FILED PURSUANT TO RULE 424(B)(3)
File Number 333-144884
ARAMARK CORPORATION
SUPPLEMENT NO. 2 TO
MARKET MAKING PROSPECTUS DATED
AUGUST 7, 2007
THE DATE OF THIS SUPPLEMENT IS NOVEMBER 14, 2007
ON NOVEMBER 14, 2007, ARAMARK CORPORATION FILED THE ATTACHED CURRENT REPORT ON FORM 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 14, 2007
ARAMARK CORPORATION
(Exact name of registrant as specified in charter)
| Delaware | 001-04762 | 95-2051630 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1101 Market Street Philadelphia, Pennsylvania | 19107 | |
| (Address of Principal Executive Offices) | Zip Code |
Registrant’s telephone, including area code: 215-238-3000
N/A
(Former name and former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following information, including the financial reports and schedules attached as an exhibit to this Form 8-K (which are incorporated by reference herein), is furnished pursuant to Item 2.02. Results of Operations and Financial Condition.
The information contained in this Current Report, including exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information contained in this Current Report shall not be incorporated by reference into any registration statement or other document or filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
On November 14, 2007, ARAMARK Corporation will hold a conference call announcing its financial results for the quarter and fiscal year ended September 28, 2007. A copy of the financial reports and schedules that are the subject of the conference call are attached hereto as exhibit 99.1.
ITEM 9.01. Financial Statements and Exhibits
(d) Exhibits.
| Number | Description | Method of Filing | ||
| 99.1 | ARAMARK Corporation financial reports and schedules. | Furnished herewith |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ARAMARK CORPORATION | ||||
| Date: November 14, 2007 | By: | /s/ L. FREDERICK SUTHERLAND | ||
| Name: | L. Frederick Sutherland | |||
| Title: | Executive Vice President and | |||
| Chief Financial Officer | ||||
Index to Exhibits
| Number | Description | Method of Filing | ||
| 99.1 | ARAMARK Corporation financial reports and schedules. | Furnished herewith |
EXHIBIT 99.1
ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands)
| Successor | Predecessor | ||||||||
| Three Months Ended September 28, 2007 | Three Months Ended September 29, 2006 | ||||||||
Sales | $ | 3,148,724 | $ | 2,932,112 | |||||
Costs and Expenses: | |||||||||
Cost of services provided | 2,832,320 | 2,638,565 | |||||||
Depreciation and amortization | 121,028 | 88,284 | |||||||
Selling and general corporate expenses | 48,585 | 49,038 | |||||||
| 3,001,933 | 2,775,887 | ||||||||
Operating income | 146,791 | 156,225 | |||||||
Interest and other financing costs, net | 128,258 | 34,402 | |||||||
Income from continuing operations before income taxes and cumulative effect of change in accounting principle | 18,533 | 121,823 | |||||||
Provision for income taxes | 6,260 | 47,202 | |||||||
Income from continuing operations before cumulative effect of change in accounting principle | 12,273 | 74,621 | |||||||
Income from discontinued operations, net | — | 3,093 | |||||||
Cumulative effect of change in accounting principle, net | — | (3,351 | ) | ||||||
Net income | $ | 12,273 | $ | 74,363 | |||||
Notes:
The three month period of fiscal 2007 includes $1.1 million of merger-related expenses, $9.9 million of SFAS 123R stock-based compensation expense and $30.7 million of increased buyout-related intangibles amortization.
The three month period of fiscal 2006 includes $5.7 million of merger-related expenses and $5.0 million of SFAS 123R stock-based compensation expense.
ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands)
| Successor | Predecessor | ||||||||||||
Period from through | Period from through | Fiscal Year Ended | |||||||||||
Sales | $ | 8,438,448 | $ | 3,945,868 | $ | 11,621,173 | |||||||
Costs and Expenses: | |||||||||||||
Cost of services provided | 7,623,684 | 3,586,961 | 10,537,383 | ||||||||||
Depreciation and amortization | 322,480 | 116,438 | 339,337 | ||||||||||
Selling and general corporate expenses | 126,874 | 173,934 | 178,922 | ||||||||||
Goodwill impairment | — | — | 35,000 | ||||||||||
Other (income) expense | (21,177 | ) | — | — | |||||||||
| 8,051,861 | 3,877,333 | 11,090,642 | |||||||||||
Operating income | 386,587 | 68,535 | 530,531 | ||||||||||
Interest and other financing costs, net | 365,887 | 48,672 | 139,945 | ||||||||||
Income from continuing operations before income taxes and cumulative effect of change in accounting principle | 20,700 | 19,863 | 390,586 | ||||||||||
Provision for income taxes | 4,641 | 5,063 | 129,230 | ||||||||||
Income from continuing operations before cumulative effect of change in accounting principle | 16,059 | 14,800 | 261,356 | ||||||||||
Income from discontinued operations, net | — | — | 3,093 | ||||||||||
Cumulative effect of change in accounting principle, net | — | — | (3,351 | ) | |||||||||
Net income | $ | 16,059 | $ | 14,800 | $ | 261,098 | |||||||
Notes:
The Successor period from January 27, 2007 through September 28, 2007 includes $5.7 million of merger-related expenses, $27.5 million of SFAS 123R stock-based compensation expense, $82.3 million of increased buyout-related intangibles amortization, a $12.8 million charge for the cost of obtaining a bridge financing facility for the merger and a $3.8 million currency transaction gain. The results for this period also include a $21.2 million gain related to the sale of our ownership stake in SMG.
The Predecessor period from September 30, 2006 through January 26, 2007 includes $112.1 million of merger-related expenses (inclusive of a $77.1 million charge for stock-based compensation expense) and $7.0 million of SFAS 123R stock-based compensation expense.
The twelve month period of fiscal 2006 includes $6.4 million of merger-related expenses and $22.0 million of SFAS 123R stock-based compensation expense. The twelve month period of fiscal 2006 also includes a pre-tax charge of $45.9 million to reflect a goodwill impairment charge, inventory write-downs and severance accruals. The twelve month period of fiscal 2006 also includes a $14.9 million favorable income tax adjustment based on the settlement of certain open tax years.
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
(In Thousands)
| Successor | Predecessor | |||||||
| September 28, 2007 | September 29, 2006 | |||||||
| Assets | ||||||||
Current Assets | $ | 1,643,901 | $ | 1,526,844 | ||||
Property and Equipment, net | 1,205,121 | 1,196,830 | ||||||
Goodwill | 4,627,751 | 1,747,094 | ||||||
Other Intangible Assets | 2,375,571 | 297,986 | ||||||
Other Assets | 710,164 | 494,563 | ||||||
| $ | 10,562,508 | $ | 5,263,317 | |||||
| Liabilities and Shareholders’ Equity | ||||||||
Current Liabilities (1) | $ | 1,762,788 | $ | 1,586,696 | ||||
Long-Term Borrowings | 5,839,123 | 1,763,088 | ||||||
Other Liabilities | 1,362,248 | 391,941 | ||||||
Common Stock Subject to Repurchase | 179,677 | — | ||||||
Total Shareholders’ Equity | 1,418,672 | 1,521,592 | ||||||
| $ | 10,562,508 | $ | 5,263,317 | |||||
(1) - Includes $51.4 million and $40.2 million of current maturities of long-term borrowings as of September 28, 2007 and September 29, 2006, respectively.
