Aramark Services 10Q 2013 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________

FORM 10-Q

___________________________________________


x	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 28, 2013


¨	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 001-04762

___________________________________________

ARAMARK CORPORATION

(Exact name of registrant as specified in its charter)

___________________________________________



Delaware	95-2051630
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
ARAMARK Tower 1101 Market Street Philadelphia, Pennsylvania	19107
(Address of principal executive offices)	(Zip Code)

(215) 238-3000

(Registrant’s telephone number, including area code)

___________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common stock outstanding as of July 26, 2013: 1,000 shares

Table of Contents

PART I—FINANCIAL INFORMATION


ITEM 1.	FINANCIAL STATEMENTS

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands, Except Share Amounts)



	June 28, 2013			September 28, 2012
ASSETS
Current Assets:
Cash and cash equivalents	$	97,802		$	136,689
Receivables	1,330,120			1,315,997
Inventories, at lower of cost or market	516,494			508,416
Prepayments and other current assets	221,825			197,272
Total current assets	2,166,241			2,158,374
Property and Equipment, net	958,208			1,003,377
Goodwill	4,602,266			4,729,474
Other Intangible Assets	1,450,850			1,595,149
Other Assets	949,549			989,948
	$	10,127,114		$	10,476,322
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	71,139		$	37,462
Accounts payable	699,567			873,345
Accrued expenses and other current liabilities	1,127,340			1,231,705
Total current liabilities	1,898,046			2,142,512
Long-Term Borrowings	6,145,917			5,375,819
Deferred Income Taxes and Other Noncurrent Liabilities	1,090,061			1,207,585
Common Stock Subject to Repurchase and Other	163,775			177,926
Equity:
ARAMARK Shareholder’s Equity:
Common stock, par value $.01 (authorized: 1,000 shares; issued and outstanding: 1,000 shares)	—			—
Capital surplus	1,441,308			1,451,241
(Accumulated deficit) / Earnings retained for use in the business	(518,134		)	161,137
Accumulated other comprehensive loss	(93,859		)	(73,745		)
Total ARAMARK shareholder’s equity	829,315			1,538,633
Noncontrolling interest	—			33,847
Total equity	829,315			1,572,480
	$	10,127,114		$	10,476,322

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands)



	Three Months Ended		Three Months Ended
	June 28, 2013		June 29, 2012
Sales	$	3,490,030	$	3,336,094
Costs and Expenses:
Cost of services provided	3,178,092		3,036,522
Depreciation and amortization	135,808		132,388
Selling and general corporate expenses	52,506		51,895
	3,366,406		3,220,805
Operating income	123,624		115,289
Interest and Other Financing Costs, net	80,917		87,807
Income Before Income Taxes	42,707		27,482
Provision for Income Taxes	14,715		4,260
Net income	27,992		23,222
Less: Net income attributable to noncontrolling interests	226		640
Net income attributable to ARAMARK shareholder	$	27,766	$	22,582

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands)



	Nine Months Ended		Nine Months Ended
	June 28, 2013		June 29, 2012
Sales	$	10,429,682	$	10,104,266
Costs and Expenses:
Cost of services provided	9,481,859		9,140,888
Depreciation and amortization	404,512		395,968
Selling and general corporate expenses	163,382		151,531
	10,049,753		9,688,387
Operating income	379,929		415,879
Interest and Other Financing Costs, net	290,364		315,154
Income from Continuing Operations Before Income Taxes	89,565		100,725
Provision for Income Taxes	25,876		27,432
Income from Continuing Operations	63,689		73,293
Income from Discontinued Operations, net of tax	—		297
Net income	63,689		73,590
Less: Net income attributable to noncontrolling interests	804		2,444
Net income attributable to ARAMARK shareholder	$	62,885	$	71,146

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In Thousands)



	Three Months Ended			Three Months Ended
	June 28, 2013			June 29, 2012
Net income	$	27,992		$	23,222
Other comprehensive income (loss), net of tax:
Pension plan adjustments	(571		)	386
Foreign currency translation adjustments	(7,197		)	(9,939		)
Fair value of cash flow hedges	3,797			701
Other comprehensive income (loss), net of tax	(3,971		)	(8,852		)
Comprehensive income	24,021			14,370
Less: Net income attributable to noncontrolling interests	226			640
Comprehensive income attributable to ARAMARK shareholder	$	23,795		$	13,730



	Nine Months Ended			Nine Months Ended
	June 28, 2013			June 29, 2012
Net income	$	63,689		$	73,590
Other comprehensive income (loss), net of tax:
Pension plan adjustments	(1,701		)	1,158
Foreign currency translation adjustments	(31,153		)	(15,171		)
Fair value of cash flow hedges	12,740			34,920
Other comprehensive income (loss), net of tax	(20,114		)	20,907
Comprehensive income	43,575			94,497
Less: Net income attributable to noncontrolling interests	804			2,444
Comprehensive income attributable to ARAMARK shareholder	$	42,771		$	92,053

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)



	Nine Months Ended			Nine Months Ended
	June 28, 2013			June 29, 2012
Cash flows from operating activities:
Net income	$	63,689		$	73,590
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	404,512			395,968
Income taxes deferred	(46,454		)	(44,734		)
Share-based compensation expense	12,328			12,539
Changes in noncash working capital	(287,132		)	(281,594		)
Other operating activities	37,849			34,639
Net cash provided by operating activities	184,792			190,408
Cash flows from investing activities:
Purchases of property and equipment, client contract investments and other	(263,591		)	(226,725		)
Disposals of property and equipment	8,740			8,094
Proceeds from divestitures	919			4,457
Acquisition of certain businesses, net of cash acquired	(22,566		)	(151,317		)
Other investing activities	24,425			2,124
Net cash used in investing activities	(252,073		)	(363,367		)
Cash flows from financing activities:
Proceeds from long-term borrowings	3,223,127			391,797
Payments of long-term borrowings	(2,448,041		)	(279,079		)
Net change in funding under the Receivables Facility	36,200			27,395
Dividends/advances paid to Parent Company	(657,853		)	(53,720		)
Distribution in connection with spin-off of Seamless Holdings	(47,352		)	—
Proceeds from issuance of Parent Company common stock	4,882			5,805
Repurchase of Parent Company common stock	(38,419		)	(20,762		)
Other financing activities	(44,150		)	(10,826		)
Net cash provided by financing activities	28,394			60,610
Decrease in cash and cash equivalents	(38,887		)	(112,349		)
Cash and cash equivalents, beginning of period	136,689			213,323
Cash and cash equivalents, end of period	$	97,802		$	100,974

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

FOR THE NINE MONTHS ENDED JUNE 28, 2013

(Unaudited)

(In Thousands)



