-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ri1quwsM7Cz3FkWg/ZaerryS4MY35mGbVtC2YgNSBzABEYrYP65ecMWlqFWrxBqx Oeoobg3ZRP1+7Sc89XCnXQ== 0000840826-95-000017.txt : 19950424 0000840826-95-000017.hdr.sgml : 19950424 ACCESSION NUMBER: 0000840826-95-000017 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950420 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19950421 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAKA INTERNATIONAL INC CENTRAL INDEX KEY: 0000840826 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 043024178 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-17229 FILM NUMBER: 95530404 BUSINESS ADDRESS: STREET 1: ONE CORPORATE PL STREET 2: 55 FERNCROFT RD CITY: DANVERS STATE: MA ZIP: 01923 BUSINESS PHONE: 5087749115 MAIL ADDRESS: STREET 1: ONE CORPORATE PLACE 55 FERNCROFT RD CITY: DANVERS STATE: MA ZIP: 01923 8-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 April 20, 1995 (Date of Report) Date of earliest event reported: February 8, 1995 DAKA International, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 0-17229 04-3024178 (Commission File Number) (I.R.S. Employer Identification No.) One Corporate Place 55 Ferncroft Road Danvers, Massachusetts 01923 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (508) 774-9115 Item 2. Acquisition or Disposition of Assets On February 8, 1995, Daka, Inc. ("Daka"), a wholly-owned subsidiary of DAKA International, Inc. (the "Registrant"), acquired an 80.01% general partnership interest in a newly-formed limited partnership, Daka Restaurants, L.P. ("DRLP"), for cash of $10.1 million. Also on February 8, 1995, DRLP acquired substantially all of the assets and foodservice contracts comprising the education foodservice business (the "Business") of ServiceMaster Management Services L.P. ("SMMSLP") in exchange for a cash payment of $10.1 million, the assumption of $200 thousand of liabilities and the issuance of a 19.99% limited partnership interest in DRLP to SMMSLP. In addition, DRLP acquired certain working capital assets such as cash on hand, inventory, accounts receivable and prepaid expenses, and assumed certain liabilities related to the acquired contracts. The purchase price for the net working capital assets acquired of $10.2 million, subject to adjustment, will be paid to SMMSLP in cash on August 7, 1995. The Registrant has guaranteed the August 7, 1995 payment to be made by DRLP. Daka, as the sole general partner, will be responsible for providing day-to-day management for the 110 contracts acquired which, in 1994, generated managed volume of approximately $81 million. The cash contributed by Daka to DRLP in connection with the acquisition of its 80.01% general partner interest was provided by the Registrant using available borrowing capacity under the Registrant's $75 million Revolving Credit Agreement with the Chase Manhattan Bank, N.A. as agent for several banks. In connection with the acquisition by DRLP, the Registrant and SMMSLP entered into a Put and Call Agreement pursuant to which SMMSLP may require that the Registrant purchase SMMSLP's limited partnership interest in DRLP at any time during the ten year term of the partnership. The purchase price to be paid to SMMSLP upon exercise of its put right shall be $2.6 million plus SMMSLP's portion of any net undistributed earnings of DRLP. Pursuant to the Put and Call Agreement, the Registrant may require SMMSLP to sell its limited partnership interest to the Registrant any time on or after February 8, 2000. The purchase price to be paid to SMMSLP upon exercise by the Registrant of its call right shall be 120% of the sum of (i) $2.6 million, (ii) SMMSLP's portion of any net undistributed earnings of DRLP. Item 7. Financial Statements and Exhibits (A) Financial Statements of the Acquired Business: Report of Independent Public Accountants Statement of Net Assets - December 21, 1994 Statement of Revenues and Expenses and Change in Net Assets - Year Ended December 21, 1994 Statement of Cash Flows - Year Ended December 21, 1994 Notes to Financial Statements - Year Ended December 21, 1994 (B) Pro Forma Financial Information: Pro Forma Condensed Consolidated Balance Sheet - December 31, 1994 Pro Forma Condensed Consolidated Statement of Income - Six Months Ended December 31, 1994 Pro Forma Condensed Consolidated Statement of Income - Year Ended July 2, 1994 Notes to Pro Forma Condensed Consolidated Financial Information (C) Exhibits: *10.22 Business Transfer Agreement by and between Daka Restaurants, L.P. as Transferee and ServiceMaster Management Services L.P. as Transferor as of February 8, 1995.