-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AG0kIvmhEyg+/MZqu3/UxxZuKRtkC2YtNDEgm6Hz4lWGQPvWM/VmdPA/3vtL9/rX gTQ8qZeD8VPoodR8kBQ8zg== 0000950116-95-000529.txt : 19951124 0000950116-95-000529.hdr.sgml : 19951124 ACCESSION NUMBER: 0000950116-95-000529 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19950929 FILED AS OF DATE: 19951122 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-08827 FILM NUMBER: 95595862 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-K405 1 FORM 10-K 1995 10-K =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K |X| Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended September 29, 1995 or | | Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to __________ Commission file number: 1-8827 ARAMARK CORPORATION (Exact name of registrant as specified in its charter) Delaware 23-2319139 (State of incorporation) (I.R.S. Employer Identification No.) ARAMARK Tower 1101 Market Street Philadelphia, Pennsylvania 19107 (Address of principal executive offices) Telephone Number: 215-238-3000 Securities registered pursuant to Section 12(b) of the Act: Name Of Each Exchange Title Of Each Class On Which Registered ------------------------------------ ----------------------------- 13% Subordinated Debentures Due 1997 Philadelphia Stock Exchange Securities registered pursuant to Section 12(g) of the Act: Class B Common Stock, $.01 par value Series C Preferred Stock, $1.00 par value 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X| Aggregate market value of the voting stock held by nonaffiliates: $612 million Common stock outstanding at October 27, 1995: Class A Common stock 2,182,300 shares Class B Common stock 22,667,009 shares Documents incorporated by reference: Portions of the registrant's Proxy Statement for the 1995 annual meeting of stockholders are incorporated by reference in Part III of this Report. ============================================================================== As used herein, references to the "Company" shall mean ARAMARK Corporation and its subsidiaries (including ARAMARK Services, Inc.) unless the context otherwise requires. References to "ARAMARK" shall mean ARAMARK Services, Inc. and its subsidiaries unless the context otherwise requires. PART I Item 1. Business Description of Business Segments The Company is engaged in providing or managing services, including food, leisure and support services, uniform services, health and education services and distributive services. ARAMARK was organized in 1959 in Delaware. The Company was formed in September 1984 by the management of ARAMARK and acquired ARAMARK in December 1984 through a merger. The Company provides most of its services in the United States. The Company also conducts operations, primarily the management of food services, in Belgium, Canada, the Czech Republic, Germany, Hungary, Japan, Korea, Mexico, Spain and the United Kingdom. Financial information by business segment and geographic area appears in note 11 to the consolidated financial statements. The businesses of the Company have been grouped into the segments described below. Food, Leisure & Support Services The Company provides food, refreshment, specialized dietary and support services (including maintenance and housekeeping) to businesses, and to educational, governmental and medical institutions. Food, lodging and merchandise services are also provided at leisure facilities such as convention centers, stadiums, parks, arenas, race tracks and other recreational facilities. Food, refreshment, specialized dietary and support services are operated at customer locations generally under contracts of indefinite duration which may be subject to termination by either party. However, food and related services at leisure facilities generally are for fixed contract terms well in excess of one year. The Company's food, leisure and support services are performed under various financial arrangements including a management-fee basis and a profit-and-loss basis. See note 2 to the consolidated financial statements. At most customer food service locations, the equipment and facilities used in providing these services are owned by the customer. Vending machines and related equipment, however, are generally owned by the Company. At most leisure services customer locations, the equipment is owned by the Company. 1 There is a high level of competition in the food, leisure and support services business from local, regional and national companies as well as from businesses and institutions which operate their own services. This competition takes a number of different forms, including pricing, maintaining high food and service standards, and innovative approaches to marketing with a strong emphasis on securing and retaining customer accounts. The Company believes that it is a significant provider of food, leisure and support services in the United States, Spain, Germany, Belgium and Canada, but that its volume of such business is small in relation to the total market. See note 10 to the consolidated financial statements for information relating to the seasonal aspects of this business segment. Uniform Services The Company rents, cleans, maintains and delivers personalized work apparel and other textile items for customers throughout the United States on a contract basis. Also provided are walk-off mats, cleaning cloths, disposable towels, and other environmental control items. The Company also operates one of the largest direct marketers of personalized work clothing, uniforms, casual apparel and related accessories, primarily in the United States. Service contracts for the rental and laundering of work apparel and other textile items are for well in excess of one year and typically for an initial term of five years. Generally, the direct marketing business is conducted under an invoice arrangement with customers. The uniform rental services business is highly competitive in the areas in which the Company operates, with numerous competitors in each major operating area. Although no one uniform rental services company is predominant in this industry, the Company believes that it is a significant competitor. Competition in the direct marketing of work clothing and related items is from numerous retailers and other direct marketers at local, regional and national levels. In this market, while the Company is a significant competitor, the Company's volume of sales is small in relation to the total market. The significant competitive factors in the uniform services business are the quality of services provided to customers and the prices charged for such services. During the year the Company acquired certain uniform rental services businesses and also acquired a direct marketing public safety equipment business. See note 2 to the consolidated financial statements. Health & Education Services The Company provides contract management services (including physician staffing and other specialized services) to hospital emergency and other departments and to military healthcare facilities and clinics, as well as contract medical services to correctional institutions and to CHAMPUS beneficiaries. The Company also provides child care services primarily at Company-operated facilities, and to a lesser extent on customer sites and in before and after school programs. 2 Revenues from emergency and primary care management services are received generally from the hospitals and clinics at which the care is provided under contracts generally with a term of one or more years and from third party payors. Revenues from medical services to correctional institutions are received directly from governmental authorities under contracts with terms of one or more years. Child care services are provided to and are primarily paid for on a weekly basis directly by individual families under short-term agreements. The Company leases a significant number of its child care facilities under long-term arrangements. The Company believes it is a significant provider of emergency care management services, medical services to correctional institutions and CHAMPUS beneficiaries, and child care services in the United States. Competition in all phases of this business segment is from both national and local providers of health and education services as well as from private and public institutions which provide for their own health and education services. Significant competitive factors in the Company's health and education services businesses are the quality of care, reputation, physical appearance of facilities, the types of programs offered to the users of these services and the prices charged for such services. Distributive Services The Company provides wholesale distribution of magazines, books and other printed matter. These materials are purchased from national distributors and publishers and are delivered to retail locations patronized by the general public. Distribution services are generally rendered under short-term agreements, which ordinarily permit the return of unsold magazines and books with full credit being given to the retailer and with the Company in turn receiving full credit from its suppliers. Competition in the distribution of books and periodicals exists primarily from magazine and book subscriptions, direct distribution by publishers to retailers and from other wholesale distributors. While the Company's volume of business in the distribution of books and periodicals is small in relation to the total market, the Company believes the volume of its wholesale periodical and book distribution units makes it a significant wholesale distributor. During the year the Company acquired certain wholesale magazine and book distribution businesses. See note 2 to the consolidated financial statements. Employees The Company employs approximately 140,000 persons, both full and part time, including approximately 39,000 employees outside the United States. Approximately 28,000 employees in the United States are represented by various labor unions. 3 Item 2. Properties The principal property and equipment of the Company are its service equipment and fixtures (including vehicles) and real estate. The service equipment and fixtures include vending, commissary, warehouse and janitorial and maintenance equipment used primarily by the food, leisure and support services segment, and laundry equipment used by the uniform services segment. The vehicles include automobiles and delivery trucks used in the food, leisure and support services segment and in the distributive services and uniform services segments. The service equipment and fixtures represent 62% of the net book value of all fixed assets as of September 29, 1995. The Company's real estate is comprised of child care facilities, of which a significant number are held under long-term operating leases. The Company also maintains other real estate and leasehold improvements which it uses in its distributive services and uniform services segments and in commissary and distribution operations in its food, leisure and support services segment. Additional information concerning property and equipment (including other real estate leases and noncancelable lease commitments) is included in notes 1 and 8 to the consolidated financial statements. No individual parcel of real estate owned or leased is of material significance to the Company's total assets. See note 11 to the consolidated financial statements for information concerning the identifiable assets of the Company's business segments. Item 3. Legal Proceedings The Company and its subsidiaries are not parties to any lawsuits (other than ordinary routine litigation incidental to its business) which are material to the Company's business or financial condition. See note 8 to the consolidated financial statements for additional information concerning legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders Not Applicable. 4 Item 4A. Directors and Executive Officers of the Registrant
Directors: Name Principal Occupation - ---- -------------------- Joseph Neubauer.......................................Chairman and Chief Executive Officer ARAMARK Corporation Robert J. Callander...................................Executive-in-Residence, Columbia University Retired Vice Chairman, Chemical Banking Corporation Alan K. Campbell......................................Retired Executive Vice President and Vice Chairman, ARAMARK Corporation Ronald R. Davenport...................................Chairman, Sheridan Broadcasting Corporation Philip L. Defliese....................................Professor Emeritus, Columbia University Retired Chairman, Coopers & Lybrand Lee F. Driscoll, Jr...................................Corporate Director Mitchell S. Fromstein.................................Chairman, President and Chief Executive Officer Manpower, Inc. Edward G. Jordan......................................Former Chairman and Chief Executive Officer Consolidated Rail Corporation Thomas H. Kean........................................President, Drew University Former Governor of New Jersey Reynold C. MacDonald..................................Retired Chairman, Acme Metals Incorporated James E. Preston......................................Chairman, President and Chief Executive Officer Avon Products, Inc.
Officers: Name (Age as of November 1, 1995) Office Held Officer Since - ----------------------------------- ------------ ------------- Joseph Neubauer (54)..................................Chairman, President...................................1979 and Director Julian L. Carr, Jr. (49)..............................Executive Vice President..............................1988 James E. Ksansnak (55)................................Executive Vice President and Chief Financial Officer...........................1986 William Leonard (47)..................................Executive Vice President..............................1992 Martin W. Spector (57)................................Executive Vice President General Counsel and Secretary.........................1976 L. Frederick Sutherland (43)..........................Executive Vice President..............................1983 Brian J. Gail (48)....................................Senior Vice President.................................1994 Brian G. Mulvaney (39)................................Senior Vice President ................................1993 Alan J. Griffith (41).................................Vice President, Controller and Chief Accounting Officer..............................1994 Dean E. Hill (44).....................................Vice President........................................1993 John P. Kallelis (57).................................Vice President........................................1982 Michael R. Murphy (38)................................Director of Audit and Controls........................1995 Melvin M. Mahoney (47)................................Treasurer.............................................1985 Joan C. Mazzotti (45).................................Assistant Secretary and Associate General Counsel.............................1994 Donald S. Morton (47).................................Assistant Secretary and Associate General Counsel.............................1985 Richard M. Thon (40)..................................Assistant Treasurer...................................1994
5 Except as set forth below, the principal occupation of each executive officer throughout the past five years has been the performance of the functions of the corporate offices shown above. Mr. Carr was vice president of the Company from November 1988 until February 1991 when he was elected to his current position. Mr. Ksansnak was senior vice president of the Company from May 1986 until February 1991 when he was elected to his current position. Mr. Leonard was president of ARAMARK Uniform Services from 1984 until March 1992 when he was elected to his current position. Mr. Sutherland was vice president and treasurer of the Company from 1983 until February 1991 when he was elected senior vice president. In May 1993 he was elected to his current position. Mr. Gail was elected senior vice president of the Company in August 1994. Prior to joining the Company in May 1994, he was president and chief executive officer and prior thereto senior vice president of FCB - Philadelphia. Mr. Mulvaney was vice president of ARAMARK Uniform Services from 1988 until February 1993 when he was elected vice president of the Company. In February, 1995 he was elected to his current position. Mr. Griffith was elected vice president of the Company in February 1995. He was assistant controller of the Company from May 1985 until November 1991 when he became the director of corporate planning. In December 1993 he became controller and chief accounting officer. Mr. Hill was elected vice president of the Company in January 1993. Prior to joining the Company in 1993, he was vice president of Farley Industries, Inc. and Fruit of the Loom, Inc. Mr. Murphy became director of audit and controls in September 1995. He joined the Company as senior audit manager in January 1993. Prior to that time he was a senior audit manager with Arthur Andersen LLP. Mr. Mahoney was elected treasurer of the Company in February 1991. He had been assistant treasurer since 1985. Ms. Mazzotti was elected assistant secretary in 1994. She has been with the Company since 1977 as assistant and then associate general counsel. Mr. Thon was elected assistant treasurer of the Company in August 1994. Previously he held various treasury analyst positions since joining the Company in 1987. 6 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters There are currently approximately 1,300 record holders of Class B common stock of the Company, all of whom are employees or directors of the Company (or members of their families or trusts created by them). There are currently 135 record holders of the Class A common stock of the Company, all of whom are institutional investors, Company benefit plans or individuals not employed by the Company. There is no established public trading market for the common stock of the Company. However, employees of the Company are able to sell shares of common stock through various programs maintained by the Company. See note 7 to the consolidated financial statements for information regarding the Company's shareholders' agreement. Under the Company's primary credit agreement, there are various covenants that restrict the amount of cash dividends that may be paid to the holders of outstanding common stock of the Company. See note 4 to the consolidated financial statements. 7 Item 6. Selected Financial Data The following table presents summary consolidated financial data for the Company. The following data should be read in conjunction with the consolidated financial statements and the related notes thereto and Management's Discussion and Analysis of Results of Operations and Financial Condition, each included elsewhere herein.
