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TUC » Topics » Three and six months ended June 30, 2005 compared to three and six months ended June 30, 2004This excerpt taken from the TUC 10-K filed Mar 16, 2007. This excerpt taken from the TUC 10-K filed Apr 10, 2006. Fiscal
year ended December 31, 2005 compared to fiscal year ended December 31,
2004
Total revenue increased by $77,929, or 43%, to $260,623 for the year ended December 31, 2005 compared to $182,694 for the year ended December 31, 2004. The increase in total revenue for the year ended December 31, 2005 is primarily attributable to the revenue associated with the 2005 Acquisition. Facilities management revenue. Total facilities management revenue increased $74,336, or 53%, to $214,816 for the year ended December 31, 2005 compared to $140,480 for the year ended December 31, 2004. This increase is attributable to increases in revenue in the laundry facilities management business unit, primarily due to the 2005 Acquisition, partially offset by decreases in revenue in the reprographics business unit. Within the facilities management segment, revenue in the laundry facilities management business unit increased $75,167, or 55%, to $211,892 for the year ended December 31, 2005 compared to $136,725 for the year ended December 31, 2004. The increase is attributable primarily to the revenue generated by the assets acquired in the 2005 Acquisition. The acquired assets generated $69,776, or 93%, of the increase in laundry facilities management revenue for the year ended December 31, 2005. The remainder of the increase is attributable primarily to the net increase in the number of revenue generating laundry installed equipment, selected vend-price increases, a net increase in the usage of installed equipment and an increase in revenue associated with the conversion of coin-operated systems to card-operated systems. Due to the convenience of card-operated systems, usage, and therefore revenue, typically increases upon the conversion from a coin-operated system. Revenue in the reprographics business unit decreased $831, or 22%, to $2,924 for the year ended December 31, 2005 compared to $3,755 for the year ended December 31, 2004. The decline is primarily attributable to the continued decline in the use of copiers in libraries and similar facilities and a reduction in the number of locations we operate. We expect the decreases in revenue from our reprographics business unit to continue, as the usage of vended copiers declines and we continue our strategy of not renewing contracts that we predict will have a negative impact on income. Product sales revenue. Product sales revenue increased $3,593, or 9%, to $45,807 for the year ended December 31, 2005 compared to $42,214 for the year ended December 31, 2004. The increase in revenue for the year ended December 31, 2005 as compared to the same period in 2004 is attributable primarily to increases in revenue in the MicroFridge® business unit. Revenue in the MicroFridge® business unit increased $3,226, or 12%, to $30,513 for the year ended December 31, 2005 compared to $27,287 for the year ended December 31, 2004. The increase is primarily attributable to an increase in sales to the academic market and hospitality and assisted living market, partially offset by a decrease in government sales. The increase in academic sales can be attributed to a more aggressive sales and marketing effort coupled with cross selling opportunities with laundry route 21 sales. We believe that the hospitality sales increase is attributable to an increase in capital spending by the industry and the addition of several new distributors by our Company. Our sales to the government are continually affected by changes in government spending priorities. We believe current spending is directed away from military housing improvements and toward the current military efforts in the Middle East. Revenue in the laundry equipment sales business unit increased $367, or 2%, to $15,294 for the year ended December 31, 2005 compared to $14,927 for the year ended December 31, 2004. Sales in the laundry equipment sales business unit are sensitive to the strength of the economy, consumer confidence, local permitting and the availability of financing to small businesses, and therefore tend to fluctuate from period to period. Cost of facilities management revenue. Cost of facilities management revenue includes rent paid to customers as well as costs associated with installing and servicing machines and costs of collecting, counting, and depositing facilities management revenue, and the costs of purchasing, delivering and servicing rented facilities management equipment and MicroFridge® equipment. Cost of facilities management revenue increased by $48,697, or 52%, to $143,156 for the year ended December 31, 2005 as compared to $94,459 for the year ended December 31, 2004. This increase is attributable primarily to the cost associated with the revenue generated by the assets acquired in the 2005 Acquisition. Included in the cost for the year ended December 31, 2005 is $316 related to losses incurred as a result of the 2005 hurricanes. As a percentage of facilities management