** *10.23 Limited Partnership Agreement of Daka Restaurants, L.P. as of February 8, 1995 *10.24 Put and Call Agreement by and between DAKA International, Inc. and ServiceMaster Management Services L.P. as of February 8, 1995. *Previously filed as Exhibits to Form 8-K dated February 23, 1995. **The schedules to exhibit 10.22 are not included herein. The Registrant will furnish to the Securities and Exchange Commission, supplementally, a copy of any omitted schedule upon the Securities and Exchange Commission's request. Item 7. (A) Financial Statements of the Acquired Business Financial Statements as of December 21, 1994 of the Education Food Service Business that Daka Restaurants, L.P. acquired from ServiceMaster Management Services, L.P. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of ServiceMaster Management Services L.P.: We have audited the accompanying statement of net assets of the Education Food Service business that Daka Restaurants, L.P. acquired from ServiceMaster Management Services, L.P. ("the Partnership") (as defined in Note 1) as of December 21, 1994, and the related statement of revenues and expenses and change in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets of the Education Food Service business that Daka Restaurants, L.P. acquired from ServiceMaster Management Services, L.P. as of December 21, 1994, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Chicago, Illinois March 30, 1995 EDUCATION FOOD SERVICE BUSINESS THAT DAKA RESTAURANTS, L.P. ACQUIRED FROM SERVICEMASTER MANAGEMENT SERVICES, L.P. STATEMENT OF NET ASSETS AS OF DECEMBER 21, 1994 (In thousands)
1994 ASSETS: Current assets: Cash $ 151 Accounts receivable, less allowance of $69 10,073 Inventories 1,645 Prepaid expenses and other current assets 197 --------- Total current assets 12,066 --------- Property and equipment: Equipment, net of depreciation of $1,098 1,323 Improvements of client facilities, net of amortization of $3,318 3,302 Intangible assets, net of amortization of $1,631 2,835 --------- Total assets $ 19,526 ========= LIABILITIES AND NET ASSETS: Current liabilities: Unearned meal plan revenues and client prepayments $ 76 Accrued commissions 306 Accrued expenses 811 --------- Total current liabilities 1,193 --------- Commitments and contingencies Net assets of business sold 18,333 --------- Total liabilities and net assets $ 19,526 =========
The accompanying Notes to Financial Statements are an integral part of these statements. EDUCATION FOOD SERVICE BUSINESS THAT DAKA RESTAURANTS, L.P. ACQUIRED FROM SERVICEMASTER MANAGEMENT SERVICES, L.P. STATEMENT OF REVENUES AND EXPENSES AND CHANGE IN NET ASSETS FOR THE YEAR ENDED DECEMBER 21, 1994 (In thousands)
1994 Revenues: $ 81,328 Costs and expenses: Cost of services rendered and products sold 74,773 Selling and administrative expenses 3,905 Depreciation and amortization 1,980 --------- Total costs and expenses 80,658 --------- Income $ 670 ========= Change in Net Assets: Beginning net assets 16,846 Income 670 Net transfers from ServiceMaster Management Services, L.P. 817 --------- Ending net assets $ 18,333 =========
The accompanying Notes to Financial Statements are an integral part of these statements. EDUCATION FOOD SERVICE BUSINESS THAT DAKA RESTAURANTS, L.P. ACQUIRED FROM SERVICEMASTER MANAGEMENT SERVICES, L.P. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 21, 1994 (In thousands)
1994 Cash flows from operating activities: Income $ 670 Adjustments to reconcile income to net cash provided from operating activities: Depreciation and amortization 1,980 Allowance for uncollectible accounts 161 Changes in assets and liabilities: Accounts receivable (2,207) Inventories 1,390 Prepaid expenses and other current assets 148 Accrued expenses and other liabilities 205 --------- Net cash provided from operating activities $ 2,347 --------- Cash flows from investing activities: Property additions (1,567) Improvement of client facilities (1,554) --------- Net cash used in investing activities $ (3,121) --------- Cash flows from financing activities: Net transfers from ServiceMaster Management Services L.P. 817 --------- Net cash provided from financing activities 817 --------- Cash increase during the year 43 Cash, beginning of year 108 --------- Cash, end of year $ 151 =========
The accompanying Notes to Financial Statements are an integral part of these statements. EDUCATION FOOD SERVICE BUSINESS THAT DAKA RESTAURANTS, L.P. ACQUIRED FROM SERVICEMASTER MANAGEMENT SERVICES, L.P. NOTES TO FINANCIAL STATEMENTS (In thousands) 1. Business and Basis of Presentation Business ServiceMaster Management Services L.P., ("SMMSLP"), a wholly owned subsidiary of ServiceMaster L.P., ("SMLP"), provides a variety of supportive management services to healthcare, education, and commercial customers, including the management of housekeeping, plant operations and maintenance, laundry and linen, grounds and landscaping, clinical equipment maintenance, energy management services and foodservice. On February 8, 1995, SMMSLP transferred certain of its education foodservice and business dining contracts and related assets and liabilities (the "Business") to Daka Restaurants, L.P. ("DRLP"), a newly formed limited partnership. This transfer, which did not constitute a complete transfer of SMMSLP's education foodservice assets and liabilities, was made in exchange for a cash payment of $10,100, the assumption of liabilities of $200, a deferred payment of approximately $10,200 to be paid by DRLP on August 8, 1995 and a 19.99% limited partnership interest in DRLP. Daka, Inc., ("Daka"), a wholly owned subsidiary of DAKA International, Inc., ("DAKA"), owns the remaining 80.01% of DRLP and, as the general partner, will be responsible for the day to day management of DRLP. DAKA has guaranteed DRLP's deferred payment to SMMSLP. In connection with the transfer of the Business to DRLP, SMMSLP and DAKA entered into a Put and Call Agreement whereby SMMSLP may require that DAKA purchase its limited partnership interest in DRLP at any time during the ten year term of the partnership for a purchase price of $2,600 plus any net undistributed earnings of DRLP. The provisions of the Put and Call Agreement also provide that DAKA may require SMMSLP to sell its limited partnership interest in DRLP to DAKA, any time after February 8, 2000 for a purchase price of 120% of the sum of $2,600 plus any net undistributed earnings of DRLP. Basis of Presentation The accompanying financial statements include the net assets, results of operations and cash flows related to the education foodservice business sold to DRLP. Net transfers from SMMSLP are presented as part of the net assets of the business sold. 2. Summary of Significant Accounting Policies Cash Management Under SMLP's centralized cash management system, SMMSLP's daily cash collections are swept into SMLP's centralized cash management account from which all operating expenses are funded by SMLP. Accordingly, SMMSLP's cash swept by SMLP as well as liabilities to be funded by SMLP have been excluded from the assets and liabilities of the Business included in the accompanying statement of net assets. The cash balance in the accompanying statement of net assets consists of petty cash located at the facilities transferred to DRLP. Accrued expenses include reserves for salaries and wages of $250, deposits from facilities of $165, and reserves for unvouchered accounts payable of $102 as well as other various items. Vouchered accounts payable are not included as these amounts are paid through SMLP's cash management account. Inventories Inventories, which consist primarily of food and supplies located at the customer locations, are valued at the lower of cost (determined using the first-in first-out basis) or market value. In addition, it also includes work in process related to facility design services performed by the Business. Work in process is recorded at cost, and consists of materials and labor related to the design and construction of foodservice facilities and components therein. Property and Equipment Foodservice equipment and other related equipment included in property and equipment are stated at cost and are depreciated using the straight-line method of depreciation over their estimated useful lives which range from five to seven years. Included in property and equipment are improvements made to client facilities, pursuant to the related foodservice contract. Such improvements are amortized over the term of the foodservice contract or the term specified in the foodservice contract. In the event that a facility contract is terminated, the unamortized portion is usually reimbursed by the facility. Intangible Assets Included in intangible assets is goodwill, which represents the purchase price associated with acquired businesses in excess of the fair value of the assets acquired. Intangible assets are amortized on a straight-line basis over forty years. Revenue Recognition Revenues consist of product sales and contract fees for services rendered. Retail sales made to guests of foodservice clients are reflected in the statements of revenues and expenses. When the Business principally uses people who are employees of the facility, the payroll costs for such employees are charged to the Business by the facility and are included in "Cost of services rendered and products sold" in the statement of revenues and expenses. Receivables from the facilities are reflected in the statement of net assets at the net amount due, after deducting from the contract price all amounts chargeable to the business. Income Taxes SMMSLP is a limited partnership, and as such is not currently subject to federal income taxes. Therefore, no provision has been included with respect to the business sold. 3. Commitments and Contingencies Rental expense for foodservice equipment for the fiscal year ended December 21, 1994 was $107. Future minimum annual rentals as of December 21, 1994 under noncancelable operating leases are $100 in 1995 and $0 thereafter. 