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW DATA
(Unaudited)
(In Thousands)
| Successor | Predecessor | |||||||||||||
| Period from January 27, 2007 through September 28, 2007 | Period from September 30, 2006 through January 26, 2007 | Fiscal Year Ended | ||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | 16,059 | $ | 14,800 | $ | 261,098 | ||||||||
Less: Income from discontinued operations, net | — | — | (3,093 | ) | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | 322,480 | 116,438 | 339,337 | |||||||||||
Cumulative effect of change in accounting principle, net | — | — | 3,351 | |||||||||||
Income taxes deferred | (118,668 | ) | (11,640 | ) | (53,722 | ) | ||||||||
Goodwill impairment | — | — | 35,000 | |||||||||||
Stock-based compensation expense | 27,518 | 84,059 | 22,000 | |||||||||||
Gain from sale of investment | (21,177 | ) | — | — | ||||||||||
Changes in noncash working capital | 302,722 | (269,729 | ) | 7,989 | ||||||||||
Net proceeds from sale of receivables | 22,000 | — | — | |||||||||||
Other operating activities | 9,463 | (10,079 | ) | (26,163 | ) | |||||||||
Net cash provided by (used in) operating activities | 560,397 | (76,151 | ) | 585,797 | ||||||||||
Cash flows from investing activities: | ||||||||||||||
Net purchases of property and equipment and client contract investments | (235,791 | ) | (61,479 | ) | (270,734 | ) | ||||||||
Proceeds from sale of investment | 285,982 | — | — | |||||||||||
Acquisition of ARAMARK Corporation | (6,100,687 | ) | — | — | ||||||||||
Acquisitions and other investing activities | (55,084 | ) | (78,473 | ) | (125,783 | ) | ||||||||
Net cash used in investing activities | (6,105,580 | ) | (139,952 | ) | (396,517 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||
Net proceeds of additional long-term borrowings | 3,787,339 | 285,970 | (80,787 | ) | ||||||||||
Proceeds from issuance of common stock | — | 9,666 | 45,251 | |||||||||||
Capital contributions | 1,844,136 | — | — | |||||||||||
Repurchase of stock | (750 | ) | — | (113,460 | ) | |||||||||
Payment of dividend | — | (12,624 | ) | (50,512 | ) | |||||||||
Other financing activities | (138,508 | ) | 22,016 | 1,841 | ||||||||||
Net cash provided by (used in) financing activities | 5,492,217 | 305,028 | (197,667 | ) | ||||||||||
Increase (decrease) in cash and cash equivalents | $ | (52,966 | ) | $ | 88,925 | $ | (8,387 | ) | ||||||
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
| Successor | Predecessor | |||||||||
Three Months Ended September 28, 2007 | Three Months Ended September 29, 2006 | |||||||||
| Sales | ||||||||||
Food and Support Services - Domestic | $ | 2,153,016 | $ | 2,033,036 | ||||||
Food and Support Services - International | 578,789 | 499,459 | ||||||||
Uniform and Career Apparel | 416,919 | 399,617 | ||||||||
| $ | 3,148,724 | $ | 2,932,112 | |||||||
| Operating Income | ||||||||||
Food and Support Services - Domestic (1) | $ | 116,125 | $ | 129,718 | ||||||
Food and Support Services - International (2) | 21,061 | 15,989 | ||||||||
Uniform and Career Apparel (3) | 29,748 | 30,257 | ||||||||
Corporate (4) | (20,143 | ) | (19,739 | ) | ||||||
| $ | 146,791 | $ | 156,225 | |||||||
Notes:
The reporting segments have been modified such that the results of our Canadian food and support services operations are now included in the Food and Support Services - Domestic segment as opposed to previously being included in the Food and Support Services - International segment. Additionally, our previous Uniform Rental and Uniform Direct Marketing segments have been combined into a single Uniform and Career Apparel segment. All prior period results have been adjusted to conform to this new presentation.