revenue, cost of facilities management revenue was consistent at 67% for the years ended December 31, 2005 and 2004. Changes in facilities management rent as a percentage of facilities management revenue can be affected by new and renewed laundry leases and by other factors such as the amount of incentive payments and laundry room betterments invested in new or renewed laundry leases. As we vary the amount invested in a facility, the facilities management rent as a function of facilities management revenue can vary. Incentive payments and betterments are amortized over the life of the laundry lease. The percentage of facilities management rent to facilities management revenue is also impacted by the facilities management rent rate structure in the reprographics business unit. Because this business unit has a much lower facilities management rent rate structure than the laundry facilities management business unit, the reduction in the size of the reprographics business unit through the non-renewal of leases will result in an increase in the overall facilities management rent as a percentage of revenue. Depreciation and amortization. Depreciation and amortization increased by $10,590, or 51%, to $31,337 for the year ended December 31, 2005 as compared to $20,747 for the year ended December 31, 2004. This increase was primarily attributable to the addition of the assets and contracts acquired in the 2005 Acquisition. The laundry facilities management equipment acquired had an assigned value of $25,099 as of the acquisition date, which is being depreciated over five years and accounted for $5,020 of the increase in depreciation and amortization for the year ended December 31, 2005. The laundry facility contract rights acquired had an assigned value of $68,638 (prior to recording deferred taxes) as of the acquisition date, which is being amortized over twenty years and accounted for $3,432 of the increase in depreciation and amortization for the year ended December 31, 2005. The laundry facilities management equipment and contract rights are depreciated and amortized using the straight-line method. Also contributing to the increased depreciation expense was new equipment placed in laundry facilities at new locations and replacement of older equipment as contracts were renegotiated. 22 Cost of product sales. Cost of product sales consists primarily of the cost of laundry equipment, MicroFridge® equipment and parts and supplies sold as part of the product sales segment. Cost of product sales increased by $5,195, or 17%, to $35,069 for the year ended December 31, 2005 as compared to $29,874 for the year ended December 31, 2004. As a percentage of sales, cost of product sold was approximately 77% and 71% for the years ended December 31, 2005 and 2004, respectively. The gross margin on product sales includes the gross margins from the laundry equipment sales and MicroFridge® business units. The gross margin in the laundry equipment sales business unit decreased to 31% for the year ended December 31, 2005 as compared to 32% for the same period in 2004. The gross margin in the MicroFridge® business unit decreased to 20% for the ended December 31, 2005 as compared to 28% for the same period in 2004. The erosion of margins is attributable to the increased cost of product, fuel cost surcharges passed through to us and the cost of carrying more inventory than in prior years due to supplier shortages. The Company was unable to recover all of these expenses. General, administration, sales, marketing and depreciation expense. General, administration, sales, marketing and depreciation expense increased by $6,320, or 25%, to $31,450 for the year ended December 31, 2005 as compared to $25,130 for the year ended December 31, 2004. As a percentage of total revenue, general, administration, sales, marketing and depreciation expense decreased by 14% from 14% for the year ended December 31, 2004 to 12% for the year ended December 31, 2005. The increase in total expenses is primarily attributable to increases in sales personnel and related costs resulting from the 2005 Acquisition. Loss on early extinguishment of debt. We used a portion of the proceeds from our $150,000 senior note offering to repay the term loan portion of the 2005 senior credit facility. Unamortized financing costs of $461 related to the term loan were expensed in the third quarter of 2005. In connection with the 2005 senior credit facilities we repaid in full and terminated our 2003 senior credit facilities. Unamortized financing costs of $207 associated with our 2003 senior credit facilities were expensed in the first quarter of 2005. In connection with an amendment to our 2003 senior credit facilities, unamortized financing costs of $183 were expensed in the first quarter of 2004. Gain on sale of assets .Gain on sale of assets represents the gain from the sale of vehicles and other non-inventory assets in the ordinary course of business. In the year ended December 31, 2005, the gain included $10,588 from the sale of our corporate headquarters. In the year ended December 31, 2004, the gain included $1,218 from the sale of certain laundry facilities management equipment and contracts. This excerpt taken from the TUC 10-K filed Apr 3, 2006. Fiscal
