UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-5674
Date of Report (date of earliest event reported): March 13, 2003
ANGELICA CORPORATION
(Exact name of registrant as specified in its charter)
Missouri 43-0905260
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
424 South Woods Mill Road
Chesterfield, Missouri 63017-3406
(Address of principal executive offices) (Zip Code)
(314) 854-3800
(Registrant's telephone number, including area code)
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Earnings Press Release, dated March 13, 2003
Item 9. Regulation FD Disclosure
On March 13, 2003, Angelica Corporation (the "Registrant")
issued a press release announcing its earnings for
the fourth quarter and fiscal year ended January 25, 2003. A copy of the press
release is attached as Exhibit 99.1, which is incorporated herein by reference.
This information is furnished pursuant to Item 9 of Form
8-K and shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liabilities of that section, unless the Registrant specifically
incorporates it by reference in a document filed under the Securities Act of
1933 or Securities Exchange Act of 1934. By furnishing this information on Form
8-K, the Registrant makes no admission as to the materiality of any information
in this report that is required to be disclosed solely by reason of Regulation
FD.
* * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 13, 2003
ANGELICA CORPORATION
By: /s/ T. M. Armstrong
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T. M. Armstrong
Senior Vice President-Finance and
Administration and Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
---------- -----------
99.1 Earnings Press Release, dated March 13, 2003
Exhibit 99.1
Angelica Reports Improved Fourth Quarter and Fiscal Year 2003 Results
ST. LOUIS--(BUSINESS WIRE)--March 13, 2003--Angelica Corporation
(NYSE:AGL) announced today improved results for the fourth quarter and
fiscal year ended January 25, 2003. Full year results of continuing
operations before an extraordinary item related to a second quarter
debt refinancing, and excluding results of discontinued operations,
reflected per share earnings of $1.27 ($1.25 fully diluted) compared
with $.19 last year (which included restructuring and other charges).
In fiscal 2003, sales and revenues as well as operating earnings
improved over the prior year in both of the continuing business
segments, Textile Services and Life Uniform.
Combined sales and revenues of continuing operations in fiscal
2003 were $363,419,000 compared with $350,063,000 in the prior year,
an increase of 3.8 percent. Fiscal 2003 income from continuing
operations before the extraordinary item rose to $11,006,000 versus
$1,629,000 in the prior year. As previously reported, the
extraordinary item consisted of a prepayment penalty, paid as part of
the complete refinancing of the Company's debt following the sale of
the Manufacturing and Marketing segment. Including the extraordinary
item, which amounted to an after-tax loss of $.51 per share ($.50
fully diluted), results of continuing operations for fiscal 2003 were
earnings of $.76 per share ($.75 fully diluted) compared with $.19 per
share in the prior fiscal year (including restructuring and other
charges), an increase of 300.0 percent.
In the fourth quarter of fiscal 2003, combined sales and revenues
of continuing operations were $89,003,000 compared with $86,492,000 in
the same quarter last year, an increase of 2.9 percent. Fourth quarter
income from continuing operations was $1,890,000 versus a net loss of
$2,699,000 last year, which included the restructuring and other
charges of $4,180,000 pretax taken in that prior period.
Fourth quarter results of discontinued operations, which reflect
differences between current and prior estimates of the loss on sale
and discontinuation of the Manufacturing and Marketing segment, were a
loss of $360,000 after tax. For all of fiscal 2003, discontinued
operations had a loss after tax of $6,662,000 or $.77 per share ($.76
fully diluted).
Combining continuing and discontinued operations, the Company in
total had a net loss of $.01 per share in fiscal 2003 compared with a
net loss of $2.64 per share ($2.62 fully diluted) in the prior fiscal
year.
Revenues of the Textile Services segment in fiscal 2003 increased
4.7 percent from $259,078,000 to $271,250,000, as another strong year
of gains from net new business (new business installed less lost
business) was offset to some extent by the sale of its Denver plant
during the year. Operating earnings for the year increased 16.9
percent to $21,904,000 compared with $18,741,000 in the prior year.
The better earnings are the result of higher revenues, excellent
control of linen expense, improvements in plant productivity and
production costs, offset by sharply higher workers' compensation
costs, especially in the segment's California operations. A
fourth-quarter increase in workers' compensation costs for Textile
Services in the amount of $1,650,000 caused the segment's fourth
quarter operating earnings of $3,772,000 to be 14.0 percent lower than
the $4,385,000 earned in the fourth quarter last year. Fourth quarter
revenues of $67,966,000 were 6.0 percent above revenues of $64,113,000
in the prior year quarter.
