-----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, SouueWSsg0XuzmaBMtlMD0fe5XZh47y67paeIAXIDDC2H+VA56jBhW2s9rSgkyg+ OF2D3FoR4tscD6cLmtxeTA== 0000950116-95-000017.txt : 19950515 0000950116-95-000017.hdr.sgml : 19950515 ACCESSION NUMBER: 0000950116-95-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941230 FILED AS OF DATE: 19950210 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARAMARK CORP CENTRAL INDEX KEY: 0000757523 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [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: 95508803 BUSINESS ADDRESS: STREET 1: THE ARA TOWER STREET 2: 1101 MARKET ST CITY: PHILADELPHIA STATE: PA ZIP: 19107 BUSINESS PHONE: 2152383000 MAIL ADDRESS: STREET 1: ARA GROUP INC STREET 2: 1101 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19107 FORMER COMPANY: FORMER CONFORMED NAME: ARA GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ARA HOLDING CO DATE OF NAME CHANGE: 19880515 10-Q 1 FORM 10-Q UNITED STATES 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 December 30, 1994 Commission file number 1-8827 ------------------ ARAMARK CORPORATION - -------------------------------------------------------------------------------- (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 ARAMARK 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 January 27, 1995: 2,120,764 shares Class B common stock outstanding at January 27, 1995: 26,222,690 shares - -------------------------------------------------------------------------------- PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------ ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In Thousands) ASSETS -------
December 30, September 30, 1994 1994 ------------ ------------- Current Assets: Cash and cash equivalents $ 18,322 $ 27,426 Short-term investments held by the Canadian subsidiary -- 16,203 Receivables 441,342 433,550 Inventories, at lower of cost or market 267,729 256,950 Prepayments and other current assets 129,781 69,865 ---------- ---------- Total current assets 857,174 803,994 ---------- ---------- Property and Equipment, net 688,052 681,907 Goodwill 447,600 438,725 Other Assets 321,930 197,324 ---------- ---------- $2,314,756 $2,121,950 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Current maturities of long-term borrowings $ 10,578 $ 9,391 Accounts payable 341,766 372,908 Accrued expenses and other liabilities 409,657 374,902 ---------- ---------- Total current liabilities 762,001 757,201 ---------- ---------- Long-Term Borrowings 1,161,101 981,949 Deferred Income Taxes and Other Noncurrent Liabilities 171,177 168,638 Minority Interest 192 10,812 Common Stock Subject to Potential Repurchase Under Provisions of Shareholders' Agreement 21,612 20,791 Shareholders' Equity Excluding Common Stock Subject to Repurchase: Series C preferred stock, redemption value $1,000 16,666 16,949 Class A common stock, par value $.01 21 21 Class B common stock, par value $.01 244 243 Capital surplus 47 -- Earnings retained for use in the business 199,083 178,587 Cumulative translation adjustment 4,224 7,550 Impact of potential repurchase feature of common stock (21,612) (20,791) ---------- ---------- Total 198,673 182,559 ---------- ---------- $ 2,314,756 $ 2,121,950 =========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements. -1- ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands, Except Per Share Amounts)
For the Three Months Ended ------------------------------------ December 30, December 31, 1994 1993 ------------ ------------ Revenues $ 1,380,516 $ 1,292,020 ----------- ----------- Costs and Expenses: Cost of services provided 1,264,665 1,179,726 Depreciation and amortization 37,013 34,381 Selling and general corporate expenses 18,629 16,403 ----------- ----------- 1,320,307 1,230,510 ----------- ----------- Operating income 60,209 61,510 Interest Expense, net 25,433 29,481 ----------- ----------- Income before income taxes 34,776 32,029 Provision for Income Taxes 14,064 13,140 Minority Interest (41) 502 ----------- ----------- Income before Cumulative Effect of Change in Accounting for Income Taxes and Extraordinary Item 20,753 18,387 Cumulative Effect of Change in Accounting for Income Taxes -- 1,277 Extraordinary Item Due to Early Extinguishment of Debt (net of income taxes of $468) -- 702 ----------- ----------- Net income $ 20,753 $ 16,408 =========== =========== Earnings Per Share: Income before cumulative effect of change in accounting for income taxes and extraordinary item $.42 $.36 Net income $.42 $.32 ==== ====
The accompanying notes are an integral part of these condensed consolidated financial statements. -2- ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
