-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, S04DG0EpVqlXhCwQdzYakD925pQ0Nh9CvpHS8RNNwWRJ9PxTD1jfUwzCfQ0b23xe 0+aMf/pK3vrYQPq3e4fBxA== 0000950116-94-000064.txt : 19940527 0000950116-94-000064.hdr.sgml : 19940527 ACCESSION NUMBER: 0000950116-94-000064 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940401 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARA GROUP INC CENTRAL INDEX KEY: 0000757523 STANDARD INDUSTRIAL CLASSIFICATION: 5812 IRS NUMBER: 232319139 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08827 FILM NUMBER: 94528643 BUSINESS ADDRESS: STREET 1: THE ARA TOWER STREET 2: 1101 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19107 BUSINESS PHONE: 2152383000 FORMER COMPANY: FORMER CONFORMED NAME: ARA HOLDING CO DATE OF NAME CHANGE: 19880515 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended April 1, 1994 Commission file number 1-8827 ------------- ------ THE ARA GROUP, INC. - - -------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 23-2319139 - - -------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) The ARA Tower 1101 Market Street Philadelphia, Pennsylvania 19107 - - -------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (215) 238-3000 - - -------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 --------- --------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Class A common stock outstanding at April 29, 1994: 2,142,596 Class B common stock outstanding at April 29, 1994: 25,377,676 - - -------------------------------------------------------------------------- 2 PART I - FINANCIAL INFORMATION THE ARA GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS APRIL 1, 1994 AND OCTOBER 1, 1993 (Unaudited) (In Thousands) ASSETS ------
April 1, October 1, 1994 1993 ---------- ---------- Current Assets: Cash and cash equivalents $ 24,066 $ 27,801 Receivables 389,675 388,768 Inventories, at lower of cost or market 251,966 249,858 Prepayments and other current assets 124,519 63,381 ---------- ---------- Total current assets 790,226 729,808 ---------- ---------- Property and Equipment, net 656,207 648,379 Goodwill 441,682 446,261 Other Assets 206,126 216,193 ---------- ---------- $2,094,241 $2,040,641 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Current maturities of long-term borrowings $ 12,056 $ 15,615 Accounts payable 292,125 329,129 Accrued expenses and other liabilities 384,220 340,722 ---------- ---------- Total current liabilities 688,401 685,466 ---------- ---------- Long-Term Borrowings 1,039,379 1,008,674 Deferred Income Taxes and Other Noncurrent Liabilities 180,710 182,693 Minority Interest 16,425 18,084 Common Stock Subject to Potential Repurchase Under Provisions of Shareholders' Agreement 22,572 21,651 Shareholders' Equity Excluding Common Stock Subject to Repurchase: Class C preferred stock, redemption value $1,000 17,823 34,596 Class A common stock, par value $.01 21 21 Class B common stock, par value $.01 259 243 Capital surplus 13,417 - Earnings retained for use in the business 133,431 104,827 Cumulative translation adjustment 4,375 6,037 Impact of potential repurchase feature of common stock (22,572) (21,651) ---------- ---------- Total 146,754 124,073 ---------- ---------- $2,094,241 $2,040,641 ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 THE ARA GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED APRIL 1, 1994 AND APRIL 2, 1993 (Unaudited) (In Thousands, Except Per Share Amounts)
For the Three Months Ended For the Six Months Ended -------------------------- ------------------------ April 1, April 2, April 1, April 2, 1994 1993 1994 1993 ---------- ---------- ---------- ---------- Revenues $1,257,614 $1,188,456 $2,549,634 $2,403,338 ---------- ---------- ---------- ---------- Costs and Expenses: Cost of services provided 1,156,230 1,090,870 2,335,956 2,200,981 Depreciation and amortization 34,845 32,468 69,226 64,582 Selling and general corporate expenses 17,069 16,044 33,472 31,718 Other expense (income) - (735) - (4,345) ---------- ---------- ---------- ---------- 1,208,144 1,138,647 2,438,654 2,292,936 ---------- ---------- ---------- ---------- Operating income 49,470 49,809 110,980 110,402 Interest Expense, net 28,275 31,244 57,756 64,062 ---------- ---------- ---------- ---------- Income before income taxes 21,195 18,565 53,224 46,340 Provision for Income Taxes 7,750 6,556 20,890 17,752 Minority Interest 321 375 823 762 ---------- ---------- ---------- ---------- Income before Cumulative Effect of Change in Accounting for Income Taxes and Extraordinary Item 13,124 11,634 31,511 27,826 Cumulative Effect of Change in Accounting for Income Taxes - - 1,277 - Extraordinary Item due to Early Extinguishment of Debt (net of income taxes) 117 - 819 4,297 ---------- ---------- ---------- ---------- Net income $ 13,007 $ 11,634 $ 29,415 $ 23,529 ========== ========== ========== ========== Earnings Per Share: Income before cumulative effect of change in accounting for income taxes and extraordinary item $.25 $.23 $.61 $.55 Net income $.25 $.23 $.57 $.46 ==== ==== ==== ====