	Total			Total ARAMARK Shareholder’s Equity			Common Stock		Capital Surplus			(Accumulated Deficit) / Earnings Retained for Use in the Business			Accumulated Other Comprehensive Loss			Noncontrolling Interest
Balance, September 28, 2012	$	1,572,480		$	1,538,633		$	—	$	1,451,241		$	161,137		$	(73,745	)	$	33,847
Net income	63,101			62,885								62,885						216
Other comprehensive income (loss)	(20,114		)	(20,114		)									(20,114		)
Capital contributions from issuance of Parent Company common stock	20,437			20,437					20,437
Compensation expense related to stock incentive plans	12,328			12,328					12,328
Tax benefits related to stock incentive plans	3,566			3,566					3,566
Decrease in Parent Company common stock subject to repurchase obligation, net	13,903			13,903					13,903
Purchases of Parent Company common stock	(60,167		)	(60,167		)			(60,167		)
Dividends to Parent Company, net	(638,046		)	(638,046		)						(638,046		)
Distribution of Seamless Holdings	(138,173		)	(104,110		)						(104,110		)				(34,063		)
Balance, June 28, 2013	$	829,315		$	829,315		$	—	$	1,441,308		$	(518,134	)	$	(93,859	)	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

FOR THE NINE MONTHS ENDED JUNE 29, 2012

(Unaudited)

(In Thousands)



	Total			Total ARAMARK Shareholder’s Equity			Common Stock		Capital Surplus			Earnings Retained for Use in the Business			Accumulated Other Comprehensive Loss			Noncontrolling Interest
Balance, September 30, 2011	$	1,476,963		$	1,445,184		$	—	$	1,476,061		$	46,468		$	(77,345	)	$	31,779
Net income	72,682			71,146								71,146						1,536
Other comprehensive income	20,907			20,907											20,907
Capital contributions from issuance of Parent Company common stock	25,296			25,296					25,296
Compensation expense related to stock incentive plans	12,539			12,539					12,539
Tax benefits related to stock incentive plans	4,466			4,466					4,466
Increase in Parent Company common stock subject to repurchase obligation, net	(13,337		)	(13,337		)			(13,337		)
Purchases of Parent Company common stock	(51,296		)	(51,296		)			(51,296		)
Advance to Parent Company, net	(28,435		)	(28,435		)						(28,435		)
Distributions to noncontrolling interest	(457		)															(457		)
Balance, June 29, 2012	$	1,519,328		$	1,486,470		$	—	$	1,453,729		$	89,179		$	(56,438	)	$	32,858

The accompanying notes are an integral part of these condensed consolidated financial statements.

ARAMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(1)	BASIS OF PRESENTATION:

ARAMARK Corporation (the “Company” or “ARAMARK”) was acquired on January 26, 2007 through a merger transaction with RMK Acquisition Corporation, a Delaware corporation controlled by investment funds associated with GS Capital Partners, CCMP Capital Advisors, J.P. Morgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC (collectively, the “Sponsors”), Joseph Neubauer, Chairman and former Chief Executive Officer of ARAMARK, and certain other members of the Company’s management. The acquisition was accomplished through the merger of RMK Acquisition Corporation with and into ARAMARK Corporation with ARAMARK Corporation being the surviving company (the “Transaction”).

The Company is a wholly-owned subsidiary of ARAMARK Intermediate Holdco Corporation ("ARAMARK Intermediate"), which is wholly-owned by ARAMARK Holdings Corporation ("ARAMARK Holdings" or the “Parent Company”). ARAMARK Holdings, ARAMARK Intermediate and RMK Acquisition Corporation were formed for the purpose of facilitating the Transaction. The Company’s operating results are included in the consolidated federal tax returns filed by the Parent Company. Any realized tax effects or credits attributable to the Company’s operations accrue to the Company based upon the Parent Company’s procedures for allocating the costs and benefits to its subsidiaries. The income tax provisions in the accompanying Condensed Consolidated Statements of Income approximate the provisions that would be required if the Company were a separate taxpayer. All income tax payments are made by the Company on behalf of the Parent Company (see Note 16).

On March 30, 2007, ARAMARK Corporation was merged with and into ARAMARK Services, Inc. with ARAMARK Services, Inc. being the surviving corporation. In connection with the consummation of the merger, ARAMARK Services, Inc. changed its name to ARAMARK Corporation.

The condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries in which a controlling financial interest is maintained. For those material consolidated subsidiaries in which the Company’s ownership is less than 100%, the outside stockholders’ interests are shown as noncontrolling interest in the accompanying Condensed Consolidated Balance Sheets. All significant intercompany transactions and accounts have been eliminated. The condensed consolidated financial statements exclude the accounts of ARAMARK Holdings and ARAMARK Intermediate, but do reflect the Sponsors’ investment cost basis allocated to the assets and liabilities acquired on January 26, 2007 and the Parent Company’s common stock subject to repurchase. See Note 16 for further discussion of ARAMARK Holdings.

The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited consolidated financial statements, and the notes to those statements, included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2012. The condensed consolidated balance sheet as of September 28, 2012 was derived from audited financial statements which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of the Company, the statements include all adjustments, which are of a normal, recurring nature, required for a fair presentation for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for a full year, due to the seasonality of some of the Company’s business activities and the possibility of changes in general economic conditions. Certain amounts in the prior period’s financial statements have been reclassified to conform with the current year classifications. The reclassifications had no effect on net income.


(2)	ACQUISITIONS AND DIVESTITURES:

Fiscal 2013

Spin-off of Seamless Holdings Corporation

On October 29, 2012, the Company completed the spin-off of its majority interest in Seamless North America, LLC ("Seamless") to the shareholders of ARAMARK Holdings.

In the spin-off, the Company distributed all of the issued and outstanding shares of the common stock of Seamless Holdings Corporation (“Seamless Holdings”), an entity formed for the purpose of completing the spin-off and whose assets primarily consist of the Company's former interest in Seamless, to its parent company and sole stockholder, ARAMARK Intermediate. Thereafter, ARAMARK Intermediate distributed such shares to ARAMARK Holdings, its parent company and sole stockholder, who then distributed all of the shares of Seamless Holdings on a pro rata basis to the holders of ARAMARK Holdings common stock as of October 26, 2012, the record date, through a tax-free stock dividend. Each ARAMARK Holdings shareholder received one share of Seamless Holdings common stock for each share of ARAMARK Holdings common stock held as of the record date.

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Until October 29, 2012, Seamless Holdings and its subsidiaries were part of the Company and its assets, liabilities, results of operations, and cash flows are included in the amounts reported in these condensed consolidated financial statements until that date.

Following the spin-off, Seamless Holdings is an independent company and ARAMARK retains no ownership interest in Seamless Holdings or Seamless. However, one member of the Seamless Holdings board of directors also serves on the Company’s board of directors.

In connection with the completion of the spin-off, Seamless Holdings, ARAMARK, ARAMARK Intermediate and the Parent Company entered into a Distribution Agreement, Seamless Holdings and the Parent Company entered into a Tax Matters Agreement and ARAMARK entered into a Transition Services Agreement with each of Seamless Holdings and Seamless. These agreements, as well as several additional ancillary agreements, govern the future relationships among the various parties involved in the spin-off. None of the agreements are expected to have a material impact on the Company’s financial position, results of operations, or liquidity.

As a result of this continuing involvement, the Company does not present Seamless Holdings and its subsidiaries as a discontinued operation. The Company's proforma results of operations for fiscal 2013 and fiscal 2012 would not have been materially different than reported assuming the spin-off and related transactions had occurred at the beginning of the prior year period.

