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Weak job market will be very slow to recover, UniFirst
07
Jan '10
UniFirst Corporation announced results for the first quarter of fiscal 2010, which ended on November 28, 2009.

Revenues for the first quarter of fiscal 2010 were $256.2 million, a 2.4% decrease from the previous year's $262.6 million. First quarter net income was $23.6 million or $1.21 per diluted common share, a 25.0% increase from the first quarter of fiscal 2009, when net income was $18.9 million or $0.97 per diluted common share.

"Although our revenues were down compared to the prior year as a result of the impact of millions of U.S. and Canadian job losses, we're encouraged with the sequential revenue growth achieved in the first quarter," said Ronald D. Croatti, UniFirst President and Chief Executive Officer. "All of our segments contributed to the growth, with a large portion of the top line improvement coming from the seasonal impact of our Specialty Garments business."

The Company's core laundry revenues in the first quarter of 2010 declined 4.9% compared to the same period in fiscal 2009. However, these revenues were up 3.7% when compared to the fourth quarter of fiscal 2009. Income from operations from the core laundry business was up 8.6%, as operating expenses were down $14.5 million compared to the first quarter of 2009.

The decline in our core laundry expenses was primarily the result of lower energy, payroll and merchandise costs. This expense comparison also benefitted from a $1.6 million accounting charge recorded in the first quarter of fiscal 2009 related to a decline in the interest rates used in valuing certain environmental obligations. Other general and administrative expenses, including travel costs, also were lower in fiscal 2010. These benefits were partially offset by higher healthcare costs as well as an increase in depreciation expense.

The Company's Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, increased its revenues $5.1 million or 29.0% compared to the first quarter of fiscal 2009. This increase in revenues was the result of a larger number of power reactor outages occurring in the first quarter of fiscal 2010 compared to the same period a year ago. As a result of this revenue increase, operating income for this segment increased from $1.7 million in the first quarter of fiscal 2009 to $4.6 million in the first quarter of fiscal 2010.

The Company's increase in net income for the first quarter of 2010 was also the result of lower interest expense as well as favorable foreign currency fluctuations during the quarter compared to a year ago.

UniFirst continues to generate strong cash flows and maintain a solid balance sheet. At the end of the first quarter of fiscal 2010, the Company had $79.7 million of cash and cash equivalents on hand. Cash produced by operating activities in the first quarter was $47.5 million compared to $26.0 million a year earlier. In addition, as of the end of the first quarter, total debt as a percentage of capital declined to 21.8% from 22.5% at the end of fiscal 2009.

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