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 THE ARA GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED APRIL 1, 1994 AND APRIL 2, 1993 (Unaudited) (In Thousands)
1994 1993 -------- -------- Cash flows from operating activities: Net income $ 29,415 $ 23,529 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 69,226 64,582 Income taxes deferred (1,818) 262 Minority interest 823 762 Extraordinary item 819 4,297 Cumulative effect of accounting change 1,277 - Changes in noncash working capital (63,465) (60,832) Other operating activities (3,579) 1,911 -------- -------- Net cash used in operating activities 32,698 34,511 -------- -------- Cash flows from investing activities: Purchases of property and equipment (59,197) (60,719) Disposals of property and equipment 6,190 5,676 Divestiture of certain businesses 5,223 - Sale of investment 6,194 13,877 Acquisition of certain businesses (6,279) (12,267) Other investing activities (2,048) (5,606) -------- -------- Net cash used in investing activities (49,917) (59,039) -------- -------- Cash flows from financing activities: Proceeds from additional long-term borrowings 52,863 49,058 Payment of long-term borrowings including premiums (27,082) (21,004) Proceeds from issuance of common stock 10,584 8,440 Repurchase of stock (21,435) (12,926) Other financing activities (1,446) (1,613) -------- -------- Net cash provided by financing activities 13,484 21,955 -------- -------- Decrease in cash and cash equivalents (3,735) (2,573) Cash and cash equivalents, beginning of period 27,801 23,785 -------- -------- Cash and cash equivalents, end of period $ 24,066 $ 21,212 ======== ========
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 THE ARA GROUP, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: -------------------------------------------- The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company, the statements include all adjustments (which include only normal recurring adjustments) required for a fair statement of financial position, results of operations and cash flows for such periods. The results of operations for the interim periods are not necessarily indicative of the results for a full year. The Company develops operating income projections for each of its lines of business and evaluates the recoverability and amortization period of goodwill using these projections. Based on management's current assessment, the estimated remaining useful life of goodwill is appropriate and the remaining balance is fully recoverable. (2) OTHER EXPENSE (INCOME): ----------------------- During the first six months of fiscal 1993, the Company sold 768,000 shares of stock of Living Centers of America, Inc. for $13.9 million. Other expense (income) in fiscal 1993 includes gains on the sale of stock of $6.8 million and a $2.5 million addition to the claims and litigation reserve in the second quarter. (3) EARLY EXTINGUISHMENT OF DEBT: ----------------------------- During the first six months of fiscal 1994, the Company redeemed $13.4 million of its 12.5% subordinated debentures for total cash premiums of $1.2 million. During the first six months of fiscal 1993, the Company repurchased $100 million of its 10.55% senior notes for a $7 million cash premium and issued $100 million of 8.25% senior notes. For the first six months of fiscal 1994 and 1993, the redemption premiums (net of applicable income tax benefits of $0.5 million and $2.7 million, respectively), are reflected in the Condensed Consolidated Statements of Income as an "Extraordinary Item". (4) CAPITAL STOCK: -------------- During the first six months of fiscal 1994, pursuant to the ARA Ownership Program, employees purchased 2,371,195 shares or $14.5 million of Class B Common Stock for $10.6 million of cash plus $3.9 million of deferred payment obligations. (5) SUPPLEMENTAL CASH FLOW INFORMATION: ----------------------------------- The Company made interest payments of $54.5 million and $63.2 million and income tax payments of $23.9 million and $18.8 million during the first six months of fiscal 1994 and 1993, respectively. During the first six months of fiscal 1994, the Company purchased $16.8 million of its Preferred Stock and $5.3 million of its Common Stock, issuing $1.0 million in subordinated installment notes as partial consideration, and contributed $3.4 million of Class A Common Stock to its employee benefit plans. 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (6) ARA SERVICES, INC. AND SUBSIDIARIES: ------------------------------------ The following financial information has been summarized from the separate consolidated financial statements of ARA Services, Inc. (a wholly owned subsidiary of The ARA Group, Inc.) and the subsidiaries which it currently owns. ARA Services, Inc. is the borrower under the revolving credit facility and certain other senior debt agreements and incurs the interest expense thereunder. This interest expense is only partially allocated to all of the other subsidiaries of The ARA Group, Inc.