Fiscal 2012

Acquisitions

On October 3, 2011, ARAMARK Refreshment Services, LLC, a subsidiary of the Company, purchased all of the outstanding shares of capital stock of Van Houtte USA Holdings, Inc. (doing business as “Filterfresh”), a provider of office coffee services in the United States, for cash consideration of approximately $145.2 million. The acquisition was financed with cash on hand and borrowings under the Company’s revolving credit facility. Under the terms of the purchase agreement, if a certain significant customer relationship was not maintained within a specific timeframe, the Company was entitled to a refund of a portion of the purchase price. During the second quarter of fiscal 2012, the Company received a refund of approximately $7.4 million related to the termination of this customer relationship.

As part of the acquisition of Filterfresh, the Company acquired a subsidiary with a redeemable noncontrolling interest. The Company classifies redeemable noncontrolling interests outside of shareholder’s equity in the Condensed Consolidated Balance Sheets in “Common Stock Subject to Repurchase and Other.” As of June 28, 2013 and September 28, 2012, the redeemable noncontrolling interest related to the subsidiary was approximately $10.3 million and $10.4 million, respectively. For the three and nine months ended June 28, 2013, net income attributable to redeemable noncontrolling interest was $0.2 million and $0.6 million, respectively. Distributions to redeemable noncontrolling interest was $0.7 million for the nine months ended June 28, 2013. For the three and nine months ended June 29, 2012, net income attributable to redeemable noncontrolling interest was $0.3 million and $0.9 million, respectively. Distributions to redeemable noncontrolling interest was $0.7 million for the nine months ended June 29, 2012.

For the three and nine months ended June 29, 2012, $25.3 million and $85.4 million of sales, respectively, and ($0.3) million and ($2.0) million of net loss, respectively, which included transition and integration costs, were recorded in the Condensed Consolidated Statements of Income related to the acquisition.


(3)	SUPPLEMENTAL FINANCIAL INFORMATION:

The Company made interest payments of approximately $249.7 million and $263.7 million and income tax payments of approximately $65.0 million and $69.6 million during the nine months ended June 28, 2013 and June 29, 2012, respectively.

As of June 28, 2013 and September 28, 2012, “Accumulated other comprehensive loss” consists of pension plan adjustments (net of tax) of approximately ($52.0) million and ($50.3) million, respectively, foreign currency translation adjustment (net of tax) of approximately ($10.7) million and $20.4 million, respectively, fair value of cash flow hedges (net of tax) of approximately ($20.4) million and ($33.1) million, respectively, and share of equity investees' accumulated other comprehensive loss (net of tax) of approximately ($10.8) million and ($10.8) million, respectively.

For the three and nine months ended June 28, 2013 and June 29, 2012, the tax effects on comprehensive income (loss) were as follows (in thousands):

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



	Three Months Ended			Three Months Ended
	June 28, 2013			June 29, 2012
Foreign currency translation adjustments	$	4,658		$	(2,364	)
Fair value of cash flow hedges	(2,651		)	(153		)
Pension plan adjustments	398			(207		)

	Nine Months Ended			Nine Months Ended
	June 28, 2013			June 29, 2012
Foreign currency translation adjustments	$	11,679		$	3,438
Fair value of cash flow hedges	(8,187		)	(21,654		)
Pension plan adjustments	1,009			(629		)

(4) SEVERANCE AND ASSET WRITE-DOWNS:

During the second quarter of fiscal 2013, the Company initiated a series of actions and further developed its plans to drive efficiency through the consolidation and centralization of its operations. As a result, the Company recorded charges during the second quarter of fiscal 2013 of approximately $40.8 million for severance and related costs. During the third quarter of fiscal 2013, the Company enhanced the benefits under its severance policy which resulted in an additional charge of approximately $6.6 million related to planned terminations initiated during the second quarter. In addition, during the second quarter of fiscal 2013, the Company recorded charges of approximately $11.7 million for goodwill impairments (see Note 5) and other asset write-downs of approximately $11.4 million primarily related to the write-offs of certain client contractual investments.


(5)	GOODWILL AND OTHER INTANGIBLE ASSETS:

Goodwill represents the excess of the fair value of consideration paid for an acquired entity over the fair value of assets acquired and liabilities assumed in a business combination. Goodwill is not amortized and is subject to an impairment test that the Company conducts annually or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists, using discounted cash flows.

During the second quarter of fiscal 2013, the Company recorded an impairment charge of approximately $11.7 million in the Food and Support Services—International segment to write-off all of the goodwill associated with its reporting units in Spain and Korea. The impairment charge is included in "Cost of services provided" in the Condensed Consolidated Statement of Income. The impairment charge resulted from continued economic weakness in Spain and recent reductions in government support for the Healthcare and Education sectors, two of the primary sectors of the Spanish reporting unit. In Korea, the Company undertook a recent strategic analysis of the Korean reporting unit, which prompted the impairment analysis in the second quarter. The completion of the step two impairment analyses confirmed that goodwill for both reporting units was impaired. The Company estimated these nonrecurring fair value measurements using a discounted cash flow valuation methodology, a Level 3 measurement, which included making assumptions about the future profitability and cash flows of the business.

Changes in total goodwill during the nine months ended June 28, 2013 follow (in thousands):



Segment	September 28, 2012		Acquisitions and Divestitures		Impairment			Translation and Other			June 28, 2013
Food and Support Services—North America	$	3,701,137	$	7,398	$	—		$	(113,477	)	$	3,595,058
Food and Support Services—International	454,552		—		(11,698		)	(9,431		)	433,423
Uniform and Career Apparel	573,785		—		—			—			573,785
	$	4,729,474	$	7,398	$	(11,698	)	$	(122,908	)	$	4,602,266

The amounts for acquisitions during fiscal 2013 may be revised upon final determination of the purchase price allocations. The other adjustments to the Food and Support Services—North America segment primarily represents the goodwill impact of the Seamless Holdings spin-off (see Note 2).

Other intangible assets consist of (in thousands):

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



	June 28, 2013							September 28, 2012
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Customer relationship assets	$	1,884,733	$	(1,189,340	)	$	695,393	$	1,897,933	$	(1,064,492	)	$	833,441
Trade names	757,040		(1,583		)	755,457		763,127		(1,419		)	761,708
	$	2,641,773	$	(1,190,923	)	$	1,450,850	$	2,661,060	$	(1,065,911	)	$	1,595,149

Acquisition-related intangible assets consist of customer relationship assets, the ARAMARK trade name and other trade names. Customer relationship assets are being amortized principally on a straight-line basis over the expected period of benefit, 5 to 24 years, with a weighted average life of approximately 11 years. The ARAMARK trade name is an indefinite lived intangible asset and is not amortizable but is evaluated for impairment at least annually.

Amortization of intangible assets for the nine months ended June 28, 2013 and June 29, 2012 was approximately $143.9 million and $149.1 million, respectively.