ARAMARK Corporation and Subsidiaries -------------------------------------------------------------------- Fiscal Year Ended on or near September 30, -------------------------------------------------------------------- 1995 1994 1993 1992(1) 1991 -------- -------- -------- -------- -------- (In millions, except per share amounts and ratios) Income Statement Data: Revenues.................................... $5,600.6 $5,161.6 $4,890.7 $4,865.3 $4,774.4 Earnings before interest and income taxes (2)....................... 277.0 272.0 268.9 261.6 260.2 Interest expense, net....................... 109.4 108.5 125.7 137.9 142.3 Income before extraordinary item and cumulative effect of change in accounting for income taxes (3)........................... 100.2 95.0 84.3 70.7 64.2 Net income.................................. 93.5 86.1 77.1 67.4 64.2 Earnings per share: (4) Income before extraordinary item and cumulative effect of change in accounting for income taxes (3).......................... $2.01 $1.87 $1.64 $1.40 $1.23 Net income................................. $1.88 $1.69 $1.49 $1.33 $1.23 Ratio of earnings to fixed charges (5)...... 2.1x 2.1x 1.9x 1.7x 1.6x Balance Sheet Data (at period end): Total assets................................ $2,599.7 $2,122.0 $2,040.6 $2,005.0 $2,002.6 Long-term borrowings: (6) Senior..................................... 1,109.4 691.5 533.8 629.5 722.1 Subordinated............................... 165.4 290.4 474.9 413.5 415.1 Common stock subject to potential repurchase (7)............................. 19.1 20.8 21.7 20.4 17.7 Shareholders' equity........................ 252.3 182.6 124.1 103.8 40.6
- ---------- (1) Fiscal 1992 is a fifty-three week period. See note 1 to the consolidated financial statements. (2) See note 2 to the consolidated financial statements. (3) See notes 3 and 6 to the consolidated financial statements. (4) Based on weighted average shares of common stock outstanding for all periods. See note 1 to the consolidated financial statements. (5) For the purpose of determining the ratio of earnings to fixed charges, earnings include pre-tax income plus fixed charges (excluding capitalized interest). Fixed charges consist of interest on all indebtedness (including capitalized interest) plus that portion of operating lease rentals representative of the interest factor (deemed to be one-third of operating lease rentals). (6) See note 4 to the consolidated financial statements. (7) See note 7 to the consolidated financial statements. 8 Item 7. Management's Discussion and Analysis of Results of Operations and Financial Condition RESULTS OF OPERATIONS Fiscal 1995 Compared to Fiscal 1994 Overview. Revenues for the fiscal year ended September 29, 1995 were $5.6 billion, a 9% increase over fiscal 1994. Operating income of $277 million increased 4% compared to the prior year. Revenues increased over the prior year in all business segments and, with the exception of Health and Education Services, all business segments posted year-over-year improvements in operating earnings. Fiscal 1995 consolidated results were adversely impacted by the National Hockey League strike and Major League Baseball situation in the United States and Canada. The hockey strike, which ended in January 1995, resulted in a season that was approximately half the normal schedule. The baseball strike, which began in August 1994 and also adversely impacted fiscal 1994 results, ended in April 1995 resulting in a shortened 1995 season. A decline in average attendance from prior year was experienced after the resumption of the season. The baseball situation is still unsettled and may impact fiscal 1996. Had the hockey strike and baseball situation not occurred, management estimates that consolidated operating income and income before extraordinary items would have been approximately 5% and 8% higher in fiscal 1995, and 3% and 5% higher in fiscal 1994, respectively. The Company's operating income margin, excluding "other income" of $5.8 million in 1994, decreased to 4.9% from 5.1%. The decrease in margin is due primarily to the impact of the baseball and hockey situation described above. Interest expense increased approximately $1.0 million or 1%, due primarily to increased debt levels to finance acquisitions and increased interest rates, largely offset by the impact of refinancing certain of the Company's indebtedness. See notes 2 and 3 to the consolidated financial statements. Fiscal 1995 and 1994 net income include an extraordinary item for early extinguishment of debt of $6.7 million and $7.7 million, respectively, as described in note 3 to the consolidated financial statements. Fiscal 1994 net income also included a charge of $1.3 million related to the cumulative effect of adopting Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. See note 6 to the consolidated financial statements. Segment Results. Food, Leisure and Support Services segment revenues were 8% higher than the prior year due to new accounts and increased volume at both domestic and international food businesses plus the impact of the current year acquisition, partially offset by the effects of the hockey and baseball situation (see notes 2 and 11 to the consolidated financial statements). Uniform Services segment revenues increased 10% as a result of increased volume at both the uniform rental and direct marketing businesses. Health and Education Services segment revenues increased 10% as a result of new contracts at correctional institutions and enrollment growth and pricing at Children's World. Revenue for the Distributive Services segment increased 10% due primarily to the current year acquisitions. See notes 2 and 11 to the consolidated financial statements. 9 Operating income for the Food, Leisure and Support Services segment increased 6%. Increased earnings were due to revenue growth and improved margins in the domestic food business plus the current year acquisition. However, earnings were adversely impacted by the hockey and baseball situation described above (see note 11 to the consolidated financial statements). Fiscal 1994 operating income for the Food & Support Services segment also included the $5.8 million gain on the sale of stock of an affiliate. Uniform Services segment operating income increased 7% as a result of revenue growth, reduced by higher merchandise and other operating costs. Operating income for the Health and Education Services segment decreased 23% from the prior year due primarily to higher operating costs and an increase in insurance reserves in the healthcare services business (see note 11 to the consolidated financial statements), partially offset by revenue related increases at Children's World. Distributive Services segment operating income increased 3%, with revenue related increases being partially offset by increased operating expenses. Fiscal 1994 Compared to Fiscal 1993 Overview. Revenues for the fiscal year ended September 30, 1994 were $5.2 billion, a 6% increase over fiscal 1993. Earnings before interest and taxes of $272 million increased 1% compared to the prior year. Each of the Company's business segments reflected improvements in operating earnings. However, the 1994 results were adversely impacted by the Major League Baseball strike in the United States and Canada and costs associated with several corporate development and strategic initiatives, including costs related to a change in corporate identity. See note 11 to the consolidated financial statements. Earnings before interest and taxes for both fiscal 1994 and fiscal 1993 include other income of $5.8 million and $5.0 million, respectively, and in fiscal 1994 a gain of $4.7 million on the issuance of stock by an affiliate. See note 2 to the consolidated financial statements. The Company's operating income margin decreased to 5.2% from 5.5%. The decrease in margin is due primarily to the baseball strike and increased general corporate expenses referred to above. Interest expense declined $17.2 million or 14%, due primarily to lower borrowing levels and the impact of refinancing certain of the Company's indebtedness. Fiscal 1994 and 1993 net income include an extraordinary item for the early extinguishment of debt of $7.7 million and $7.2 million, respectively, as described in note 3 to the consolidated financial statements. Fiscal 1994 net income also includes a charge of $1.3 million related to the cumulative effect of adopting Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. See note 6 to the consolidated financial statements. Segment Results. Food, Leisure and Support Services segment revenues were 4% greater than prior year. Increases related to new accounts, primarily in the U.S. business and education markets, and an acquisition of a company in Spain were partially offset by the effects of a divestiture in late fiscal 1993 and the baseball strike in fiscal 1994. See notes 2 and 11 to the consolidated financial statements. Uniform Services segment revenues increased 11% as a result of increased volume in both the uniform rental and direct marketing businesses. Health and Education Services segment revenues increased 9% as a result of new contracts at correctional institutions and hospitals and continued enrollment growth in the child care services business. Revenues for the Distributive Services segment increased 3% due to increased volume. 10 Operating income for the Food, Leisure and Support Services segment increased 1% over the prior year. Increased earnings in the U.S. business dining market and the gain from the sale of stock of an affiliate were offset by the impact of the baseball strike, startup costs of new contracts, and continued sluggish economic conditions in selected European markets. Depreciation and amortization in this segment increased by $9 million due to acquisition related amortization and depreciation on recent capital projects. Uniform Services operating income increased 9% as a result of the revenue growth. Operating income for the Health and Education Services segment increased 11% due to revenue growth plus improvements in operating efficiency due to leveraging of overhead costs. Distributive Services operating income increased 7%, primarily due to increased volume with costs remaining relatively constant. FINANCIAL CONDITION AND LIQUIDITY Cash flows generated from operating activities increased 23% or $52 million from the prior year. Debt increased by $292 million from the prior year due primarily to acquisition activity. See note 2 to the consolidated financial statements. The Company expects to continue to fund capital expenditures, acquisitions and other liquidity needs from cash provided by operating activities, normal disposals of property and equipment and borrowings available under its credit facility. As of September 29, 1995, the Company has capital commitments of approximately $47 million related to several long-term concession contracts at stadiums and arenas. During fiscal 1995, the Company amended its credit facility, increasing the maximum borrowing amount from $800 million to $1 billion. See note 4 to the consolidated financial statements. Currently, the Company has approximately $375 million of unused committed credit availability under its credit facility, including the availability under a C$73 million Canadian credit facility which was established during fiscal 1995 to finance the purchase of the remaining minority interest of its Canadian subsidiary (see note 2 to the consolidated financial statements). Also, during fiscal 1995, the Company issued $150 million of 8.15% notes and $100 million of 8% notes which were used primarily to refinance the redemption of its 12% subordinated debentures and 10.25% senior note. See note 3 to the consolidated financial statements. During fiscal 1995, the Company repurchased $2 million of its Series C Preferred Stock and $5 million of its Class A Common Stock. The Company also repurchased $44 million of its Class B Common Stock, with $23 million of subordinated installment notes issued as partial consideration. Additionally, the Company issued $10 million of Class B Common Stock to eligible employees, primarily through the exercise of installment stock purchase opportunities. 11 Item 8. Financial Statements and Supplementary Data See Index to Financial Statements and Schedules at page S-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not Applicable. PART III Items 10, 11, 12, and 13 of Part III are incorporated by reference to the registrant's Proxy Statement for its 1995 Annual Stockholders' Meeting to be filed with the Commission pursuant to Regulation 14A (except for the stock price performance graph and the committee report on executive compensation in the Company's Proxy Statement). PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Index to Financial Statements See Index to Financial Statements and Schedules at page S-1. (b) Reports on Form 8-K None. (c) Exhibits Required by Item 601 of Regulation S-K See Index to Exhibits. (d) Financial Statement Schedules See Index to Financial Statements and Schedules at page S-1. 