For the Three Months Ended For the Six Months Ended -------------------------- ------------------------- April 1, April 2, April 1, April 2, 1994 1993 1994 1993 -------- -------- -------- -------- (in thousands) Revenues $707.7 $675.0 $1,423.2 $1,348.4 Cost of services provided 665.5 635.1 1,335.5 1,263.1 Income before cumulative effect of change in accounting for income taxes and extraordinary item 2.8 2.5 8.2 9.2 Cumulative effect of change in accounting for income taxes - - 0.3 - Extraordinary item - - - 4.3 Net income 2.8 2.5 7.9 4.9
April 1, October 1, 1994 1993 -------- ---------- (in thousands) Current assets $ 342.8 $ 339.9 Noncurrent assets 1,289.6 1,221.2 Current liabilities 382.8 364.6 Noncurrent liabilities 1,174.6 1,126.1 Minority interest 16.4 18.1 7 THE ARA GROUP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS --------------------- Overview -------- Revenues of $1.3 billion and $2.5 billion for the second quarter and six months, respectively, were 6% higher than the comparable prior year periods. Operating income for the second quarter of $49.5 million was approximately the same as the prior year quarter. For the six month period, operating income of $111.0 million was also approximately the same as the prior year period. Excluding the fiscal 1993 other income of $0.7 million for the three months and $4.3 million for the six months, operating income increased 1% and 5%, respectively, over the comparable prior year periods. See note 2 to the condensed consolidated financial statements. The Company's operating margin for the six months, excluding the 1993 other income, was 4.4% for both periods. Interest expense decreased 10% for the three and six month periods due primarily to the favorable impact of refinancing certain of the Company's long-term notes and subordinated debentures. Income before cumulative effect of change in accounting for income taxes and extraordinary item for the three and six months increased 13% versus 1993. Net income for the six months includes a $1.3 million cumulative effect adjustment for a change in method of accounting for income taxes. Extraordinary items for the six month period in fiscal 1994 and 1993 equaled $0.8 million and $4.3 million, respectively. See note 3 to the condensed consolidated financial statements. Segment Results --------------- Food, Leisure and Support Services segment revenues increased 5% for the three and six month periods due to new domestic food service accounts, new arena and convention center contracts and the September 1993 acquisition of a Spanish food service company partially offset by a 1% revenue decline due to the unfavorable effect of currency exchange rates. Uniform Services segment revenues increased 11% for the three and six months reflecting increased volume from uniform rental operations and WearGuard. Health and Education Services segment revenues increased 7% and 8%, respectively, for the three and six month periods due primarily to new contracts and higher base business volume at Spectrum Healthcare and continued enrollment growth at Children's World. The Distributive Services segment posted revenue increases of 2% and 3% for the three and six month periods, respectively, due to volume increases in certain geographical areas. 8 Food, Leisure and Support Services segment operating income increased 10% and 5% for the three and six month periods, respectively, compared to the prior year due to higher revenues plus the positive effect of lower off-season costs at certain recreational facilities. Uniform Services segment operating income increased 8% and 10% for the respective three and six month periods primarily due to increased sales volume partially offset by somewhat higher operating costs at uniform rental operations. Health and Education segment operating income increased 10% for the second quarter and 7% for the six months due primarily to higher revenues. Distributive Services segment operating income for the three months approximated the prior year as the favorable impact of higher revenues was offset by higher costs incurred as a result of the January, 1994 California earthquake. Operating income for this segment increased 6% for the six months due to higher revenues combined with first quarter operating efficiencies. FINANCIAL CONDITION ------------------- The Company's indebtedness increased $27 million during the first six months of fiscal 1994 principally to finance capital expenditures, seasonal working capital requirements and stock repurchases. Stock repurchases of $21 million include $17 million of preferred stock repurchases. The Company currently has approximately $240 million of unused committed credit available under its $650 million revolving credit facility. 9 PART II - OTHER INFORMATION Item 1: Not Applicable. ------- Item 2: The Restated Certificate of Incorporation was amended to ------- eliminate the requirement of a supermajority vote of directors for certain Board actions and to provide for certain other matters. Item 3: Not Applicable. ------- Item 4: (a) The Annual Meeting of Stockholders was held on January 11, ------- 1994. (b) Not Applicable. (c) A proposal to amend the Restated Certificate of Incorporation to eliminate the requirement of a supermajority vote of directors for certain Board actions and to provide for certain other matters was voted upon and approved at the meeting. There were 23,843,155 affirmative votes and 205,917 negative or abstained votes cast with respect to this matter. (d) Not Applicable. Item 5: Not Applicable. ------- Item 6: Exhibits and Reports on Form 8-K ------- -------------------------------- (a)(1)Exhibit 3 - Restated Certificate of Incorporation (2)Exhibit 11 - Computation of Fully Diluted Earnings Per Share (b)None 10 SIGNATURE --------- 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 thereunto duly authorized. THE ARA GROUP, INC. s/Alan J. Griffith --------------------------------- Alan J. Griffith May 16, 1994 Controller and Chief Accounting Officer EX-3 2 EXHIBIT 3 11 EXHIBIT 3 RESTATED CERTIFICATE OF INCORPORATION OF THE ARA GROUP, INC. (Originally Incorporated on September 7, 1984 under the name "ARA Acquiring Company") FIRST: The name of the Corporation is The ARA Group, Inc. SECOND: The address of the Corporation's registered office in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of the Corporation's registered agent at such address is The Corporation Trust Company. THIRD: The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: The total number of shares of all classes of stock which the Corporation shall have the authority to issue is 185,000,000 shares, consisting of (i) 10,000,000 shares of Series Preferred Stock, $1.00 par value per share (the "Series Preferred Stock") , and (ii) 25,000,000 shares of Common Stock, Class A, $.01 par value per share (the "Class A Common Stock") , and (iii) 150,000,000 shares of Common Stock, Class B, $.01 par value per share (the "Class B Common Stock") . The Class A Common Stock and the Class B Common Stock are referred to collectively as the "Common Stock". The Board of Directors shall have the full authority permitted by law to fix full or limited, or no voting power, and such other designations, powers, preferences, and relative, participating, optional, special or other rights (including, as examples and not as a limitation, multiple voting powers and conversion rights) , and qualifications, limitations or restrictions of any series of the class of Series Preferred Stock that may be desired. 