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UniFirst's Core Laundry segment revenue soars

03
Apr '08

The increase in earnings is primarily due to strong revenue growth as well as higher operating margins in the Company's core laundry operations, which excludes the Company's Specialty Garments and First Aid segments. Core laundries revenues increased 21.0% and 16.8% for the quarterly and six month periods, respectively, compared to fiscal 2007.

The core laundries organic growth, which excludes the effects of the extra week, acquisitions and fluctuations in the Canadian exchange rate, was 7.6% and 7.8% for the quarter and six month periods. Even excluding the severance and environmental charges from the fiscal 2007 results, the core laundry operations pro forma operating margins increased significantly from 8.2% and 9.7% in the second quarter and first half of fiscal 2007 to 11.0% and 11.7% for the comparative quarterly and six month periods of fiscal 2008, respectively.

The improvement is primarily due to lower merchandise amortization as well as lower payroll and related costs as a percentage of revenues. Fuel costs associated with our fleet of delivery vehicles continued to climb during the second quarter and have partially offset these benefits.

The Company's Specialty Garments and First Aid segments also produced solid quarterly results contributing to the Company's overall revenue and income growth. In addition, the Company provided for income taxes at a rate of 38.5% for both the second quarter and first six months of fiscal 2008 compared to 39.25% for the comparable 2007 periods.

"We're very pleased with the record results we've produced in the quarter and first half" said UniFirst President and Chief Executive Officer, Ron Croatti. "However, with the prospect of continued weakness in the U.S. economy and a lack of buyer confidence in many business sectors, we're approaching the second half of the year with the appropriate amount of caution."

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