ITEM 1. BUSINESS - -----------------
GENERAL DEVELOPMENT OF BUSINESS
(a) Angelica Corporation (the "Company") and its subsidiaries provide products and services to a wide variety of institutions and individuals, which are in primarily three markets: health services, hospitality and other service industries. The Company was founded in 1878 and was incorporated as Angelica Corporation in 1968.
(b) The Company's businesses are reported in three industry segments: Rental Services, Manufacturing and Marketing and Retail Sales. Information about the Company's industry segments appears on page 23 of the Company's Annual Report to Shareholders for the year ended January 29, 1994 and is incorporated by reference. This information includes sales and rental service revenues, earnings, identifiable assets for each segment, depreciation and capital additions for each of the five years in the period ended January 29, 1994.
(c) 1 (i) RENTAL SERVICES ---------------
This segment has 35 plants generally in or near major metropolitan areas in the United States providing textile rental and laundry services for health care institutions, presently servicing 865 institutions with approximately 136,000 beds. This segment also provides general linen services in selected areas, principally to hotels, casinos, motels and restaurants.
MANUFACTURING AND MARKETING ---------------------------
The Company's Manufacturing and Marketing operations consist of the Angelica Uniform Group in the United States and operations in Canada, and the United Kingdom, collectively engaged in the manufacture and sale of uniforms and business career apparel for a wide variety of institutions and businesses.
RETAIL SALES ------------
The Retail Sales segment is a specialty retailer offering uniforms and duty shoes primarily for nurses and other health care professionals through a nationwide chain of 244 retail stores, located primarily in malls and strip shopping centers.
(ii) Not applicable.
(iii) The raw materials used by the Company (principally by the Angelica Uniform Group) in the conduct of its business consist principally of textile piece goods, thread, and trimmings, such as buttons, zippers and labels. The Company purchases piece goods from most major United States manufacturers of textile products. These materials are available from a number of sources.
(iv) The Company does not hold any material patents, licenses, franchises or concessions.
(v) The Company does not consider its business to be seasonal to any significant extent.
(vi) Not applicable.
(vii) No segment of the Company's business is dependent on a single customer or a few customers.
(viii) Since the bulk of the Company's sales are to institutional users which buy on a regular recurring basis, the Company's backlog of orders at any given time consists principally of firm orders in the process of being filled and is not considered significant to the Company's business.
(ix) Not applicable.
(x) The markets in which the Rental Services segment operates are very competitive. Industry statistics are not available, but the Company believes that its Rental Services segment constitutes the largest supplier of textile rental and laundry services to health care institutions in the United States. Competition is on the basis of quality, reliability and price.
The Manufacturing and Marketing operations compete with more than four dozen firms, including divisions of larger corporations, in the United States, Canada and England. Competition is also provided by local firms in most major metropolitan areas. The nature and degree of competition varies with the customer and market where it occurs. Industry statistics are not available, but the Company believes that it is the leading supplier of garments to hospitals, hotels and motels, and food service establishments and one of the leading suppliers of uniforms to linen suppliers in the United States. Competition is extensive and is based on many factors, including design, quality, consistency of product, delivery, price and distribution.
The Company believes there are approximately 2,000 retail stores in the U.S. offering merchandise comparable to
that offered by the Company's Retail Sales segment. Retail operations are conducted under highly competitive conditions in the local area where each of the Company's stores is located, with competition being on the basis of store location, merchandise selection and value. Industry statistics are not available, but the Company believes its Retail Sales segment is the nation's largest specialty retailer offering uniforms and duty shoes to nurses and other health care professionals.
(xi) The Angelica Uniform Group carries on research, development and testing programs both internally and in cooperation with independent laboratories and research institutions, and works with suppliers to develop specialized fabrics to improve performance and to meet specific technological requirements. The dollar amount spent is not significant.
(xii) The Company does not expect any material expenditures will be required in order to comply with any Federal, state or local environmental regulations.