4. Transaction with Parent Company Selling and administrative expenses include those costs incurred directly by the Business, such as building maintenance expenses, general office expenses, postage expenses, and computer system charges, as well as an allocation of other administrative and selling costs incurred by SMMSLP. Expenses allocated by SMMSLP totaled $933 for the fiscal year ended December 21, 1994. These expenses, which management believes were incremental as a result of the operations of the Business, have been allocated based on specific identification where possible. These amounts allocated to the Business would not necessarily represent the amounts that would have been incurred had the Business operated as an unaffiliated entity, yet management believes that this method results in a reasonable allocation of administrative and selling expenses to the Business. The accompanying statement of revenues and expenses does not include an allocation of income or expense related to investments or borrowings of SMMSLP. 5. Employee Benefits Certain of the Businesses' union employees are covered by multi-employer pension plans administered by the Business. Amounts contributed to the plans were not material in the fiscal year ended December 21, 1994. Certain employees of the Business are covered under benefit plans sponsored by SMMSLP. As a result of the sale, these employees will be treated as terminated employees from the SMMSLP plans. The employees are entitled to receive their contributions to the plan, including rollovers, as well as the vested portion of the employer's contribution as of the termination date. Item 7. (B) Pro Forma Financial Information DAKA INTERNATIONAL, INC. PROFORMA FINANCIAL INFORMATION Introduction: On February 8, 1995, Daka, Inc. ("Daka"), a wholly-owned subsidiary of DAKA International, Inc. (the "Registrant"), acquired an 80.01% general partnership interest in a newly-formed limited partnership, Daka Restaurants, L.P. ("DRLP"), for cash of $10.1 million. Also on February 8, 1995, DRLP acquired substantially all of the assets and foodservice contracts comprising the educational foodservice business (the "Business") of ServiceMaster Management Services L.P. ("SMMSLP") in exchange for a cash payment of $10.1 million, the assumption of $200 thousand of liabilities and a 19.99% limited partnership interest in DRLP. In addition, DRLP acquired certain working capital assets such as cash on hand, inventory, accounts receivable and prepaid expenses, and assumed certain liabilities related to the acquired contracts. The purchase price for the net working capital assets acquired of $10.2 million, subject to adjustment, will be paid to SMMSLP in cash on August 7, 1995. The Registrant has guaranteed the August 7, 1995 payment to be made by DRLP. The accompanying Proforma Condensed Consolidated Balance Sheet as of December 31, 1994 is intended to reflect the acquisition of the Business as if it had occurred on December 31, 1994. The accompanying Proforma Condensed Consolidated Statements of Income for the year ended July 2, 1994 and for the six months ended December 31, 1994 are intended to reflect the acquisition of the Business as if it had occurred at the beginning of each fiscal period presented. The accompanying Proforma Condensed Consolidated Financial Information does not purport to be indicative of the results of operations and financial conditions that would have been achieved if the acquisition of the Business had actually been consummated at the beginning of each fiscal period presented. In addition, the accompanying Proforma Condensed Consolidated Financial Information does not purport to be indicative of the results of operations which may be achieved in the future. The accompanying Proforma Condensed Consolidated Financial Information has been prepared using the assumptions set forth in the accompanying Notes to the Proforma Condensed Consolidated Financial Information and should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the Registrant's Annual Report on Form 10-K for the year ended July 2, 1994 and the unaudited Consolidated Financial Statements and Notes thereto contained in the Registrant's Quarterly Report on Form 10-Q for the period ended December 31, 1994. DAKA INTERNATIONAL, INC. PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET December 31, 1994 (In thousands) ServiceMaster DAKA Management International, Inc. Services L.P. December 31, December 21, Proforma Proforma 1994 1994 Adjustments Amounts ----------- ----------- ----------- ---------- (Unaudited) (Audited) (Unaudited) (Unaudited) ASSETS: Current assets: Cash and equivalents $ 6,096 $ 151 $ 6,247 Accounts and notes receivable, net 28,030 10,073 (f) $(500) 37,603 Inventories 8,524 1,645 10,169 Prepaid expenses and other current assets 3,163 197 3,360 -------- -------- -------- -------- Total current assets 45,813 12,066 (500) 57,379 -------- -------- -------- -------- Property and equipment, net 76,499 1,323 77,822 Investments in and advances to affiliates 173 173 Other assets, net 15,886 6,137 (b) 4,815 26,838 Deferred income taxes 184 184 -------- -------- -------- -------- $138,555 $ 19,526 $ 4,315 $162,396 LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 20,173 $ 20,173 Accrued expenses 14,051 $ 1,193 (f) $ 765 16,009 Deferred purchase price (a) 10,873 10,873 Current portion of long-term debt 564 564 Deferred income taxes 76 76 -------- -------- -------- -------- Total current liabilities 34,864 1,193 11,638 47,695 -------- -------- -------- -------- Long-term debt 54,579 (c) 10,085 64,664 Other long term liabilities 6,990 6,990 Minority interests 1,812 (d) 925 2,737 Stockholders' equity 40,310 18,333 (e)(18,333) 40,310 -------- -------- -------- -------- $138,555 $ 19,526 $ 4,315 $162,396 ======== ======== ======== ========
See Notes to Proforma Financial Information. DAKA INTERNATIONAL, INC. PROFORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME Six Months Ended December 31, 1994 (In thousands, except per share data) ServiceMaster DAKA Management Proforma Proforma International,Inc. Services L.P. Adjustments Amounts ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: Sales $137,455 $ 43,517 $180,972 Management fees and franchising income 4,712 4,712 -------- -------- -------- -------- 142,167 43,517 185,684 -------- -------- -------- -------- Costs and expenses: Cost of sales and operating expenses 115,117 39,906 155,023 Selling, general and administrative expense 13,697 1,953 15,650 Depreciation and amortization 4,839 1,107 (a)$ (464) 5,482 Interest expense 1,861 (b) 378 2,239 Interest income (104) (104) Minority interests (104) (c) 203 99 -------- -------- -------- -------- 135,306 42,966 117 178,389 -------- -------- -------- -------- Income before income taxes 6,861 551 (117) 7,295 Income tax expense 2,515 (d) 184 2,699 -------- -------- -------- -------- Net income 4,346 551 (301) 4,596 Preferred Stock dividends 400 400 -------- -------- -------- -------- Net income available to common stockholders $ 3,946 $ 551 $ (301) $ 4,196 ======== ======== ======== ======== Weighted average shares outstanding: Primary 4,020 4,020 Fully diluted 8,627 8,627 Earnings per share: Primary 0.98 1.04 Fully diluted 0.58 0.61
DAKA INTERNATIONAL, INC. PROFORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME Year Ended July 2, 1994 (In thousands, except per share data)
ServiceMaster ServiceMaster Management Management DAKA Services L.P. Services L.P. International,Inc. Year Ended 6 Months Ended Year Ended December 21, December 21, July 2, 1994 1994 1994 ------------ ------------ ------------ (Audited) (Audited) (Unaudited) Revenues: Sales $239,352 $ 81,328 $(43,517) Management fees and franchising income 10,443 -------- -------- -------- 249,795 81,328 (43,517) -------- -------- -------- Costs and expenses: Cost of sales and operating expenses 201,189 74,773 (39,906) Selling, general and administrative expense 27,304 3,905 (1,953) Depreciation and amortization 8,223 1,980 (1,107) Interest expense 2,738 Interest income (251) Minority interests 99 -------- -------- -------- 239,302 80,658 (42,966) -------- -------- -------- Income before income taxes 10,493 670 (551) Income tax expense 3,591 -------- -------- -------- Net income 6,902 670 (551) Preferred Stock dividends 800 -------- -------- -------- Net income available to common stockholders $ 6,102 $ 670 $ (551) ======== ======== ======== Weighted average shares outstanding: Primary 3,933 Fully diluted 8,579 Earnings per share: Primary 1.55 Fully diluted 0.96
ServiceMaster Management Services L.P. 6 Months Ended December 22, Proforma Proforma 1994 Adjustments Results ------------ ------------ ------------ (Unaudited) (Unaudited) (Unaudited) Revenues: Sales $ 36,772 $313,935 Management fees and franchising income 10,443 -------- -------- -------- 36,772 324,378 -------- -------- -------- Costs and expenses: Cost of sales and operating expenses 33,387 269,443 Selling, general and administrative expense 1,970 31,226 Depreciation and amortization 471 (a)$ (60) 9,507 Interest expense (b) 758 3,496 Interest income (251) Minority interests (c) 224 323 -------- -------- -------- 35,828 922 313,744 -------- -------- -------- Income before income taxes 944 (922) 10,634 Income tax expense (d) 60 3,651 -------- -------- -------- Net income 944 (982) 6,983 Preferred Stock dividends 800 -------- -------- -------- Net income available to common stockholders $ 944 $ (982) $ 6,183 ======== ======== ======== Weighted average shares outstanding: Primary 3,933 Fully diluted 8,579 Earnings per share: Primary 1.57 Fully diluted 0.97