(6)	BORROWINGS:

Long-term borrowings at June 28, 2013 and September 28, 2012 are summarized in the following table (in thousands):



	June 28, 2013			September 28, 2012
Senior secured revolving credit facility	$	142,024		$	—
Senior secured term loan facility, due January 2014	—			650,913
Senior secured term loan facility, due July 2016	3,285,350			2,637,920
Senior secured term loan facility, due September 2019	1,393,310			—
8.50% senior notes, due February 2015	—			1,280,000
Senior floating rate notes, due February 2015	—			500,000
5.75% senior notes, due March 2020	1,000,000			—
Receivables Facility, due January 2015	300,000			263,800
Capital leases	54,248			49,584
Other	42,124			31,064
	6,217,056			5,413,281
Less—current portion	(71,139		)	(37,462		)
	$	6,145,917		$	5,375,819

The Transaction

In connection with the completion of the Transaction on January 26, 2007, the Company (i) entered into a $4.15 billion senior secured term loan facility with an original maturity date of January 26, 2014, (ii) issued $1.28 billion of 8.50% senior notes due 2015 (the "Fixed Rate Notes") and $500 million of senior floating rate notes due 2015 (the "Floating Rate Notes"), (iii) entered into a $600 million senior secured revolving credit facility with an original six-year maturity, and (iv) entered into a synthetic letter of credit facility for up to $250 million (which was reduced to $200 million in January 2008).

In the second quarter of fiscal 2013, the Company completed a refinancing, repurchasing all of the outstanding notes of both ARAMARK Corporation as well as the Parent Company Notes issued at ARAMARK Holdings (see Note 16). The Company refinanced that debt with new term loans and new notes as described herein.

Senior Secured Credit Agreement

Senior Secured Term Loan Facilities

Amendment Agreement No. 4

On February 22, 2013, the Company entered into Amendment Agreement No. 4 (“Amendment Agreement No. 4”) to the Amended and Restated Credit Agreement dated as of March 26, 2010 (as amended, the “Credit Agreement”) which provided for, among other things, additional term loans and the extension of a portion of the revolving credit facility. On March 7, 2013, the Company borrowed $1,400 million of term loans pursuant to Amendment Agreement No. 4. The new term loans were borrowed by the Company with an original issue discount of 0.50%. The term loans under Amendment Agreement No. 4 mature on September 7, 2019. These term loans have a Eurocurrency rate margin, with respect to the U.S. dollar denominated,

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Canadian dollar denominated and Euro denominated term loans, of 3.00% and base rate margin on U.S. dollar denominated base rate term loans of 2.00%. Eurrocurrency rate borrowings have a minimum LIBOR rate of 1.00% and base rate borrowings have a minimum rate of 2.00%.

Amendment Agreement No. 4 also increases the applicable margins for the Company's existing term loans and the fee rates on letter of credit deposits with respect to the synthetic letter of credit facility. From and after the effective date of Amendment Agreement No. 4, (A) the Eurocurrency rate margin and letter of credit fees with respect to the U.S. dollar denominated, Canadian dollar denominated and Euro denominated term loans and extended maturity letter of credit deposits increased 0.25% to 3.50%, (B) the margin on U.S. dollar denominated base rate term loans increased 0.25% to 2.50% and (C) the margins on yen denominated term loans and sterling denominated term loans increased 0.125% to 3.50%.

Amendment Agreement No. 4 also provides for an increase in the maximum Consolidated Secured Debt Ratio to reflect the additional secured indebtedness associated with the new term loan borrowings and provides certain additional flexibility with respect to the restricted payments covenant. As of June 28, 2013, we were in compliance with the Consolidated Secured Debt Ratio.

During the second quarter of fiscal 2013, approximately $14.0 million of third-party costs directly attributable to the term loans borrowed pursuant to Amendment Agreement No. 4 were capitalized and are included in “Other Assets” in the Condensed Consolidated Balance Sheets, of which approximately $6.2 million were paid to entities affiliated with GS Capital Partners and J.P. Morgan Partners.

Amendment Agreement No. 3

During the first quarter of fiscal 2013, approximately $11.6 million of third-party costs directly attributable to Amendment Agreement No. 3 were expensed and are included in “Interest and Other Financing Costs, net” in the Condensed Consolidated Statements of Income. Approximately $4.6 million of the third-party costs were paid to entities affiliated with GS Capital Partners and J.P. Morgan Partners.

Amendment Agreement No. 2

During the second quarter of fiscal 2012, approximately $7.5 million of third-party costs directly attributable to Amendment Agreement No. 2 were expensed and are included in “Interest and Other Financing Costs, net” in the Condensed Consolidated Statements of Income. Approximately $4.5 million of the third-party costs were paid to entities affiliated with GS Capital Partners and J.P. Morgan Partners.

Senior Secured Revolving Credit Facility

Amendment Agreement No. 4

Amendment Agreement No. 4 provides for the extension, from January 26, 2015 to January 26, 2017, of the maturity of $500 million in revolving lender commitments of the existing $550 million revolving credit facility. The maturity date of the extended revolving credit facilities would accelerate to April 26, 2016 if term loans under the Credit Agreement that are due on July 26, 2016 remain outstanding on April 26, 2016. Third party costs directly attributable to the revolving credit facility of approximately $2.8 million were capitalized and are included in “Other Assets” in the Condensed Consolidated Balance Sheets, of which approximately $0.6 million were paid to entities affiliated with GS Capital Partners and J.P. Morgan Partners.

Amendment Agreement No. 5

On March 22, 2013, the Company entered into Amendment Agreement No. 5 (“Amendment Agreement No. 5”) to the Credit Agreement. Amendment Agreement No. 5 increased the aggregate revolving loan commitments made available to the Company under the Credit Agreement by $55.0 million to $605.0 million.

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5.75% Senior Notes due 2020

On March 7, 2013, the Company issued $1,000 million of 5.75% Senior Notes due 2020 (the “Senior Notes”) pursuant to a new indenture, dated as of March 7, 2013 (the “Indenture”), entered into by the Company. The Senior Notes were issued at par. The Senior Notes were sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain persons in offshore transactions in reliance on Regulation S, under the Securities Act. The Senior Notes are unsecured obligations of the Company. The Senior Notes rank equal in right of payment to all of the Company's existing and future senior debt and senior in right of payment to all of the Company's existing and future debt that is expressly subordinated in right of payment to the Senior Notes. The Senior Notes are guaranteed on a senior, unsecured basis by substantially all of the domestic subsidiaries of the Company. Interest on the Senior Notes is payable on March 15 and September 15 of each year, commencing on September 15, 2013. The Senior Notes and guarantees are structurally subordinated to all of the liabilities of any of the Company's subsidiaries that do not guarantee the Senior Notes. The Senior Notes mature on March 15, 2020.

Prior to March 15, 2015, the Company may redeem up to 40% of the Senior Notes with the proceeds from one or more qualified equity offerings at a price equal to 105.750% of the principal amount of the Senior Notes redeemed, plus accrued and unpaid interest and additional interest, if any, to the date of redemption. In addition, at any time prior to March 15, 2015, the Company may redeem all or a portion of the Senior Notes at a price equal to 100% of the principal amount of the Senior Notes redeemed plus a “make whole” premium and accrued and unpaid interest and additional interest, if any, to the date of redemption. Thereafter, the Company has the option to redeem all or a portion of the Senior Notes at any time at the redemption prices set forth in the Indenture.