4A. Common Stock A statement of the designations, powers, preferences, and rights of the Common Stock, and the qualifications, limitations and restrictions in respect thereof, is as follows: 1. Classes. The Common Stock shall be divided into two classes, the Class A Common Stock and the Class B Common Stock. The Common Stock shall be issuable only in whole shares. The powers, preferences and rights of the Class A Common Stock and the Class B Common Stock, and the qualifications, limitations and restrictions thereon, shall be in all respects identical, except as otherwise provided in this Part 4A. 12 2. Dividends. Subject to any provision in this Article FOURTH with respect to any stock of the Corporation to the contrary, out of the assets of the Corporation which are by law available for the payment of dividends, dividends and other distributions may be, but shall not be required to be, declared and paid upon shares of Common Stock, and the holders of shares of Class A Common Stock and Class B Common Stock shall be entitled to receive the same dividends and other distributions, ratably with the holder of one share of Class A Common Stock entitled to receive ten times what the holder of one share of Class B Common Stock is entitled to receive; provided, however, that in the case of dividends or other distributions payable in Common Stock, only shares of Class B Common Stock shall be distributed with respect to Class B Common Stock and only shares of Class A Common Stock shall be distributed with respect to Class A Common Stock, and any such distribution shall be made ratably, with the holder of one share of Class A Common Stock entitled to receive the same number of shares of Class A Common Stock as the number of shares of Class B Common Stock the holder of one share of Class B Common Stock shall be entitled to receive; and provided further, that the Board of Directors, may declare and pay dividends and other distributions with respect to the Class A Common Stock without declaring or paying any dividend or other distribution with respect to the Class B Common Stock. 3. Voting Rights. (a) Subject to the special voting rights of the holders of any other stock of the Corporation, the Common Stock (and any other stock of the Corporation which may be entitled to vote with the holders of Common Stock) , voting as a single class except where the Class A Common Stock and the Class B Common Stock (and such other stock) are required by law to vote as separate classes, shall possess all of the voting power of the Corporation with respect to the election of directors and for all other purposes. (b) Each share of Common Stock, whether Class A Common Stock or Class B Common Stock, shall be entitled to one vote on all matters submitted to a vote of the Corporation's stockholders. 4. Liquidation. Upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after provision for the payment of creditors and after provision shall be made for holders of all shares of stock of the Corporation having a preference upon liquidation, dissolution or winding up, the remaining assets of the Corporation shall be distributed among the holders of Common Stock, ratably, with the holder of one share of Class A Common Stock entitled to receive ten times what the holder of one share of Class B Common Stock is entitled to receive, and, to the extent provided in this Article FOURTH, the holders of any other stock of the Corporation which may be entitled to share in such distribution. 5. Conversion of Class B Common Stock. (a) Each share of Class B Common stock may at any time, but only with the prior approval of the Board of Directors, be converted at the election of the holder thereof into one-tenth of a fully paid and 13 nonassessable share of Class A Common Stock. Subject to the terms of any such approval, the holder of shares of Class B Common Stock may elect to convert any or all of such shares at one time or at various times in such holder's discretion. Such right shall be exercised by the surrender of the certificate representing each share of Class B Common Stock to be converted to the agent for the registration of transfer of shares of Class B Common Stock at its office, or to the Corporation at its principal executive offices, accompanied by a written notice of the election by the holder thereof to convert and (if so required by the transfer agent or by the Corporation) by instruments of transfer, in form satisfactory to the transfer agent and to the Corporation, duly executed by such holder or the holder's duly authorized attorney. (b) If a holder of Class B Common Stock ceases to be either a director or full-time employee of the Corporation or any of its Subsidiaries (a "Management Investor") or a Permitted Transferee of a person who is then a Management Investor, then each share of Class B Common Stock held by such holder shall thereupon be converted into one-tenth of a share of Class A Common Stock effective immediately. No share of Class B Common Stock may be issued other than to a Management Investor or a person who would be a Permitted Transferee of a Management Investor, and any such share issued to any other person shall ipso facto be converted into one-tenth of a share of Class A Common Stock effective at the time of the purported issuance. (c) At any time when the Board of Directors authorizes and directs the conversion of all the Class B Common Stock into Class A Common Stock, then, at the time designated by the Board for the occurrence of such event, each outstanding share of Class B Common Stock shall be converted into one-tenth of a share of Class A Common Stock and no further shares of Class B Common