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. ARAMARK CORPORATION By: Alan J. Griffith -------------------------- Alan J. Griffith Vice President, Controller and Chief Accounting Officer November 22, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on November 22, 1995. Signature Title - --------- ----- Joseph Neubauer Chairman and President and Director - -------------------------- (Principal Executive Officer) Joseph Neubauer James E. Ksansnak Executive Vice President - -------------------------- (Principal Financial Officer) James E. Ksansnak Alan J. Griffith Vice President, Controller - -------------------------- and Chief Accounting Officer Alan J. Griffith (Principal Accounting Officer) Robert J. Callander Alan K. Campbell Ronald R. Davenport Philip L. Defliese Lee F. Driscoll, Jr. Directors Mitchell S. Fromstein Edward G. Jordan Thomas H. Kean Reynold C. MacDonald James E. Preston Martin W. Spector - -------------------------- Martin W. Spector Attorney-in-Fact 13 ARAMARK CORPORATION AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Page ---- Report of Independent Public Accountants S-2 Report of Chartered Accountants S-3 Consolidated Balance Sheets: As of September 29, 1995 and September 30, 1994 S-4 Consolidated Statements of Income: Fiscal Years 1995, 1994 and 1993 S-6 Consolidated Statements of Cash Flows: Fiscal Years 1995, 1994 and 1993 S-7 Consolidated Statements of Shareholders' Equity: Fiscal Years 1995, 1994 and 1993 S-8 Notes to Consolidated Financial Statements S-11 Consolidated Supporting Schedules Filed: Schedule Number - -------- I Condensed Financial Information of Registrant S-25 II Valuation and Qualifying Accounts and Reserves S-29 All other schedules are omitted because they are not applicable, not required, or the information required to be set forth therein is included in the consolidated financial statements or in the notes thereto. S-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To ARAMARK Corporation: We have audited the accompanying consolidated balance sheets of ARAMARK Corporation (a Delaware corporation) and subsidiaries as of September 29, 1995 and September 30, 1994, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three fiscal years in the period ended September 29, 1995. These consolidated financial statements and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedules based on our audits. We did not audit the financial statements of Versa Services Ltd., the Company's Canadian subsidiary, prior to fiscal 1995, which statements reflect assets representing 3.6% of consolidated assets as of September 30, 1994, and revenues representing 5.6% and 6.3% of consolidated revenues for the fiscal years 1994 and 1993, respectively. Those statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included for Versa Services Ltd. for fiscal years 1994 and 1993, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors for 1994 and 1993, the financial statements referred to above present fairly, in all material respects, the financial position of ARAMARK Corporation and subsidiaries as of September 29, 1995 and September 30, 1994, and the results of their operations and their cash flows for each of the three fiscal years in the period ended September 29, 1995, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the index to financial statements are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. As discussed in Note 6 to the consolidated financial statements, ARAMARK Corporation changed its method of accounting for income taxes in fiscal 1994. ARTHUR ANDERSEN LLP Philadelphia, Pennsylvania November 13, 1995 S-2 REPORT OF CHARTERED ACCOUNTANTS To The Directors of Versa Services Ltd.: We have audited the consolidated balance sheets of Versa Services Ltd. as at September 28, 1994 and September 29, 1993 and the consolidated statements of income and retained earnings and cash flows for the fifty-two week periods then ended (not presented separately herein). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at September 28, 1994 and September 29, 1993, and the results of its operations and the changes in its financial position for the fifty-two week periods then ended in accordance with accounting principles generally accepted in Canada. Mississauga, Canada ERNST & YOUNG November 16, 1994 Chartered Accountants S-3 ARAMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 29, 1995 and September 30, 1994 (dollars in thousands, except per share amounts)
- ---------------------------------------------------------------------------------------------------------------- 1995 1994 - ---------------------------------------------------------------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents $ 23,082 $ 27,426 Short-term investments held by the Canadian subsidiary - 16,203 Receivables (less allowances: 1995, $15,096; 1994, $12,423) 488,920 433,550 Inventories 285,510 256,950 Prepayments and other current assets 64,772 69,865 - ------------------------------------------------------------------------------------------------------------------ Total current assets 862,284 803,994 - ------------------------------------------------------------------------------------------------------------------ Property and Equipment, at Cost: Land, buildings and improvements 411,993 379,671 Service equipment and fixtures 1,038,958 888,134 Leased property under capital leases 10,213 8,204 - ------------------------------------------------------------------------------------------------------------------ 1,461,164 1,276,009 Less-Accumulated depreciation 705,082 594,102 - ------------------------------------------------------------------------------------------------------------------ 756,082 681,907 - ------------------------------------------------------------------------------------------------------------------ Goodwill 506,193 438,725 - ------------------------------------------------------------------------------------------------------------------ Other Assets (including $208 million of investments in acquisitions made at yearend 1995) 475,127 197,324 - ------------------------------------------------------------------------------------------------------------------ $2,599,686 $2,121,950 ==================================================================================================================
The accompanying notes are an integral part of these financial statements. S-4 ARAMARK CORPORATION AND SUBSIDIARIES
- ---------------------------------------------------------------------------------------------------------------- 1995 1994 - ---------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current maturities of long-term borrowings $ 8,384 $ 9,391 Accounts payable 440,761 372,908 Accrued payroll and related expenses 152,664 142,911 Other accrued expenses and current liabilities 246,794 231,991 - ---------------------------------------------------------------------------------------------------------------- Total current liabilities 848,603 757,201 - ---------------------------------------------------------------------------------------------------------------- Long-Term Borrowings: Senior 1,115,371 697,695 Subordinated 165,414 290,414 Obligations under capital leases 2,370 3,231 - ---------------------------------------------------------------------------------------------------------------- 1,283,155 991,340 Less-current portion 8,384 9,391 - ---------------------------------------------------------------------------------------------------------------- Total long-term borrowings 1,274,771 981,949 - ---------------------------------------------------------------------------------------------------------------- Deferred Income Taxes and Other Noncurrent Liabilities 204,968 168,638 Minority Interest - 10,812 Common Stock Subject to Potential Repurchase Under Provisions of Shareholders' Agreement 19,060 20,791 Shareholders' Equity Excluding Common Stock Subject to Repurchase: Series C preferred stock, redemption value $1,000; authorized: 40,000 shares; issued: 1995 - 14,965 shares; 1994 - 16,949 shares 14,965 16,949 Class A common stock, par value $.01; authorized: 25,000,000 shares; issued: 1995 - 2,148,069 shares; 1994 - 2,074,251 shares 21 21 Class B common stock, par value $.01; authorized: 150,000,000 shares; issued: 1995 - 23,499,782 shares; 1994 - 24,338,494 shares 235 243 Earnings retained for use in the business 247,805 178,587 Cumulative translation adjustment 8,318 7,550 Impact of potential repurchase feature of common stock (19,060) (20,791) - ---------------------------------------------------------------------------------------------------------------- Total 252,284 182,559 - ---------------------------------------------------------------------------------------------------------------- $2,599,686 $2,121,950 ================================================================================================================
The accompanying notes are an integral part of these financial statements. S-5 ARAMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Fiscal Years Ended September 29, 1995, September 30, 1994 and October 1, 1993 (dollars in thousands, except per share amounts)
- ---------------------------------------------------------------------------------------------------------------- 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------- Revenues $5,600,645 $5,161,578 $4,890,738 - ---------------------------------------------------------------------------------------------------------------- Costs and Expenses: Cost of services provided 5,094,179 4,686,086 4,432,840 Depreciation and amortization 156,869 143,763 130,511 Selling and general corporate expense 72,602 70,196 63,406 Other expense (income) - (5,792) (4,955) - ---------------------------------------------------------------------------------------------------------------- 5,323,650 4,894,253 4,621,802 - ---------------------------------------------------------------------------------------------------------------- Operating income 276,995 267,325 268,936 Gain on Issuance of Stock by an Affiliate - 4,658 - - ---------------------------------------------------------------------------------------------------------------- Earnings before interest and income taxes 276,995 271,983 268,936 Interest Expense, net 109,418 108,499 125,671 - ---------------------------------------------------------------------------------------------------------------- Income before income taxes 167,577 163,484 143,265 Provision For Income Taxes 67,388 67,119 57,526 Minority Interest - 1,332 1,405 - ---------------------------------------------------------------------------------------------------------------- Income Before Extraordinary Item and Cumulative Effect of Change in Accounting for Income Taxes 100,189 95,033 84,334 Extraordinary Item Due to Early Extinguishments of Debt (net of income taxes of $4,458 in 1995, $5,118 in 1994 and $4,660 in 1993) 6,686 7,677 7,202 Cumulative Effect of Change in Accounting for Income Taxes - 1,277 - - ---------------------------------------------------------------------------------------------------------------- Net Income $ 93,503 $ 86,079 $ 77,132 ================================================================================================================ Earnings Per Share: Income before extraordinary item and cumulative effect of change in accounting for income taxes $2.01 $1.87 $1.64 Net income $1.88 $1.69 $1.49 ================================================================================================================
The accompanying notes are an integral part of these financial statements. S-6 ARAMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Fiscal Years Ended September 29, 1995, September 30, 1994 and October 1, 1993 (in thousands)
- ---------------------------------------------------------------------------------------------------------------- 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $93,503 $ 86,079 $ 77,132 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 156,869 143,763 130,511 Income taxes deferred 4,920 (2,174) 6,058 Minority interest - 1,332 1,405 Cumulative effect of accounting change - 1,277 - Gain on issuance of stock by affiliate - (4,658) - Extraordinary item 6,686 7,677 7,202 Changes in noncash working capital: Receivables (25,162) (40,557) (933) Inventories (13,992) (6,915) (6,425) Prepayments 13,244 (15,675) 53,288 Accounts payable 25,186 36,956 (11,395) Accrued expenses 22,737 36,926 (198) Changes in noncurrent liabilities (6,525) (1,368) 8,541 Changes in other assets 4,020 (6,445) 4,106 Other (2,232) (9,186) (5,604) - ---------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 279,254 227,032 263,688 - ---------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Purchases of property and equipment (193,470) (145,935) (142,121) Disposals of property and equipment 16,063 11,525 11,348 Sale of investments 16,203 13,543 15,945 Divestiture of certain businesses 1,719 7,297 11,928 Increase in short-term investments - (16,203) - Purchase of subsidiary stock (20,491) (17,623) - Acquisition of certain businesses: Working capital other than cash acquired 7,877 (3,066) 8,697 Property and equipment (20,131) (573) (4,544) Additions to intangibles and other assets (342,301) (6,734) (45,547) Assumed borrowings - - 2,885 Other (2,268) 7,758 (5,368) - ---------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (536,799) (150,011) (146,777) - ---------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Proceeds from additional long-term borrowings 486,844 167,329 108,174 Payment of long-term borrowings including premiums (209,742) (210,511) (157,407) Redemption of preferred stock (1,984) (17,647) (137) Proceeds from issuance of common stock 9,718 12,416 9,462 Repurchase of common stock (26,435) (25,729) (45,795) Payment of special dividend - - (24,157) Payment of preferred stock dividend (1,049) (1,917) - Other (4,151) (1,337) (3,035) - ---------------------------------------------------------------------------------------------------------------- Net cash provided by/(used in) financing activities 253,201 (77,396) (112,895) - ---------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (4,344) (375) 4,016 Cash and cash equivalents, beginning of year 27,426 27,801 23,785 - ---------------------------------------------------------------------------------------------------------------- Cash and cash equivalents, end of year $ 23,082 $ 27,426 $ 27,801 ================================================================================================================
