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UniFirst Announces Fiscal 2013 Second Quarter Results

  UniFirst Announces Fiscal 2013 Second Quarter Results

Business Wire

WILMINGTON, Mass. -- March 27, 2013

UniFirst Corporation (NYSE: UNF) today announced results for its second fiscal
quarter, which ended February 23, 2013. Revenues were $334.3 million, up 7.9%
from $310.0 million in the year ago period. Net income was $26.6 million
($1.33 per diluted share), up 38.8% compared to $19.2 million ($0.96 per
diluted share) reported in the year ago period.

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “Our
excellent results for the first half of the year are due to strong execution
in all facets of our operations. We are very pleased with these results,
particularly as we have been faced with a challenging economic environment.
Businesses remain hesitant to add new costs, including new employees who are
potential wearers of our uniforms.”

Second quarter revenues in the Core Laundry Operations were $301.6 million, up
8.8% from those reported in the prior year’s second quarter. Excluding the
effect of acquisitions and a stronger Canadian dollar, revenues grew 8.3%.
Revenues in this segment were positively affected in the period by the impact
of a customer related specialty merchandise buyout that added approximately
0.8% to the organic growth. This segment’s income from operations increased
46.9% year to year and its operating margin expanded to 13.4% from 9.9%.
Excluding the impact of the merchandise buyout discussed above, this segment’s
second quarter operating margin would have been 12.9% and diluted earnings per
share would have been $1.27. Increased profitability in this segment was
primarily the result of improved operating leverage that came with our strong
revenue growth. Expenses related to merchandise, energy, payroll and other
costs related to our plant operations were all lower as a percentage of
revenue compared to the prior year.

Revenues for the Specialty Garments segment, which consists of nuclear
decontamination and cleanroom operations, were $22.6 million, down 3.9% from
$23.5 million in the second quarter of fiscal 2012. This segment had income
from operations for the quarter of $1.3 million down from $2.6 million in the
same quarter a year ago. These results were impacted by a weaker than
anticipated performance from this segment’s European operations as well as the
completion of two large projects in the latter part of fiscal 2012.

UniFirst continues to maintain a solid balance sheet and financial position.
Cash and cash equivalents at the end of the quarter totaled $163.3 million, up
from $120.1 million at the end of fiscal 2012. Cash provided by operating
activities for the first half of the year was $92.5 million, up 53.1% compared
to $60.4 million for the first half of fiscal 2012. The improved cash flows
were primarily the result of higher earnings as well as lower cash outflows
related to working capital. At the end of the quarter, total debt was $110.8
million, or 10.4% of total capital.

Outlook

Mr. Croatti continued, “Based on the strength of the first half and our
current outlook for the remainder of the year, we are increasing our
previously communicated guidance. We project our fiscal 2013 revenues to be
between $1.344 billion and $1.354 billion and diluted earnings per share to be
between $5.65 and $5.80. Our guidance assumes no further deterioration of the
U.S. economy and also includes one extra week of operations in our fourth
quarter due to the timing of our fiscal calendar.”

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 11,000 Team Partners who serve more than 240,000
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 adverse 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, 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, 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 25, 2012 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
                                              
                   Thirteen weeks ended            Twenty-six weeks ended
                   February       February        February      February
                   23,             25,             23,             25,
(In thousands,
except per         2013 (2)        2012 (2)        2013 (2)        2012 (2)
share data)
                                                                             
Revenues         $ 334,306       $ 309,959       $ 666,875       $ 622,984
                                                                             
Operating
expenses:
Cost of            208,421         201,437         409,972         396,576
revenues (1)
Selling and
administrative     65,817          61,197          130,105         120,321
expenses (1)
Depreciation
and                17,179         16,489         33,950         32,897  
amortization
Total
operating          291,417        279,123        574,027        549,794 
expenses
                                                                             
Income from        42,889         30,836         92,848         73,190  
operations
                                                                             