Stock may be issued thereafter. (d) In the event of any such conversion pursuant to paragraph (a) , (b) or (c) , the certificate or certificates representing shares of Class B Common Stock held by such holder shall thereupon and thereafter be deemed to represent the number of whole shares of Class A Common Stock issuable upon such conversion and the right to receive cash in lieu of fractional shares pursuant to paragraph (f) hereof. Upon the surrender of any such certificate to the agent for the registration of transfer of shares of Class B Common Stock at its office, or to the Corporation at its principal executive offices, such certificate shall be cancelled and a certificate for the number of whole shares of Class A Common Stock to which he shall be entitled, together with a cash adjustment for any fraction of a share if not evenly convertible pursuant to paragraph (f) hereof, shall be issued and delivered to the holder thereof as hereinafter provided. (e) The issuance of a certificate for shares of Class A Common Stock upon conversion of shares of Class B Common Stock shall be made without charge for any stamp or other similar tax in respect of such issuance. However, if any such certificate is to be issued in a name other than that of the holder of the share or shares of Class B Common Stock converted, the person or persons requesting issuance thereof shall pay to the transfer agent or to the Corporation the amount of any tax which may be payable in respect of any such transfer, or shall establish to the satisfaction of the transfer agent or of the Corporation that such tax has been paid. As promptly as practicable after the surrender for conversion of a certificate representing shares of Class B Common Stock and the 14 payment of any tax as herein before provided, the Corporation will deliver or cause to be delivered at the office of the transfer agent to, or upon the written order of, the holder of such certificate, a certificate or certificates representing the number of whole shares of Class A Common Stock issuable upon such conversion, issued in such name or names as such holder may direct together with a cash adjustment for any fraction of a share as provided pursuant to paragraph (f) hereof, if not evenly convertible. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of the surrender of the certificate representing shares of Class B Common Stock (if on such date the transfer books of the Corporation shall be closed, then immediately prior to the close of business on the first date thereafter that said books shall be open) or, in the case of a conversion under paragraph (b) or (c) of this Section, immediately upon the event giving rise to the conversion, and all rights of such holder arising from ownership of shares of Class B Common Stock shall cease at such time, and the person or persons in whose name or names the certificate representing shares of Class A Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock at such time and shall have and may exercise all the rights and powers appertaining thereto. No adjustments in respect of any past dividends and other distributions shall be made upon the conversion of any share of Class B Common Stock; provided, however, that if any share of Class B Common Stock shall be converted subsequent to the record date for the payment of a dividend or other distribution on shares of Class B Common Stock but prior to such payment, the registered holder of such shares at the close of business on such record date shall be entitled to receive the dividend or other distribution payable to holders of Class B Common Stock. The Corporation shall at all times reserve and keep available, solely for the purpose of issue upon conversion of outstanding shares of Class B Common Stock, such number of shares of Class A Common Stock as may be issuable upon the conversion of all such outstanding shares of Class B Common Stock, provided that the Corporation may deliver shares of Class A Common Stock held in the treasury of the Corporation. (f) No fractions of shares of Class A Common Stock are to be issued upon conversion, but in lieu thereof the Corporation will pay therefor in cash, a sum equal to the number of shares of Class B Common Stock not evenly convertible multiplied by the per share fair market value of the Class B Common Stock, as determined by an Appraiser according to the most recent existing appraisal; provided, however, that such appraisal shall be as of a date not more than six months prior to its use hereunder. 4B. Series C Stock A statement of the powers, designations, preferences, rights, qualifications, limitations and restrictions of 40,000 shares of Series Preferred Stock is as follows: 1. Designation. There shall be a series of Series Preferred Stock which shall consist of 40,000 shares and shall be designated as Adjustable Rate Callable Nontransferable Series C Preferred Stock (the "Series C Stock") . The number of authorized shares of Series C Stock may be increased by resolution of the Board of Directors. 15 2. Rank. (a) Rank of Series C Stock. To the extent and in the manner provided in this Part 4B, the Series C Stock shall, with respect to dividend rights and rights on liquidation, rank (i) junior to or on parity with, as the case may be, any other stock of the Corporation, the terms of which shall specifically provide that such stock shall rank senior to, or on parity with, as the case may be, the Series C Stock with respect to dividend rights or rights on liquidation or both, and (ii) senior to any other stock of the Corporation. (b) Certain Definitions. The following terms as used in this Part 4B, shall be deemed to have the meanings set forth in this section. (i) The term "Participating Stock" shall mean the Class A Common Stock and the Class B Common Stock and any other stock of the Corporation of any class which has the right to participate in the distribution of either earnings or assets of the Corporation without limit as to the amount or percentage. (ii) The term "Parity Stock" with respect to Series C Stock shall mean the Series C Stock and all other stock of the Corporation ranking equally therewith as to the payment of dividends or the distribution of assets upon liquidation. The term "Dividend Parity Stock" with respect to Series C Stock shall mean the Series C Stock and all other stock of the Corporation ranking equally therewith as to the payment of dividends. The term "Liquidation Parity Stock" with respect to Series C Stock shall mean the Series C Stock and all other stock of the Corporation ranking equally therewith as to distribution of assets upon liquidation. (iii) The term "Junior Stock" with respect to Series C Stock shall mean the Participating Stock and all other stock of the Corporation ranking junior thereto as to the payment of dividends and the distribution of assets upon liquidation. The term "Dividend Junior Stock" with respect to Series C Stock shall mean the Participating Stock and all other stock of the Corporation ranking junior thereto as to the payment of dividends. The term "Liquidation Junior Stock" with respect to Series C Stock shall mean the Participating Stock and all other stock of the Corporation ranking junior thereto as to distribution of assets upon liquidation. (iv) The term "Senior Stock" with respect to Series C Stock shall mean all stock of the Corporation ranking senior thereto as to the payment of dividends or distribution of assets upon liquidation. 