| (1) | The three month period of fiscal 2007 includes $23.4 million of increased buyout-related intangibles amortization. |
| (2) | The three month period of fiscal 2007 includes $1.4 million of increased buyout-related intangibles amortization. |
| (3) | The three month period of fiscal 2007 includes $5.9 million of increased buyout-related intangibles amortization. |
| (4) | The three month period of fiscal 2007 includes $1.1 million of merger-related expenses and $9.9 million of SFAS 123R stock-based compensation expense. The three month period of fiscal 2006 includes $5.7 million of merger-related expenses and $5.0 million of SFAS 123R stock-based compensation expense. |
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
| Successor | Predecessor | |||||||||||||
| Period from January 27, 2007 through September 28, 2007 | Period from September 30, 2006 through January 26, 2007 | Fiscal Year Ended | ||||||||||||
| Sales | ||||||||||||||
Food and Support Services - Domestic | $ | 5,758,952 | $ | 2,674,435 | $ | 8,001,908 | ||||||||
Food and Support Services - International | 1,561,579 | 714,550 | 1,999,028 | |||||||||||
Uniform and Career Apparel | 1,117,917 | 556,883 | 1,620,237 | |||||||||||
| $ | 8,438,448 | $ | 3,945,868 | $ | 11,621,173 | |||||||||
| Operating Income | ||||||||||||||
Food and Support Services - Domestic (1) | $ | 267,457 | $ | 130,735 | $ | 433,855 | ||||||||
Food and Support Services - International (2) | 64,691 | 22,621 | 73,440 | |||||||||||
Uniform and Career Apparel (3) | 82,029 | 51,161 | 89,701 | |||||||||||
| 414,177 | 204,517 | 596,996 | ||||||||||||
Corporate (4) | (48,767 | ) | (135,982 | ) | (66,465 | ) | ||||||||
Other income (expense) (5) | 21,177 | — | — | |||||||||||
| $ | 386,587 | $ | 68,535 | $ | 530,531 | |||||||||
Notes:
The reporting segments have been modified such that the results of our Canadian food and support services operations are now included in the Food and Support Services - Domestic segment as opposed to previously being included in the Food and Support Services - International segment. Additionally, our previous Uniform Rental and Uniform Direct Marketing segments have been combined into a single Uniform and Career Apparel segment. All prior period results have been adjusted to conform to this new presentation.
| (1) | The Successor period from January 27, 2007 through September 28, 2007 includes $63.3 million of increased buyout-related intangibles amortization. |
| (2) | The Successor period from January 27, 2007 through September 28, 2007 includes $2.7 million of increased buyout-related intangibles amortization. |
| (3) | The Successor period from January 27, 2007 through September 28, 2007 includes $16.3 million of increased buyout-related intangibles amortization. The twelve month period of fiscal 2006 includes a pre-tax charge of $45.9 million to reflect a goodwill impairment charge, inventory write-downs and severance accruals. |
| (4) | The Successor period from January 27, 2007 through September 28, 2007 includes $5.7 million of merger-related expenses, $27.5 million of SFAS 123R stock-based compensation expense and a $3.8 million currency transaction gain. The Predecessor period from September 30, 2006 through January 26, 2007 includes $112.1 million of merger-related expenses (inclusive of a $77.1 million charge for stock-based compensation expense) and $7.0 million of SFAS 123R stock-based compensation expense. The twelve month period of fiscal 2006 includes $6.4 million of merger-related expenses and $22.0 million of SFAS 123R stock-based compensation expense. |
| (5) | The Successor period from January 27, 2007 through September 28, 2007 includes a $21.2 million gain related to the sale of our stake in SMG. |
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED CONSOLIDATED SALES GROWTH
(Unaudited)
(In thousands)
Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions, divestitures, the impact of currency translation and conforming the fiscal reporting period of a subsidiary to that of ARAMARK Corporation, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. Elimination of the currency translation effect provides constant currency comparisons without the distortion of currency rate fluctuations.
Although ARAMARK Corporation continued as the same legal entity after the going-private transaction (the “Transaction”), the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Three Months Ended | % Change | ||||||||||
| September 28, 2007 | September 29, 2006 | ||||||||||
ARAMARK Corporation Consolidated Sales (as reported) | $ | 3,148,724 | $ | 2,932,112 | 7 | % | |||||
Effect of Currency Translation | — | 42,818 | |||||||||
Effect of Acquisitions and Divestitures | (13,201 | ) | (10,272 | ) | |||||||
ARAMARK Corporation Consolidated Sales (as adjusted) | $ | 3,135,523 | $ | 2,964,658 | 6 | % | |||||
| Fiscal Year Ended | % Change | ||||||||||
| September 28, 2007 | September 29, 2006 | ||||||||||
ARAMARK Corporation Consolidated Sales (as reported) | $ | 12,384,316 | $ | 11,621,173 | 7 | % | |||||
Effect of Currency Translation | — | 152,801 | |||||||||
Effect of Acquisitions and Divestitures | (79,646 | ) | (54,662 | ) | |||||||
Conforming the Fiscal Reporting Period of a Subsidiary to that of ARAMARK Corporation | (25,223 | ) | — | ||||||||
ARAMARK Corporation Consolidated Sales (as adjusted) | $ | 12,279,447 | $ | 11,719,312 | 5 | % | |||||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED CONSOLIDATED OPERATING INCOME
(Unaudited)
(In thousands)
Management believes that presentation of operating income, adjusted to eliminate the effects of items related to the going-private transaction (the “Transaction”), the gain on the sale of the Company’s 50% interest in SMG, a venue management company, and the other items described below, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.
Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Three Months Ended | % Change | |||||||||
| September 28, 2007 | September 29, 2006 | |||||||||
ARAMARK Corporation Consolidated Operating Income (as reported) | $ | 146,791 | $ | 156,225 | ||||||
Transaction-Related Charges | 1,146 | 5,678 | ||||||||
Stock-Based Compensation under SFAS 123R | 9,940 | 5,158 | ||||||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 30,747 | — | ||||||||
Goodwill Impairment and Related Adjustments in the Uniform and Career Apparel Segment | — | 3,010 | ||||||||
ARAMARK Corporation Consolidated Operating Income (as adjusted) | $ | 188,624 | $ | 170,071 | 11 | % | ||||
| Fiscal Year Ended | % Change | |||||||||
| September 28, 2007 | September 29, 2006 | |||||||||
ARAMARK Corporation Consolidated Operating Income (as reported) | $ | 455,122 | $ | 530,531 | ||||||
Transaction-Related Charges | 117,825 | 6,428 | ||||||||
Gain on Sale of 50% Interest in SMG | (21,177 | ) | — | |||||||
Currency Transaction Gain | (3,804 | ) | — | |||||||
Stock-Based Compensation under SFAS 123R | 34,625 | 22,708 | ||||||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 82,332 | — | ||||||||
Goodwill Impairment and Related Adjustments in the Uniform and Career Apparel Segment | — | 45,947 | ||||||||
ARAMARK Corporation Consolidated Operating Income (as adjusted) | $ | 664,923 | $ | 605,614 | 10 | % | ||||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Management believes that presentation of operating income, adjusted to eliminate the effects of items related to the the going-private transaction (the “Transaction”), the gain on the sale of the Company’s 50% interest in SMG, a venue management company, and the other items described below, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. The table below is presented to illustrate the effect of these adjustments on operating income margin, which we define as operating income expressed as a percentage of sales.
Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Fiscal Year Ended | ||||||||
| September 28, 2007 | September 29, 2006 | |||||||
ARAMARK Corporation Consolidated Sales (as reported) | $ | 12,384,316 | $ | 11,621,173 | ||||
ARAMARK Corporation Consolidated Operating Income (as reported) | $ | 455,122 | $ | 530,531 | ||||
ARAMARK Corporation Consolidated Operating Income Margin (as reported) | 3.67 | % | 4.57 | % | ||||
ARAMARK Corporation Consolidated Sales (as reported) | $ | 12,384,316 | $ | 11,621,173 | ||||
ARAMARK Corporation Consolidated Operating Income (as reported) | $ | 455,122 | $ | 530,531 | ||||
Transaction-Related Charges | 117,825 | 6,428 | ||||||
Gain on Sale of 50% Interest in SMG | (21,177 | ) | — | |||||
Currency Transaction Gain | (3,804 | ) | — | |||||
Stock-Based Compensation under SFAS 123R | 34,625 | 22,708 | ||||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 82,332 | — | ||||||
Goodwill Impairment and Related Adjustments in the Uniform and Career Apparel Segment | — | 45,947 | ||||||
ARAMARK Corporation Consolidated Operating Income (as adjusted) | $ | 664,923 | $ | 605,614 | ||||
ARAMARK Corporation Consolidated Operating Income Margin (as adjusted) | 5.37 | % | 5.21 | % | ||||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED FOOD AND SUPPORT SERVICES - DOMESTIC SALES GROWTH
(Unaudited)
(In thousands)
Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions, divestitures and the impact of currency translation, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. Elimination of the currency translation effect provides constant currency comparisons without the distortion of currency rate fluctuations.
