UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended January 31, 2001 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ______________ Commission File No. 0-11399 ------- COYNE INTERNATIONAL ENTERPRISES CORP. BLUE RIDGE TEXTILE MANUFACTURING, INC. OHIO GARMENT RENTAL, INC. -------------------------------------------------------------------------------- (Exact name of Registrants as specified in their respective charters) New York 16-6040758 Georgia 58-2018333 Ohio 34-1261376 --------------------------------------------------------- --------------------------------------------------- (State or Other Jurisdiction of Incorporation (IRS Employer Identification No.) or Organization) 140 Cortland Avenue, Syracuse, New York 13221 --------------------------------------------------------- --------------------------------------------------- (Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: (315)475-1626 ------------- Securities Registered Pursuant to Section 12(b) of the Act: NONE ---- Securities Registered Pursuant to Section 12(g) of the Act: NONE ---- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES: X NO 1 TABLE OF CONTENTS

Page ---- PART I. Financial Information: Item 1. Financial Statements Consolidated Balance Sheets .................................................................... 3 Unaudited Consolidated Statements of Operations ~~and Retained Earnings (Deficit)~~............................................... 5 Unaudited Consolidated Statements of Cash Flows................................................. 6 Notes to Unaudited Consolidated Financial Statements ~~(Unaudited)~~........................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................ ~~Liquidity~~16 ~~and~~PART ~~Capital~~II. ~~Resources~~Other Information Item 1. Legal Proceedings.............................................................................. 917 ~~Results~~Item of2. ~~Operations~~Changes ~~for~~in ~~the~~Securities ~~Third~~and ~~Quarter~~Use of ~~Fiscal~~Proceeds...................................................... ~~2000~~17 ~~Compared~~Item to3. ~~the~~Defaults ~~Third~~Upon ~~Quarter~~Senior Securities................................................................ 17 Item 4. Submission of ~~Fiscal~~Matters ~~1999~~to a Vote of Security Holders............................................ 17 Item 5. Other Information.............................................................................. 1017 ~~PART~~Item II6. ~~Other~~Exhibits ~~Information~~and Reports on Form 8-K............................................................... 17 Signatures ............................................................................................... 1118

2 PART I. Financial Information Item 1. Financial Statements Coyne International Enterprises Corp. and Subsidiaries Consolidated Balance Sheets ================================================================================

~~July~~January 31, October 31, Assets 2001 2000 ~~1999~~ ------ ---------------- -- ------------------ (~~Unaudited~~unaudited) Current ~~assets~~Assets: Cash and cash equivalents $ ~~164~~693,~~390~~312 $ ~~213~~909,~~407~~340 ~~Receivables~~Accounts receivable, ~~principally~~less ~~trade~~allowance 18for doubtful accounts of $381,~~304~~000 in January and $341,~~944~~000 in October 17,544,437 16,~~768~~929,~~958~~975 Inventories 1011,~~702~~762,~~906~~422 712,~~371~~725,~~395~~141 ~~Uniforms~~Rental ~~and~~merchandise ~~other rental items~~ in service, ~~net 30~~33,~~634~~118,~~126~~843 2732,~~838~~712,~~084~~967 Prepaid ~~expense~~expenses and other assets ~~555~~642,~~532~~469 ~~796~~698,~~094~~768 ------------- ------------- Total current assets 63,761,483 63,976,191 Property, plant and equipment, at cost: Land 2,432,180 2,432,180 Buildings and improvements 41,412,438 39,829,930 Machinery and equipment 41,521,592 42,729,434 Vehicles 11,573,483 11,420,295 Construction in process 1,519,560 1,505,965 ------------- ------------- ~~Total~~98,459,253 ~~current~~97,917,804 ~~assets~~Less: 60Accumulated depreciation (55,~~361~~465,~~898~~017) 52(54,~~987~~100,~~938~~700) ~~Property~~------------- ------------- Total property, plant and equipment, ~~net 44~~42,~~887~~994,~~860~~236 4643,~~553~~817,~~709~~104 Other assets: Purchased routes and acquisition intangibles, net 17,~~398~~044,~~251~~767 17,~~062~~239,~~547~~942 Deferred financing ~~cost~~costs, net 2,~~358~~236,~~453~~076 2,~~606~~322,~~593~~568 Deferred income taxes 34,~~411~~324,~~000~~623 23,~~190~~724,~~000~~623 Other ~~assets 533~~148,~~282~~944 ~~444~~202,~~795~~521 ------------- ------------- Total other assets 23,754,410 23,489,654 ------------- ------------- $ ~~128~~130,~~950~~510,~~744~~129 $ ~~121~~131,~~845~~282,~~582~~949 =============~~=========~~ =============~~=======~~