3. Dividends. (a) Cumulative Dividends. The holders of record of Series C Stock shall be entitled to receive, as and if declared by the Board of Directors, cumulative cash dividends thereon at the per annum rate per share equal to the Established Dividend Rate (as defined in paragraph (c) ) , and no more, but only out of funds legally available for the payment of such distributions under the General Corporation Law of the State of Delaware. Dividends on the Series C Stock shall be payable semi-annually on June 15 and December 15 in each year. Dividends shall accrue from the date of original issuance. Accumulations of dividends shall not bear interest. 16 (b) Limitations Upon Dividend Arrearage. Unless full cumulative dividends upon the Series C Stock have been paid, no dividend or other distribution (except in Junior Stock) shall be declared or paid on Dividend Junior Stock and no amount shall be set aside for or applied to the redemption, purchase or other acquisition of (i) any Dividend Junior Stock or Liquidation Junior Stock other than by exchange therefor of Junior Stock or out of the proceeds of a substantially concurrent sale of shares of Junior Stock or (ii) any Parity Stock except in accordance with a purchase or exchange offer made simultaneously by the Corporation to all holders of record of Parity Stock which, considering the annual dividend rates and the other relative rights and preferences of such shares, in the opinion of the Board of Directors (whose determination shall be conclusive) , will result in fair and equitable treatment among all such shares. In the event that stated dividends on all Dividend Parity Stock (including, by way of example and not as a limitation, full cumulative dividends on the Series C Stock) are not paid in full, all shares of Dividend Parity Stock shall participate ratably in the payment of dividends, including accumulations, if any, in accordance with the sums which would be payable thereon if all dividends thereon were declared and paid in full. (c) The "Established Dividend Rate" shall initially be $60.00, and shall be reset as provided in this paragraph. On each December 16, beginning December 16, 1993 and continuing so long as any shares of Series C Stock shall be outstanding, the Established Dividend Rate shall be reset at a rate equal to $1,000 multiplied by 80% of the Prime Rate that shall have been in effect at the close of business on the December 1 next preceding (or if such December 1 shall not have been a business day, the business day next preceding such December 1) , rounded up to the nearest $1.00; provided, however, that the Established Dividend Rate shall in no event be less than $60.00 nor greater than $100.00. For purposes of the preceding sentence, the "Prime Rate" shall mean the rate of interest publicly announced from time to time by Chemical Bank at its main office in New York City as its Prime Rate. The Corporation shall file with the duly appointed transfer agent for the Series C Stock a certificate stating the new Established Dividend Rate determined as provided in this paragraph and showing the computation thereof, and will cause a notice stating the new Established Dividend Rate and the computation thereof to be mailed to the holders of shares of Series C Stock. 4. Liquidation Rights. (a) Liquidation Value. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of Series C Stock shall be entitled to receive from the assets of the Corporation, payment in cash, of $1,000 per share, plus a further amount equal to unpaid cumulative dividends on Series C Stock accrued to the date when such payments shall be made available to the holders thereof, and no more, before any amount shall be paid or set aside for, or any distribution of assets shall be made to the holders of Liquidation Junior Stock. If, upon such liquidation, dissolution or winding up, the amounts available for distribution to the holders of all Liquidation Parity Stock shall be insufficient to permit the payment in full to such holders of the preferential amounts to which they are entitled, then such amounts shall be paid ratably among the shares of Liquidation Parity Stock in accordance with the respective preferential amounts (including unpaid cumulative dividends, if any) payable with respect thereto if paid in full. 17 (b) Actions Not Considered Liquidation. None of the following shall be considered a liquidation, dissolution or winding up of the Corporation within the meaning of this section: (1) a consolidation or merger of the Corporation with or into any other corporation; (2) a merger of any other corporation into the Corporation; (3) a reorganization of the Corporation; (4) the purchase or redemption of all or part of the outstanding shares of any class or classes of the Corporation; (5) a sale or transfer of all or any part of the assets of the Corporation; or (6) a share exchange to which the Corporation is a party. 