The accompanying notes are an integral part of these financial statements. S-7 ARAMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE FISCAL YEAR ENDED SEPTEMBER 29, 1995 (in thousands)
Impact of Potential Series C Class A Class B Cumulative Repurchase Preferred Common Common Capital Retained Translation Feature of Stock Stock Stock Surplus Earnings Adjustment Common Stock --------- ------- ------- ------- -------- ---------- ------------ Balance, September 30, 1994 $16,949 $21 $243 $ - $178,587 $7,550 $(20,791) Net income 93,503 Dividends on preferred stock (1,046) Issuance of Class A common stock to employee benefit plans 6,576 Issuance of Class B common stock 31 20,637 Retirement of common and preferred stock (1,984) (39) (27,213) (23,239) Change during the period 768 1,731 ------- ------- ----- -------- -------- ------- -------- Balance, September 29, 1995 $14,965 $21 $235 $ - $247,805 $8,318 $(19,060) ======= ======= ===== ======== ======== ====== ========
The accompanying notes are an integral part of these financial statements. S-8 ARAMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994 (in thousands)
Impact of Potential Series C Class A Class B Cumulative Repurchase Preferred Common Common Capital Retained Translation Feature of Stock Stock Stock Surplus Earnings Adjustment Common Stock --------- ------- ------- ------- -------- ----------- ------------ Balance, October 1, 1993 $34,596 $21 $243 $ - $104,827 $6,037 $(21,651) Net income 86,079 Dividends on preferred stock (1,337) Issuance of Class A common stock to employee benefit plans 1 8,881 Issuance of Class B common stock 25 18,910 Retirement of common and preferred stock (17,647) (1) (25) (27,791) (10,982) Change during the period 1,513 860 ------- ---- ---- ------- --------- ------ -------- Balance, September 30, 1994 $16,949 $21 $243 $ - $178,587 $7,550 $(20,791) ======= ==== ==== ======= ======== ====== ========
The accompanying notes are an integral part of these financial statements. S-9 ARAMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY FOR THE FISCAL YEAR ENDED OCTOBER 1, 1993 (in thousands)
Impact of Potential Series C Class A Class B Cumulative Repurchase Preferred Common Common Capital Retained Translation Feature of Stock Stock Stock Surplus Earnings Adjustment Common Stock --------- ------- ------- ------- -------- ----------- ------------ Balance, October 2, 1992 $ - $ 6 $ 53 $ - $113,091 $11,070 $(20,437) Net income 77,132 Special dividend 34,733 (59,514) Dividends on preferred stock (883) Issuance of Class A common stock to employee benefit plans 10,688 Issuance of Class B common stock 11 18,420 Retirement of common and preferred stock (137) (1) (3) (29,108) (24,801) Common stock split 16 182 (198) Change during the period (5,033) (1,214) ------ --- ----- -------- -------- ------- --------- Balance, October 1, 1993 $34,596 $21 $243 $ - $104,827 $ 6,037 $(21,651) ======= === ==== ======== ======== ======= ========
The accompanying notes are an integral part of these financial statements. S-10 ARAMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: FISCAL YEAR The Company's fiscal year is the fifty-two or fifty-three week period which ends on the Friday nearest September 30th. The years ended September 29, 1995, September 30, 1994 and October 1, 1993 are fifty-two week periods. PRINCIPLES OF CONSOLIDATION, ETC. The consolidated financial statements include the accounts of the Company and all its subsidiaries. All significant intercompany balances and transactions have been eliminated and net income is reduced by the portion of income applicable to minority shareholders of less than wholly-owned subsidiaries. In fiscal 1997, the Company is required to adopt the provisions of Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." The Company will complete its analysis of the impact of this standard in fiscal 1996, but currently does not anticipate that the adoption will have a material impact on the consolidated financial statements. CURRENCY TRANSLATION Gains and losses resulting from the translation of financial statements of non-U.S. subsidiaries are reflected as a currency translation adjustment in shareholders' equity. Currency transaction gains and losses included in operating results for fiscal 1995, 1994 and 1993 were not significant. CURRENT ASSETS The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. At September 30, 1994, securities having maturities in excess of three months, all of which were owned by the Company's Canadian subsidiary, were classified as short-term investments and were recorded at cost which approximated market value. Inventories are valued at the lower of cost (principally the first-in, first-out method) or market. The LIFO (last-in, first-out) method of determining cost is used to value directly marketed work clothing and casual apparel. The stated value of inventories determined using the LIFO method is not significantly different from replacement or current cost. Personalized work apparel and linens in service are recorded at cost and are amortized over their estimated useful lives, approximately two years. In accordance with industry practice, magazines and books are sold to retailers with the right to return unsold items for ultimate credit from the publishers. The components of inventories as of the respective year-ends are as follows: 1995 1994 - ------------------------------------------------------------------------------- Food 25.7% 24.9% Work apparel, casual apparel and linens 57.2% 60.9% Magazines and books 8.8% 5.6% Parts, supplies and novelties 8.3% 8.6% - ------------------------------------------------------------------------------- 100.0% 100.0% - ------------------------------------------------------------------------------- S-11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued) PROPERTY AND EQUIPMENT Property and equipment are stated at cost and are depreciated over their estimated useful lives on a straight-line basis. Gains and losses on dispositions are included in operating results. Maintenance and repairs are charged to operations currently, and replacements and significant improvements are capitalized. The estimated useful lives for the major categories of property and equipment are 10 to 40 years for buildings and improvements and 3 to 10 years for service equipment and fixtures. Depreciation expense in fiscal 1995, 1994 and 1993 was $116.4 million, $107.5 million and $99.0 million, respectively. GOODWILL Goodwill, which represents the excess of cost over fair value of the net assets of acquired businesses, is being amortized on a straight-line basis principally over 40 years. 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 upon management's current assessment, the estimated remaining amortization period of goodwill is appropriate and the remaining balance is fully recoverable. Accumulated amortization at September 29, 1995 and September 30, 1994 is $130.2 million and $113.7 million, respectively. OTHER ASSETS Other assets consist primarily of investments in less than 50% owned entities, contract rights, customer lists, and long-term receivables . Investments in which the Company owns more than 20% but less than a majority are accounted for using the equity method. Contract rights and customer lists are being amortized on a straight-line basis over the expected period of benefit, 5 to 20 years. As discussed in Note 2, at September 29, 1995, other assets includes approximately $208 million related to the purchase price of acquisitions consummated at yearend. OTHER LIABILITIES Other noncurrent liabilities consist primarily of deferred compensation, insurance accruals, deferred gains arising from sale and leaseback transactions and subordinated installment notes arising from repurchases of common stock. The Company is self-insured for a limited portion of the risk retained under its general liability and workers' compensation and malpractice insurance arrangements. Self-insurance reserves are determined based on actuarial analyses. The self-insurance reserves for workers' compensation insurance are accrued on a present value basis using a discount rate which approximates a risk-free rate. EARNINGS PER SHARE Earnings per share is reported on a fully diluted Common Stock, Class B equivalent basis (which reflects Common Stock, Class A shares converted to a Class B basis; ten for one) and is based upon the weighted average number of common shares outstanding during the respective periods, plus the common equivalent shares, if dilutive, that would result from the exercise of stock options. Fully diluted earnings per share approximates primary earnings per share and is equivalent to fully diluted earnings per share under the "two-class" method. S-12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued) SUPPLEMENTAL CASH FLOW INFORMATION 1995 1994 1993 ---- ---- ---- (in millions) Interest Paid $107.4 $108.2 $113.5 Income Taxes Paid $53.5 $54.0 $41.0 Significant noncash investing and financing activities are as follows: o During fiscal 1995, 1994, and 1993, the Company contributed $6.6 million, $8.9 million, and $10.7 million, respectively, of Class A Common Stock to its employee benefit plans to fund previously accrued obligations. In addition, during fiscal 1995, 1994 and 1993 the Company contributed $1.8 million, $1.8 million and $1.7 million, respectively, of stock units to its stock unit retirement plan in satisfaction of its accrued obligations. See Note 5 to the consolidated financial statements. o During the third quarter of fiscal 1993, the Company paid a special dividend on its common stock which included $34.7 million of new Series C Preferred Stock. See Note 7 to the consolidated financial statements. o During fiscal 1995, 1994 and 1993, the Company received $9.4 million, $4.0 million and $5.9 million, respectively, of employee notes under its Deferred Payment program as partial consideration for the issuance of Common Stock Class B. Also, during fiscal 1995, 1994, and 1993, the Company issued subordinated installment notes of $22.5 million, $13.2 million and $8.3 million, respectively, as partial consideration for repurchases of Common Stock. See Note 7 to the consolidated financial statements. NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.: During fiscal 1995, late in the first quarter the Company acquired a provider of food and support services to stadiums and arenas; two magazine and book distribution companies, one in the first quarter and one late in the third quarter; a uniform rental business late in the fourth quarter; and a direct marketer of public safety clothing and equipment late in the fourth quarter, all for aggregate consideration of approximately $360 million in cash. The acquisitions were accounted for under the purchase method of accounting and the fiscal 1995 financial statements reflect the results of operations and cash flows of the acquired companies from the date of the acquisitions. The two fourth quarter acquisitions were closed in September 1995, and pending completion of appraisals and other valuations, the cost of these investments (approximately $208 million) has been included in "Other Assets." Had the above acquisitions occurred as of the beginning of the fiscal period, pro forma consolidated revenues and earnings before interest, taxes, depreciation and amortization would have been approximately 4% and 6%, and 6% and 7% greater in fiscal 1995 and 1994, respectively. Additionally, net income and earnings per share would have been approximately 9% and 18% lower in fiscal 1995 and 1994, respectively. The pro forma results are unaudited and are based on historical results, adjusted for the impact of certain acquisition related adjustments, such as: increased amortization of intangibles, increased interest expense on acquisition debt, and the related income tax effects. The pro forma results do not S-13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.: (Continued) reflect any synergies that might be achieved from combined operations and therefore, in management's opinion, are not indicative of what actual results would have been if the acquisitions had occurred at the beginning of the respective periods. In addition, they are not intended to be a projection of future results. In the fourth quarter of fiscal 1994, the Company initiated a tender offer for the 30% minority interest of its Canadian subsidiary. The transaction was completed in fiscal 1995 for total consideration of approximately $38 million, of which $20.5 million was paid in fiscal 1995. During the fourth quarter of fiscal 1994, an affiliate, 33% owned by the Company, sold common stock through a public offering. The Company sold approximately 9% of its equity investment in connection with the public offering, receiving net proceeds of $6.9 million and recorded a gain of $5.8 million, which