See notes to unaudited consolidated financial statements 3 Coyne International Enterprises Corp. and Subsidiaries Consolidated Balance Sheets --------------------------------------------------------------------------------

~~July~~January 31, October 31, Liabilities and ~~Shareholder~~Shareholders's Equity (Deficit) 2001 2000 ~~1999~~ ---------------------------------------------- ------------------ ----------------- (~~Unaudited~~unaudited) Current ~~liabilities~~Liabilities: Current maturities of long-term ~~debt~~obligations $ 23,~~988~~294,~~150~~841 $ 3,~~214~~385,~~908~~619 Accounts payable 411,~~568~~789,~~744~~742 58,~~378~~934,~~142~~685 Accrued expenses: Salaries and employee benefits 43,~~069~~832,~~039~~298 54,~~297~~714,~~557~~396 Accrued ~~Interest~~interest 1~~.703~~,~~019~~586,839 3,~~903~~655,~~155~~175 Other 73,~~850~~103,~~798~~567 52,~~067~~268,~~695~~201 Deferred income taxes 1112,~~000~~108,~~000~~370 1012,~~000~~032,~~000~~060 ------------------ ----------------~~---~~ Total current liabilities 3235,~~179~~715,~~750~~657 3234,~~861~~990,~~457~~136 Long-term obligations~~: Capital lease and other loan obligations~~, net of current maturities 27102,~~749~~288,~~553~~944 19102,~~332~~811,~~429~~292 ~~Senior subordinated notes 75,000,000 75,000,000~~ Other liabilities 2,~~838~~243,~~032~~825 32,~~083~~170,~~507~~095 ------------------ ----------------~~---~~ Total liabilities ~~137~~140,~~767~~248,~~335~~426 ~~130~~139,~~277~~971,~~393~~523 ------------------ ----------------~~---~~ Shareholders' equity (deficit): Preferred stock - 5% non-cumulative, non-voting, callable at par: Class A - $100 par value; 30,000 shares authorized, 23,107 ~~shares~~Shares issued and outstanding. 2,310,700 2,310,700 Class B - $500 par value; 5,000 shares authorized, 4,991 ~~shares~~Shares issued, 2,991 shares outstanding. 2,495,500 2,495,500 Common stock - $.01 par value: Class A - voting,; 100,000 shares authorized, 2,923 shares ~~issued~~Issued and outstanding. 29 29 Class B - non-voting; 99,000 shares authorized;, 74,030 shares ~~issued~~Issued and outstanding. 740 740 Additional paid-in capital 849,512 849,512 Retained earnings (deficit) (1213,~~401~~101,~~814~~190) (12,~~030~~212,~~087~~139) Accumulated other comprehensive loss (138,599) -----------------~~---~~ ----------------~~-----~~ (67,~~745~~583,~~333~~308) (6,~~373~~555,~~606~~658) Less: Treasury stock, 2,000 shares of Class B preferred stock at cost (166,667) (166,667) Shareholder ~~receivable~~receivables (1,~~904~~988,~~591~~322) (1,~~891~~966,~~538~~249) -----------------~~---~~ ----------------~~-----~~ Total shareholders' equity (deficit) (89,~~816~~738,~~591~~297) (8,~~431~~688,~~811~~574) -----------------~~---~~ ----------------~~-----~~ ~~Total liabilities and shareholders' equity (deficit)~~ $ ~~128~~130,~~950~~510,~~744~~129 $ ~~121~~131,~~845~~282,~~582~~949 =================~~===~~ ================~~=====~~