For the Three Months Ended ------------------------------- December 30, December 31, 1994 1993 ------------ ------------ Cash flows from operating activities: Net income $ 20,753 $ 16,408 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 37,013 34,381 Income taxes deferred (1,233) (1,067) Minority interest (41) 502 Extraordinary item -- 702 Cumulative effect of accounting change -- 1,277 Changes in noncash working capital (79,340) (62,261) Other operating activities (5,367) (2,189) --------- --------- Net cash used in operating activities (28,215) (12,247) --------- --------- Cash flows from investing activities: Purchases of property and equipment (38,624) (28,213) Disposals of property and equipment 2,923 4,209 Sale of investments 16,203 6,194 Purchase of subsidiary stock (19,758) -- Acquisition of certain businesses (115,680) (3,472) Other investing activities 2,306 (814) --------- --------- Net cash used in investing activities (152,630) (22,096) --------- --------- Cash flows from financing activities: Proceeds from additional long-term borrowings 179,541 49,163 Payment of long-term borrowings including premiums (6,202) (20,666) Other financing activities (1,598) (262) --------- --------- Net cash provided by financing activities 171,741 28,235 --------- --------- Decrease in cash and cash equivalents (9,104) (6,108) Cash and cash equivalents, beginning of period 27,426 27,801 --------- --------- Cash and cash equivalents, end of period $ 18,322 $ 21,693 ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements. -3- ARAMARK CORPORATION 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. (2) ACQUISITIONS: ------------ During the first quarter, the Company acquired Harry M. Stevens, a provider of food and support services to stadiums and arenas, and Rainier News a magazine distribution company, for approximately $130 million in cash, notes and preferred stock. Due to the timing of the Harry M. Stevens acquisition, an appraisal of the assets acquired is not yet completed and, accordingly, the investment is included in the condensed consolidated balance sheet as "Other Assets." The Company has a definitive agreement to purchase the TW Recreational Services subsidiary of Flagstar Companies, Inc. for approximately $130 million. The acquisition is subject to certain third party approval. During the first quarter, the Company completed the buyback of the remaining minority interest of its Canadian subsidiary for cash consideration of $19.8 million. (3) NEW ACCOUNTING PRONOUNCEMENTS: ----------------------------- During the first quarter of fiscal 1995, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) 112, "Employers Accounting for Postemployment Benefits", SFAS 114, "Accounting by Creditors for Impairment of a Loan", and SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities." The adoption of these standards was not material to the Company's consolidated financial statements. (4) DEBT: ---- During the first quarter of fiscal 1995, the Company increased the borrowing limits under its credit facility to $1 billion from $800 million. The additional borrowing capacity is reduced on a pro-rata basis over the existing quarterly commitment reduction schedule. (5) CAPITAL STOCK: ------------- During the first quarter of fiscal 1995, pursuant to the ARAMARK Ownership Program, employees purchased 327,660 shares or $1.7 million of Class B Common Stock for $0.8 million cash plus $0.9 million of deferred payment obligations. -4- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (6) SUPPLEMENTAL CASH FLOW INFORMATION: ---------------------------------- The Company made interest payments of $24.7 million and $20.6 million and income tax payments of $14.3 million and $9.5 million during the first quarter of fiscal 1995 and 1994, respectively. During the first quarter of fiscal 1995, the Company purchased $2.8 million of its Class B Common Stock, issuing $1.3 million in subordinated installment notes as partial consideration, and contributed $1.3 million of Class A Common Stock to its employee benefit plans. In connection with the acquisitions described in Note 2, the Company issued promissory notes and preferred stock of a subsidiary totaling $9 million. (7) ARAMARK SERVICES, INC. AND SUBSIDIARIES: --------------------------------------- The following financial information has been summarized from the separate consolidated financial statements of ARAMARK Services, Inc. (a wholly owned subsidiary of ARAMARK Corporation) and the subsidiaries which it currently owns. ARAMARK 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 ARAMARK Corporation. For the Three Months Ended ---------------------------- December 30, December 31, 1994 1993 ------------ ------------ (in millions) Revenues $753.9 $715.5 Cost of services provided 705.1 670.0 Income before cumulative effect of change in accounting for income taxes 9.8 5.4 Cumulative effect of change in accounting for income taxes -- 0.3 Net income 9.8 5.1 December 30, September 30, 1994 1994 ------------ ------------- (in millions) Current assets $ 350.4 $ 355.8 Noncurrent assets 1,346.1 1,223.8 Current liabilities 444.0 398.8 Noncurrent liabilities 1,171.2 1,093.6 Minority interest 0.2 10.8 -5- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS - --------------------- Overview - -------- Revenues of $1.4 billion for the first quarter of fiscal 1995 were 7% higher than the prior year period. First quarter operating income of $60.2 million was $1.3 million or 2% lower than the prior year period. The decrease is primarily attributable to the National Hockey League and Major League Baseball