UniFirst Corporation to Recognize Impairment of Investment in CRM System
September 21 2017 - 8:00AM
UniFirst Corporation (NYSE:UNF) today announced that it expects to
recognize an impairment of capitalized costs as part of its ongoing
CRM systems project. The Company expects the non-cash charge
related to this impairment will be between $50 million and $60
million and recognized in its results for the fourth quarter ended
August 26, 2017. The after tax impact of this charge is expected to
be between $31 million and $37 million.
As the Company has previously disclosed, it has
been working on a CRM systems project to modernize and improve its
current capabilities. The Company has worked with a
well-regarded third-party contractor to develop the custom-built
applications and interfaces. This project experienced
repeated delays due primarily to significant quality issues with
the stability and performance of the underlying code. Based
on the Company’s analysis of the project together with input from
outside consultants, including the lead third-party contractor, the
Company has now determined that it is no longer probable that the
current version of the CRM system that was being developed will be
completed and placed into service.
President and Chief Executive Officer, Steven
Sintros said, “We are committed to continuing to invest in
technology in the ongoing effort to bring new capabilities and
efficiencies to our customers as well as our employees. For
example, we recently successfully deployed a new sales and
marketing prospect management platform including mobile technology
to our entire sales organization. We are also confident in our
current ability to continue providing high levels of service to our
customers utilizing our existing proven systems while we continue
to migrate to newer technology.”
The Company is finalizing its analysis with
respect to the amount of the expected impairment charge, which is
also subject to review by our independent auditors. As a
result, the expected amount of the impairment charge is preliminary
and subject to change.
About UniFirst:Headquartered in
Wilmington, Mass., UniFirst Corporation (NYSE:UNF) is a North
American leader in the supply and servicing of uniform and workwear
programs, as well as the delivery of facility service programs.
Together with its subsidiaries, the company also provides first aid
and safety products, and manages specialized garment programs for
the cleanroom and nuclear industries. UniFirst manufactures its own
branded workwear, protective clothing, and floorcare products, and
with 250 service locations, over 300,000 customer locations, and
14,000 employee Team Partners, the company outfits nearly 2 million
workers each business day. For more information, contact UniFirst
at 800.455.7654 or visit UniFirst.com.
Forward Looking Statements:This
public announcement contains forward looking statements that
reflect the Company’s current views with respect to future events
and financial performance, including projected revenues and
earnings per share. Forward looking statements contained in this
public announcement are subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995 and may be
identified by words such as “estimates,” “anticipates,” “projects,”
“plans,” “expects,” “intends,” “believes,” “seeks,” “could,”
“should,” “may,” “will,” or the negative versions thereof, and
similar expressions and by the context in which they are used. Such
forward looking statements are based upon our current expectations
and speak only as of the date made. Such statements are highly
dependent upon a variety of risks, uncertainties and other
important factors that could cause actual results to differ
materially from those reflected in such forward looking statements.
Such factors include, but are not limited to, the performance and
success of our new Chief Executive Officer, our ability to
efficiently design, construct, and implement a new customer
relationship management (“CRM”) computer system, our ability to
maintain and grow Arrow’s customer base and enhance its operating
margins, our ability to compete successfully without any
significant degradation in our margin rates, uncertainties caused
by the continuing adverse worldwide economic conditions and their
impact on our customers’ businesses and workforce levels,
uncertainties regarding any existing or newly-discovered expenses
and liabilities related to environmental compliance and
remediation, any adverse outcome of pending or future contingencies
or claims, uncertainties regarding our ability to consummate and
successfully integrate acquired businesses, our ability to preserve
positive labor relationships and avoid becoming the target of
corporate labor unionization campaigns that could disrupt our
business, the continuing increase in domestic healthcare costs,
including the ultimate impact of the Affordable Care Act, our
retention of customers and renewal of customer contracts,
uncertainties regarding the price levels of natural gas,
electricity, fuel and labor, the negative effect on our business
from sharply depressed oil prices, fluctuation on our revenue and
net income from our specialty garments segment, the effect of
currency fluctuations on our results of operations and financial
condition, rampant criminal activity and instability in Mexico
where our principal garment manufacturing plants are located, the
impact on our goodwill and intangibles that might result from
adverse financial and economic changes, interruptions or failures
of our information technology systems, including as a result of
cyber-attacks, failure to comply with other state and federal
regulations that might result in penalties or costs, seasonal and
quarterly fluctuations in business levels, any loss of key
management or other personnel, our dependence on third
parties to supply us with raw materials, increased costs as a
result of any future changes in federal or state laws, rules and
regulations or governmental interpretation of such laws, rules and
regulations, demand and prices for our products and services,
economic and other developments associated with the war on
terrorism and its impact on the economy, general economic
conditions and other factors described under “Item 1A. Risk
Factors” in our Annual Report on Form 10-K for the year ended
August 27, 2016 and in our other filings with the Securities
and Exchange Commission. We undertake no obligation to update any
forward looking statements to reflect events or circumstances
arising after the date on which such statements are made.
CONTACT: Steven S. Sintros, President &
CEOPhone: 978- 658-8888 Email: ssintros@UniFirst.com
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