DAKA INTERNATIONAL, INC. NOTES TO PROFORMA FINANCIAL INFORMATION (In thousands) The following describe the proforma adjustments made to the accompanying Proforma Condensed Consolidated Balance Sheet and Statements of Income. Proforma Condensed Consolidated Balance Sheet - December 31, 1994: (a) Represents deferred purchase price for net working capital assets acquired by DRLP computed as follows in accordance with Business Transfer Agreement: Current assets $ 12,066 Current liabilities (1,193) --------- Proforma adjustment $ 10,873 =========
The actual amount of the deferred purchase price as of February 8, 1995 is approximately $10.2 million. The difference between the deferred purchase price of $10.9 million, reflected in the accompanying Proforma Condensed Consolidated Balance Sheet, and the $10.2 million as of February 8, 1995 is primarily due to a decrease in accounts receivable as a result of normal collections. The deferred purchase price is payable to SMMSLP on August 7, 1995. (b) Represents the allocation of the purchase price of the Business, excluding the net working capital assets, computed as follows: Purchase price $ 10,250 Allocation of purchase price to fixed assets (1,323) Estimated costs of acquisition 1,100 Carryover of historical cost basis of SMMSLP 925 --------- Goodwill 10,952 Goodwill and other assets in historical financial statement (6,137) --------- Proforma adjustment $ 4,815 =========
(c) Represents borrowings under the Registrant's Revolving Credit Agreement used to fund its capital contribution to the partnership. The partnership used all of the cash contributed to fund the purchase price of the acquired Business. (d) Represents SMMSLP's 19.99% interest in the assets transferred to DRLP calculated as follows: SMMSLP's Historical cost basis: Net book value of equipment 1,323 Net book value of improvement of client facilities 3,302 --------- 4,625 SMMSLP's interest in assets transferred 19.99% --------- Proforma adjustment 925 =========
(e) Represents the elimination of the historical equity of the Business acquired. (f) This proforma adjustment is comprised of the following: Estimated costs of acquisition $ 1,100 Less amount allocated to allowance for bad debt (500) Additional liability assumed 165 --------- Proforma adjustment $ 765 =========
Proforma Condensed Consolidated Statement of Income - Six Months Ended December 31, 1994: (a) Adjustment to eliminate historical depreciation and amortization and to record depreciation and amortization on new asset values and goodwill. This adjustment is comprised of the following: Eliminate historical depreciation and amortization $ (1,107) Depreciation and amortization associated with: Goodwill 10 year life 548 Fixed assets 7 year average life 95 --------- Proforma adjustment $ (464) =========
(b) To reflect interest expense on $10.1 million of borrowings at 7.5%, (the Registrant's weighted average borrowing rate) for the six month period. (c) To reflect partners 19.99% share of income generated by the Business after considering the proforma adjustment for depreciation and amortization. The proforma adjustment for interest expense is not considered in computing minority interests since it is an expense of the general partner, not the partnership. (d) To record income taxes on the historical income before income taxes of the Business and proforma adjustments at the federal statutory rate of 35% plus state income taxes at the Registrant's effective rate of 7.2%. Proforma Condensed Consolidated Statement of Income - Year Ended July 2,1994: (a) Adjustment to eliminate historical depreciation and amortization and to record depreciation and amortization on new asset values and goodwill. This adjustment is comprised of the following: Eliminate historical depreciation and amortization $ (1,344) Depreciation and amortization associated with: Goodwill 10 year life 1,095 Fixed assets 7 year average life 189 --------- Proforma adjustment $ (60) =========
(b) To reflect interest expense on $10.1 million of borrowings at 7.5%, (the Registrant's weighted average borrowing rate) for the year ended July 2, 1994. (c) To reflect partners 19.99% share of income generated by the Business after considering the proforma adjustment for depreciation and amortization. The proforma adjustment for interest expense is not considered in computing minority interests since it is an expense of the general partner, not the partnership. (d) To record income taxes on the historical income before income taxes of the Business and proforma adjustments at the federal statutory rate of 35% plus state income taxes at the Registrant's effective rate of 7.2%. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized DAKA International, Inc. Date: April 20, 1995 By: /s/Michael A. Woodhouse ------------------------ Michael A. Woodhouse Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Principal Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----