strikes in the United States and Canada, partially offset by improved operating earnings in certain business segments as discussed below. In addition, the Company incurred expenses in connection with the change in corporate identity. It is estimated that had the strikes not occurred, the Company's fiscal 1995 first quarter revenues, operating income and net income would have been 1%, 3% and 6% higher, respectively. The Company's operating income margin decreased to 4.4% in 1995 from 4.8% in 1994. The decrease in margin is due primarily to the baseball and hockey strikes and increased general corporate expenses referred to above. First quarter interest expense declined $4.0 million or 14% due primarily to the favorable impact of refinancing certain of the Company's subordinated debentures during 1994. Fiscal 1995 first quarter income before cumulative effect and extraordinary item was $20.7 million or a 13% increase over the prior year first quarter. Segment Results - --------------- Food, Leisure and Support Services segment revenues increased 4% due primarily to new accounts and increased volume at both domestic and international food businesses, partially offset by the impact of the National Hockey League and Major League Baseball strikes. Uniform Services segment revenues increased 14%, reflecting increased volume at uniform rental operations and WearGuard. Health & Education segment revenues increased 12% resulting from new contracts at Spectrum Healthcare Services and continued enrollment and tuition increases at Children's World. Distributive segment revenues increased 4% from increased unit volume and the effect of the first quarter acquisition. Food, Leisure and Support Services segment operating income increased 1% as a result of increased revenues in the domestic food businesses, partially offset by the impact of the hockey and baseball strikes and continuing start-up problems of the Spanish foodservice business. Had the strikes not occurred, it is estimated that Food, Leisure and Support segment fiscal 1995 first quarter operating income would have been 8% higher. Uniform Services operating income increased 7% due to the higher volume, partially offset by increases in merchandise and other operating costs. Health & Education segment operating income decreased 3%, due to new contract start-up costs and increased operating costs at Spectrum Healthcare Services, partially offset by volume related improvements in operating income at Children's World. Distributive segment operating income decreased 11% due to higher operating expenses. On January 11, 1995, the National Hockey League entered into a new labor accord. A shortened hockey season began on January 20, 1995. As of February 10, 1995, the Major League Baseball strike continues. Management cannot currently predict the impact the strike may have on fiscal 1995 operating results if the strike continues into the 1995 baseball season. FINANCIAL CONDITION - ------------------- The Company's indebtedness increased $180 million during the first quarter of fiscal 1995, principally to finance acquisitions (see note 2 to the condensed consolidated financial statements), capital expenditures and a seasonal increase in working capital. During the first quarter, the Company increased its borrowing limit under its credit facility to $1 billion (see note 4). The Company currently has approximately $350 million of unused committed credit availability under this facility, which management believes, along with cash flows from operations, is sufficient to fund operating requirements and the potential acquisition (see note 2). -6- PART II - OTHER INFORMATION Items 1 through 4 are not applicable. - ------------------------------------- Item 5: None - ------ Item 6: Exhibits and Reports on Form 8-K - ------ -------------------------------- (a) Exhibit 11 - Computation of Fully Diluted Earnings Per Share (b) None -7- 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. ARAMARK CORPORATION February 10, 1995 s/Alan J. Griffith ------------------------------------- Alan J. Griffith Controller and Chief Accounting Officer -8- EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 ARAMARK CORPORATION AND SUBSIDIARIES COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (Unaudited) (In thousands, except per share data) Three Months Ended ---------------------------- December 30, December 31, 1994 1993 ----------- ------------ Earnings: Net Income $ 20,753 $ 16,408 Preferred stock dividends (257) (511) -------- -------- Earnings applicable to common stock $ 20,496 $ 15,897 ======== ======== Shares: Weighted average number of common shares outstanding (1) 45,723 45,758 Impact of potential exercise opportunities under the ARAMARK Ownership Plan 3,499 3,828 -------- -------- Total common and common equivalent shares 49,222 49,586 ======== ======== Fully diluted earnings per common share (2) $ .42 $ .32 ======== ======== (1) Includes Class B plus Class A Common Shares stated on a Class B Common Share Equivalent Basis. (2) Primary and fully diluted earnings per share are approximately the same. -9- -----END PRIVACY-ENHANCED MESSAGE-----