See notes to unaudited consolidated financial statements 4 Coyne International Enterprises Corp. and Subsidiaries Consolidated Statements of Operations Three Months Ended January 31, ------------------------------------ 2001 2000 ---------------- --------------- (Unaudited) Revenue: Rental operations $ 35,521,305 $ 34,789,711 Direct sales 2,622,199 2,349,296 --------------- --------------- 38,143,504 37,139,007 --------------- --------------- Operating expenses: Cost of rental operations 26,935,442 25,241,081 Cost of direct sales 1,636,903 1,576,042 Selling, general and administrative 6,407,881 5,858,518 Depreciation and amortization 1,558,073 1,525,673 --------------- --------------- 36,538,299 34,201,314 --------------- --------------- Income from operations 1,605,205 2,937,693 Interest expense 2,995,256 2,793,313 --------------- --------------- Income (loss) before income taxes (1,390,051) 144,380 Income tax expense (benefit) (501,000) 150,000 --------------- --------------- Net Loss $ (889,051) $ (5,620) ======== ====== See notes to unaudited consolidated financial statements 5 Coyne International Enterprises Corp. and Subsidiaries Consolidated Statements of Cash Flows --------------------------------------------------------------------------------

Three Months Ended ~~Nine~~January ~~Months Ended July~~ 31, ~~July 31,~~ -------------------------------------- 2001 2000 ------------------------------------ ~~2000~~(unaudited) ~~1999~~Cash ~~2000~~flows ~~1999~~from ~~-----------------~~operating ~~-----------------~~activities: ~~----------------~~Net ~~--------------~~loss $ (~~Unaudited~~889,051) $ (~~Unaudited~~5,620) ~~Revenue:~~Adjustments ~~Rental~~to ~~operations~~reconcile $net ~~35,033,398~~loss ~~33,714,740~~to ~~105,144,625~~net ~~101,387,834~~cash ~~Direct~~provided ~~sales~~by ~~2,929,139~~(used ~~2,708,631~~in) ~~7,504,908~~operating ~~7,654,136~~activities: ~~----------------~~Depreciation ~~----------------~~of ~~---------------~~property, ~~--------------~~plant 37and equipment 1,~~962~~095,~~537~~967 361,~~423~~081,~~371~~964 ~~112~~Amortization of capitalized leases 268,~~649,533~~350 ~~109~~268,~~041,970~~350 ~~----------------~~Amortization ~~----------------~~of ~~---------------~~acquisition ~~--------------~~intangibles ~~Operating~~195,175 ~~expenses:~~185,791 ~~Cost~~Amortization of ~~rental~~deferred ~~operations~~financing 27costs 86,~~051,592~~492 2688,~~184,849~~813 80Provision for deferred income taxes (523,~~646,974~~690) 7841,~~172,598~~000 ~~Cost~~Changes ofin ~~direct~~operating ~~sales~~assets 1and operating liabilities: Accounts receivable (614,~~941,785~~462) (1,~~791~~012,~~930~~224) 4Inventories 962,~~839,907~~719 5(1,~~042~~322,~~707~~101) ~~Selling~~Rental merchandise in service (405,876) ~~general~~269,009 Prepaid expenses and ~~administrative~~other 6assets 109,~~495~~876 149,~~897~~380 6Accounts payable,~~649~~ accrued expenses,~~462~~ 18and other liabilities 813,~~910,606~~719 19(1,~~501~~712,~~556~~567) ---------------- -~~---------------~~ --------------- ~~--------------~~Net ~~35,489,274~~cash ~~34,626,241~~provided ~~104~~by (used in) operating activities 1,~~397~~099,~~487~~219 ~~102~~(1,~~716~~968,~~861~~205) ---------------- -~~---------------~~ --------------- ~~--------------~~Cash ~~Income~~flows from ~~operations~~investing 2activities: Purchase of property,~~473~~ plant and equipment (541,~~263~~449) (1,~~797~~392,~~130~~279) ~~8,252,046~~Acquisition 6of business,~~325,109~~ ~~Interest~~net ~~expense~~of ~~2,786,605~~cash ~~2,689,992~~acquired ~~8,450,773~~0 7(221,~~889,405~~938) ----------------- ---------------- Net cash used in investing activities (541,449) (1,614,217) ----------------- --------------- ~~Loss~~Cash ~~before~~flows ~~income~~from ~~taxes~~financing ~~(313,342)~~activities: ~~(892,862)~~Proceeds ~~(198~~from long-term borrowings 11,~~727)~~243,933 (113,~~564~~770,~~296)~~643 ~~Income~~Payments ~~tax~~under ~~expense~~long-term obligations (~~benefit~~11,857,059) (5010,~~000~~328,240) Other (~~282~~160,~~000~~672) ~~173,000~~ (~~368~~15,~~000~~198) ----------------- ---------------- Net cash provided by (used in) financing activities (773,798) 3,427,205 ----------------- --------------- Net ~~loss~~decrease ~~(263,342)~~in ~~(610,862)~~cash (~~371~~216,~~727~~028) (1155,~~196,296~~217) ~~Retained~~Cash ~~earnings~~and ~~(deficit),~~cash ~~beginning~~equivalents: Beginning of ~~the~~ period ~~(12~~909,~~138,472)~~340 ~~(11~~213,~~664,257)~~407 ~~(12,030,087) (11,078,823)~~ ---------------- -~~---------------~~ --------------- ~~-------------- Retained Earnings (deficit),~~ End of ~~Period~~period $ ~~(12~~693,~~401,814)~~312 ~~(12,275,119)~~$ ~~(12~~58,~~401,814)~~190 ~~(12,275,119)~~ ================ =~~===============~~ =============== ~~==============~~Supplemental disclosure of cash flow information: Interest paid $4,975,391 $ 4,786,959 Income taxes paid 27,232 11,734

