
Change |
Change |
||||||||||||
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Core Laundry Operations |
$ | 625,187 | $ | 596,189 | $ | 28,998 | 4.9 |
% | ||||||||
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Specialty Garments |
44,849 | 50,477 | (5,628 |
) |
-11.1 | |||||||||||
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First Aid |
20,635 | 20,209 | 426 | 2.1 | ||||||||||||
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Consolidated total |
$ | 690,671 | $ | 666,875 | $ | 23,796 | 3.6 |
% | ||||||||
Income from Operations
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Thirteen weeks ended |
||||||||||||||||
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March 1, |
February 23, |
Dollar |
Percent |
|||||||||||||
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(In thousands, except percentages) |
2014 (1) | 2013 (1) |
Change |
Change |
||||||||||||
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Core Laundry Operations |
$ | 39,443 | $ | 40,327 | $ | (884 |
) |
-2.2 |
% | |||||||
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Specialty Garments |
312 | 1,275 | (963 |
) |
-75.5 | |||||||||||
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First Aid |
969 | 1,287 | (318 |
) |
-24.7 | |||||||||||
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Consolidated total |
$ | 40,724 | $ | 42,889 | $ | (2,165 |
) |
-5.0 |
% | |||||||
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Twenty-six weeks ended |
||||||||||||||||
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March 1, |
February 23, |
Dollar |
Percent |
|||||||||||||
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(In thousands, except percentages) |
2014 (1) | 2013 (1) |
Change |
Change |
||||||||||||
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Core Laundry Operations |
$ | 91,815 | $ | 84,855 | $ | 6,960 | 8.2 |
% | ||||||||
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Specialty Garments |
3,071 | 5,979 | (2,908 |
) |
-48.6 | |||||||||||
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First Aid |
1,478 | 2,014 | (536 |
) |
-26.6 | |||||||||||
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Consolidated total |
$ | 96,364 | $ | 92,848 | $ | 3,516 | 3.8 |
% | ||||||||
(1) Unaudited
UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
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Twenty-six weeks ended (In thousands) |
March 1, 2014 (1) |
February 23, 2013 (1) |
||||||
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Cash flows from operating activities: |
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Net income |
$ | 60,109 | $ | 57,402 | ||||
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Adjustments to reconcile net income to cash provided by operating activities: |
||||||||
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Depreciation |
30,465 | 29,000 | ||||||
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Amortization of intangible assets |
4,663 | 4,950 | ||||||
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Amortization of deferred financing costs |
104 | 119 | ||||||
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Share-based compensation |
3,388 | 3,697 | ||||||
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Accretion on environmental contingencies |
358 | 271 | ||||||
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Accretion on asset retirement obligations |
362 | 331 | ||||||
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Deferred income taxes |
(190 |
) |
77 | |||||
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Changes in assets and liabilities, net of acquisitions: |
||||||||
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Receivables |
(9,545 |
) |
(11,194 |
) | ||||
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Inventories |
5,173 | 1,108 | ||||||
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Rental merchandise in service |
(4,960 |
) |
8,461 | |||||
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Prepaid expenses |
(1,504 |
) |
(2,402 |
) | ||||
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Accounts payable |
4,340 | (3,236 |
) | |||||
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Accrued liabilities |
6,248 | 6,414 | ||||||
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Prepaid and accrued income taxes |
10,094 | (2,480 |
) | |||||
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Net cash provided by operating activities |
109,105 | 92,518 | ||||||
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Cash flows from investing activities: |
||||||||
|
Acquisition of businesses |
(681 |
) |
(1,550 |
) | ||||
|
Capital expenditures |
(44,087 |
) |
(50,756 |
) | ||||
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Other |
401 | (72 |
) | |||||
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Net cash used in investing activities |
(44,367 |
) |
(52,378 |
) | ||||
|
Cash flows from financing activities: |
||||||||
|
Proceeds from loans payable and long-term debt |
4,927 | 7,046 | ||||||
|
Payments on loans payable and long-term debt |
(107,620 |
) |
(3,006 |
) | ||||
|
Proceeds from exercise of Common Stock options |
2,005 | 2,140 | ||||||
|
Payment of cash dividends |
(1,428 |
) |
(1,424 |
) | ||||
|
Net cash (used in) provided by financing activities |
(102,116 |
) |
4,756 | |||||
|
Effect of exchange rate changes |
(2,859 |
) |
(1,740 |
) | ||||
|
Net (decrease) increase in cash and cash equivalents |
(40,237 |
) |
43,156 | |||||
|
Cash and cash equivalents at beginning of period |
197,479 | 120,123 | ||||||
|
Cash and cash equivalents at end of period |
$ | 157,242 | $ | 163,279 | ||||
(1) Unaudited