In the event of certain types of changes of control, the holders of the Senior Notes may require the Company to purchase for cash all or a portion of their Senior Notes at a purchase price equal to 101% of the principal amount of such Senior Notes, plus accrued and unpaid interest, if any, to the date of repurchase.

The Indenture contains covenants limiting the Company's ability and the ability of its restricted subsidiaries to: incur additional indebtedness or issue certain preferred shares; pay dividends and make certain distributions, investments and other restricted payments; create certain liens; sell assets; enter into transactions with affiliates; limit the ability of restricted subsidiaries to make payments to the Company; enter into sale and leaseback transactions; merge, consolidate, sell or otherwise dispose of all or substantially all of the Company's assets; and designate the Company's subsidiaries as unrestricted subsidiaries. The Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Senior Notes to become or to be declared due and payable.

During the second quarter of fiscal 2013, approximately $13.8 million of third-party costs directly attributable to the Senior Notes were capitalized and are included in “Other Assets” in the Condensed Consolidated Balance Sheets. Approximately $7.3 million of the third-party costs were paid to entities affiliated with GS Capital Partners and J.P. Morgan Partners.

Registration Rights Agreement

On March 7, 2013, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) among the guarantors named therein and Goldman, Sachs & Co. and J.P. Morgan Securities LLC, as representatives of the several initial purchasers, with respect to the Senior Notes. In the Registration Rights Agreement, the Company agreed to, among other things, (1) file an exchange offer registration statement pursuant to which the Company will offer exchange notes with terms identical in all material respects to, and evidencing the same indebtedness as, the Senior Notes, in exchange for such notes (but which exchange notes will not contain terms with respect to transfer restrictions or provide for the additional interest described below); and (2) use commercially reasonable efforts to cause the exchange offer registration statement to be declared effective under the Securities Act. The Company has agreed to use commercially reasonable efforts to cause the exchange offer to be consummated or, if required, to have one or more shelf registration statements declared effective, within 390 days after the issue date of the Senior Notes.

If the Company fails to satisfy this obligation (a “registration default”), the annual interest rate on the Senior Notes will increase by 0.25%. The annual interest rate on the Senior Notes will increase by an additional 0.25% for each subsequent 90-day period during which the registration default continues, up to a maximum additional interest rate of 1.00% per year over the applicable interest rate in the Indenture. If the registration default is corrected, the applicable interest rate on the Senior Notes will revert to the original level.

Repurchase of 8.50% Senior Notes due 2015 and Senior Floating Rate Notes due 2015

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Tender Offer

In February 2013, the Company and the Parent Company commenced a tender offer to purchase for cash any and all of the Parent Company Notes (see Note 16) and the Fixed Rate Notes and the Floating Rate Notes (collectively, the "Notes"). On March 7, 2013, the Company used a portion of the aggregate proceeds of the Senior Notes offering and the borrowings under the new term loans pursuant to Amendment Agreement No. 4 to purchase all Notes tendered by March 6, 2013, the early tender date. On March 7, 2013, the Company issued redemption notices for the portions of the Company's Fixed Rate Notes and Floating Rate Notes that remained outstanding, including accrued and unpaid interest, as of March 7, 2013, which provides for the redemption of such notes on April 6, 2013 at prices of 100% of the principal amount thereof.

On March 7, 2013, the Company deposited sufficient funds in trust with the trustee under the indenture governing the Fixed Rate Notes and Floating Rate Notes in full and complete satisfaction and discharge of the remaining aggregate principal amount of such notes, including accrued and unpaid interest (the “Satisfaction and Discharge”). As a result of the Satisfaction and Discharge, the trustee became the primary obligor for payment of the remaining Fixed Rate Notes and Floating Rate Notes on or about the redemption notice date of March 7, 2013. The Company had a contingent obligation for payment of the Fixed Rate Notes and Floating Rate Notes were the trustee to default on its payment obligations. The Company believed the risk of such default was remote and therefore did not record a related liability. The remaining Fixed Rate Notes and Floating Rate Notes were redeemed by the trustee on April 6, 2013.

During the second quarter of fiscal 2013, in connection with the tender offer and Satisfaction and Discharge, the Company recorded $20.5 million of charges to "Interest and Other Financing Costs, net” in the Condensed Consolidated Statements of Income, consisting of $3.5 million of third party costs for the tender offer premium and $17.0 million of non-cash charges for the write-off of deferred financing costs.


(7)	DERIVATIVE INSTRUMENTS:

The Company enters into contractual derivative arrangements to manage changes in market conditions related to interest on debt obligations, foreign currency exposures and exposure to fluctuating natural gas, gasoline and diesel fuel prices. Derivative instruments utilized during the period include interest rate swap agreements, foreign currency forward exchange contracts, and gasoline and diesel fuel agreements. All derivative instruments are recognized as either assets or liabilities on the balance sheet at fair value at the end of each quarter. The counterparties to the Company’s contractual derivative agreements are all major international financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company continually monitors its positions and the credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties. For designated hedging relationships, the Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method of measuring ineffectiveness. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items.

Cash Flow Hedges

The Company previously entered into $1.0 billion of interest rate swap agreements, fixing the rate on a like amount of variable rate borrowings. During the third quarter of fiscal 2013, the Company entered into $300 million of forward starting interest rate swap agreements to hedge the cash flow risk of variability in interest payments on variable rate borrowings. The Company entered into an additional $600 million of forward starting interest rate swap agreements to hedge the cash flow risk of variability in interest payments on variable rate borrowings subsequent to June 28, 2013. Changes in the fair value of a derivative that is designated as and meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive income (loss) and reclassified into earnings as the underlying hedged item affects earnings. As of June 28, 2013 and September 28, 2012, approximately ($16.5) million and ($28.1) million of unrealized net of tax losses related to the interest rate swaps were included in “Accumulated other comprehensive loss,” respectively. The hedge ineffectiveness for these cash flow hedging instruments during the nine months ended June 28, 2013 and June 29, 2012 was not material.

The Company previously entered into a $169.6 million amortizing cross currency swap to mitigate the risk of variability in principal and interest payments on the Canadian subsidiary’s variable rate debt denominated in U.S. dollars. The agreement fixes the rate on the variable rate borrowings and mitigates changes in the Canadian dollar/U.S. dollar exchange rate. In March 2012, the cross currency swap was amended to match the terms of the Canadian subsidiary's debt that was impacted by Amendment Agreement No. 2. A portion of the swap was amended and extended to match the terms related to its variable rate debt denominated in U.S. dollars that was extended under Amendment Agreement No. 2. The Company has designated the

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

amended swap as cash flow hedges. During the nine months ended June 28, 2013 and June 29, 2012, approximately $4.7 million and ($1.1) million of unrealized net of tax gains (losses) related to the swap were added to “Accumulated other comprehensive loss,” respectively. Approximately ($5.5) million and $4.6 million were reclassified to offset net translation gains (losses) on the foreign currency denominated debt during the nine months ended June 28, 2013 and June 29, 2012, respectively. As of June 28, 2013 and September 28, 2012, unrealized net of tax losses of approximately ($3.9) million and ($5.0) million related to the cross currency swap were included in “Accumulated other comprehensive loss,” respectively. The hedge ineffectiveness for this cash flow hedging instrument during the nine months ended June 28, 2013 was not material. As a result of amending the cross currency swap, the hedge ineffectiveness for the nine months ended June 29, 2012 was approximately $3.0 million, which was recorded in "Interest and Other Financing Costs, net" in the Condensed Consolidated Statements of Income.