is included in "Other expense (income)." At the time a subsidiary/affiliate sells its stock to third parties, the Company recognizes the resultant change in its net investment in the subsidiary/affiliate through the income statement in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 51 (SAB No. 51). In accordance with SAB No. 51, the Company recognized a pre-tax gain of $4.7 million, and recorded a related tax provision of $1.9 million, representing the increase in book value of the Company's remaining investment created by the sale of the incremental new shares in the public offering. The Company's percentage ownership of the affiliate after the transaction is 28%. During the fourth quarter of fiscal 1993, the Company sold Encore Service Systems, Inc. for approximately $20 million resulting in a gain of approximately $15 million. In addition, all of the Company's remaining shares of Living Centers of America common stock were sold during fiscal 1993 for approximately $16 million, resulting in a gain of approximately $8 million. These gains have been included in "Other expense (income)" in the accompanying consolidated statements of income. Also included in "Other expense (income)" is an amount of $18 million to establish a reserve for potential adjustments related to certain cost-based food service contracts. This resulted from a 1993 internal review of billing procedures covering primarily insurance and employee fringe benefits. The review revealed some past inconsistencies between the billings and the literal contractual language. NOTE 3. EXTRAORDINARY ITEM: The following items have been reflected as extraordinary items in the consolidated financial statements. During fiscal 1995, the Company redeemed its $125 million 12% subordinated debentures and its $50 million 10.25% senior note for a premium. The debt extinguishment was financed through the issuance of 8.15% and 8% senior notes (see Note 4). The resultant extraordinary charge was $6.7 million or $0.13 per share. During fiscal 1994, the Company redeemed the remaining $182.3 million of its 12-1/2% subordinated debentures for a premium. The debt extinguishment was financed through borrowings under the Company's revolving credit facility. The resultant extraordinary charge was $7.7 million or $0.15 per share. During fiscal 1993, the Company repurchased the entire $100 million of its 10.55% senior notes for a premium and concurrently issued $100 million of 8-1/4% senior notes. The Company also paid a premium to redeem $38.6 million of its 12-1/2% subordinated debentures. S-14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. BORROWINGS: Long-term borrowings at September 29, 1995 and September 30, 1994 are summarized in the following table: 1995 1994 ---- ---- (in thousands) SENIOR: Credit facility borrowings $ 592,900 $401,600 Canadian credit facility 50,674 - 8% notes, due April 2002 100,000 - 8.15% notes due May 2005 150,000 - 10-5/8% notes, due August 2000 100,000 100,000 8-1/4% notes, payable in installments through 1999 80,000 100,000 10-1/4% note, due April 1998 - 50,000 Other, including mortgages and notes payable 41,797 46,095 - ------------------------------------------------------------------------------- 1,115,371 697,695 - ------------------------------------------------------------------------------- SUBORDINATED: 8-1/2% subordinated notes, due June 2003 100,000 100,000 10% exchangeable debentures and notes, due August 2000 59,299 59,299 Other, due 1997 - 2000 6,115 6,115 12% debentures, due April 2000 - 125,000 - ------------------------------------------------------------------------------- 165,414 290,414 - ------------------------------------------------------------------------------- OBLIGATIONS UNDER CAPITAL LEASES 2,370 3,231 - ------------------------------------------------------------------------------- 1,283,155 991,340 Less-current portion 8,384 9,391 - ------------------------------------------------------------------------------- $1,274,771 $981,949 =============================================================================== The $1.0 billion revolving credit facility ("Credit Agreement") is provided by a group of banks and matures in October 2001 with quarterly commitment reductions of $15.6 million starting in December 1995 which increase annually thereafter. Interest under the credit agreement is based on the Prime Rate plus a spread of 0% to 5/8% (as of September 29, 1995 - 0%), London Inter-Bank Offered Rate (LIBOR) plus a spread of 1/8% to 1-1/8% (as of September 29, 1995 - 1/2%) or the Certificate of Deposit Rate plus a spread of 1/4% to 1-1/4% (as of September 29, 1995 - 5/8%), at the option of the Company. The spread is based on certain financial ratios and borrowing levels as defined. The Company pays a fee of 1/4 of 1% on the entire credit facility. The C$73 million Canadian revolving credit facility provides for either U.S. dollar or Canadian dollar borrowings and matures in June 2000, with quarterly commitment reductions of C$1.9 million which generally increase annually. Interest on this facility is based on the Canadian Bankers Acceptance Rate, U.S. Base Rate, Canadian Prime Rate, LIBOR, or the Euro-Canadian Rate plus a spread of up to 1-1/8%, as defined. As of September 29, 1995, all borrowings under this facility are payable in Canadian dollars, with a weighted average interest rate of 7.0%. The Company pays a fee of 1/4 of 1% on the entire credit facility. The 8-1/4% notes are payable in $20 million annual installments with a final maturity of March 1999. The $20 million installment due in fiscal 1996 has been classified as non-current in the accompanying consolidated balance sheet as the Company has the ability and intent to finance it through additional borrowings under the Credit Agreement. S-15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4: BORROWINGS: (Continued) The 10-5/8% senior notes require a sinking fund payment of $50 million in August 1999 with a final maturity in August 2000. The 8-1/2% subordinated notes may be redeemed at the Company's option, in whole or in part, beginning June 1998 at a price equal to 104.25% of their principal amount and thereafter at prices declining to par in 2002, together with accrued interest. The 10% subordinated exchangeable debentures and notes may be exchanged at any time in whole or part, at the option of the holder, for 10-5/8% senior notes due August 2000 at an exchange ratio of .93. Accrued interest on borrowings totaling $22.0 million at September 29, 1995 and $23.6 million at September 30, 1994 is included in current liabilities as "Other accrued expenses." The Company utilizes derivative financial instruments, such as interest rate swap and forward exchange agreements to manage changes in market conditions related to debt obligations and foreign currency exposures. At September 29, 1995 and September 30, 1994, the Company has $175 million and $200 million of interest rate exchange agreements fixing the rate on a like amount of borrowings under the Credit Agreement at an average effective rate of 6.3% and 5.7%, respectively. As of September 29, 1995, interest rate exchange agreements remain in effect for periods ranging from 7 to 28 months. Additionally, at September 29, 1995, the Company has $100 million of interest rate cap agreements (expiring in October 1995) which cap a like amount of variable rate borrowings at 5.5%. All interest rate agreements are accounted for as hedges and the related gains or losses are recognized in income as a component of interest expense over the period being hedged. During fiscal 1993, the Company entered into a $28 million foreign currency swap agreement maturing in August 1996, which hedges the currency exposure of its net investment in Spain. The counterparties to the above derivative agreements are major international banks. The Company continually monitors its positions and credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties. The following summarizes the fair value of the Company's financial instruments as of September 29, 1995 and September 30, 1994. The fair values were computed using market quotes, if available, or based on discounted cash flows using market interest rates as of the end of the respective periods. 1995 1994 ------------------------ -------------------- Carrying Fair Carrying Fair Asset/(Liability) in millions Amount Value Amount Value ------ ----- ------ ----- Long-term debt $(1,283.2) $(1,313.3) $(991.3) $(996.0) Interest rate swap agreements - 0.7 - 6.4 Foreign currency swap agreement (2.6) (2.5) (1.5) (0.9) The Credit Agreement contains restrictive covenants which provide, among other things, limitations on the incurrence of debt, dispositions of material assets, payment of dividends and repurchases of capital stock. The terms of the Credit Agreement also require that the Company maintain certain specified minimum ratios of cash flow to fixed charges and to total borrowings and certain minimum levels of net worth (as defined). At September 29, 1995, the Company was in compliance with all of these covenants. S-16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. BORROWINGS: (Continued) Long-term borrowings maturing in the next five years, excluding capital lease obligations, are as follows: Amount ------ (in thousands) 1996 $ 7,993 1997 34,217 1998 31,903 1999 202,181 2000 319,923 NOTE 5: EMPLOYEE PENSION AND PROFIT SHARING PLANS: In the United States, the Company maintains qualified contributory and non-contributory retirement plans for eligible employees, with Company contributions to the plans based on earnings performance or salary level. Qualified non-contributory profit sharing plans are maintained by certain businesses, with annual contributions determined by management. The Company has a non-qualified stock unit retirement plan for certain employees. The total expense of the above plans for fiscal 1995, 1994 and 1993 was $15.3 million, $14.5 million and $14.1 million, respectively. During fiscal 1995, 1994 and 1993, the Company contributed 41,114 shares, 59,919 shares and 86,184 shares, respectively, of Common Stock, Class A to these plans to fund previously accrued obligations. In addition, during fiscal 1995, 1994 and 1993, the Company contributed to the stock unit retirement plan 120,700 stock units, 143,125 stock units and 159,144 stock units, respectively, which are convertible into Common Stock, Class B, in satisfaction of its accrued obligations. The value of the stock units was credited to capital surplus. The Company participates in various multi-employer union administered pension plans. Contributions to these plans, which are primarily defined benefit plans, result from contractual provisions of labor contracts and were $13.1 million, $11.9 million and $10.2 million for fiscal 1995, 1994 and 1993, respectively. Additionally, the Company maintains several contributory and noncontributory defined benefit pension plans, primarily in Canada and the United Kingdom. The projected benefit obligation of these plans as of September 29, 1995, which is fully funded, is $43.1 million. Pension expense related to these plans is not material to the consolidated financial statements. NOTE 6. INCOME TAXES: Effective October 2, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes." Prior to fiscal 1994, the Company followed the provisions of Accounting Principles Board Opinion No. 11. SFAS No. 109 requires deferred tax assets or liabilities to be recognized for the estimated future tax effects of temporary differences between the financial reporting and tax bases of the Company's assets and liabilities based on the enacted tax law and statutory tax rates applicable to the periods in which the temporary differences are expected to affect taxable income. The cumulative effect of this change in accounting principle was a charge of $1.3 million, or $0.03 per share, in the first quarter of fiscal 1994. S-17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6. INCOME TAXES: (Continued) The components of income before income taxes by source of income are as follows:
1995 1994 1993 - ------------------------------------------------------------------------------------------------------------- (in thousands) United States $153,551 $143,052 $121,818 Non-U.S. 14,026 20,432 21,447 - -------------------------------------------------------------------------------------------------------------- $167,577 $163,484 $143,265 ============================================================================================================== The provision for income taxes consists of: 1995 1994 1993 - -------------------------------------------------------------------------------------------------------------- (in thousands) Current: Federal $46,579 $51,935 $34,345 State and local 12,064 11,827 7,024 Non-U.S. 3,825 5,531 10,099 - -------------------------------------------------------------------------------------------------------------- 62,468 69,293 51,468 - -------------------------------------------------------------------------------------------------------------- Deferred: Federal 3,189 (1,516) 5,230 State and local 739 (351) 736 Non-U.S. 992 (307) 92 - -------------------------------------------------------------------------------------------------------------- 4,920 (2,174) 6,058 - -------------------------------------------------------------------------------------------------------------- $67,388 $67,119 $57,526 ==============================================================================================================
