Minnesota | 0-4063 | 41-0449530 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
5995 Opus Parkway, Minnetonka Minnesota | 55343 |
(Address of principal executive offices) | (Zip Code) |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits. | |
(c) | Exhibits. | |
99.1 Press Release dated April 30, 2015 (furnished) |
G&K SERVICES, INC. | |||
(Registrant) | |||
Date: | April 30, 2015 | By: | /s/ Tracy C. Jokinen |
Name: | Tracy C. Jokinen | ||
Title: | Chief Financial Officer |
Exhibit No. | Description |
All results reported in the tables below are only from our continuing operations | |||||||||||||||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||||||||||||
March 28, 2015 | March 29, 2014 | ||||||||||||||||||||||||
(U.S. Dollars, in thousands, except per share data) | Revenue | Operating Income | Net Income | Earnings Per Share | Revenue | Operating Income | Net Income | Earnings Per Share | |||||||||||||||||
As Reported | $ | 233,514 | $ | 21,601 | $ | 12,429 | $ | 0.61 | $ | 225,046 | $ | 18,074 | $ | 10,391 | $ | 0.51 | |||||||||
Add: Impact of pension withdrawal and associated expenses (1) | — | 6,500 | 4,069 | 0.20 | — | 8,167 | 5,103 | $ | 0.26 | ||||||||||||||||
Less: Change in merchandise amortization lives (2) | — | — | — | — | — | (1,270 | ) | (806 | ) | $ | (0.04 | ) | |||||||||||||
As Adjusted | $ | 233,514 | $ | 28,101 | $ | 16,498 | $ | 0.81 | $ | 225,046 | $ | 24,971 | $ | 14,688 | $ | 0.73 | |||||||||
Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||
March 28, 2015 | March 29, 2014 | ||||||||||||||||||||||||
(U.S. Dollars, in thousands, except per share data) | Revenue | Operating Income | Net Income | Earnings Per Share | Revenue | Operating Income | Net Income | Earnings Per Share | |||||||||||||||||
As Reported | 701,065 | 77,075 | $ | 45,750 | $ | 2.24 | $ | 671,188 | $ | 69,339 | $ | 40,344 | $ | 2.00 | |||||||||||
Add: Impact of pension withdrawal and associated expenses (1) | — | 6,500 | 4,069 | 0.21 | — | 9,854 | 6,151 | $ | 0.31 | ||||||||||||||||
Less: Change in merchandise amortization lives (2) | — | — | — | — | — | (5,346 | ) | (3,366 | ) | $ | (0.17 | ) | |||||||||||||
As Adjusted | $ | 701,065 | $ | 83,575 | $ | 49,819 | $ | 2.45 | $ | 671,188 | $ | 73,847 | $ | 43,129 | $ | 2.14 |
(1) In the first quarter of 2014, we increased our estimated liability associated with the withdrawal from the Central States Southeast and Southwest Areas Pension Fund, by $1,687. In the third quarter of fiscal 2014, we recorded $8,167 of expense related to the withdrawal from several other MEPPs. In the third quarter of fiscal 2015, we increased our estimated liability associated with the withdrawal from certain MEPPs, by $6,500. |
(2) In the fourth quarter of fiscal 2013, we modified the estimated useful lives of certain merchandise in service inventory assets to better reflect the estimated periods in which the assets will remain in-service. This benefit was recorded in the cost of rental and direct sale line item. The pretax benefit was $2,273 in the first quarter of fiscal 2014 and $1,803 in the second quarter of fiscal 2014, and $1,270 in the third quarter of fiscal 2014. |
For the Three Months Ended | |||||||
March 28, | March 29, | ||||||
(U.S. Dollars, in thousands) | 2015 | 2014 | |||||
Numerator: | |||||||
Income from continuing operations as reported | 21,601 | $ | 18,074 | ||||
Add: Impact on pension withdrawal and associated expenses | 6,500 | 8,167 | |||||