Other (income)
expense:
Interest           400             555             860             1,128
expense
Interest           (924    )       (749    )       (1,691  )      (1,380  ) 
income
Exchange rate      198            (56     )      38             571     
loss (gain)
                   (326    )      (250    )      (793    )      319     
                                                                             
Income before      43,215          31,086          93,641          72,871
income taxes
Provision for      16,573         11,890         36,239         27,873  
income taxes
                                                                             
Net income       $ 26,642       $ 19,196       $ 57,402       $ 44,998  
                                                                             
Income per
share – Basic
Common Stock     $ 1.40          $ 1.01          $ 3.02          $ 2.38
Class B Common   $ 1.12          $ 0.81          $ 2.42          $ 1.90
Stock
                                                                             
Income per
share –
Diluted
Common Stock     $ 1.33          $ 0.96          $ 2.86          $ 2.26
                                                                             
Income
allocated to –
Basic
Common Stock     $ 20,963        $ 15,081        $ 45,155        $ 35,341
Class B Common   $ 5,209         $ 3,765         $ 11,233        $ 8,832
Stock
                                                                             
Income
allocated to –
Diluted
Common Stock     $ 26,196        $ 18,863        $ 56,440        $ 44,213
                                                                             
Weighted
average number
of shares
outstanding –
Basic
Common Stock       14,962          14,873          14,943          14,856
Class B Common     4,647           4,640           4,647           4,640
Stock
                                                                             
Weighted
average number
of shares
outstanding –
Diluted
Common Stock       19,747          19,605          19,714          19,575

(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
                                                             
(In thousands)                                   February 23,       August 25,
                                                 2013 (1)           2012
Assets
Current assets:
Cash and cash equivalents                      $ 163,279          $ 120,123
Receivables, net                                 146,368            135,327
Inventories                                      74,386             75,420
Rental merchandise in service                    129,697            138,284
Prepaid and deferred income taxes                12,785             12,785
Prepaid expenses                                 8,143              5,741
                                                                    
Total current assets                             534,658            487,680
                                                                    
Property, plant and equipment:
Land, buildings and leasehold improvements       369,819            355,568
Machinery and equipment                          450,767            425,274
Motor vehicles                                   145,090            141,370
                                                                    
                                                 965,676            922,212
Less - accumulated depreciation                  532,500            510,008
                                                 433,176            412,204
                                                                    
Goodwill                                         288,674            288,137
Customer contracts and other intangible          46,101             50,531
assets, net
Other assets                                     2,412              1,982
                                                                    
                                               $ 1,305,021        $ 1,240,534
                                                                    
Liabilities and shareholders' equity
Current liabilities:
Loans payable and current maturities of        $ 110,686          $ 6,831
long-term debt
Accounts payable                                 49,055             52,340
Accrued liabilities                              84,252             78,174
Accrued income taxes                             5,621              8,180
                                                                    
Total current liabilities                        249,614            145,525
                                                                    
Long-term liabilities:
Long-term debt, net of current maturities        155                100,155
Accrued liabilities                              44,230             43,420
Accrued and deferred income taxes                54,725             54,509
                                                                    
Total long-term liabilities                      99,110             198,084
                                                                    
Shareholders' equity:
Common Stock                                     1,512              1,506
Class B Common Stock                             488                488
Capital surplus                                  48,814             42,984
Retained earnings                                900,652            844,676
Accumulated other comprehensive income           4,831              7,271
                                                                    
Total shareholders' equity                       956,297            896,925
                                                                    
                                               $ 1,305,021        $ 1,240,534

(1) Unaudited


UniFirst Corporation and Subsidiaries
Detail of Operating Results
                                                             
Revenues
                                                                             
                      Thirteen weeks ended
                      February          February          Dollar     Percent
                      23,               25,
(In thousands,
except                2013 (1)          2012 (1)          Change     Change
percentages)
                                                                             