See notes to unaudited consolidated financial statements 6 Coyne International Enterprises Corp. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements of Coyne International Enterprises Corp. and Subsidiaries, (the Company), have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, quarterly results include all adjustments, (consisting of normal recurring accruals), considered necessary for a fair presentation. For further information, refer to the consolidated financial statements and notes included in the Company's annual report on Form 10-K for the year ended October 31, 2000. The Company uses a fifty-two/fifty-three week fiscal year ending on the last Saturday of October, with quarterly interim periods of thirteen weeks. For convenience, the dating of the accompanying financial statements, and notes, herein, have been labeled as of and for the periods ending January 31, 2001, October 31, 2000 and January 31, 2000 rather than the actual period-end dates. Operating results for the three-month period ended January 31, 2001 are not necessarily indicative of the results that may be expected for the year ended October 31, 2001. 2. Long-term Obligations At January 31, 2001 the Company was not in compliance with certain bank financial covenants. Subsequent to January 31, 2001 the Company obtained waivers of such non-compliance. In addition, in March 2001, the Company amended certain of its financial covenants. Under the terms of the amendment the maximum credit available under the Company's bank revolving credit facility has been increased by $8,198,000 to $38,198,000, subject to certain collateral limitations. In addition, credit available under the bank acquisition facility has been reduced by $8,198,000 thereby eliminating all future availability under this acquisition facility. As of January 31, 2001, after giving consideration to the March 13, 2001 amendment, the Company had approximately $5.5 million available under its revolving credit facility. Other bank credit facilities totaling $21.7 million are in place and become available based on eligible collateral and other limitations. 3. Income Taxes The Company's effective tax rate differs from the federal statutory rate of 34% due to state taxes and certain expenses that are not deductible for tax purposes. These non-deductible items include the amortization of certain intangible assets and a portion of certain meals and entertainment expenses. 7 4. Derivative Instruments and Hedging Activities The Company maintains an interest-rate risk-management strategy that uses interest rate swaps to minimize significant, unanticipated earnings fluctuations caused by interest-rate volatility. The Company's specific goals are (1) to manage interest-rate sensitivity by modifying the repricing or maturity characteristics of certain of its debt and (2) to lower, (where possible), the cost of its borrowed funds. The Company uses interest-rate swaps to convert a portion of its variable-rate debt to fixed rates. At January 31, 2001, the notional amount of such debt was $5,204,170. The Company adopted Statement of Financial Accounting Standards No. 133, (SFAS 133), Accounting for Derivative Instruments and Hedging Activities, on November 1, 2000. Under SFAS 133, the Company's existing interest rate swaps have been designated as highly effective cash flow hedges. In accordance with the transition provisions of SFAS 133, the Company recorded a net-of-tax cumulative-effect-type adjustment of $138,599 in other comprehensive income to recognize this cash flow hedge at fair value. 5. Reclassification Certain amounts have been reclassified to conform with the fiscal 2001 presentation. 6. Comprehensive Income The components of comprehensive income (loss) were as follows: Three Months Three Months ended ended January 31, 2001 January 31, 2000 ---------------- ---------------- Net loss ($ 889,051) ($ 5,620) Other comprehensive loss: Unrealized holding losses (138,599) 0 Comprehensive loss ($1,027,650) ($ 5,620) ============ ========== 8 Coyne International Enterprises Corp. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 7. Consolidating Financial Statements On June 26, 1998, the Company sold $75,000,000 of 11-1/4% Senior Subordinated Notes due 2008, (the Notes). The Notes are jointly and severally guaranteed by the following wholly-owned subsidiaries of the Company, (the Subsidiary Guarantors): Blue Ridge Textile Manufacturing, Inc. and Ohio Garment Rental, Inc. The following consolidating financial statements for the Company segregate the financial information of Coyne International Enterprises Corp. (the Parent Company) and the Subsidiary Guarantors. 9 Coyne International Enterprises Corp. And Subsidiaries

