-----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, i6ZeYLOJHzgfJ1FdT7WpbqxUhlgGIj0N+gGvwN4WatyFgbH9kZ9pYVdSppHSR3M5 rKCQ7V+S5ul0A7k6HHDqGw== 0000950116-95-000366.txt : 19950814 0000950116-95-000366.hdr.sgml : 19950814 ACCESSION NUMBER: 0000950116-95-000366 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 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: 95561848 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 June 30, 1995 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) 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 July 28, 1995: 2,123,913 Class B common stock outstanding at July 28, 1995: 23,650,169 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------- ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In Thousands)
ASSETS ------ June 30, September 30, 1995 1994 ------------ -------------- Current Assets: Cash and cash equivalents $ 19,438 $ 27,426 Short-term investments held by the Canadian subsidiary - 16,203 Receivables 458,035 433,550 Inventories, at lower of cost or market 280,279 256,950 Prepayments and other current assets 78,383 69,865 ---------- ---------- Total current assets 836,135 803,994 ---------- ---------- Property and Equipment, net 721,327 681,907 Goodwill 502,824 438,725 Other Assets 264,205 197,324 ---------- ---------- $2,324,491 $2,121,950 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Current maturities of long-term borrowings $ 9,254 $ 9,391 Accounts payable 354,383 372,908 Accrued expenses and other liabilities 409,187 374,902 ---------- ---------- Total current liabilities 772,824 757,201 ---------- ---------- Long-Term Borrowings 1,126,319 981,949 Deferred Income Taxes and Other Noncurrent Liabilities 186,802 168,638 Minority Interest 340 10,812 Common Stock Subject to Potential Repurchase Under Provisions of Shareholders' Agreement 17,504 20,791 Shareholders' Equity Excluding Common Stock Subject to Repurchase: Class C preferred stock, redemption value $1,000 15,155 16,949 Class A common stock, par value $.01 22 21 Class B common stock, par value $.01 237 243 Earnings retained for use in the business 214,644 178,587 Cumulative translation adjustment 8,148 7,550 Impact of potential repurchase feature of common stock (17,504) (20,791) ---------- ---------- Total 220,702 182,559 ---------- ---------- $2,324,491 $2,121,950 ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements. ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands, Except Per Share Amounts)
For the Three Months Ended For the Nine Months Ended ----------------------------- ----------------------------- June 30, July 1, June 30, July 1, 1995 1994 1995 1994 --------- ------- -------- ------- Revenues $ 1,423,824 $ 1,309,085 $ 4,168,858 $ 3,858,719 ----------- ----------- ----------- ----------- Costs and Expenses: Cost of services provided 1,290,258 1,185,363 3,810,530 3,521,319 Depreciation and amortization 40,365 34,362 116,412 103,588 Selling and general corporate expenses 18,535 15,947 55,595 49,419 ----------- ----------- ----------- ----------- 1,349,158 1,235,672 3,982,537 3,674,326 ----------- ----------- ----------- ----------- Operating income 74,666 73,413 186,321 184,393 Interest Expense, net 27,309 26,352 82,184 84,108 ----------- ----------- ----------- ----------- Income before income taxes 47,357 47,061 104,137 100,285 Provision for Income Taxes 19,282 19,572 41,894 40,462 Minority Interest 18 368 83 1,191 ----------- ----------- ----------- ----------- Income before Cumulative Effect of Change in Accounting for Income Taxes and Extraordinary Item 28,057 27,121 62,160 58,632 Cumulative Effect of Change in Accounting for Income Taxes -- -- -- 1,277 Extraordinary Item due to Early Extinguishment of Debt (net of income taxes) 6,686 2,518 6,686 3,337 ----------- ----------- ----------- ----------- Net income $ 21,371 $ 24,603 $ 55,474 $ 54,018 =========== =========== =========== =========== Earnings Per Share: Income before cumulative effect of change in accounting for income taxes and extraordinary item $.56 $.53 $1.24 $1.15 Net income $.43 $.48 $1.10 $1.05 ==== ==== ===== =====
The accompanying notes are an integral part of these condensed consolidated financial statements. ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands)