(xiii) The Company employs approximately 9,500 persons (including approximately 690 part-time employees).
(d) The information required by Section (d) of this Item is hereby incorporated by reference to Note 9 of "Notes to Consolidated Financial Statements" appearing on page 23 of the Company's Annual Report to Shareholders for the year ended January 29, 1994.
ITEM 2.
ITEM 2. PROPERTIES - -------------------
The Company's real estate, both owned and leased, which is used in its Manufacturing and Marketing segment, at January 29, 1994 was comprised of 16 manufacturing plants in the United States, one plant in Canada, one plant in Costa Rica, and one plant in Great Britain, plus appropriate warehouses and sales facilities in the United States, Canada and the United Kingdom. As of January 29, 1994, 35 laundries plus warehouse facilities located in 15 states were used in the Rental Services segment, and 244 retail specialty stores located in 36 states were used in the Retail Sales segment. In the opinion of the Company, all such facilities are maintained in good condition and are adequate and suitable for the purposes for which they are used. The manufacturing facilities are normally fully utilized and operate generally on a one-shift basis. Laundry facilities generally are not fully utilized, although some of them operate on a multi-shift basis. The Company estimates that output of these facilities could be increased by 20 percent with existing equipment by working longer hours and by an additional 25 percent (for a total of 45 percent) by working longer hours plus installation of additional equipment. A substantial portion of the real estate utilized by the Company is leased. Capitalized leases, primarily
utilized by the Manufacturing and Marketing segment, represent approximately .01% of the net book value of all fixed assets at January 29, 1994. No difficulty in renewing leases which expire in the near future is anticipated by the Company.
Real estate which is owned by the Company is approximately 50.8% of the net book value of all fixed assets. There is no individual parcel of real estate owned or leased which is of material significance to the Company's total assets.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS - --------------------------
Management believes that liabilities, if any, resulting from pending routine litigation in the ordinary course of the Company's business should not materially affect the financial condition or operations of the Company.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS - ----------------------------------------------------------
No matters were submitted to a vote of shareholders during the fourth quarter of the Company's year ended January 29, 1994.
None of the executive officers of the Company are related to each other.
There are no arrangements or understandings between any executive officer of the Company and any other person pursuant to which such officer was selected.
PART II -------
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED - ----------------------------------------------------------- STOCKHOLDER MATTERS - -------------------
The number of shareholders of record was 1,822 at April 4, 1994. The Company's Board of Directors regularly reviews the dividends paid, and the Company expects to continue to pay dividends. However, there can be no assurance that dividends will be paid in the future since they are dependent on earnings, the financial condition of the Company and other factors.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA - --------------------------------
The information required by this item is included under the caption "Financial Summary-11 Years" on pages 26 and 27 of the Company's Annual Report to Shareholders for the year ended January 29, 1994 and is incorporated herein by reference.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL - ---------------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS - -----------------------------------
The information required by this item is included in the text contained under the caption "FINANCIAL REVIEW" on pages 13 and 14 of the Company's Annual Report to Shareholders and is incorporated herein by reference. The Company does not believe the effects of inflation and changing prices have been, or will be, material to the Company's results of operations. The Company believes that it is not affected by inflation except to the extent that the economy in general is affected thereby.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ----------------------------------------------------
The information required by this item appears on pages 15 through 24 of the Company's Annual Report to Shareholders for the year ended January 29, 1994 and is incorporated herein by reference. The financial statement schedules listed at Item 14(a)(2) are incorporated herein by reference.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON - --------------------------------------------------------- ACCOUNTING AND FINANCIAL DISCLOSURE - -----------------------------------
Not Applicable.