~~2000~~Consolidating ~~1999~~Balance Sheets January 31, 2001 ------------------- ------------------------------------------------- ~~(Unaudited)~~Parent ~~(Unaudited)~~Subsidiary ~~Cash~~Consolidating ~~flows~~Consolidated ~~from~~Assets ~~operating~~Company ~~activities~~Guarantors Adjustments Totals ------ --------------- ---------------- --------------- ----------------- Current Assets: ~~Net~~Cash ~~loss~~and cash equivalents $ ~~(371~~739,~~727)~~022 $ (145,~~196,296~~710) ~~Adjustments~~$ to693,312 ~~reconcile~~Accounts ~~net~~receivable ~~loss~~15,714,756 to1,829,681 ~~net~~17,544,437 ~~cash~~Inventories ~~used~~9,485,571 in2,276,851 ~~operating~~11,762,422 ~~activities:~~Rental ~~Depreciation~~merchandise ~~and~~in ~~amortization~~service of30,448,526 ~~plant and equipment 4~~2,~~128~~670,~~955~~317 333,~~781~~118,~~485~~843 ~~Amortization~~Prepaid ofexpenses ~~acquisition~~and ~~intangibles~~other ~~561~~assets 9,~~311~~026,821 ~~508~~60,~~243~~368 ~~Amortization~~(8,444,720) of642,469 ~~deferred~~--------------- ~~financing~~---------------- ~~263,140~~--------------- ~~266,437~~----------------- ~~Provision~~Total ~~for~~current ~~deferred~~assets ~~income~~65,414,696 ~~taxes~~6,791,507 (~~221~~8,~~000~~444,720) ~~(376~~63,~~000)~~761,483 ~~Changes~~Property, inplant ~~operating~~and ~~assets~~equipment, ~~and~~at ~~operating~~cost: ~~liabilities~~89,574,937 8,884,316 98,459,253 Less: ~~Accounts~~Accumulated ~~receivable~~depreciation (149,~~535~~823,~~986~~429) (15,~~137~~641,~~895~~588) ~~Inventories~~ (355,~~331~~465,~~511~~017) (1--------------- ---------------- --------------- ----------------- Total property,~~009~~ plant and equipment 39,~~505)~~751,508 ~~Uniforms~~3,242,728 0 42,994,236 Other assets: Purchased routes and ~~other~~acquisition ~~rental~~intangibles, ~~items~~net in16,776,379 ~~service~~268,388 (17,044,767 Deferred financing costs, net 2,~~796~~236,~~042)~~076 ~~769~~0 2,~~608~~236,076 ~~Prepaid~~Deferred ~~expenses~~income ~~and~~taxes ~~other~~4,324,623 ~~assets~~0 ~~152~~4,~~075~~324,623 ~~211~~Other 148,~~372~~944 ~~Accounts~~0 ~~payable~~148,944 ~~and~~--------------- ---------------- --------------- ----------------- Total other ~~liabilities~~assets (123,~~700~~486,~~424)~~022 (2268,~~359~~388 0 23,~~619)~~754,410 --------------- ---------------- --------------- ----------------- ~~Net~~$ ~~cash~~128,652,226 ~~used~~$ in10,302,623 ~~operating~~$ ~~activities~~ (48,~~851~~444,~~209~~720) ~~(542~~$ 130,~~170~~510,129 =============== ================ =============== ================= Liabilities and Shareholders' Equity (Deficit) ------------------- --------------------------- ~~Cash~~Current ~~flows~~Liabilities: ~~used~~Current inmaturities ~~investing~~of ~~activities:~~long-term ~~Purchases~~obligations of$ ~~property~~3,294,841 ~~plant~~$ 3,294,841 Accounts payable 10,745,079 1,044,663 11,789,742 Accrued expenses: Salaries and ~~equipment~~employee (benefits 3,754,560 77,738 3,832,298 Accrued interest 1,586,839 0 1,586,839 Other 2,~~463~~368,~~106)~~065 (6735,~~330~~502 3,~~171)~~103,567 ~~Acquisition~~Deferred ofincome ~~business~~taxes 12,108,370 0 12,108,370 --------------- ---------------- --------------- ----------------- Total current liabilities 33,857,754 1,857,903 0 35,715,657 Long-term obligations, net of ~~cash~~current ~~acquired~~maturities ~~(897~~102,~~015)~~288,944 102,288,944 Other liabilities 2,243,825 2,407,812 (12,~~582~~407,~~451~~812) 2,243,825 --------------- ---------------- --------------- ----------------- ~~Net~~Total ~~cash~~liabilities ~~used~~138,390,523 in4,265,715 ~~investing activities~~ (32,~~360~~407,~~120~~812) (7140,~~912~~248,~~622)~~426 --------------- ---------------- --------------- ----------------- ~~Cash~~Shareholders' ~~flows~~equity ~~from~~(deficit): ~~financing~~Preferred ~~activities:~~stock ~~Proceeds~~4,806,200 ~~from~~4,806,200 ~~long-term~~Common ~~borrowings~~stock 35769 1,~~287~~250,~~411~~019 34(1,~~651~~250,~~471~~019) ~~Payments~~769 ~~under~~Additional ~~long~~paid-~~term~~in ~~borrowings~~capital ~~(27~~849,~~097~~512 298,~~045)~~981 (26298,~~452,615~~981) ~~Increase~~849,512 inRetained ~~shareholder~~earnings ~~receivable~~(deficit) (13,~~053~~101,190) 4,487,908 (~~188~~4,~~510~~487,908) ~~Deferred~~(13,101,190) ~~financing~~Accumulated ~~costs~~other ~~incurred~~comprehensive loss (15138,~~000~~599) (50138,~~675~~599) --------------- ---------------- --------------- ----------------- ~~Net~~(7,583,308) ~~cash~~6,036,908 ~~provided~~(6,036,908) by(7,583,308) ~~financing~~Less: ~~activities~~Treasury 8stock,~~162~~ 2,~~313~~000 7shares of Class B preferred stock at cost (166,~~959~~667) (166,~~671~~667) Shareholder receivables (1,988,322) (1,988,322) --------------- ---------------- --------------- ----------------- ~~Net~~Total ~~decrease~~shareholders' inequity ~~cash~~ (~~49,017~~deficit) (~~495~~9,~~121~~738,297) ~~Cash~~6,036,908 ~~and cash equivalents: Beginning of period 213~~(6,~~407~~036,908) 1(9,~~073~~738,~~496~~297) --------------- ---------------- --------------- ----------------- ~~End~~128,652,226 of$ ~~the~~10,302,623 ~~period~~ $ ~~164~~(8,~~390~~444,720) $ ~~578~~130,~~375~~510,129 =============== ==== ============ =============== ~~Supplemental disclosure of cash flow information: Interest paid $ 10,385,173 $ 9,016,491 Income taxes paid (refunded) 55,317 (239,274)~~=================