For the Nine Months Ended -------------------------------------- June 30, July 1, 1995 1994 ------------ ------------ Cash flows from operating activities: Net income $ 55,474 $ 54,018 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 116,412 103,588 Income taxes deferred (2,399) (4,099) Minority interest 83 1,191 Cumulative effect of accounting change -- 1,277 Extraordinary item 6,686 3,337 Changes in noncash working capital (36,813) (41,417) Other operating activities (3,673) (6,759) ------------ ------------ Net cash provided by operating activities 135,770 111,136 ------------ ------------ Cash flows from investing activities: Purchases of property and equipment (125,854) (93,931) Disposals of property and equipment 16,538 7,705 Divestiture of certain businesses 2,483 6,887 Sale of investments 16,203 6,194 Purchase of subsidiary stock (20,386) -- Acquisition of certain businesses (144,503) (9,839) Other investing activities (44) (755) ------------ ------------ Net cash used in investing activities (255,563) (83,739) ------------ ------------ Cash flows from financing activities: Proceeds from additional long-term borrowings 337,983 87,168 Payment of long-term borrowings including premiums (209,085) (84,393) Proceeds from issuance of common stock 9,162 12,060 Repurchase of stock (21,618) (29,305) Other financing activities (4,637) (1,978) ------------ ------------ Net cash provided by (used in) financing activities 111,805 (16,448) ------------ ------------ Increase (decrease) in cash and cash equivalents (7,988) 10,949 Cash and cash equivalents, beginning of period 27,426 27,801 ------------ ------------ Cash and cash equivalents, end of period $ 19,438 $ 38,750 ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 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 fiscal 1995, the Company acquired Harry M. Stevens, a provider of food and support services to stadiums and arenas, and Rainier News and Meader Distributing, magazine and book distribution companies, for approximately $153 million in cash, notes and preferred stock. Additionally, during the first quarter, the Company completed the buyback of the remaining minority interest of its Canadian subsidiary for cash consideration of $20.3 million. The acquisitions have been accounted for by the purchase method. The costs of the acquisitions were allocated to the assets acquired and liabilities assumed based upon a preliminary estimate of their respective fair values and will be finalized during calendar 1995. Amounts allocated to goodwill are being amortized on a straight-line basis over 40 years. (3) EARLY EXTINGUISHMENT OF DEBT: ---------------------------- During the fiscal 1995 third quarter, the Company redeemed its $125 million 12% subordinated debentures due 2000 and its $50 million 10.25% senior note due 1998 and issued $150 million of 8.15% senior notes due 2005 and $100 million of 8% senior notes due 2002. The premium related to the early extinguishment of the debt, $6.7 million (net of tax benefit of $4.4 million), is reflected in the Condensed Consolidated Statements of Income as an "Extraordinary Item". Through the first nine months of fiscal 1994, the Company redeemed $65.8 million of its 12.5% subordinated debentures ($52.4 million in the fiscal third quarter). As a result of cash premiums paid in connection with the redemption, the Company recorded an extraordinary item of $3.3 million and $2.5 million (net of tax benefit of $2.2 million and $1.7 million) for the nine month and three month periods ended July 1, 1994, respectively. (4) CAPITAL STOCK: ------------- During the first nine months of fiscal 1995, pursuant to the ARAMARK Ownership Program, employees purchased 2,839,894 shares or $17.1 million of Class B Common Stock for $9.1 million of cash and $8.0 million of deferred payment obligations. (5) SUPPLEMENTAL CASH FLOW INFORMATION: ---------------------------------- The Company made interest payments of $76.8 million and $76.1 million and income tax payments of $40.7 million and $38.4 million during the first nine months of fiscal 1995 and 1994, respectively. During the first nine months of fiscal 1995, the Company purchased $1.8 million of its Preferred Stock, $5 million of Class A Common Stock from its benefit plans and $31.3 million of its Class B Common Stock, issuing $16.5 million in subordinated installment notes as partial consideration, and contributed $1.5 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 $8 million. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (6) 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 For the Nine Months Ended --------------------------------- ----------------------------------- June 30, July 1, June 30, July 1, 1995 1994 1995 1994 ----------- ------------ -------------- ------------- (in thousands) Revenues $739.8 $681.8 $2,272.7 $2,105.0 Cost of services provided 694.8 642.8 2,130.8 1,978.3 Income before cumulative effect of change in accounting for income taxes and extraordinary item 5.6 2.1 22.1 10.3 Cumulative effect of change in accounting for income taxes - - - 0.3 Extraordinary item 2.1 - 2.1 - Net income 3.5 2.1 20.0 10.0 June 30, September 30, 1995 1994 ----------- ------------ (in thousands) Current assets $ 331.0 $ 355.8 Noncurrent assets 1,422.6 1,223.8 Current liabilities 426.1 398.8 Noncurrent liabilities 1,223.9 1,093.6 Minority interest 0.3 10.8
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 third quarter and $4.2 billion for the nine month period increased 9% and 8%, respectively, over the comparable prior year periods. Third quarter operating income of $74.7 million was $1.3 million or 2% higher than the prior year period. The increase in operating income is due to improved earnings in the business segments and the impact of the Harry M. Stevens (Stevens) acquisition (see note 2 to the condensed consolidated financial statements), partially offset by increased costs related to the change in corporate identity and the impact of the Major League Baseball strike and the decline in attendance discussed below. Operating income for the nine month period of $186.3 million was 1% higher than the prior year, with improvements in business segment earnings being offset by the impact of the National Hockey League strike and Major League Baseball situation in the United States and Canada, and the corporate identity costs noted above. Excluding the impact of hockey and baseball and the Stevens acquisition, it is estimated that operating income would have been approximately 7% and 5% higher for the third quarter and nine month period, respectively, and consolidated net income (before extraordinary items) would have been approximately 14% higher for the nine month period. The Company's operating income margin for the nine month period decreased to 4.5% in fiscal 1995 from 4.8% in fiscal 1994. The decrease in margin is due primarily to hockey and baseball and increased corporate expenses referred to above. Third quarter interest expense increased $1.0 million, or 4%, from the comparable prior year period due to increased debt levels to finance acquisitions and increases in short-term interest rates, partially offset by the favorable impact of refinancing certain of the Company's subordinated debentures during fiscal 1994 and 1995 (see notes 2 and 3 to the condensed consolidated financial statements). Interest expense for the nine month period decreased $1.9 million compared to the prior year period, primarily due to the refinancing described above offset by the increase in interest expense related to the acquisitions. Segment Results - --------------- Food, Leisure and Support Services segment revenues increased 8% and 7%, respectively, for the three and nine month periods due to new accounts and increased volume at both domestic and international food businesses and due to the Stevens acquisition, partially offset by the impact of the National Hockey League strike and the Major League Baseball situation. Uniform Services segment revenues increased 8% and 11%, respectively, for the three and nine month periods, reflecting increased volume at both uniform rental operations and at WearGuard. Health & Education segment revenues increased 11% and 12%, respectively, for the three and nine month periods resulting from new contracts at Spectrum Healthcare Services and continued enrollment and tuition increases at Children's World. Distributive segment revenues for the three and nine month periods increased 11% and 7%, respectively, due to increased unit volume and the acquisitions described in note 2 to the condensed consolidated financial statements. Food, Leisure and Support Services segment operating income for the fiscal third quarter increased 2% compared to the prior year period due to increased revenues in the domestic food business and the Stevens acquisition, partially offset by the impact of the baseball strike, and a decrease in average attendance since the resumption of the season in late April. Food, Leisure and Support Services segment operating income for the nine month period increased 5% over the prior year comparable period with volume related increases in the domestic