As a result of Amendment Agreement No. 3, the Company de-designated the cross currency swap that hedged the Canadian subsidiary's term loan with a maturity date of January 26, 2014. Prior to Amendment Agreement No. 3, these contracts met the required criteria to be designated as cash flow hedging instruments. As a result, approximately $3.2 million was reclassified from “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets to “Interest and Other Financing Costs, net” in the Condensed Consolidated Statements of Income during the nine months ended June 28, 2013.

The Company previously entered into a series of pay fixed/receive floating natural gas hedge agreements based on a NYMEX price in order to limit its exposure to price increases for natural gas, primarily in the Uniform and Career Apparel segment. As of June 28, 2013, the Company has no contracts outstanding. There was no hedge ineffectiveness for the nine months ended June 29, 2012.

The following table summarizes the net of tax effect of our derivatives designated as cash flow hedging instruments on Comprehensive Income (in thousands):



	Three Months Ended			Three Months Ended
	June 28, 2013			June 29, 2012
Interest rate swap agreements	$	5,297		$	(576	)
Cross currency swap agreements	(1,500		)	858
Natural gas hedge agreements	—			101
	$	3,797		$	383

	Nine Months Ended			Nine Months Ended
	June 28, 2013			June 29, 2012
Interest rate swap agreements	$	11,595		$	28,725
Cross currency swap agreements	1,145			5,336
Natural gas hedge agreements	—			40
	$	12,740		$	34,101

Derivatives not Designated in Hedging Relationships

The Company elected to de-designate the cross currency swaps that were hedged against the Canadian subsidiary's term loan with a maturity date of January 26, 2014 due to the repayment of the term loan as a result of Amendment Agreement No. 3. As a result, on a prospective basis, changes in the fair value of these swaps are recorded in earnings. For the three and nine months ended June 28, 2013, the Company recorded a pretax gain (loss) of approximately $2.4 million and $4.6 million for the change in the fair value of these swaps in “Interest and Other Financing Costs, net” in the Condensed Consolidated Statements of Income, respectively. The changes in the fair value of these swaps are expected to offset future currency transaction gains and losses on a U.S. dollar denominated intercompany loan between the Company and its Canadian subsidiary.

The Company entered into a series of pay fixed/receive floating gasoline and diesel fuel agreements based on the Department of Energy weekly retail on-highway index in order to limit its exposure to price fluctuations for gasoline and diesel fuel. As of June 28, 2013, the Company has contracts for approximately 1.3 million gallons outstanding for fiscal 2013 and fiscal 2014. During the nine months ended June 28, 2013, the Company entered into contracts totaling approximately 0.8 million gallons. The Company does not record its gasoline and diesel fuel agreements as hedges for accounting purposes. As such, changes in the fair value of these contracts will be recorded in earnings. During the nine months ended June 28, 2013, the Company recorded a pretax gain (loss) of ($0.6) million in the Condensed Consolidated Statements of Income for the change in the fair value on these agreements. During the nine months ended June 29, 2012, the Company recorded a pretax gain (loss) of ($0.9)

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

million in the Condensed Consolidated Statements of Income for the change in the fair value on these agreements, respectively.

As of June 28, 2013, the Company had foreign currency forward exchange contracts outstanding with notional amounts of €88.4 million and £44.2 million to mitigate the risk of changes in foreign currency exchange rates on intercompany loans to certain international subsidiaries. Gains and losses on these foreign currency exchange contracts are recognized in income currently as the contracts were not designated as hedging instruments, substantially offsetting currency transaction gains and losses on the intercompany loans.

The following table summarizes the location and fair value, using Level 2 inputs, of the Company’s derivatives designated and not designated as hedging instruments in our Condensed Consolidated Balance Sheets (in thousands):



	Balance Sheet Location	June 28, 2013		September 28, 2012
ASSETS
Designated as hedging instruments:
Interest rate swap agreements	Other Assets	$	1,149	$	—
		1,149		—

Not designated as hedging instruments:
Foreign currency forward exchange contracts	Prepayments	1,186		251
Gasoline and diesel fuel agreements	Prepayments	144		696
		1,330		947
		$	2,479	$	947

LIABILITIES
Designated as hedging instruments:
Interest rate swap agreements	Accrued Expenses	$	6,739	$	—
Interest rate swap agreements	Other Noncurrent Liabilities	21,729		46,484
Cross currency swap agreements	Other Noncurrent Liabilities	14,541		45,406
		43,009		91,890

Not designated as hedging instruments:
Cross currency swap agreements	Accrued Expenses	12,096		—
		$	55,105	$	91,890

The following table summarizes the location of (gain) loss reclassified from “Accumulated other comprehensive loss” into earnings for derivatives designated as hedging instruments and the location of (gain) loss from the derivatives not designated as hedging instruments in the Condensed Consolidated Statements of Income (in thousands):

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



		Three Months Ended			Three Months Ended
	Account	June 28, 2013			June 29, 2012
Designated as hedging instruments:
Interest rate swap agreements	Interest Expense	$	5,740		$	5,508
Cross currency swap agreements	Interest Expense	250			1,741
Natural gas hedge agreements	Cost of services provided	—			147
		$	5,990		$	7,396

Not designated as hedging instruments:
Cross currency swap agreements	Interest Expense	$	(2,429	)	$	—
Gasoline and diesel fuel agreements	Cost of services provided	250			2,419
Foreign currency forward exchange contracts	Interest Expense	1,764			(3,886		)
		$	(415	)	$	(1,467	)

		Nine Months Ended			Nine Months Ended
	Account	June 28, 2013			June 29, 2012
Designated as hedging instruments:
Interest rate swap agreements	Interest Expense	$	16,950		$	60,966
Cross currency swap agreements	Interest Expense	3,256			5,671
Natural gas hedge agreements	Cost of services provided	—			276
		$	20,206		$	66,913

Not designated as hedging instruments:
Cross currency swap agreements	Interest Expense	$	(1,408	)	$	—
Gasoline and diesel fuel agreements	Cost of services provided	119			1,416
Foreign currency forward exchange contracts	Interest Expense	(4,278		)	(2,146		)
		$	(5,567	)	$	(730	)

At June 28, 2013, the net of tax loss expected to be reclassified from “Accumulated other comprehensive loss” into earnings over the next twelve months based on current market rates is approximately $13.3 million.