Core Laundry        $ 301,629         $ 277,247         $ 24,382     8.8     %
Operations
Specialty             22,593            23,501            (908   )   -3.9
Garments
First Aid             10,084           9,211            873        9.5
Consolidated        $ 334,306        $ 309,959        $ 24,347     7.9     %
total
                                                                             
                      Twenty-six weeks ended
                      February          February          Dollar     Percent
                      23,               25,
(In thousands,
except                2013 (1)          2012 (1)          Change     Change
percentages)
                                                                             
Core Laundry        $ 596,189         $ 549,520         $ 46,669     8.5     %
Operations
Specialty             50,477            53,769            (3,292 )   -6.1
Garments
First Aid             20,209           19,695           514        2.6
Consolidated        $ 666,875        $ 622,984        $ 43,891     7.0     %
total
                                                                             
                                                                             
Income from
Operations
                                                                             
                     Thirteen weeks ended
                      February          February          Dollar     Percent
                      23,               25,
(In thousands,
except                2013 (1)          2012 (1)          Change     Change
percentages)
                                                                             
Core Laundry        $ 40,327          $ 27,449          $ 12,878     46.9    %
Operations
Specialty             1,275             2,576             (1,301 )   -50.5
Garments
First Aid             1,287            811              476        58.8
Consolidated        $ 42,889         $ 30,836         $ 12,053     39.1    %
total
                                                                             
                      Twenty-six weeks ended
                      February          February          Dollar     Percent
                      23,               25,
(In thousands,
except                2013 (1)          2012 (1)          Change     Change
percentages)
                                                                             
Core Laundry        $ 84,855          $ 62,431          $ 22,424     35.9    %
Operations
Specialty             5,979             9,142             (3,163 )   -34.6
Garments
First Aid             2,014            1,617            397        24.6
Consolidated        $ 92,848         $ 73,190         $ 19,658     26.9    %
total
                                                                             

(1) Unaudited


UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
                                                              
Twenty-six weeks ended                           February 23,     February 25,
                                               2013 (1)       2012 (1)
(In thousands)
Cash flows from operating activities:
Net income                                       $   57,402       $  44,998
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation                                         29,000          27,550
Amortization of intangible assets                    4,950           5,347
Amortization of deferred financing costs             119             119
Share-based compensation                             3,697           3,701
Accretion on environmental contingencies             271             316
Accretion on asset retirement obligations            331             316
Deferred income taxes                                77              362
Changes in assets and liabilities, net of
acquisitions:
Receivables                                          (11,194  )      (11,698 )
Inventories                                          1,108           (1,348  )
Rental merchandise in service                        8,461           (10,246 )
Prepaid expenses                                     (2,402   )      (3,169  )
Accounts payable                                     (3,236   )      (1,699  )
Accrued liabilities                                  6,414           1,891
Prepaid and accrued income taxes                     (2,480   )      4,006
Net cash provided by operating activities            92,518          60,446
                                                                             
Cash flows from investing activities:
Acquisition of businesses                            (1,550   )      –
Capital expenditures                                 (50,756  )      (34,275 )
Other                                                (72      )      (464    )
Net cash used in investing activities                (52,378  )      (34,739 )
                                                                             
Cash flows from financing activities:
Proceeds from loans payable and long-term            4,054           38,910
debt
Payments on loans payable and long-term debt         (14      )      (54,325 )
Proceeds from exercise of Common Stock               2,140           1,914
options
Payment of cash dividends                            (1,424   )      (1,418  )
Net cash provided by (used in) financing             4,756           (14,919 )
activities
                                                                             
Effect of exchange rate changes                      (1,740   )      (254    )
                                                                             
Net increase in cash and cash equivalents            43,156          10,534
Cash and cash equivalents at beginning of            120,123         48,812
period
                                                                             
Cash and cash equivalents at end of period       $   163,279      $  59,346

(1) Unaudited

Contact:

UniFirst Corporation
Steven S. Sintros, 978-658-8888
Vice President & CFO
Fax: 978-988-0659
ssintros@UniFirst.com
 
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