Recently, Textile Services completed an exchange of its operations
in Philadelphia, Pennsylvania for the plant and operations of a
competitor in Vallejo, California. This exchange provides an
opportunity for the segment to better utilize resources and to add
increased economic value. Construction work on the new plant in
Phoenix, Arizona continues on schedule for a mid-year opening of the
state-of-the-art facility. Textile Services also plans to open a new
plant in the Carolinas before this year end.
At Life Uniform, sales of $92,169,000 in fiscal 2003 were 1.3
percent higher than sales of $90,985,000 in the prior year. Despite a
generally weaker retail market in the fourth quarter and only a 1.9
percent same-store sales gain in that quarter, Life achieved a 3.8
percent same-store gain for the whole of fiscal 2003.
Catalogue/e-commerce sales increased 62.9 percent in the year to
$5,239,000. Offsetting these sales gains were fewer stores in
operation, as Life ended the year with 249 stores compared with 287 at
the end of the prior year. Operating results of this segment in fiscal
2003 were earnings of $2,948,000 compared with a loss of $4,951,000 in
the prior year including restructuring and other charges taken last
year. Operating earnings benefited from better gross margins, closing
unprofitable stores, improving profitability in the
catalogue/e-commerce business as well as the higher sales levels.
As a result of the refinancing of the Company's debt following
sale of the Manufacturing and Marketing segment, both the amount of
debt outstanding and the interest rates were substantially reduced.
Interest expense of $2,563,000 in fiscal 2003 compares with $7,390,000
in the prior year, a reduction of 65.3 percent. Cash flow for fiscal
2003 also was very strong, with cash from operating activities of
$23,887,000 in fiscal 2003 versus $13,798,000 in the prior year.
Don W. Hubble, Chairman, President and Chief Executive Officer of
Angelica said, "We are pleased that both continuing business segments
had nice improvements to operating results in fiscal 2003 despite a
number of challenges. Increased workers' compensation costs were a
disappointment, but they have our attention. We know this challenge is
not unique to Angelica, but we believe we can reduce these costs
through better management, and we have implemented comprehensive
programs to do so." He went on to say, "We continue to see the current
economic recovery as challenging, even though healthcare seems to be
less affected than other areas of the economy. In addition, future
energy and fuel costs are highly uncertain. However, although
quarterly comparisons in fiscal 2004 will be adversely affected by
higher workers' compensation costs, at this time we believe we can
achieve a per share earnings increase for the whole year in the low
double-digit range."
Angelica Corporation, traded on the New York Stock Exchange under
the symbol AGL, provides textile rental and linen management services
to healthcare institutions, and operates a national chain of retail
healthcare uniform and shoe stores with a fully-integrated catalogue
and e-commerce operation.
Results for fourth quarter and fiscal year ended January 25, 2003
compared with same periods ended January 26, 2002 (dollars in
thousands, except per share amounts):
Fourth Quarter
----------------------- Percent
Fiscal 2003 Fiscal 2002 Inc (Dec)
----------- ----------- ---------
Continuing Operations:
-------------------------------------
Combined sales and revenues:
Textile Services $67,966 $64,113 6.0
Life Uniform 21,037 22,379 (6.0)
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Total $89,003 $86,492 2.9
Segment operating earnings:
Textile Services $3,772 $4,385 (14.0)
Life Uniform (a) 840 (4,990) n/m
----------- -----------
Total $4,612 ($605) n/m
Interest expense $160 $1,551 (89.7)
Corporate expense and other, net $2,441 $810 201.4
Pretax income $2,011 ($2,966) n/m
Income before extraordinary loss $1,890 ($2,699) n/m
Extraordinary loss, net of tax (b) -- --
Income after extraordinary loss $1,890 ($2,699) n/m
Earnings per share before extra-
ordinary loss:
- Basic $.22 $(.31) n/m
- Diluted $.21 $(.31) n/m
Earnings per share after
extraordinary loss:
- Basic $.22 $(.31) n/m
- Diluted $.21 $(.31) n/m
Discontinued Operations:
-------------------------------------
Loss from operations, net of tax -- $(161)
Estimated loss on disposal, net of
tax -- $(23,998)
Loss on disposal in excess of
original estimate, net of tax $(360) --
----------- -----------
Loss from discontinued
operations, net of tax $(360) $(24,159)
Combined Continuing and
-------------------------------------
Discontinued Operations (after
-------------------------------------
extraordinary loss):
-------------------------------------
Net income (loss) $1,530 ($26,858) n/m
Earnings (loss) per share:
- Basic $.18 ($3.12) n/m
- Diluted $.17 ($3.10) n/m
Percent
Fiscal 2003 Fiscal 2002 Inc (Dec)
----------- ----------- ---------