year ended December 31, 2005 compared to fiscal year ended December 31,
2004
Total revenue increased by $77,929, or 43%, to $260,623 for the year ended December 31, 2005 compared to $182,694 for the year ended December 31, 2004. The increase in total revenue for the year ended December 31, 2005 is primarily attributable to the revenue associated with the 2005 Acquisition. Facilities management revenue. Total facilities management revenue increased $74,336, or 53%, to $214,816 for the year ended December 31, 2005 compared to $140,480 for the year ended December 31, 2004. This increase is attributable to increases in revenue in the laundry facilities management business unit, primarily due to the 2005 Acquisition, partially offset by decreases in revenue in the reprographics business unit. Within the facilities management segment, revenue in the laundry facilities management business unit increased $75,167, or 55%, to $211,892 for the year ended December 31, 2005 compared to $136,725 for the year ended December 31, 2004. The increase is attributable primarily to the revenue generated by the assets acquired in the 2005 Acquisition. The acquired assets generated $69,776, or 93%, of the increase in laundry facilities management revenue for the year ended December 31, 2005. The remainder of the increase is attributable primarily to the net increase in the number of revenue generating laundry installed equipment, selected vend-price increases, a net increase in the usage of installed equipment and an increase in revenue associated with the conversion of coin-operated systems to card-operated systems. Due to the convenience of card-operated systems, usage, and therefore revenue, typically increases upon the conversion from a coin-operated system. Revenue in the reprographics business unit decreased $831, or 22%, to $2,924 for the year ended December 31, 2005 compared to $3,755 for the year ended December 31, 2004. The decline is primarily attributable to the continued decline in the use of copiers in libraries and similar facilities and a reduction in the number of locations we operate. We expect the decreases in revenue from our reprographics business unit to continue, as the usage of vended copiers declines and we continue our strategy of not renewing contracts that we predict will have a negative impact on income. Product sales revenue. Product sales revenue increased $3,593, or 9%, to $45,807 for the year ended December 31, 2005 compared to $42,214 for the year ended December 31, 2004. The increase in revenue for the year ended December 31, 2005 as compared to the same period in 2004 is attributable primarily to increases in revenue in the MicroFridge® business unit. Revenue in the MicroFridge® business unit increased $3,226, or 12%, to $30,513 for the year ended December 31, 2005 compared to $27,287 for the year ended December 31, 2004. The increase is primarily attributable to an increase in sales to the academic market and hospitality and assisted living market, partially offset by a decrease in government sales. The increase in academic sales can be attributed to a more aggressive sales and marketing effort coupled with cross selling opportunities with laundry route 21 sales. We believe that the hospitality sales increase is attributable to an increase in capital spending by the industry and the addition of several new distributors by our Company. Our sales to the government are continually affected by changes in government spending priorities. We believe current spending is directed away from military housing improvements and toward the current military efforts in the Middle East. Revenue in the laundry equipment sales business unit increased $367, or 2%, to $15,294 for the year ended December 31, 2005 compared to $14,927 for the year ended December 31, 2004. Sales in the laundry equipment sales business unit are sensitive to the strength of the economy, consumer confidence, local permitting and the availability of financing to small businesses, and therefore tend to fluctuate from period to period. Cost of facilities management revenue. Cost of facilities management revenue includes rent paid to customers as well as costs associated with installing and servicing machines and costs of collecting, counting, and depositing facilities management revenue, and the costs of purchasing, delivering and servicing rented facilities management equipment and MicroFridge® equipment. Cost of facilities management revenue increased by $48,697, or 52%, to $143,156 for the year ended December 31, 2005 as compared to $94,459 for the year ended December 31, 2004. This increase is attributable primarily to the cost associated with the revenue generated by the assets acquired in the 2005 Acquisition. Included in the cost for the year ended December 31, 2005 is $316 related to losses incurred as a result of the 2005 hurricanes. As a percentage of facilities management revenue, cost of facilities management revenue was consistent at 67% for the years ended December 31, 2005 and 2004. Changes in facilities management rent as a percentage of facilities management revenue can