10 Coyne International Enterprises Corp. and Subsidiaries

~~Three~~Consolidating ~~Months~~Balance ~~Ended~~Sheets ~~Nine~~October ~~Months~~31, ~~Ended~~2000 ~~July~~------------------------------------------------------------------ 31Parent ~~July~~Subsidiary ~~31,~~Consolidating Consolidated Assets Company Guarantors Adjustments Totals ------ ------------- -------------- -------------- --------------- Current Assets: Cash and cash equivalents $ 955,728 $ (46,388) $ 909,340 Accounts receivable 15,243,854 1,686,121 16,929,975 Inventories 9,487,201 3,237,940 12,725,141 Rental merchandise in service 30,643,937 2,069,030 32,712,967 Prepaid expenses and other assets 10,035,907 14,628 (9,351,767) 698,768 ------------- -------------- ~~2000~~-------------- ~~1999~~--------------- ~~2000~~Total ~~1999~~current assets 66,366,627 6,961,331 (~~Unaudited~~9,351,767) 63,976,191 Property, plant and equipment, at cost: 89,059,067 8,858,737 97,917,804 Less: Accumulated depreciation (~~Unaudited~~48,572,337) ~~Statement~~(5,528,363) of(54,100,700) ~~operations~~------------- -------------- -------------- --------------- Total property, plant and equipment 40,486,730 3,330,374 0 43,817,104 Other assets: ~~Revenues~~Purchased $routes and acquisition intangibles, net 16,968,910 271,032 17,239,942 Deferred financing costs, net 2,322,568 0 2,322,568 Deferred income taxes 3,~~877~~724,~~809~~623 0 3,724,623 Other 202,521 0 202,521 ------------- -------------- -------------- --------------- Total other assets 23,218,622 271,032 0 23,489,654 ------------- -------------- -------------- --------------- $ 4130,~~066~~071,~~875~~979 11$ 10,~~531~~562,~~657~~737 $ 12(9,~~338~~351,~~495~~767) ~~Operating~~$ 131,282,949 ============= ============== ============== =============== Liabilities and Shareholders' Equity (Deficit) ---------------------------------------------- Current Liabilities: Current maturities of long-term obligations $ 2,707,503 $ 678,116 $ 3,385,619 Accounts payable 8,934,685 8,934,685 Accrued expenses: Salaries and employee benefits 4,635,123 79,273 4,714,396 Accrued interest 3,~~656~~655,~~785~~175 3,~~884~~655,~~482~~175 10Other 1,~~870~~814,~~719~~620 11453,~~374~~581 2,~~897~~268,201 ~~Operating~~Deferred income ~~221~~taxes 12,~~024~~032,060 ~~182~~12,~~393~~032,060 ~~660~~------------- -------------- -------------- --------------- Total current liabilities 33,~~938~~779,166 ~~963~~1,~~598~~210,970 ~~Net~~0 ~~income~~34,990,136 Long-term obligations, net of current maturities 102,811,292 102,811,292 Other liabilities 2,170,095 3,242,883 (~~loss~~3,242,883) 272,~~887~~170,095 ------------- -------------- -------------- --------------- Total liabilities 138,760,553 4,453,853 (3,~~848~~242,883) 74139,~~451~~971,523 ~~239~~------------- -------------- -------------- --------------- Shareholders' equity (deficit): Preferred stock 4,~~137~~806,200 4,806,200 Common stock 769 1,250,019 (1,250,019) 769 Additional paid-in capital 849,512 298,981 (298,981) 849,512 Retained earnings (deficit) (12,212,139) 4,559,884 (4,559,884) (12,212,139) ------------- -------------- -------------- --------------- (6,555,658) 6,108,884 (6,108,884) (6,555,658) Less: Treasury stock, 2,000 shares of Class B preferred stock at cost (166,667) (166,667) Shareholder receivables (1,966,249) (1,966,249) ------------- -------------- -------------- --------------- Total shareholders' equity (deficit) (8,688,574) 6,108,884 (6,108,884) (8,688,574) ------------- -------------- -------------- --------------- $ 130,071,979 $ 10,562,737 $ (9,351,767) $ 131,282,949 ============= ============== ============== ===============