The provision for income taxes varies from the amount determined by applying the United States Federal statutory rate to pre-tax income as a result of the following:
1995 1994 1993 - -------------------------------------------------------------------------------------------------------------- (% of pre-tax income) United States statutory income tax rate 35.0% 35.0% 34.8% Increase (decrease) in taxes, resulting from: State income taxes, net of Federal tax benefit 4.7 4.6 3.7 Permanent book/tax differences, primarily resulting from purchase accounting 1.7 3.0 2.4 Tax credits (1.2) (1.5) (1.5) Other, net - (.1) .8 ------------------------------------------------------------------------------------------------------------- Effective income tax rate 40.2% 41.0% 40.2% ==============================================================================================================
As of September 29, 1995 and September 30, 1994 the components of the net deferred tax asset are as follows (in thousands): 1995 1994 ---- ---- Deferred tax liabilities: Property and equipment $63,959 $64,718 Inventory 5,037 5,484 Investments 12,406 3,523 Other 12,165 1,202 -------- --------- Gross deferred tax liability 93,567 74,927 -------- --------- S-18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6. INCOME TAXES: (Continued) 1995 1994 ------- ------- Deferred tax assets: Insurance 23,183 17,797 Employee compensation and benefits 34,459 30,228 Accruals and allowances 19,461 20,648 Intangibles 4,749 9,954 Other 3,648 2,254 Valuation allowance (425) (1,000) ------ ------ Net deferred tax asset 85,075 79,881 ------ ------ Net deferred tax liability/(asset) $ 8,492 $(4,954) ======= ======= The components of deferred income taxes for 1993, the year prior to the adoption of SFAS No. 109 are as follows: (in thousands) Excess of tax over book depreciation $ 1,905 Accrued vacation 52 Provision for insurance costs (3,009) Tax vs. book basis of dispositions 5,598 Other 1,512 ------- $ 6,058 ======= NOTE 7. CAPITAL STOCK: There are two classes of common stock authorized and outstanding, Common Stock, Class A and Common Stock, Class B. Each Class A and Class B Share is entitled to one vote on all matters submitted to shareholders, voting together as a single class except where otherwise required by law. Each Class A Share is entitled to ten times the dividends and other distributions payable on each Class B Share. Class B Shares may be held only by employees, directors and their family members, and upon termination of employment each Class B Share is automatically converted into 1/10 of a Class A Share. During the third quarter of fiscal 1993, the Company paid a special dividend of $5 per Class B equivalent share on all shares of its Common Stock owned as of April 19, 1993, with $2 per Class B equivalent share, or $24.2 million, paid in cash and $3 per Class B equivalent share, or $34.7 million, in new Series C Preferred Stock ("Preferred Stock"). Concurrent with the dividend, the Company repurchased for cash 55,495 shares of its Class A Common Stock for $28.9 million. Holders of the Preferred Stock are entitled to cumulative dividends payable semi-annually; voting rights in the event of failure to pay dividends for four consecutive periods (two years); and upon liquidation, $1,000 per share plus accrued and unpaid dividends. The current dividend rate on the Preferred Stock is $68 per share and is reset annually in December of each year at a rate equal to $1,000 multiplied by 80% of Chemical Bank's announced prime rate of interest, but not less than $60 per share nor greater than $100 per share. The Preferred Stock may be repurchased, in whole or in part, at any time only at the Company's option at a price equal to $1,000 per share plus accrued and unpaid dividends. During fiscal 1995 and 1994 the Company repurchased 1,984 and 17,647 preferred shares for $2.0 million and $17.6 million, respectively. As of September 29, 1995 the Company's stock option plans provided for the issuance of up to 33,001,148 options to purchase shares of Common Stock, Class B. The Company granted installment stock purchase opportunities under its stock ownership program in fiscal 1995, 1994 and 1993 which provide for the purchase of shares of Common Stock, Class B. Installment stock purchase opportunities are exercisable in six annual installments with the exercise price of each purchase S-19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7. CAPITAL STOCK: (Continued) opportunity equal to the current fair market value at the time the purchase opportunity is granted. During fiscal 1994, the Company implemented a program to extend non-qualified stock options to additional qualified employees. Under the program, options vest after three years and may be exercised for a period of three years after vesting. The exercise price of each option is equal to the current fair market value at the date of grant. In fiscal 1995, the Company granted cumulative installment stock purchase opportunities under its existing stock ownership program which are similar to the installment stock purchase opportunities discussed above, however, any purchase opportunities not exercised during an installment period may be carried forward to subsequent installment periods. In 1993, the Company implemented the Deferred Payment Program which enables holders of non-qualified stock options and installment purchase opportunities to defer a portion of the total amount required to exercise the options. Interest currently accrues on deferred payments at 8.75% compounded annually and is payable when the deferred payments are due. At September 29, 1995 and September 30, 1994 the receivables from individuals under the Deferred Payment Program were $17.5 million and $9.8 million, respectively, which are classified in the consolidated balance sheet as a reduction of Shareholders' Equity. The Company holds as collateral all shares purchased in which any portion of the purchase price is financed under the Deferred Payment Program until the deferred payment is received from the individual by the Company. Status of the options, including installment stock purchase opportunities, under the various ownership programs follows:
Number of Shares Average Option Price ----------------------------------------- ------------------------ 1995 1994 1993 1995 1994 1993 ----------- ----------- ----------- ------ ------ ----- Options granted 4,409,920 4,314,635 2,776,296 $13.11 $11.19 $9.14 Options exercised 3,084,830 2,588,030 4,904,360 $6.17 $6.33 $3.14 Options outstanding 10,107,199 10,383,764 10,030,024 $10.47 $8.05 $6.26
At September 29, 1995, 514,696 of the outstanding option shares were exercisable at an average option price of $2.14. The Company has reserved 10,804,832 shares of Common Stock, Class B at September 29, 1995 for issuance of stock pursuant to its employee ownership and benefit programs. The Company and its shareholders are parties to an Amended and Restated Shareholders' Agreement. Pursuant to this agreement, holders of common stock who are individuals, upon their death, complete disability or normal retirement, may cause the Company to repurchase up to 30% of their shares for cash at the then appraised value, but only to the extent such repurchase by the Company is permitted under the Credit Agreement. Under this Credit Agreement restriction, repurchases of capital stock cannot exceed an aggregate limit, which amount was $19.1 million at September 29, 1995 and $20.8 million at September 30, 1994. Pursuant to interpretations of its rules related to "Redeemable Preferred Stock," the Securities and Exchange Commission has requested that these amounts representing the Company's potential repurchase of its Common Stock be presented as a separate item and accordingly, the Company's Shareholders' Equity reflects this reclassification in the consolidated financial statements. Also, the Shareholders' Agreement provides that the Company may, at its option, repurchase shares from individuals who are no longer employees. Such repurchased shares may be resold to others including replacement personnel at prices equal to or greater than the repurchase price. Generally, payment for shares repurchased can be, at the Company's option, in cash or subordinated installment notes, which are subordinated to all other indebtedness of the Company. Interest on these notes is payable semi-annually and principal payments are made annually over varying periods not to exceed ten years. The noncurrent portion of these notes ($36.8 million as of September 29, 1995 and $24.9 million as of September 30, 1994) is included in the consolidated balance sheets as "Other Noncurrent Liabilities" and the current portion of these notes ($11.3 million as of September 29, 1995 and $8.7 million as of September 30, 1994) is included in the consolidated balance sheets as "Accounts Payable." S-20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8. COMMITMENTS AND CONTINGENCIES: 1995 1994 - ------------------------------------------------------------------------------- (in thousands) Facilities under capital leases $10,213 $8,204 Less-accumulated amortization 8,211 5,590 - ------------------------------------------------------------------------------- $ 2,002 $2,614 =============================================================================== Rental expense for all operating leases was $124.2 million, $121.2 million and $119.4 million for fiscal 1995, 1994 and 1993, respectively. Following is a schedule of the future minimum rental commitments under all noncancelable leases as of September 29, 1995: Fiscal Year Operating Capital - ------------------------------------------------------------------------------- (in thousands) 1996 $126,461 $660 1997 71,494 737 1998 64,964 485 1999 58,940 268 2000 53,889 255 Subsequent years 183,421 499 - ------------------------------------------------------------------------------- Total minimum rental obligations $559,169 2,904 =============================================================================== Less-amount representing interest 534 - ------------------------------------------------------------------------------- Present value of capital leases 2,370 Less-current portion 390 - ------------------------------------------------------------------------------- Noncurrent obligations under capital leases $1,980 =============================================================================== The Company has capital commitments of approximately $47 million at September 29, 1995 in connection with several long-term concession contracts at stadiums and arenas. The Company is party to certain claims and litigation arising in the ordinary course of business. The Company believes it has meritorious defenses to these claims and is of the opinion that adequate reserves have been provided for the ultimate resolution of these matters. NOTE 9. 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 Credit Agreement and certain other senior debt described in Note 4 and incurs the interest expense thereunder. This interest expense is only partially allocated to all of the other subsidiaries of ARAMARK Corporation. 1995 1994 1993 -------------- ------------- ------------ (in thousands) Revenues $2,975,397 $2,763,098 $2,607,630 Cost of services provided 2,808,554 2,594,291 2,439,471 Net income (loss) 14,749 18,677 (357) 1995 1994 --------------- -------------- (in thousands) Current assets $ 366,370 $ 355,841 Noncurrent assets 1,545,474 1,223,750 Current liabilities 435,289 398,814 Noncurrent liabilities 1,377,799 1,093,563 Minority interest - 10,812 S-21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10. QUARTERLY RESULTS (Unaudited): The following table summarizes quarterly financial data for fiscal 1995 and 1994.
Fiscal Quarter ------------------------------------------------------ 1995 First (3) Second(4) Third(5) Fourth Year - ------------------------------------------------------------------------------------------------------------- (in thousands, except earnings per share) Revenues $1,380,516 $1,364,518 $1,423,824 $1,431,787 $5,600,645 Cost of services provided 1,264,665 1,255,607 1,290,258 1,283,649 5,094,179 Income before extraordinary item 20,753 13,350 28,057 38,029 100,189 Extraordinary item (1) - - 6,686 - 6,686 Net income 20,753 13,350 21,371 38,029 93,503 Earnings per share: Income before extraordinary item $.42 $.26 $.56 $.77 $2.01 Net income $.42 $.26 $.43 $.77 $1.88 Fiscal Quarter ----------------------------------------------------- 1994 First Second Third Fourth Year - ------------------------------------------------------------------------------------------------------------- (in thousands, except earnings per share) Revenues $1,292,020 $1,257,614 $1,309,085 $1,302,859 $5,161,578 Cost of services provided 1,179,726 1,156,230 1,185,363 1,164,767 4,686,086 Income before extraordinary item and cumulative effect of accounting change 18,387 13,124 27,121 36,401 95,033 Extraordinary item (1) 702 117 2,518 4,340 7,677 Net income (2) 16,408 13,007 24,603 32,061 86,079 Earnings per share: Income before extraordinary item and cumulative effect of accounting change $.36 $.25 $.53 $.73 $1.87 Net income $.32 $.25 $.48 $.64 $1.69