be affected by new and renewed laundry leases and by other factors such as the amount of incentive payments and laundry room betterments invested in new or renewed laundry leases. As we vary the amount invested in a facility, the facilities management rent as a function of facilities management revenue can vary. Incentive payments and betterments are amortized over the life of the laundry lease. The percentage of facilities management rent to facilities management revenue is also impacted by the facilities management rent rate structure in the reprographics business unit. Because this business unit has a much lower facilities management rent rate structure than the laundry facilities management business unit, the reduction in the size of the reprographics business unit through the non-renewal of leases will result in an increase in the overall facilities management rent as a percentage of revenue. Depreciation and amortization. Depreciation and amortization increased by $10,590, or 51%, to $31,337 for the year ended December 31, 2005 as compared to $20,747 for the year ended December 31, 2004. This increase was primarily attributable to the addition of the assets and contracts acquired in the 2005 Acquisition. The laundry facilities management equipment acquired had an assigned value of $25,099 as of the acquisition date, which is being depreciated over five years and accounted for $5,020 of the increase in depreciation and amortization for the year ended December 31, 2005. The laundry facility contract rights acquired had an assigned value of $68,638 (prior to recording deferred taxes) as of the acquisition date, which is being amortized over twenty years and accounted for $3,432 of the increase in depreciation and amortization for the year ended December 31, 2005. The laundry facilities management equipment and contract rights are depreciated and amortized using the straight-line method. Also contributing to the increased depreciation expense was new equipment placed in laundry facilities at new locations and replacement of older equipment as contracts were renegotiated. 22 Cost of product sales. Cost of product sales consists primarily of the cost of laundry equipment, MicroFridge® equipment and parts and supplies sold as part of the product sales segment. Cost of product sales increased by $5,195, or 17%, to $35,069 for the year ended December 31, 2005 as compared to $29,874 for the year ended December 31, 2004. As a percentage of sales, cost of product sold was approximately 77% and 71% for the years ended December 31, 2005 and 2004, respectively. The gross margin on product sales includes the gross margins from the laundry equipment sales and MicroFridge® business units. The gross margin in the laundry equipment sales business unit decreased to 31% for the year ended December 31, 2005 as compared to 32% for the same period in 2004. The gross margin in the MicroFridge® business unit decreased to 20% for the ended December 31, 2005 as compared to 25% for the same period in 2004. The erosion of margins is attributable to the increased cost of product, fuel cost surcharges passed through to us and the cost of carrying more inventory than in prior years due to supplier shortages. The Company was unable to recover all of these expenses. General, administration, sales, marketing and depreciation expense. General, administration, sales, marketing and depreciation expense increased by $6,320, or 25%, to $31,450 for the year ended December 31, 2005 as compared to $25,130 for the year ended December 31, 2004. As a percentage of total revenue, general, administration, sales, marketing and depreciation expense decreased by 14% from 14% for the year ended December 31, 2004 to 12% for the year ended December 31, 2005. The increase in total expenses is primarily attributable to increases in sales personnel and related costs resulting from the 2005 Acquisition. Loss on early extinguishment of debt. We used a portion of the proceeds from our $150,000 senior note offering to repay the term loan portion of the 2005 senior credit facility. Unamortized financing costs of $461 related to the term loan were expensed in the third quarter of 2005. In connection with the 2005 senior credit facilities we repaid in full and terminated our 2003 senior credit facilities. Unamortized financing costs of $207 associated with our 2003 senior credit facilities were expensed in the first quarter of 2005. In connection with an amendment to our 2003 senior credit facilities, unamortized financing costs of $183 were expensed in the first quarter of 2004. Gain on sale of assets .Gain on sale of assets represents the gain from the sale of vehicles and other non-inventory assets in the ordinary course of business. In the year ended December 31, 2005, the gain included $10,588 from the sale of our corporate headquarters. In the year ended December 31, 2004, the gain included $1,218 from the sale of certain laundry facilities management equipment and contracts. This excerpt taken from the TUC 8-K filed Aug 1, 2005. Three and six months ended June 30, 2005 compared to three and six months ended June 30, 2004 Total revenue increased by $18,172, or 40%, to $63,383 