food business being partially offset by the impact of hockey and baseball. Excluding the effects of hockey and baseball and the Stevens acquisition, it is estimated that segment operating income would have been 13% and 11% higher for the third quarter and nine month period, respectively. Uniform Services operating income increased 6% and 5% for the three and nine month periods, respectively, due to the increased volume, partially offset by increases in merchandise and other operating costs. Health & Education segment operating income increased 5% and 4% for the three and nine month periods, respectively, with volume related improvements in operating income at Children's World being partially offset by increased operating costs at Spectrum Healthcare Services. Distributive segment third quarter operating income increased 7% over the prior year period, due to the revenue related increases discussed above. Distributive segment operating income for the nine month period decreased 1% compared to the prior year period, with revenue related increases being offset by higher operating expenses and the impact of current year acquisitions. FINANCIAL CONDITION - ------------------- The Company's indebtedness increased $144 million during the first nine months of fiscal 1995, principally to finance acquisitions (see note 2 to the condensed consolidated financial statements) and capital expenditures. During the third quarter, the Company redeemed its $125 million 12% subordinated debentures due 2000 and its $50 million 10.25% senior note due 1998 and issued $150 million of 8.15% senior notes due 2005 and $100 million of 8% senior notes due 2002. The premium related to the early extinguishment of the debt, $6.7 million after tax, is reflected as an extraordinary item in the fiscal 1995 third quarter financial statements. Remaining proceeds from the note offering were used to reduce outstanding borrowings on the credit facility. The financing transactions extended overall maturities and decreased the Company's average borrowing rate. Additionally, during the third quarter, the Company established a C$75 million credit facility at its Canadian subsidiary for general operating purposes and to refinance borrowings related to the purchase of the remaining minority interest described above. The Company currently has approximately $500 million of unused committed credit availability under its $1 billion revolving credit facility, which management believes, along with cash flows from operations, is sufficient to fund operating requirements. PART II - OTHER INFORMATION Items 1 through 5 are not applicable. - ------------------------------------- Item 6: Exhibits. - ------ -------- (a) (1) Exhibit 11 - Computation of Fully Diluted Earnings Per Share (2) Exhibit 27 - Financial Data Schedule (b) None 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 s/Alan J. Griffith ---------------------------- Alan J. Griffith August 14, 1995 Vice President & Controller and Chief Accounting Officer EXHIBIT 11 ARAMARK CORPORATION AND SUBSIDIARIES COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (1) (Unaudited) (In Thousands, except per share data)
Three Months Ended Nine Months Ended ---------------------------- --------------------------- June 30, July 1, June 30, July 1, 1995 1994 1995 1994 -------- -------- -------- -------- Earnings: Net Income $21,371 $24,603 $55,474 $54,018 Preferred stock dividends (261) (266) (791) (1,077) ------- ------- -------- ------- Earnings applicable to common stock $21,110 $24,337 $54,683 $52,941 ======= ======= ======= ======= Shares: Weighted average number of common shares outstanding (2) 46,928 47,444 46,667 46,727 Impact of potential exercise opportunities under the ARAMARK Ownership Program 2,486 3,131 2,931 3,476 ------- ------- ------- ------- Total common and common equivalent shares 49,414 50,575 49,598 50,203 ======= ====== ======= ======= Fully diluted earnings per common and common equivalent share $.43 $.48 $1.10 $1.05 ==== ==== ===== =====
(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. EX-27 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 ARAMARK Corporation 1,000 U.S. Dollars SEP-29-1995 OCT-01-1994 JUN-30-1995 9-MOS 1 $19,438 0 458,035 14,315 280,279 836,135 1,383,095 661,768 2,324,491 772,824 1,126,319 259 0 15,155 205,288 2,324,491 0 4,168,858 0 3,810,530 116,412 5,074 82,184 104,137 41,894 62,160 0 (6,686) 0 55,474 0 $1.10
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