Less: Change in merchandise amortization lives | — | (1,270 | ) | ||||
Adjusted income from continuing operations | 28,101 | 24,971 | |||||
Income taxes at 38.5 percent | 10,819 | 9,614 | |||||
Adjusted income after tax from continuing operations | 17,282 | 15,357 | |||||
Annualized adjusted income after tax from continuing operations | $ | 69,128 | $ | 61,428 | |||
Denominator: | |||||||
Current maturities of long-term debt | $ | 337 | $ | — | |||
Long-term debt | 229,000 | 175,000 | |||||
Total stockholders' equity | 386,612 | 485,133 | |||||
Less: cash and cash equivalents | (13,328 | ) | (49,535 | ) | |||
Total capital | $ | 602,621 | $ | 610,598 | |||
Return on invested capital | 11.5 | % | 10.1 | % |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
G&K Services, Inc. and Subsidiaries | |||||||||||||||
(Unaudited) | |||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||
(U.S. Dollars, in thousands, except per share data) | March 28, 2015 | March 29, 2014 | March 28, 2015 | March 29, 2014 | |||||||||||
Rental and direct sale revenue | $ | 233,514 | $ | 225,046 | $ | 701,065 | $ | 671,188 | |||||||
OPERATING EXPENSES | |||||||||||||||
Cost of rental and direct sale revenue | 154,573 | 150,284 | 463,018 | 443,109 | |||||||||||
Pension withdrawal and associated expenses | 6,500 | 8,167 | 6,500 | 9,854 | |||||||||||
Selling and administrative | 50,840 | 48,521 | 154,472 | 148,886 | |||||||||||
Total operating expenses | 211,913 | 206,972 | 623,990 | 601,849 | |||||||||||
INCOME FROM CONTINUING OPERATIONS | 21,601 | 18,074 | 77,075 | 69,339 | |||||||||||
Interest expense | 1,745 | 1,560 | 5,463 | 4,707 | |||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 19,856 | 16,514 | 71,612 | 64,632 | |||||||||||
Provision for income taxes | 7,427 | 6,123 | 25,862 | 24,288 | |||||||||||
NET INCOME FROM CONTINUING OPERATIONS | 12,429 | 10,391 | 45,750 | 40,344 | |||||||||||
Net loss from discontinued operations | — | (181 | ) | — | (8,393 | ) | |||||||||
NET INCOME | $ | 12,429 | $ | 10,210 | $ | 45,750 | $ | 31,951 | |||||||
EARNINGS (LOSS) PER COMMON SHARE | |||||||||||||||
BASIC | |||||||||||||||
From continuing operations | $ | 0.62 | $ | 0.52 | $ | 2.29 | $ | 2.04 | |||||||
From discontinued operations | — | (0.01 | ) | — | (0.43 | ) | |||||||||
BASIC EARNINGS PER COMMON SHARE | $ | 0.62 | $ | 0.51 | $ | 2.29 | $ | 1.61 | |||||||
DILUTED | |||||||||||||||
From continuing operations | $ | 0.61 | $ | 0.51 | $ | 2.24 | $ | 2.00 | |||||||
From discontinued operations | — | (0.01 | ) | — | (0.42 | ) | |||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.61 | $ | 0.50 | $ | 2.24 | $ | 1.58 | |||||||
Earnings available to common stockholders: | |||||||||||||||
Net income from continuing operations | $ | 12,429 | $ | 10,391 | $ | 45,750 | $ | 40,344 | |||||||
Less: Income allocable to participating securities | (235 | ) | (142 | ) | (771 | ) | (560 | ) | |||||||
Net income from continuing operations available to common stockholders | $ | 12,194 | $ | 10,249 | $ | 44,979 | $ | 39,784 | |||||||
Weighted average number of shares outstanding, basic | 19,679 | 19,657 | 19,653 | 19,545 | |||||||||||
Weighted average number of shares outstanding, diluted | 20,074 | 19,996 | 20,037 | 19,924 | |||||||||||
Dividends Declared per Share | $ | 0.31 | $ | 0.27 | $ | 0.93 | $ | 0.81 | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
G&K Services, Inc. and Subsidiaries | |||||||
(Unaudited) | |||||||