Continuing Operations:
-------------------------------------
Combined sales and revenues:
Textile Services $271,250 $259,078 4.7
Life Uniform 92,169 90,985 1.3
----------- -----------
Total $363,419 $350,063 3.8
Segment operating earnings:
Textile Services $21,904 $18,741 16.9
Life Uniform (a) 2,948 (4,951) n/m
----------- -----------
Total $24,852 $13,790 80.2
Interest expense $2,563 $7,390 (65.3)
Corporate expense and other, net $7,003 $4,610 51.9
Pretax income $15,286 $1,790 754.0
Income before extraordinary loss $11,006 $1,629 575.6
Extraordinary loss, net of tax (b) $(4,409) --
Income after extraordinary loss $6,597 $1,629 305.0
Earnings per share before extra-
ordinary loss:
- Basic $1.27 $.19 568.4
- Diluted $1.25 $.19 557.9
Earnings per share after
extraordinary loss:
- Basic $.76 $.19 300.0
- Diluted $.75 $.19 294.7
Discontinued Operations:
-------------------------------------
Loss from operations, net of tax -- $(340)
Estimated loss on disposal, net of
tax -- $(23,998)
Loss on disposal in excess of
original estimate, net of tax $(6,662) --
----------- -----------
Loss from discontinued
operations, net of tax $(6,662) $(24,338)
Combined Continuing and
-------------------------------------
Discontinued Operations (after
-------------------------------------
extraordinary loss):
-------------------------------------
Net income (loss) ($65) ($22,709) n/m
Earnings (loss) per share:
- Basic ($.01) $(2.64) n/m
- Diluted ($.01) $(2.62) n/m
(a) Reflects restructuring and other charges of $4,180 pretax
taken in the fourth quarter of fiscal 2002.
(b) During the second quarter of fiscal 2003, a prepayment penalty
was paid to lenders in connection with the complete
refinancing of the Company's debt following the sale of the
Manufacturing and Marketing segment. In accordance with FASB
Statement No. 4, that prepayment penalty was treated as an
extraordinary item. Under FASB Statement No. 145, adopted by
the Company effective at the beginning of fiscal 2004, the
prepayment penalty will not be treated as an extraordinary
item, and accordingly, these results will be restated in
future presentations to reflect this change in accounting
treatment.
Condensed balance sheets as of January 25, 2003 and January 26, 2002
(dollars in thousands):
January 25, January 26,
2003 2002
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Current assets:
Cash and investments $18,166 $18,742
Receivables, net 35,316 33,536
Inventories 13,395 14,435
Linens in service 32,520 32,196
Other 11,333 19,446
Net current assets of discontinued segment 2,162 61,774
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Total current assets 112,892 180,129
Property and equipment, net 78,553 76,685
Other long-term assets 36,839 32,215
Long-term assets of discontinued segment -- 1,836
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Total assets $228,284 $290,865
============= ===========
Current liabilities:
Current maturities of long-term debt (a) 237 $71,602
Accounts payable 21,740 19,208
Other 29,618 40,609
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Total current liabilities 51,595 131,419
Long-term debt (a) 20,574 812
Other long-term liabilities 16,455 17,130
Shareholders' equity 139,660 141,504
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Total liabilities and shareholders' equity $228,284 $290,865
============= ===========
(a) On May 30, 2002, the Company refinanced its existing debt with
proceeds from the sale of the Manufacturing and Marketing
segment and from a new three-year $70,000,000 unsecured credit
facility arranged by LaSalle Bank N.A.
Forward-Looking Statements:
Any forward-looking statements made in this document reflect the
Company's current views with respect to future events and financial
performance and are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such statements are
subject to certain risks and uncertainties that may cause actual
results to differ materially from those set forth in these statements.
These potential risks and uncertainties include, but are not limited
to, competitive and general economic conditions, the ability to retain
current customers and to add new customers in competitive market
environments, competitive pricing in the marketplace, delays in the
shipment of orders, availability of labor at appropriate rates,
availability and cost of energy and water supplies, the cost of
workers' compensation and healthcare benefits, the ability to attract
and retain key personnel, actual charges to the restructuring reserve
and related asset valuation allowances significantly different from
the estimated charges, unusual or unexpected cash needs for operations
or capital transactions, the ability to obtain financing in required
amounts and at appropriate rates, and other factors which may be
identified in the Company's filings with the Securities and Exchange
Commission.
CONTACT: Angelica Corporation, St. Louis
Don W. Hubble, 314/854-3800
www.angelica.com