5. Redemption. (a) Optional Redemption. The Series C Stock may be called for redemption and redeemed at the option of the Corporation by resolution of the Board of Directors, in whole at any time or in part at any time or from time to time upon the notice hereinafter provided for in paragraph (c) , by the payment therefor of the redemption price per share of $1,000 plus an amount equal to the accrued and unpaid cumulative dividends thereon to the date fixed by the Board of Directors as the redemption date. In addition, the Corporation may so call for redemption at any time after January 1, 1994 all, but not less than all, of the shares of Series C Stock held by any person, but only if such person is not also a holder of shares of either Class A Common Stock or Class B Common Stock. (b) No Mandatory Redemption. There is no mandatory sinking fund for, or other required redemption of, the Series C Stock. (c) Manner of Redemption. (i) If less than all of the outstanding shares of Series C Stock shall be called for redemption (and such redemption is not pursuant to the second sentence of paragraph (a) ) , the particular shares to be redeemed shall be selected by lot or by such other equitable manner as may be prescribed by resolution of the Board of Directors. (ii) Notice of redemption of any shares of Series C Stock shall be given by the Corporation by first-class mail, not less than 30 nor more than 60 days prior to the date fixed by the Board of Directors of the Corporation for redemption (the "redemption date") , to the holders of record of the shares to be redeemed at their respective addresses then appearing on the records of the Corporation. The notice of the redemption shall state: (1) the redemption date; (2) the redemption price; (3) if less than all outstanding shares of Series C Stock of the holder are to be redeemed, the identification of the shares of Series C Stock to be redeemed; (4) that dividends on the shares to be redeemed shall cease to accrue on the redemption date; and (5) the place or places where such shares of Series C Stock to be redeemed are to be surrendered for payment of the redemption price. (iii) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price of the shares called for redemption) , dividends on the shares of Series C Stock so called for redemption shall cease to accrue, and from and after the redemption date or such earlier date as funds shall be set aside for payment of the redemption price (unless default shall be made by the Corporation in providing money for the payment of the redemption price of the shares called for redemption) said shares shall no longer be deemed to 18 be outstanding, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and the notice shall so state) , such shares shall be redeemed by the Corporation at the redemption price aforesaid. (iv) Shares of Series C Stock redeemed by the Corporation shall be restored to the status of authorized and unissued shares of Series Preferred Stock, undesignated as to series, and, except as otherwise provided by the express terms of the series redeemed or of any other outstanding series, may be reissued by the Corporation as shares of one or more series of Series Preferred Stock other than Series C Stock. 6. Voting Rights. (a) No Voting Rights Generally. Except as expressly provided to the contrary in this resolution or as otherwise required by law, the holders of Series C Stock shall have no right to vote at, or to participate in, any meeting of stockholders of the Corporation, or to receive any notice of such meeting. (b) Rights Upon Dividend Arrearage. (i) In the event that dividends upon the Series C Stock shall be in arrears in an amount equal to four full semi-annual dividends thereon, the number of directors constituting the full board shall be increased by two, and the holders of the Series C Stock voting noncumulatively and separately as a single class together with the holders of any other shares of Series Preferred Stock having the right to elect directors as a class under such circumstances, shall be entitled to elect two members of the Board of Directors of the Corporation at the next annual meeting of stockholders of the Corporation or at a special meeting called as hereinafter provided in this section. Such voting rights of the holders of Series C Stock shall continue until all accumulated and unpaid dividends thereon shall have been paid in full, whereupon such special voting rights of the holders of Series C Stock shall cease (and the respective terms of the two additional directors shall thereupon expire and the number of directors constituting the full board shall be decreased by two) subject to being again revived from time to time upon the recurrence of the conditions described in this section as giving rise thereto. (ii) At any time when such right of holders of Series C Stock to elect two additional directors shall have so vested, the Corporation may, and upon the written request of the holders of record of not less than 10% of the Series C Stock then outstanding (or 10% of all Series Preferred Stock having the right to vote for such directors in case holders of shares of other series of Series Preferred Stock shall also have the right to elect directors as a class in such circumstances) shall, call a special meeting of holders of such Series C Stock (and other series of Series Preferred Stock, if applicable) for the election of directors. In the case of such a written request, such special meeting shall be held within 60 days after the delivery of such request, and, in either case, at the place and upon the notice provided by law and in the bylaws of the Corporation; except that the Corporation shall not be required to call such a special meeting if such request is received less than 120 days before the date fixed for the next ensuing annual meeting of stockholders of the Corporation. 19 (iii) Whenever the number of directors of the Corporation shall have been increased by two as provided in this section, the number as so increased may thereafter be further increased or decreased in such manner as may be permitted by the bylaws of the Corporation and without the vote of the holders of Series C Stock. No such action shall impair the right of the holders of Series C Stock to elect and to be represented by two directors as provided in this section. (iv) The two directors elected as provided in this section shall serve until the next annual meeting of stockholders of the Corporation and until their respective successors shall be elected and qualified or the earlier expiration of their terms as provided in this section. No such director may be removed without the vote or consent of holders of a majority of the shares of Series C Stock (or holders of a majority of shares of Series Preferred Stock having the right to vote in the election of such director in case holders of shares of other series of Series Preferred Stock shall also have the right to elect such director as a class) . If, prior to the expiration of the term of any such director, a vacancy in the office of such director shall occur, such vacancy shall, until the expiration of such term, in each case be filled by appointment made by the remaining director elected as provided in this section. 