(8)	CAPITAL STOCK:

Pursuant to the Stockholders Agreement of the Parent Company, upon termination of employment from the Company or one of its subsidiaries, members of the Company’s management (other than Mr. Neubauer) who hold shares of common stock of the Parent Company can cause the Parent Company to repurchase all of their initial investment shares (as defined) or shares acquired as a result of the exercise of Installment Stock Purchase Opportunities at appraised fair market value. Generally, payment for shares repurchased could be, at the Parent Company’s option, in cash or installment notes, which would be effectively subordinated to all indebtedness of the Company. The amount of this potential repurchase obligation has been classified outside of shareholder’s equity, which reflects the Parent Company’s investment basis and capital structure in the Company’s condensed consolidated financial statements. The amount of common stock subject to repurchase as of June 28, 2013 and September 28, 2012 was $153.6 million and $167.5 million, which is based on approximately 9.5 million and 11.0 million shares of common stock of the Parent Company valued at $16.21 and $15.17 per share, respectively. The fair value of the common stock subject to repurchase is calculated using discounted cash flow techniques and comparable public company trading multiples. Inputs used in the discounted cash flow analysis include the weighted average cost of capital, long-term revenue growth rates, long-term EBIT margins and residual growth rates. Inputs used in the comparable public company trading multiples include the last-twelve-months' EBITDA multiple, forward EBITDA multiples and control premium. During the nine months ended June 28, 2013 and June 29, 2012, approximately $60.2 million and $51.3 million of common stock of the Parent Company was repurchased, respectively, and has been reflected in the Company’s condensed consolidated financial statements. The Stockholders Agreement, the senior secured credit agreement and the indenture governing the Senior Notes contain limitations on the amount the Company can expend for such share repurchases.

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(9)	SHARE-BASED COMPENSATION:

The Parent Company adopted the Fourth Amended and Restated ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan (the "Amended Stock Incentive Plan") on June 20, 2013. The Amended Stock Incentive Plan now provides for the grant of restricted stock units and restricted stock in addition to stock options. The Parent Company also approved a new form of non-qualified stock option award agreement which provides for 100% time-based vesting. Options granted under earlier forms of non-qualified discretionary stock option agreements provided for 50% time-based vesting and 50% performance-based vesting. Finally, the Parent Company offered to holders of outstanding installment stock purchase opportunities ("ISPOs") the ability to exchange such awards for restricted stock and non-qualified stock options, which were granted pursuant to a restricted stock award agreement and a replacement stock option award agreement, respectively, with the Parent Company. On June 20, 2013, the Compensation and Human Resources Committee of the Parent Company approved a new restricted stock award agreement and non-qualified replacement stock option award agreement to be used in connection with the exchange. Subsequent to June 28, 2013, as a result of the exchange, outstanding ISPOs were converted into approximately 0.2 million of restricted stock awards and approximately 1.1 million of non-qualified replacement stock option awards. The accounting for this modification will be reflected beginning in the fourth quarter of fiscal 2013.

During the three and nine months ended June 28, 2013, share-based compensation expense was approximately $3.5 million, before taxes of $1.4 million, and approximately $12.3 million, before taxes of $4.9 million, respectively. During the three and nine months ended June 29, 2012, share-based compensation expense was approximately $0.9 million, before taxes of $0.4 million, and approximately $12.5 million, before taxes of $4.9 million, respectively.

Stock Options

Time-Based Options

The compensation cost charged to expense during the three and nine months ended June 28, 2013 for Time-Based Options was approximately $1.8 million and $5.8 million, respectively. The compensation cost charged to expense during the three and nine months ended June 29, 2012 for Time-Based Options was approximately $2.1 million and $6.2 million, respectively.

Performance-Based Options

During the three and nine months ended June 28, 2013, the Company recognized a charge to expense of approximately $1.5 million and $4.9 million for Performance-Based Options, respectively. During the three and nine months ended June 29, 2012, the Company recognized a reduction to expense of approximately ($2.1) million and a charge to expense of approximately $3.5 million for Performance-Based Options, respectively. During the third quarter of fiscal 2012, the Company reversed approximately $2.4 million of compensation expense related to expense previously recognized for the Performance-Based Options as meeting the 2012 EBIT performance target was not probable.

Installment Stock Purchase Opportunities

The Company recorded approximately $0.2 million and $0.8 million of compensation expense related to ISPOs during the three and nine months ended June 28, 2013, respectively. The Company recorded approximately $0.5 million and $0.8 million of compensation expense related to ISPOs during the three and nine months ended June 29, 2012, respectively.

Seamless Unit Options

The Company recognized compensation expense of approximately $0.2 million for Seamless unit options during the nine months ended June 28, 2013. During the three and nine months ended June 29, 2012, the Company recognized compensation expense of approximately $0.4 million and $1.5 million for Seamless unit options, respectively.

Deferred Stock Units

The Parent Company granted 42,462 deferred stock units during the nine months ended June 28, 2013. The compensation cost charged to expense during the nine months ended June 28, 2013 for deferred stock units was approximately $0.6 million. The Parent Company granted 34,480 deferred stock units during the nine months ended June 29, 2012. The compensation cost charged to expense during the nine months ended June 29, 2012 for deferred stock units was approximately $0.5 million.

(10) ACCOUNTS RECEIVABLE SECURITIZATION:

The Company has an agreement (the "Receivables Facility") with several financial institutions whereby it sells on a continuous basis an undivided interest in all eligible trade accounts receivable, as defined in the Receivables Facility. The maximum amount available under the facility is $300 million, which expires in January 2015. Pursuant to the Receivables

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Facility, the Company formed ARAMARK Receivables, LLC, a wholly-owned, consolidated, bankruptcy-remote subsidiary. ARAMARK Receivables, LLC was formed for the sole purpose of buying and selling receivables generated by certain subsidiaries of the Company. Under the Receivables Facility, the Company and certain of its subsidiaries transfer without recourse all of their accounts receivable to ARAMARK Receivables, LLC. As collections reduce previously transferred interests, interests in new, eligible receivables are transferred to ARAMARK Receivables, LLC, subject to meeting certain conditions. At June 28, 2013 and September 28, 2012, the amount of outstanding borrowings under the Receivables Facility was $300.0 million and $263.8 million and is included in “Long-Term Borrowings,” respectively.


(11)	EQUITY INVESTMENTS:

The Company’s principal equity method investment is its 50% ownership interest in AIM Services Co., Ltd., a Japanese food and support services company (approximately $183.6 million and $233.4 million at June 28, 2013 and September 28, 2012, respectively, which is included in “Other Assets” in the Condensed Consolidated Balance Sheets). Summarized financial information for AIM Services Co., Ltd. follows (in thousands):



	Three Months Ended		Three Months Ended
	June 28, 2013		June 29, 2012
Sales	$	398,610	$	471,782
Gross profit	47,148		55,495
Net income	6,803		8,723



	Nine Months Ended		Nine Months Ended
	June 28, 2013		June 29, 2012
Sales	$	1,294,082	$	1,431,878
Gross profit	149,553		165,833
Net income	22,183		26,319

The period to period comparisons of the summarized financial information for AIM Services Co., Ltd., presented in U.S. dollars above, is significantly impacted by currency translation. ARAMARK’s equity in undistributed earnings of AIM Services Co., Ltd., net of amortization related to purchase accounting for the Transaction, was $2.8 million and $8.0 million for the three and nine months ended June 28, 2013, respectively. ARAMARK’s equity in undistributed earnings of AIM Services Co., Ltd., net of amortization related to purchase accounting for the Transaction, was $3.3 million and $10.0 million for the three and nine months ended June 29, 2012, respectively.