PART III --------
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------------------------------
Information with respect to directors of the Company under the captions "Information About Nominees for Directors" and "Information About Directors Continuing in Office," on page 3 of the Company's Proxy Statement for the Annual Meeting of Shareholders to be held on May 24, 1994 is incorporated herein by reference. Information with respect to executive officers of the Company appears under the caption "Executive Officers of the Registrant" on pages 4 through 5 of Part I of this Form 10-K.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION - --------------------------------
Information with respect to executive compensation under the captions "Compensation of Directors and Other Information Concerning the Board and its Committees" on pages 4-5, "Summary Compensation Table" on page 7, "Option Grants in Last Fiscal Year" on page 8, "Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values" on page 9, "Employment Contracts and Termination of Employment and Change-In-Control Arrangements" on page 9, and "Pension Plan" on page 12 of the Company's Proxy Statement for the Annual Meeting of Shareholders to be held on May 24, 1994 is incorporated by reference.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND - ------------------------------------------------------------- MANAGEMENT - ----------
Information with respect to security ownership of certain beneficial owners and management under the caption "Beneficial Ownership of the Company's Securities" on pages 5 and 6 of the Company's Proxy Statement for the Annual Meeting of Shareholders to be held on May 24, 1994 is incorporated by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - --------------------------------------------------------
Not applicable.
PART IV -------
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K - --------------------------------------------------------------------------
All other schedules are not submitted because they are not applicable or not required or because the information is included in the financial statements or notes thereto.
(iii) Report of Independent Public Accountants on Schedules appears at page 13 of the Form 10-K
3. Exhibits --------
See Exhibit Index on pages 17-20 hereof for a list of all management contracts, compensatory plans and arrangements required by this item (Exhibit Nos. 10.1 through 10.21) and all other Exhibits filed or incorporated by reference as a part of this report.
(b) Reports on Form 8-K -------------------
The Registrant filed no reports on Form 8-K during the last quarter of the year ended January 29, 1994.
Other Matters - -------------
For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990), under the Securities Act of 1933, as amended, the undersigned registrant hereby undertakes as follows, which undertaking is hereby incorporated by reference into registrant's Registration Statements on Form S-8 Nos. 33-5524 (filed May 8, 1986), 33-22850 (filed June 29, 1988), 2-77932 (filed June 9, 1982), 2-97291 (filed April 25, 1985), and 33-625 (filed October 3, 1985).
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURE ---------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. ANGELICA CORPORATION ----------------------------- (Registrant)
By: /s/ L. J. Young ---------------------------------------------- L.J. Young Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) Date: April 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
By: /s/ T. M. Armstrong By: /s/ L. Linden Mann -------------------------------- ----------------------------------- T.M. Armstrong L. Linden Mann Senior Vice President- Controller Finance and Administration (Principal Accounting Officer) Chief Financial Officer (Principal Financial Officer)
Earle H. Harbison, Jr. * Lee M. Liberman * - ----------------------------------- ----------------------------------- (Earle H. Harbison, Jr.) (Lee M. Liberman) Director Director
Leslie F. Loewe * Martin Sneider * - ----------------------------------- ----------------------------------- (Leslie F. Loewe) (Martin Sneider) Director Director
Elliot H. Stein * William P. Stiritz * - ----------------------------------- ----------------------------------- (Elliot H. Stein) (William P. Stiritz) Director Director
H. Edwin Trusheim * - ----------------------------------- (H. Edwin Trusheim) Director
By his signature below, L.J. Young has signed this Form 10-K on behalf of each person named above whose name is followed by an asterisk, pursuant to power of attorney filed with this Form 10-K.
/s/ L. J. Young --------------------------------------- L.J. Young, as attorney-in-fact Date: April 25, 1994
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------
To Angelica Corporation:
We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in the Annual Report to Shareholders of Angelica Corporation and subsidiaries incorporated by reference in this Form 10-K, and have issued our report thereon dated March 15, 1994. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in Item 14(a)2(ii) on page 10 are the responsibility of the Corporation's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
St. Louis, Missouri, March 15, 1994
The Company will furnish to any record or beneficial shareholder requesting a copy of this Annual Report on Form 10-K a copy of any exhibit indicated in the above list as filed with this Annual Report on Form 10-K upon payment to it of its expenses in furnishing such exhibit.