7. Restrictions on Transfer. The shares of Series C Stock shall not be transferable prior to February 1, 1997 (other than by will or the laws of descent) , except that such shares may be transferred to the Corporation pursuant to a redemption or purchase thereof. On and after February 1, 1997, the shares of Series C Stock shall be freely transferable at any time, at the option of the holder. 8. No Conversion Rights. The holders of shares of Series C Stock shall not have the right to convert such shares into other securities of the Corporation. FIFTH: Subject to the rights of holders of Series Preferred Stock to elect additional directors under certain circumstances, the Corporation shall be governed in accordance with the following provisions: 5A. Number of Directors The Board of Directors of the Corporation shall consist of not less than nine and not more than 19 members and the Chief Executive Officer of the Corporation shall always be one of the members. The exact number of directors within such minimum and maximum shall be fixed by the Board of Directors. 5B. Election Directors need not be elected by written ballot. SIXTH: The following terms shall have the accompanying defined meanings: 1. "Appraiser" shall mean a firm headquartered in the United States of nationally recognized standing in the business of appraisal or valuation of securities which does not own any stock of the Corporation and which has been selected by the Board of Directors to act as an independent appraiser. 20 2. "Permitted Transferee" shall have the meaning as defined in the Stockholders' Agreement. 3. "Stockholders' Agreement" shall mean the Amended and Restated Stockholders' Agreement dated as of April 7, 1988, by and among the Corporation and the persons named therein as the same may be amended and a copy of which is on file with the Secretary of the Corporation. 4. "Subsidiary" shall mean any corporation or other entity of which the Corporation shall, directly or indirectly, own 50% or more of the equity, as determined by the Board of Directors and any other corporation or other entity in which the Corporation shall directly or indirectly have an equity investment and which the Board of Directors shall in its sole discretion designate. SEVENTH: The By-Laws of the Corporation may be made, altered, amended, changed, added to or repealed by the Board of Directors of the Corporation without the assent or vote of the stockholders. EIGHTH: Each person who was or is made a party or is threatened to be made a party to or is involuntarily involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative ("proceeding") , by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer or representative or in any other capacity while serving as a director, officer or representative shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended, against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith; provided, however, that the Corporation shall indemnify any such person seeking indemnity in connection with an action, suit or proceeding (or part thereof) initiated by such person only if action, suit or proceeding (or part thereof) was authorized by the Board of Directors. Such right shall be a contract right and shall include the right to be paid by the Corporation expenses incurred in defending any such proceeding in advance of its final disposition upon delivery to the Corporation of an undertaking, by or on behalf of such person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified under this section or otherwise. If a claim under this Article is not paid in full by the Corporation within ninety days after a written claim has been received by the Corporation, the claimant unpaid may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation 21 to indemnify the claimant for the amount claim, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant had not met the applicable standard of conduct. The rights conferred by this Article shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-Laws, agreement, vote of stockholders or disinterested directors or otherwise. The Corporation may maintain insurance, at its expense, to protect itself and any such director, officer or representative against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify him against such expense, liability or loss under the Delaware General Corporation Law. NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power. TENTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed by the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said Court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the Court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all stockholders or class of stockholders of the Corporation, as the case may be, and also on the Corporation. ELEVENTH: To the fullest extent permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended, a director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as director. 22 IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which restates and integrates and further amends the Corporation's Certificate of Incorporation, as heretofore amended and restated, having been duly adopted pursuant to the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware, has been duly executed this 8th day of February, 1994. THE ARA GROUP, INC. Attest: /s/ Donald S. Morton By: /s/ Martin W. Spector --------------------------- ----------------------------- Donald S. Morton Martin W. Spector Assistant Secretary Executive Vice President EX-11 3 EXHIBIT 11 23 EXHIBIT 11 THE ARA GROUP, INC. AND SUBSIDIARIES COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (1) (Unaudited) (In Thousands, except per share data)
Three Months Ended Six Months Ended ------------------- -------------------- April 1, April 2, April 1, April 2, 1994 1993 1994 1993 ------- ------- ------- ------- Earnings: Net Income $13,007 $11,634 $29,415 $23,529 Preferred stock dividends (301) - (811) - ------- ------- ------- ------- Earnings applicable to common stock $12,706 $11,634 $28,604 $23,529 ======= ======= ======= ======= Shares: Weighted average number of common shares outstanding (2) 47,514 46,419 46,639 45,636 Impact of potential exercise opportunities under the ARA Ownership Program 3,241 4,806 3,572 5,293 ------- ------- ------- ------- Total common and common equivalent shares 50,755 51,225 50,211 50,929 ======= ======= ======= ======= Fully diluted earnings per common and common equivalent share $.25 $.23 $.57 $.46 ==== ==== ==== ====
(1) Primary and fully diluted earnings per share are approximately the same. (2) Includes Class B plus Class A Common Shares stated on a Class B Common Share Equivalent Basis. -----END PRIVACY-ENHANCED MESSAGE-----