(1) See Note 3. (2) Includes cumulative effect of change in accounting for income taxes of $1,277 in the fiscal 1994 first quarter. See Note 6. (3) Fiscal 1995 first quarter results were adversely impacted by the National Hockey League strike (See Note 11). (4) Fiscal 1995 second quarter results were adversely impacted by the incremental seasonal operating loss related to the Harry M. Stevens acquisition. (5) Fiscal 1995 third quarter results were adversely impacted by the Major League Baseball strike (See Note 11). In the first and second fiscal quarters, within the Food, Leisure and Support Services segment there is a lower level of activity at the higher margin leisure and recreational food service operations which is partly offset by increased activity in the educational market. In addition, there is a seasonal increase in volume of directly marketed work clothing and casual apparel during the first quarter. Whereas in the third and fourth fiscal quarters, there is a significant increase at leisure and recreational accounts which is partially offset by the effect of summer closings in the educational market. S-22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11. BUSINESS SEGMENTS: The Company provides or manages services in the following business segments: Food, Leisure and Support Services - Food, refreshment, specialized dietary and support services, including maintenance and housekeeping, provided to business, educational, governmental and medical institutions and in recreational and other facilities serving the general public. The current year acquisition discussed in Note 2 was not material to segment revenues and operating income. Fiscal 1994 operating income includes a $5.8 million gain on the sale of stock of an affiliate and the 1993 operating income includes a $15 million gain from a divestiture and a reserve of approximately $18 million for potential adjustments as described in Note 2. The 1995 and 1994 segment operating results have been adversely impacted by the Major League Baseball strike in the U.S. and Canada. Additionally, the fiscal 1995 segment operating results have been adversely impacted by the National Hockey League strike in the U.S. and Canada and a decrease in average attendance at Major League Baseball games subsequent to the resumption of the season in April 1995. Had the hockey strike and baseball situation not occurred, it is estimated that segment reported results for revenues and operating income would have been approximately 2% and 10% greater in fiscal 1995, and 2% and 6% greater in fiscal 1994, respectively. Also, total Company operating income and income before extraordinary items would have been approximately 5% and 8% higher in fiscal 1995, and 3% and 5% higher in fiscal 1994, respectively. Uniform Services - Rental of personalized work apparel and linens for business and institutions on a contract basis and the direct marketing of work clothing, casual apparel, safety equipment, and accessories. The acquisitions consummated in the fourth quarter discussed in Note 2 are included in the identifiable asset disclosure in fiscal 1995. Health and Education Services - General management of child care centers, and specialized services to emergency rooms, and other hospital specialties, and medical services to correctional institutions. Fiscal 1995 segment operating income is lower than prior year primarily due to an increase in insurance reserves, reflecting a refinement in the claims estimation methodology. Distributive Services - Wholesale distribution of magazines and other published materials to retail locations patronized by the general public. The acquisitions discussed in Note 2 contributed approximately 6% of segment revenues and were not material to reported operating income in fiscal 1995. Revenues by segment are substantially comprised of services to unaffiliated customers and clients. Operating income reflects expenses directly related to individual segments plus an allocation of expenses applicable to more than one segment. General corporate expenses include expenses not specifically identifiable with an individual segment. The increase in fiscal 1994 expenses is primarily due to incremental costs related to a change in corporate identity. Direct selling expenses are approximately 1% of revenues for fiscal 1995, 1994 and 1993. Corporate assets consist principally of goodwill not allocable to any individual segment and other noncurrent assets. S-23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 11. BUSINESS SEGMENTS: (Continued)
Revenues Operating Income --------------------------------------- ---------------------------------------- 1995 1994 1993 1995 1994 1993 ---------- ---------- ---------- ---------- ---------- ------- (in millions) Food, Leisure & Support Services $3,521.2 $3,274.3 $3,149.6 $146.4 $138.4 $137.4 Uniform Services 893.4 810.5 731.0 102.6 96.0 87.6 Health & Education 742.9 673.3 619.3 28.5 37.2 33.7 Distributive 443.1 403.5 390.8 27.4 26.5 24.8 -------- -------- -------- ------ ------ ------ Total $5,600.6 $5,161.6 $4,890.7 304.9 298.1 283.5 ======== ======== ======== General Corporate and Other Expenses (27.9) (30.8) (22.6) Gain on Sale of Remaining Living Centers Common Stock - - 8.0 ------ ------ ------ Operating Income 277.0 267.3 268.9 Gain on Issuance of Stock by an Affiliate - 4.7 - Interest Expense, net (109.4) (108.5) (125.7) ------ ------ ------ Income Before Income Taxes, Minority Interest, Extraordinary Item, and Accounting Change $167.6 $163.5 $143.2 ====== ====== ======
Depreciation and Amortization, Capital Expenditures and Identifiable Assets
Depreciation Capital and Amortization Expenditures --------------------------------- ----------------------------------- 1995 1994 1993 1995 1994 1993 ------ ------ ------ ------ ------ ----- (in millions) Food, Leisure & Support Services $ 89.7 $ 85.5 $ 76.6 $128.2 $ 83.2 $ 82.4 Uniform Services 40.7 36.3 33.9 50.6 39.9 37.9 Health & Education 18.2 16.5 15.1 26.6 18.4 22.5 Distributive 3.5 2.3 2.1 3.9 2.0 1.4 ------ ------ ------ ------ ------ ------ 152.1 140.6 127.7 209.3 143.5 144.2 Corporate 4.8 3.2 2.8 4.3 3.0 2.5 ------ ------ ------ ------ ------ ------ $156.9 $143.8 $130.5 $213.6 $146.5 $146.7 ====== ====== ====== ====== ====== ======
Identifiable Assets ---------------------------------------- 1995 1994 1993 --------- ---------- ------- (in millions) Food, Leisure & Support Services $1,264.5 $1,085.7 $1,054.6 Uniform Services 847.6 608.7 570.7 Health & Education 272.0 280.2 261.3 Distributive 131.5 74.2 65.6 -------- -------- -------- 2,515.6 2,048.8 1,952.2 Corporate 84.1 73.2 88.4 -------- -------- -------- $2,599.7 $2,122.0 $2,040.6 ======== ======== ======== Most services are provided in the United States, with operations also being conducted in Belgium, Canada, the Czech Republic, Germany, Hungary, Japan, Korea, Mexico, Spain and the United Kingdom. The Company's non-U.S. operations for each year contributed approximately 16% of total revenues and 8% of total operating income, and identifiable assets for these operations were approximately 11% of the total. S-24 ARAMARK CORPORATION AND SUBSIDIARIES SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT ARAMARK CORPORATION BALANCE SHEETS SEPTEMBER 29, 1995 AND SEPTEMBER 30, 1994 (in thousands) ASSETS ------ 1995 1994 ------- ------- Current Assets: Receivables $ 1,261 $ 498 Inventories 292 187 Prepayments 1,560 2,032 -------- -------- Total current assets 3,113 2,717 -------- -------- Property & Equipment, net 11,924 9,436 Investment in Subsidiaries 732,156 634,154 Notes Receivable from ARAMARK Services, Inc. 100,000 225,000 Other Assets 10,245 6,634 -------- -------- $857,438 $877,941 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Accounts payable $ 12,546 $ 12,832 Accrued expenses 13,901 23,093 -------- -------- Total current liabilities 26,447 35,925 -------- -------- Long-Term Borrowings 165,414 290,414 Other Noncurrent Liabilities 54,936 45,217 Payable to Subsidiaries 339,297 303,035 Common Stock Subject to Potential Repurchase Under Provisions of Shareholders' Agreement 19,060 20,791 Shareholders' Equity Excluding Common Stock Subject to Repurchase: Series C preferred stock, redemption value $1,000 14,965 16,949 Class A common stock, par value $.01 21 21 Class B common stock, par value $.01 235 243 Earnings retained for use in the business 247,805 178,587 Cumulative translation adjustment 8,318 7,550 Impact of potential repurchase feature of common stock (19,060) (20,791) -------- -------- Total 252,284 182,559 -------- -------- $857,438 $877,941 ======== ======== The accompanying notes are an integral part of these financial statements. S-25 ARAMARK CORPORATION AND SUBSIDIARIES SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) ARAMARK CORPORATION STATEMENTS OF INCOME FOR THE FISCAL YEARS ENDED SEPTEMBER 29, 1995, SEPTEMBER 30, 1994 AND OCTOBER 1, 1993 (in thousands)
1995 1994 1993 ---------- ---------- ------- Equity in Net Income of Subsidiaries $93,503 $86,079 $ 67,640 ------- ------- -------- Gain on Divestiture of an affiliate - - 14,570 ------- ------- -------- Management Fee Income 56,360 67,571 49,592 ------- ------- -------- General and Administrative Expenses 39,322 45,808 27,652 ------- ------- -------- Interest (Income) Expense - Intercompany interest income (16,532) (38,778) (36,774) Interest expense 25,916 47,746 54,503 ------- ------- -------- Interest Expense, net 9,384 8,968 17,729 ------- ------- -------- Income before income taxes 101,157 98,874 86,421 Provision for Income Taxes 3,062 5,118 6,748 ------- ------- -------- Income Before Extraordinary Item 98,095 93,756 79,673 Extraordinary Item Due to Early Extinguishments of Debt (net of income taxes of $3,062 in 1995, $5,118 in 1994 and $1,670 in 1993) 4,592 7,677 2,541 ------- ------- -------- Net income $93,503 $86,079 $77,132 ======= ======= =======
The accompanying notes are an integral part of these financial statements. S-26 ARAMARK CORPORATION AND SUBSIDIARIES SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) ARAMARK CORPORATION STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED SEPTEMBER 29, 1995, SEPTEMBER 30, 1994 AND OCTOBER 1, 1993 (in thousands)
1995 1994 1993 ---------- ---------- ------- Cash flows from operating activities: Net income $ 93,503 $ 86,079 $ 77,132 Equity in net income of subsidiaries (93,503) (86,079) (67,640) Extraordinary item 4,592 7,677 2,541 Gain on divestiture - - (14,570) Other, primarily noncash working capital (22,264) (8,408) 4,298 ---------- -------- -------- Net cash provided by (used in) operating activities (17,672) (731) 1,761 ---------- -------- -------- Cash flows from investing activities: Purchases of property and equipment (4,258) (3,023) (2,486) Other 119 2,072 120 ---------- -------- -------- Net cash used in investing activities (4,139) (951) (2,366) ---------- -------- -------- Cash flows from financing activities: Proceeds from additional long-term borrowings - - 100,000 Payment of long-term borrowings including premiums (131,250) (194,694) (45,470) Change in notes receivable from ARAMARK Services, Inc. 125,000 175,000 (100,000) Change in intercompany payable to subsidiaries 47,811 54,253 106,702 Redemption of preferred stock (1,984) (17,647) (137) Proceeds from issuance of common stock 9,718 12,416 9,462 Repurchase of common stock (26,435) (25,729) (45,795) Payment of special dividend - - (24,157) Payment of preferred stock dividend (1,049) (1,917) - ---------- --------- --------- Net cash provided by financing activities 21,811 1,682 605 ---------- --------- --------- Change in cash $ - $ - $ - ========== ========= =========
The accompanying notes are an integral part of these financial statements. S-27 ARAMARK CORPORATION AND SUBSIDIARIES SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) ARAMARK CORPORATION NOTES TO FINANCIAL STATEMENTS Note 1. These statements should be read in conjunction with the Company's consolidated financial statements and notes thereto beginning on page S-4. Property and equipment are stated at cost and are depreciated over their estimated useful lives on a straight-line basis. Other assets consist primarily of long-term receivables arising from the divestiture of subsidiaries. Other noncurrent liabilities consist primarily of deferred compensation and subordinated installment notes arising from repurchases of common stock. Note 2. During fiscal 1993, certain subsidiaries of the Company made a dividend distribution totaling approximately $140 million. This transaction resulted in a reduction in the payable to subsidiaries. Note 3. The Company has guaranteed certain obligations of ARAMARK Services, Inc., its wholly-owned subsidiary, primarily those incurred pursuant to the Credit Agreement borrowings. See Note 4 to the Company's consolidated financial statements. Total guarantees were $1.2 billion on September 29, 1995. S-28 ARAMARK CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE FISCAL YEARS ENDED SEPTEMBER 29, 1995, SEPTEMBER 30, 1994 AND OCTOBER 1, 1993
Additions Reductions ------------------------- -------------------------- Balance, Acquisition Divestiture Deductions Balance, Beginning of of Charged to of from End of Description Fiscal Year Businesses Income Businesses Reserves(1) Fiscal Year ----------- ------------ ----------- ---------- ---------- ----------- ----------- - - - - - - - - - - - - - - - - (in thousands) - - - - - - - - - - - - - - - - - - - - - Fiscal Year 1995 ---------------- Reserve for doubtful accounts, advances & current notes receivable $12,423 $2,928 $6,357 $ - $6,612 $15,096 ======= ====== ====== ======= ====== ======= Fiscal Year 1994 ---------------- Reserve for doubtful accounts, advances & current notes receivable $10,242 $1,288 $6,141 $ - $5,248 $12,423 ======= ====== ====== ======= ====== ======= Fiscal Year 1993 ---------------- Reserve for doubtful accounts, advances & current notes receivable $ 9,881 $ 37 $7,425 $ 19 $7,082 $10,242 ======== ====== ====== ======= ====== =======