for the three months ended June 30, 2005 compared to $45,211 for the three months ended June 30, 2004. Total revenue increased by $36,985, or 42%, to $125,756 for the six months ended June 30, 2005 compared to $88,771 for the six months ended June 30, 2004. Facilities management revenue Total facilities management revenue increased $18,119, or 52%, to $52,922 for the three months ended June 30, 2005 compared to $34,803 for the three months ended June 30, 2004. Total facilities management revenue increased $36,546, or 52%, to $106,433 for the six months ended June 30, 2005 compared to $69,887 for the six months ended June 30, 2004. These increases are attributable to increases in revenue in the laundry facilities management business unit, primarily due to the 2005 Acquisition, partially offset by decreases in revenue in the reprographics business unit. Within the facilities management segment, revenue in the laundry facilities management business unit increased $18,531, or 55%, to $52,140 for the three months ended June 30, 2005 compared to $33,609 for the three months ended June 30, 2004. Revenue in the laundry facilities management business unit increased $37,201, or 55%, to $104,834 for the six months ended June 30, 2005 compared to $67,633 for the six months ended June 30, 2004. These increases are attributable primarily to the revenue generated by the assets acquired in the 2005 Acquisition. The acquired assets generated $17,520, or 95%, and $33,789, or 91%, of the increase in laundry facilities management revenue for the three and six months ended June 30, 2005, respectively. The remainder of these increases is attributable primarily to the net increase in the number of revenue generating laundry installed equipment, selected vend-price increases, a net increase in the usage of installed equipment and an increase in revenue associated with the conversion of coin-operated systems to debit-card-operated systems. Due to the convenience of debit- card-operated systems, usage, and therefore revenue, typically increase upon the conversion from a coin-operated system. 26 Revenue in the reprographics business unit decreased by $412, or 35%, to $782 for the three months ended June 30, 2005 compared to $1,194 for the three months ended June 30, 2004. Revenue in the reprographics business unit decreased $655, or 29%, to $1,599 for the six months ended June 30, 2005 compared to $2,254 for the six months ended June 30, 2004. These declines are primarily attributable to the continued decline in the use of copiers in libraries and similar facilities and a reduction in the number of locations we operate. We expect the decreases in revenue from our reprographics business unit to continue, as the usage of vended copiers declines and we continue our strategy of not renewing contracts which we predict will have a negative impact on income. Product sales revenue Revenue from our product sales segment was relatively flat at $10,461 for the three months ended June 30, 2005 compared to $10,408 for the three months ended June 30, 2004. Product sales revenue increased $439, or 2%, to $19,323 for the six months ended June 30, 2005 compared to $18,884 for the six months ended June 30, 2004. The increase in revenue for the six months ended June 30, 2005 as compared to the same period in 2004 is attributable to increases in revenue in the laundry equipment sales business unit, partially offset by decreases in revenue in the MicroFridge business unit. Revenue in the MicroFridge business unit decreased $205, or 3%, to $6,429 for the three months ended June 30, 2005 compared to $6,634 for the three months ended June 30, 2004. Revenue in the MicroFridge business unit decreased $73, or 1%, to $12,088 for the six months ended June 30, 2005 compared to $12,161 for the six months ended June 30, 2004. These decreases are primarily attributable to a decrease in sales to the academic market and government customers, partially offset by an increase in sales to the hospitality market. Sales to academic customers have been adversely affected by increased competition and we believe that our sales to the government continue to be affected by overall spending by the government being directed away from military housing improvements and toward the current military efforts in the Middle East. We believe that the hospitality sales increase is attributable to an increase in capital spending by the industry and the addition of several new distributors by our Company. Revenue in the laundry equipment sales business unit increased $258, or 7%, to $4,032 for the three months ended June 30, 2005 compared to $3,774 for the three months ended June 30, 2004. Revenue in the laundry equipment sales business unit increased $512, or 8%, to $7,235 for the six months ended June 30, 2005 compared to $6,723 for the six months ended June 30, 2004. Sales in the laundry equipment sales business unit are sensitive to the strength of the economy, consumer confidence, local permitting and the availability of financing to small businesses, and therefore tend to fluctuate significantly from quarter to quarter. | EXCERPTS ON THIS PAGE:
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