11 Coyne International Enterprises Corp. and Subsidiaries Consolidating Statements of Operations

12 Coyne International Enterprises Corp. and Subsidiaries Consolidating Statements of Operations

13 Coyne International Enterprises Corp. and Subsidiaries

14 Coyne International Enterprises Corp. and Subsidiaries

15 ITEM 2. Management's Discussion and Analysis of the Financial Condition and Results of Operations Coyne International Enterprises Corp. and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Certain statements included in this Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q, which are not statements of historical fact, are intended to be, and are hereby identified as, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, the words "believe," "anticipate," "plan," "expect," "estimate," "intend" and other similar expressions are intended to identify forward-looking statements. The Company cautions readers that forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by such forward-looking statements. Such factors include, among others, the following: the success or failure of the Company in implementing its current business and operational strategies; availability, terms and access to capital and customary trade credit; general economic and business conditions; competition; changes in the Company's business strategy; labor relations; the outcome of pending or yet-to-be instituted legal proceedings; labor and employee benefit costs; and availability and terms of necessary or desirable financing or refinancing. Results of Operations for the First Quarter of Fiscal 2001 Compared to the First Quarter of Fiscal 2000 Total revenues increased 2.7% for the three months ended January 31, 2001 over the same period in fiscal 2000. Income from operations decreased 45.3% for the three months ended January 31, 2001 versus the same period in fiscal 2000. Factors contributing to this decrease, include increased merchandise and installation costs associated with new business and re-garmenting existing accounts; increases in natural gas and vehicle fuel costs; and increased spending to train and develop the professional sale force and improve the customer service program. Interest expense increased 7.2% for the three months ended January 31, 2001 over the same period in fiscal 2000 as a direct result of increased average outstanding debt for the comparable periods. Liquidity and Capital Resources Net cash provided by operating activities increased $3.1 million for the three months ended January 31, 2001 over the same period in fiscal 2000. This increase is primarily attributed to large inventory purchases in 2000. Net cash used in financing activities increased by $4.1 million for the three months ended January 31, 2001 over the same period in fiscal 2000 as a result of decreased borrowing needs for inventory purchases in 2001. 16 The Company's primary source of liquidity has been borrowings under its revolving credit facilities. Giving consideration to collateral eligibility formulae, the Company had approximately $5.5 million available under its revolving credit line at January 31,2001. Other bank credit facilities totaling $21.7 million are in place and become available based on eligible collateral and other limitations. As discussed above, the operating results of the Company for the three months ended January 31,2001 were adversely impacted by increased operating costs. The Company has responded by implementing an action plan that includes reduction in workforce, revenue enhancements and improved merchandise spending controls. The fiscal 2001 plan has been revised to reflect the anticipated impact of these actions on operating results. Based on the revised plan, and the impact of the revised credit facility, the Company expects that it will be able to meet its obligations as they become due for the next twelve months. PART II. Other Information Item 1. Legal Proceedings The Company is involved in certain claims and litigation arising in the ordinary course of business, which are not considered material to the financial operations or cash flow of the Company. Item 2. Changes in Securities and Use of Proceeds Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K Not applicable. 17 SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. COYNE INTERNATIONAL ENTERPRISES CORP. Date: March 13, 2001 By: /S/ Thomas E. Krebbeks -------------------------------- Thomas E. Krebbeks VP of Finance and Chief Financial Officer By: /S/ Thomas C. Crowley -------------------------------- Thomas C. Crowley Chief Operating Officer 18

Filing Compare · COYNE INTERNATIONAL ENTERPRISES CORP