Although ARAMARK Corporation continued as the same legal entity after the going-private transaction (the “Transaction”), the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Three Months Ended | % Change | ||||||||||
| September 28, 2007 | September 29, 2006 | ||||||||||
Food and Support Services - Domestic Sales (as reported) | $ | 2,153,016 | $ | 2,033,036 | 6 | % | |||||
Effect of Currency Translation | — | 8,825 | |||||||||
Effect of Acquisitions and Divestitures | (2,161 | ) | (1,638 | ) | |||||||
Food and Support Services - Domestic Sales (as adjusted) | $ | 2,150,855 | $ | 2,040,223 | 5 | % | |||||
| Fiscal Year Ended | % Change | ||||||||||
| September 28, 2007 | September 29, 2006 | ||||||||||
Food and Support Services - Domestic Sales (as reported) | $ | 8,433,387 | $ | 8,001,908 | 5 | % | |||||
Effect of Currency Translation | — | 13,607 | |||||||||
Effect of Acquisitions and Divestitures | (29,366 | ) | (15,138 | ) | |||||||
Food and Support Services - Domestic Sales (as adjusted) | $ | 8,404,021 | $ | 8,000,377 | 5 | % | |||||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED FOOD AND SUPPORT SERVICES - DOMESTIC OPERATING INCOME
(Unaudited)
(In thousands)
Management believes that presentation of operating income, adjusted to eliminate the effects of the incremental amortization of acquisition-related customer relationship intangible assets resulting from the going-private transaction (the “Transaction”), provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.
Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Three Months Ended | % Change | ||||||||
| September 28, 2007 | September 29, 2006 | ||||||||
Food and Support Services - Domestic Operating Income (as reported) | $ | 116,125 | $ | 129,718 | |||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 23,410 | — | |||||||
Food and Support Services - Domestic Operating Income (as adjusted) | $ | 139,535 | $ | 129,718 | 8 | % | |||
| Fiscal Year Ended | % Change | ||||||||
| September 28, 2007 | September 29, 2006 | ||||||||
Food and Support Services - Domestic Operating Income (as reported) | $ | 398,192 | $ | 433,855 | |||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 63,324 | — | |||||||
Food and Support Services - Domestic Operating Income (as adjusted) | $ | 461,516 | $ | 433,855 | 6 | % | |||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED FOOD AND SUPPORT SERVICES - INTERNATIONAL SALES GROWTH
(Unaudited)
(In thousands)
Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions, divestitures, the impact of currency translation and conforming the fiscal reporting period of a subsidiary to that of ARAMARK Corporation, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. Elimination of the currency translation effect provides constant currency comparisons without the distortion of currency rate fluctuations.
Although ARAMARK Corporation continued as the same legal entity after the going-private transaction (the “Transaction”), the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Three Months Ended | % Change | ||||||||||
| September 28, 2007 | September 29, 2006 | ||||||||||
Food and Support Services - International Sales (as reported) | $ | 578,789 | $ | 499,459 | 16 | % | |||||
Effect of Currency Translation | — | 33,993 | |||||||||
Effect of Acquisitions and Divestitures | — | (631 | ) | ||||||||
Food and Support Services - International Sales (as adjusted) | $ | 578,789 | $ | 532,821 | 9 | % | |||||
| Fiscal Year Ended | % Change | ||||||||||
| September 28, 2007 | September 29, 2006 | ||||||||||
Food and Support Services - International Sales (as reported) | $ | 2,276,129 | $ | 1,999,028 | 14 | % | |||||
Effect of Currency Translation | — | 139,194 | |||||||||
Effect of Acquisitions and Divestitures | (12,383 | ) | (5,994 | ) | |||||||
Conforming the Fiscal Reporting Period of a Subsidiary to that of ARAMARK Corporation | (25,223 | ) | — | ||||||||
Food and Support Services - International Sales (as adjusted) | $ | 2,238,523 | $ | 2,132,228 | 5 | % | |||||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED FOOD AND SUPPORT SERVICES - INTERNATIONAL OPERATING INCOME
(Unaudited)
(In thousands)
Management believes that presentation of operating income, adjusted to eliminate the effects of the incremental amortization of acquisition-related customer relationship intangible assets resulting from the going-private transaction (the “Transaction”), provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.
Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Three Months Ended | |||||||||
| September 28, 2007 | September 29, 2006 | ||||||||
Food and Support Services - International Operating Income (as reported) | $ | 21,061 | $ | 15,989 | |||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 1,406 | — | |||||||
Food and Support Services - International Operating Income (as adjusted) | $ | 22,467 | $ | 15,989 | |||||
| Fiscal Year Ended | % Change | ||||||||
| September 28, 2007 | September 29, 2006 | ||||||||
Food and Support Services - International Operating Income (as reported) | $ | 87,312 | $ | 73,440 | |||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 2,705 | — | |||||||
Food and Support Services - International Operating Income (as adjusted) | $ | 90,017 | $ | 73,440 | 23 | % | |||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED UNIFORM AND CAREER APPAREL OPERATING INCOME
(Unaudited)
(In thousands)
Management believes that presentation of operating income, adjusted to eliminate the effects of the incremental amortization of acquisition-related customer relationship intangible assets resulting from the going-private transaction (the “Transaction”) and a charge for goodwill impairment and adjustments to asset and liability carrying values, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.
Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Three Months Ended | % Change | ||||||||
| September 28, 2007 | September 29, 2006 | ||||||||
Uniform and Career Apparel Operating Income (as reported) | $ | 29,748 | $ | 30,257 | |||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 5,931 | — | |||||||
Goodwill Impairment and Related Adjustments | — | 3,010 | |||||||
Uniform and Career Apparel Operating Income (as adjusted) | $ | 35,679 | $ | 33,267 | 7 | % | |||
| Fiscal Year Ended | % Change | ||||||||
| September 28, 2007 | September 29, 2006 | ||||||||
Uniform and Career Apparel Operating Income (as reported) | $ | 133,190 | $ | 89,701 | |||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 16,303 | — | |||||||
Goodwill Impairment and Related Adjustments | — | 45,947 | |||||||
Uniform and Career Apparel Operating Income (as adjusted) | $ | 149,493 | $ | 135,648 | 10 | % | |||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED UNIFORM AND CAREER APPAREL OPERATING INCOME MARGIN
(Unaudited)
(In thousands)
Management believes that presentation of operating income, adjusted to eliminate the effects of the incremental amortization of acquisition-related customer relationship intangible assets resulting from the going-private transaction (the “Transaction”) and a charge for goodwill impairment and adjustments to asset and liability carrying values, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. The table below is presented to illustrate the effect of this adjustment on operating income margin, which we define as operating income expressed as a percentage of sales.
| Three Months Ended | ||||||||
| September 28, 2007 | September 29, 2006 | |||||||
Uniform and Career Apparel Sales (as reported) | $ | 416,919 | $ | 399,617 | ||||
Uniform and Career Apparel Operating Income (as reported) | $ | 29,748 | $ | 30,257 | ||||
Uniform and Career Apparel Operating Income Margin (as reported) | 7.14 | % | 7.57 | % | ||||
Uniform and Career Apparel Sales (as reported) | $ | 416,919 | $ | 399,617 | ||||
Uniform and Career Apparel Operating Income (as reported) | $ | 29,748 | $ | 30,257 | ||||
Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction | 5,931 | — | ||||||
Goodwill Impairment and Related Adjustments | — | 3,010 | ||||||
Uniform and Career Apparel Operating Income (as adjusted) | $ | 35,679 | $ | 33,267 | ||||
Uniform and Career Apparel Operating Income Margin (as adjusted) | 8.56 | % | 8.32 | % | ||||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED CORPORATE EXPENSES
(Unaudited)
(In thousands)
Management believes that presentation of corporate expenses, adjusted to eliminate the effects of charges related to the going-private transaction (the “Transaction”), a currency transaction gain and stock-based compensation expense under SFAS 123R, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.