(1) Allowances granted and amounts determined not to be collectible. S-29 INDEX TO EXHIBITS 3.1 Restated Certificate of Incorporation.* 3.2 Corporate By-laws, as amended, are incorporated by reference to the Company's Registration Statement on Form S-8 (No. 33-14365). 4.1 Amended and Restated Stockholders' Agreement.* 4.2 Amended and Restated Registration Rights Agreement is incorporated by reference to the Company's quarterly report on Form 10-Q for the fiscal quarter ended April 1, 1988. Long-term debt instruments authorizing debt which does not exceed 10% of the total consolidated assets of the Company are not filed herewithin but will be furnished on request of the Commission. 10.1 Restated Employment Agreement dated November 13, 1991 with Joseph Neubauer is incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 27, 1991. 10.2 Agreement relating to employment and post-employment competition dated October 1, 1991 with Julian L. Carr, Jr.* 10.3 Agreement relating to employment and post-employment competition dated May 6, 1986 with James E. Ksansnak is incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 29, 1989. 10.4 Agreement relating to employment and post-employment competition dated October 4, 1991 with William Leonard is incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended October 1, 1993. 10.5 Agreement relating to employment and post-employment competition dated December 19, 1983 with Martin W. Spector is incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 29, 1989. 10.6 Amended and Restated Credit and Guaranty Agreement dated as of March 12, 1993.* 11 Computation of Earnings Per Share. 12 Ratio of Earnings to Fixed Charges. 21 Subsidiaries of Registrant. 23.1 Consent of Arthur Andersen LLP, Independent Public Accountants. 23.2 Consent of Ernst & Young, Chartered Accountants. 24 Powers of Attorney. 27 Financial Data Schedule. * Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994. EX-11 2 EXHIBIT 11 EXHIBIT 11 ARAMARK CORPORATION AND SUBSIDIARIES COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (1) (In thousands, except per share data)
Fiscal Year Ended ------------------------------------------------------------------------------ September 29, September 30, October 1, October 2, September 27, 1995 1994 1993 1992 1991 ----------- ----------- ----------- ---------- ------------- Earnings: Net income $93,503 $86,079 $77,132 $67,381 $64,223 Preferred stock dividends (1,046) (1,337) (883) -- -- ------- ------- ------- ------- ------- Net income available to common stock $92,457 $84,742 $76,249 $67,381 $64,223 ======= ======= ======= ======= ======= Shares: Weighted average number of common shares outstanding (2) 46,381 46,616 46,133 44,746 45,595 Additional shares assuming conversion of preferred stock (3) -- -- -- -- 1,477 Impact of potential exercise opportunities under the ARAMARK Ownership Program 2,928 3,512 4,873 5,898 5,263 ------ ------ ------ ------ ------ Total common and common equivalent shares 49,309 50,128 51,006 50,644 52,335 ====== ====== ====== ====== ====== Fully diluted earnings per common and common equivalent share $1.88 $1.69 $1.49 $1.33 $1.23 ===== ===== ===== ===== =====
(1) Primary and fully diluted earnings per share are approximately the same. Weighted average shares outstanding and earnings per share amounts for the period ending October 1, 1993 and prior have been retroactively adjusted to reflect the November 1993 four-for-one stock split. (2) Includes Class B plus Class A Common Shares stated on a Class B Common Share Equivalent Basis. (3) Reflects conversion of Preferred Stock stated on a Class B Common Share Equivalent Basis for fiscal 1991. EX-12 3 EXHIBIT 12 EXHIBIT 12 ARAMARK CORPORATION AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (A) (In thousands)
Fiscal Year Ended --------------------------------------------------------------------------------- September 29, September 30, October 1, October 2, September 27, 1995 1994 1993 1992 1991 ------------ ------------- ---------- ---------- -------------- Income before income taxes and minority interest $167,577 $163,484 $143,265 $123,723 $117,899 Fixed charges, excluding capitalized interest 152,991 150,432 168,158 180,913 190,118 Other, net 1,502 (477) 1,222 1,231 (1,819) -------- -------- -------- -------- -------- Earnings, as adjusted $322,070 $313,439 $312,645 $305,867 $306,198 ======== ======== ======== ======== ======== Interest expense $111,605 $110,040 $128,367 $141,180 $145,727 Capitalized interest 79 27 47 47 14 Portion of operating lease rentals representative of interest factor 41,386 40,392 39,791 39,733 44,391 -------- -------- -------- -------- -------- Fixed charges $153,070 $150,459 $168,205 $180,960 $190,132 ======== ======== ======== ======== ======== Ratio of earnings to fixed charges 2.1x 2.1x 1.9x 1.7x 1.6x ==== ==== ==== ==== ====
(A) For the purpose of determining the ratio of earnings to fixed charges, earnings include pre-tax income plus fixed charges (excluding capitalized interest). Fixed charges consist of interest on all indebtedness (including capitalized interest) plus that portion of operating lease rentals representative of the interest factor (deemed to be one-third of operating lease rentals). EX-21 4 EXHIBIT 21 EXHIBIT 21 DIRECT AND INDIRECT DOMESTIC SUBSIDIARIES OF ARAMARK CORPORATION (Companies are incorporated in Delaware unless otherwise indicated) Advertising & Display Services, Inc. ARA RBI, Inc. ARAMARK Advertising Services, Ltd. (PA) ARAMARK Business Dining Services of Texas, Inc. (TX) ARAMARK Cleanroom Services, Inc. ARAMARK Consumer Discount Company (PA) ARAMARK Correctional Services, Inc. ARAMARK Delaware, Inc. ARAMARK Educational Group, Inc. ARAMARK Educational Services, Inc. ARAMARK Educational Services of Texas, Inc. (TX) ARAMARK Educational Services of Vermont Inc. (VT) ARAMARK Enterprises, Inc. (DC) ARAMARK Facilities Management, Inc. ARAMARK Facility Services, Inc. (MD) ARAMARK Food and Support Services, Inc. ARAMARK Health & Education Services, Inc. ARAMARK Healthcare Support Services, Inc. ARAMARK Healthcare Support Services of Puerto Rico, Inc. ARAMARK Healthcare Support Services of Texas, Inc. (TX) ARAMARK Healthcare Support Services of the Virgin Islands, Inc. ARAMARK/HMS Company ARAMARK Industrial Services, Inc. ARAMARK Kitty Hawk, Inc. (ID) ARAMARK Leisure Convention Services, Inc. (PA) ARAMARK Leisure Services Group, Inc. ARAMARK Leisure Services, Inc. ARAMARK Leisure Services/International Group, Inc. ARAMARK Leisure Services of Texas, Inc. (TX) ARAMARK Leisure Services of Wisconsin, Inc. (WI) ARAMARK Magazine & Book Services, Inc. ARAMARK Marketing Services Group, Inc. ARAMARK Mile High Enterprises, Inc. (CO) ARAMARK Pittsburgh Limited ARAMARK Pittsburgh Stadium Concessions, Inc. (PA) ARAMARK Refreshment Services, Inc. ARAMARK Senior Notes Company ARAMARK Services of Puerto Rico, Inc. ARAMARK Services, Inc. ARAMARK Summer Games 1996, Inc. ARAMARK SWV Corporation (WV) ARAMARK Uniform Services Group, Inc. ARAMARK Uniform Services, Inc. ARAMARK Uniform Services II, Inc. (MO) ARAMARK Uniform Services III, inc. (MO) ARAMARK Uniform Manufacturing Company ARAMARK Virginia Sky-Line Co., Inc. (VA) ARASERVE of Kansas, Inc. (KS) Children's World Learning Centers, Inc. CHS Primary Care, Inc. Coordinated Health Services, Inc. (PA) Correctional Medical Services, Inc. (MO) Correctional Medical Services of Delaware, Inc. Correctional Medical Services of Illinois, Inc. (IL) CWLC Brokerage, Inc. (CO) Davre's, Inc. Delsac VI, Inc. Delsac VII, Inc. Delsac VIII, Inc. Delsac X, Inc. (OH) Dragon Wagon, Inc. Fashion-Tex Services, Inc. (CA) Gall's, Inc. H. M. S. Delaware, Inc. H. M. S. Inc. (MA) Harry M. Stevens Holding Corp. (NY) Harry M. Stevens, Inc. (NY) Harry M. Stevens Maintenance Services, Inc. (MD) Harry M. Stevens of New Jersey (NJ) Harry M. Stevens, Inc. of Penn. (PA) Harry M. Stevens Services, Inc. (TX) Landy Textile Rental Services, Inc. (PA) Linen Supply Service, Inc. (IL) Main, Inc. (FL) Meader Distributing Co., Inc. (MN) Medical Claims Management Group, Inc. Mesa Verde Company (CO) Professional Anesthesia Services, Inc. Ranier News, Inc. (WA) Restin, Inc. (CA) Smithsub, Inc.(VA) Spectrum Emergency Care, Inc. (MO) Spectrum Emergency Care of Delaware, Inc. 2 Spectrum Emergency Care of New Mexico, Inc. (MO) Spectrum Healthcare of Delaware, Inc. Spectrum Healthcare Resources, Inc. Spectrum Healthcare Resources of Delaware, Inc. Spectrum Healthcare Services, Inc. Spectrum Primary Care, Inc. Spectrum Primary Care of Delaware, Inc. Stevens California Enterprises (CA) Stevens Venture Corp. Texas Stevens, Inc. (TX) WearGuard Corporation Woodhaven Foods, Inc. (PA) For certain subsidiaries, individuals are the record owners of director's qualifying shares and/or other shares held for regulatory purposes. 3 EX-23 5 EXHIBIT-23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated November 13, 1995 included in this Form 10-K for the fiscal year ended September 29, 1995 into the Company's previously filed Registration Statements on Form S-8, Registration Nos. 33-11818, 33-30879, 33-33329, 33-44002 and 33-57825, and on Form S-3, Registration No. 33-41357, 33-47564, 33-52587 and 33-64259. ARTHUR ANDERSEN LLP Philadelphia, Pennsylvania November 20, 1995 EX-23 6 EXHIBIT-23.2 EXHIBIT 23.2 CONSENT OF CHARTERED ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of ARAMARK Corporation and, where applicable, ARAMARK Services, Inc., on Form S-8, registration numbers 33-11818, 33-30879, 33-33329, 33-44002, and 33-57825, and on Form S-3,registration numbers 33-41357, 33-47564, 33-52587, and 33-64259, and in the related Prospectuses, of our report dated November 16, 1994, with respect to the consolidated financial statements of Versa Services Ltd. for the fifty-two week periods ended September 28, 1994 and September 29, 1993, such report included in the Annual Report on Form 10-K of ARAMARK Corporation for the year ended September 29, 1995 filed with the Securities and Exchange Commission. Mississauga, Canada, Ernst & Young November 20, 1995 Chartered Accountants EX-24 7 EXHIBIT-24 EXHIBIT 24 ALAN K. CAMPBELL POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Alan K. Campbell ------------------------- Alan K. Campbell EDWARD G. JORDAN POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Edward G. Jordan ------------------------- Edward G. Jordan JAMES E. PRESTON POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ James E. Preston ------------------------ James E. Preston JOSEPH NEUBAUER POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Joseph Neubauer -------------------------- Joseph Neubauer LEE F. DRISCOLL, JR. POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Lee F. Driscoll, Jr. ------------------------- Lee F. Driscoll, Jr. MITCHELL S. FROMSTEIN POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Mitchell S. Fromstein -------------------------- Mitchell S. Fromstein PHILIP L. DEFLIESE POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Philip L. Defliese ---------------------------- Philip L. Defliese REYNOLD C. MACDONALD POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Reynold C. MacDonald -------------------------- Reynold C. MacDonald ROBERT J. CALLANDER POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Robert J. Callander -------------------------- Robert J. Callander RONALD R. DAVENPORT POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Ronald R. Davenport ------------------------- Ronald R. Davenport THOMAS H. KEAN POWER OF ATTORNEY The undersigned director of ARAMARK Corporation, a Delaware corporation (the "Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W. Spector and Donald S. Morton, as his Attorney-in-Fact and hereby grants to each of them acting alone without the others, for him and in his name as such director, full power to: (a) sign the Annual Report on Form 10-K for the fiscal year ended September 29, 1995, and amendments thereto which the Company may file with the Securities and Exchange Commission pursuant to the requirements of Section 13 and/or Section 15(d) of the Securities Exchange Act of 1934; and (b) perform every other action which any such Attorney-in-fact may deem necessary or proper in connection with any of such reports or amendments (all as approved by the Company's principal executive, financial and accounting officers whose signatures to such report or amendment thereto shall be conclusive evidence of such approval). Dated: November 14, 1995 /s/ Thomas H. Kean --------------------------- Thomas H. Kean EX-27 8 FINANCIAL DATA SCHEDULE
5 Article 5 of Regulation S-X This schedule contains summary financial information extracted from the ARAMARK Corporation Consolidated Statement of Income for the 52 week period ended September 29, 1995 and Consolidated Balance Sheet as of September 29, 1995, and is qualified in its entirety by reference to such financial statements. 0000757523 ARAMARK 1,000 12-MOS SEP-29-1995 OCT-01-1994 SEP-29-1995 23,082 0 488,920 15,096 285,510 862,284 1,461,164 705,082 2,599,686 848,603 1,274,771 256 0 14,965 237,063 2,599,686 0 5,600,645 0 5,094,179 156,869 6,357 109,418 167,577 67,388 100,189 0 (6,686) 0 93,503 $1.88 $1.88
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