(U.S. Dollars, in thousands) | March 28, 2015 | June 28, 2014 | |||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 13,328 | $ | 37,118 | |||
Accounts receivable, net | 96,934 | 100,193 | |||||
Inventory | 40,102 | 38,423 | |||||
Merchandise in service | 129,643 | 124,111 | |||||
Other current assets | 18,671 | 27,250 | |||||
Total current assets | 298,678 | 327,095 | |||||
Property, plant and equipment, net | 213,239 | 201,382 | |||||
Goodwill | 324,289 | 333,214 | |||||
Other assets | 63,026 | 61,828 | |||||
Total assets | $ | 899,232 | $ | 923,519 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities | |||||||
Accounts payable | $ | 49,775 | $ | 44,600 | |||
Accrued expenses and other current liabilities | 69,275 | 72,640 | |||||
Deferred income taxes | 26,088 | 26,306 | |||||
Current maturities of long-term debt | 337 | 792 | |||||
Total current liabilities | 145,475 | 144,338 | |||||
Long-Term debt, net of current maturities | 229,000 | 266,230 | |||||
Deferred income taxes | 16,824 | 17,214 | |||||
Other noncurrent liabilities | 121,321 | 121,693 | |||||
Stockholders' Equity | 386,612 | 374,044 | |||||
Total liabilities and stockholders' equity | $ | 899,232 | $ | 923,519 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
G&K Services, Inc. and Subsidiaries | |||||||
(Unaudited) | |||||||
For the Nine Months Ended | |||||||
March 28, | March 29, | ||||||
(U.S. Dollars, in thousands) | 2015 | 2014 | |||||
Operating Activities: | |||||||
Net income | $ | 45,750 | $ | 31,951 | |||
Adjustments to reconcile net income to net cash provided by operating activities - | |||||||
Depreciation and amortization | 23,873 | 23,152 | |||||
Loss on sale of businesses | — | 12,837 | |||||
Pension withdrawal and associated expenses | 6,500 | 9,854 | |||||
Deferred income taxes | 3,624 | 16,457 | |||||
Share-based compensation | 5,320 | 4,575 | |||||
Changes in operating items, exclusive of acquisitions and divestitures- | |||||||
Accounts receivable | 268 | (8,565 | ) | ||||
Inventory and merchandise in service | (9,518 | ) | (7,478 | ) | |||
Accounts payable | 6,224 | (4,154 | ) | ||||
Other | (1,175 | ) | (36,087 | ) | |||
Net cash provided by operating activities | 80,866 | 42,542 | |||||
Investing Activities: | |||||||
Capital expenditures | (40,022 | ) | (23,172 | ) | |||
Divestiture of businesses | — | 6,641 | |||||
Net cash used for investing activities | (40,022 | ) | (16,531 | ) | |||
Financing Activities: | |||||||
Repayments of long-term debt | (675 | ) | (18 | ) | |||
Repayments of revolving credit facilities, net | (36,962 | ) | |||||
Cash dividends paid | (18,542 | ) | (16,057 | ) | |||
Net Issuance of common stock, under stock option plans | 4,107 | 8,582 | |||||
Repurchase of common stock | (11,158 | ) | (8,619 | ) | |||
Shares associated with tax withholdings under our equity incentive plans | (1,600 | ) | (1,329 | ) | |||
Excess tax benefits of shared-based compensation | 3,676 | 3,801 | |||||
Net cash used for financing activities | (61,154 | ) | (13,640 | ) | |||
Effect of Exchange Rates on Cash | (3,480 | ) | (1,426 | ) | |||
Decrease in Cash and Cash Equivalents | (23,790 | ) | 10,945 | ||||
Cash and Cash Equivalents: | |||||||
Beginning of period | 37,118 | 38,590 | |||||
End of period | $ | 13,328 | $ | 49,535 | |||
Supplemental Cash Flow Information | |||||||
Cash paid for- | 4,123 | 3,405 | |||||
Interest | 13,187 | 25,465 | |||||
Income taxes | |||||||
Supplemental Non-cash Investing Information | |||||||
Capital expenditures included in accounts payable | 2,862 | — |