Although ARAMARK Corporation continued as the same legal entity after the going-private transaction (the “Transaction”), the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.
| Three Months Ended | ||||||||
| September 28, 2007 | September 29, 2006 | |||||||
Corporate Expenses (as reported) | $ | 20,143 | $ | 19,739 | ||||
Transaction-Related Charges | (1,146 | ) | (5,678 | ) | ||||
Stock-Based Compensation under SFAS 123R | (9,940 | ) | (5,158 | ) | ||||
Corporate Expenses (as adjusted) | $ | 9,057 | $ | 8,903 | ||||
| Fiscal Year Ended | ||||||||
| September 28, 2007 | September 29, 2006 | |||||||
Corporate Expenses (as reported) | $ | 184,749 | $ | 66,465 | ||||
Transaction-Related Charges | (117,825 | ) | (6,428 | ) | ||||
Currency Transaction Gain | 3,804 | — | ||||||
Stock-Based Compensation under SFAS 123R | (34,625 | ) | (22,708 | ) | ||||
Corporate Expenses (as adjusted) | $ | 36,103 | $ | 37,329 | ||||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED EBITDA
(Unaudited)
(In millions)
The following is a reconciliation of income from continuing operations before cumulative effect of change in accounting principle, which is a GAAP measure of our operating results, to Adjusted EBITDA as defined in our debt agreements. The terms and related calculations are defined in the Company’s senior secured credit agreement and indenture.
Twelve Months Ended September 28, 2007 | ||||
Income from continuing operations before cumulative effect of change in accounting principle | $ | 30.9 | ||
Interest and other financing costs, net | 414.6 | |||
Provision for income taxes | 9.7 | |||
Depreciation and amortization | 438.9 | |||
EBITDA | 894.1 | |||
Stock-based compensation expense | 111.6 | |||
Unusual or non-recurring gains and losses | (23.7 | ) | ||
Pro forma EBITDA for equity method investees | 1.8 | |||
Pro forma EBITDA for current year acquisitions | 1.4 | |||
Costs related to the merger transaction | 40.4 | |||
Other | 4.6 | |||
Adjusted EBITDA | $ | 1,030.2 | ||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED EBITDA
(Unaudited)
(In millions)
The following is a reconciliation of income from continuing operations before cumulative effect of change in accounting principle, which is a GAAP measure of our operating results, to Adjusted EBITDA as defined in our debt agreements. The terms and related calculations are defined in the Company’s senior secured credit agreement and indenture.
Twelve Months Ended June 29, 2007 | ||||
Income from continuing operations before cumulative effect of change in accounting principle | $ | 93.2 | ||
Interest and other financing costs, net | 320.7 | |||
Provision for income taxes | 50.7 | |||
Depreciation and amortization | 406.1 | |||
EBITDA | 870.7 | |||
Stock-based compensation expense | 107.1 | |||
Unusual or non-recurring gains and losses | (25.1 | ) | ||
Pro forma EBITDA for equity method investees | 0.2 | |||
Pro forma EBITDA for current year acquisitions | 0.7 | |||
Costs related to the merger transaction | 45.0 | |||
Other | 10.4 | |||
Adjusted EBITDA | $ | 1,009.0 | ||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ADJUSTED EBITDA
(Unaudited)
(In millions)
The following is a reconciliation of income from continuing operations before cumulative effect of change in accounting principle, which is a GAAP measure of our operating results, to Adjusted EBITDA as defined in our debt agreements. Our share of EBITDA from SMG, a venue management company, that was previously included in Adjusted EBITDA has been eliminated due to the sale of our 50% interest in SMG in June 2007. The terms and related calculations are defined in the Company’s senior secured credit agreement and indenture.
Twelve Months Ended September 29, 2006 | ||||
Income from continuing operations before cumulative effect of change in accounting principle | $ | 261.4 | ||
Interest and other financing costs, net | 139.9 | |||
Provision for income taxes | 129.2 | |||
Depreciation and amortization | 339.3 | |||
EBITDA | 869.8 | |||
Stock-based compensation expense | 22.8 | |||
Unusual or non-recurring gains and losses | 43.7 | |||
Pro forma EBITDA for equity method investees(1) | (1.7 | ) | ||
Pro forma EBITDA for current year acquisitions | 6.8 | |||
Costs related to the merger transaction | 6.4 | |||
Other | 13.8 | |||
Adjusted EBITDA | $ | 961.6 | ||
| ________________ | ||||
(1) Pro forma EBITDA for equity method investees as reported in the Company’s Current Report on Form 8-K filed on January 8, 2007 | $ | 20.0 | ||
Elimination of our share of EBITDA for the SMG equity method investment | (21.7 | ) | ||
| $ | (1.7 | ) | ||