(12)	BUSINESS SEGMENTS:

Sales and operating income by reportable segment follow (in thousands):



	Three Months Ended		Three Months Ended
Sales	June 28, 2013		June 29, 2012
Food and Support Services—North America	$	2,405,860	$	2,319,566
Food and Support Services—International	727,516		673,907
Uniform and Career Apparel	356,654		342,621
	$	3,490,030	$	3,336,094

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



	Three Months Ended			Three Months Ended
Operating Income	June 28, 2013			June 29, 2012
Food and Support Services—North America	$	73,146		$	74,110
Food and Support Services—International	28,694			22,979
Uniform and Career Apparel	35,388			30,386
	137,228			127,475
Corporate	(13,604		)	(12,186		)
Operating Income	123,624			115,289
Interest and other financing costs, net	(80,917		)	(87,807		)
Income Before Income Taxes	$	42,707		$	27,482



	Nine Months Ended		Nine Months Ended
Sales	June 28, 2013		June 29, 2012
Food and Support Services—North America	$	7,217,759	$	7,053,423
Food and Support Services—International	2,154,567		2,030,425
Uniform and Career Apparel	1,057,356		1,020,418
	$	10,429,682	$	10,104,266



	Nine Months Ended			Nine Months Ended
Operating Income	June 28, 2013			June 29, 2012
Food and Support Services—North America	$	298,935		$	301,429
Food and Support Services—International	37,877			65,822
Uniform and Career Apparel	89,761			86,971
	426,573			454,222
Corporate	(46,644		)	(38,343		)
Operating Income	379,929			415,879
Interest and other financing costs, net	(290,364		)	(315,154		)
Income from Continuing Operations Before Income Taxes	$	89,565		$	100,725

In the first and second fiscal quarters, within the Food and Support Services—North America segment, historically there has been a lower level of activity at the sports, entertainment and recreational food service operations that is partly offset by increased activity in the educational operations. However, in the third and fourth fiscal quarters, historically there has been a significant increase at sports, entertainment and recreational accounts that is partially offset by the effect of summer recess on the educational accounts.

Food and Support Services—North America sales and operating income for the nine months ended June 28, 2013 were negatively affected by Hurricane Sandy and the National Hockey League lockout. Food and Support Services—North America operating income for the three and nine months ended June 28, 2013 includes $6.6 million and $33.7 million of severance and related costs, respectively. Food and Support Services—North America operating income for the nine months ended June 28, 2013 also includes $6.8 million of asset write-offs and other income recognized of approximately $14.0 million relating to the recovery of the Company's investment (possessory interest) at one of the National Park Service ("NPS") sites in the Sports & Entertainment sector, which was terminated in the current year. Food and Support Services—North America operating income for the nine months ended June 29, 2012 includes transition and integration costs of $4.3 million related to the Filterfresh acquisition and a favorable risk insurance adjustment of $1.7 million related to favorable claims experience.

Food and Support Services—International operating income for the nine months ended June 28, 2013 includes $12.8 million of severance and related costs and $16.3 million of goodwill impairment charges and other asset write-offs. Food and Support Services—International operating income for the nine months ended June 29, 2012 includes a favorable adjustment of $1.5 million related to a non-income tax settlement in the U.K. and $2.1 million of severance related expenses.

Uniform and Career Apparel operating income for the nine months ended June 28, 2013 includes a net charge of approximately $3.5 million related to a multiemployer pension withdrawal and a preliminary settlement of wage and hour

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

claims, net of a favorable risk insurance adjustment and severance related expenses of $3.7 million. Uniform and Career Apparel operating income for the nine months ended June 29, 2012 includes a favorable risk insurance adjustment of $5.7 million related to favorable claims experience and severance related expenses of $4.0 million.

Corporate expenses include share-based compensation expense (see Note 9). Corporate expenses for the nine months ended June 28, 2013 includes $0.9 million of severance and related costs.

Interest and Other Financing Costs, net, for the nine month period of fiscal 2013 was favorably impacted by the maturity of interest rate swaps during fiscal 2012. Interest and Other Financing Costs, net, for the nine months ended June 28, 2013 includes charges of $20.5 million in connection with the tender offer and Satisfaction and Discharge (see Note 6), consisting of $3.5 million of third party costs for the tender offer premium and $17.0 million of non-cash charges for the write-off of deferred financing costs. Interest and Other Financing Costs, net, for the nine month period of fiscal 2013 also includes approximately $11.6 million of third-party costs incurred related to Amendment Agreement No. 3 to the senior secured credit agreement (see Note 6) and approximately $3.2 million of hedge ineffectiveness related to the repayment of the Canadian subsidiary's term loan with a maturity date of January 26, 2014 (see Note 7). Interest and Other Financing Costs, net, for the nine month periods of fiscal 2012 includes $10.5 million of third-party costs related to Amendment Agreement No. 2 (see Note 6) and the amendment of the Company's Canadian subsidiary cross currency swap (see Note 7).


(13)	NEW ACCOUNTING STANDARD UPDATES:

In December 2011, the FASB issued an accounting standard update ("ASU") that requires companies with financial instruments and derivative instruments that are offset on the balance sheet or subject to a master netting arrangement to provide additional disclosures regarding the instruments impact on a company’s financial position. In January 2013, the FASB issued an accounting standard update to clarify the scope of this ASU. The guidance is effective for the Company beginning in the first quarter of fiscal 2014. The Company is currently evaluating the impact of this pronouncement.

In September 2011, the FASB issued an accounting standard update that simplifies how entities test goodwill for impairment. The amendment permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The Company adopted the guidance beginning in fiscal 2013 which did not have a material impact on the condensed consolidated financial statements.

In June 2011, the FASB issued an accounting standard update that modifies the presentation of comprehensive income in the financial statements. The standard requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This standard eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. The Company adopted the guidance retrospectively beginning in the first quarter of fiscal 2013 which only resulted in changes to the presentation of the condensed consolidated financial statements.

In June 2012, the FASB issued an accounting standard update which amends the guidance on testing indefinite-lived intangible assets, other than goodwill, for impairment. The amendment permits an entity to perform a qualitative impairment assessment before proceeding to the two-step impairment test. The Company adopted the guidance beginning in fiscal 2013 which did not have a material impact on the condensed consolidated financial statements.

In February 2013, the FASB issued an accounting standard update which requires companies to disclose information about reclassifications out of accumulated other comprehensive income ("AOCI"). Companies also are required to present reclassifications by component when reporting changes in AOCI balances. For significant items reclassified out of AOCI to net income in their entirety in the period, companies must report the effect of the reclassifications on the respective line items in the statement where net income is presented. The guidance is effective for the Company beginning in the first quarter of fiscal 2014. The Company is currently evaluating the impact of this pronouncement.


(14)	COMMITMENTS AND CONTINGENCIES:

Certain of the Company’s lease arrangements, primarily vehicle leases, with terms of one to eight years, contain provisions related to residual value guarantees. The maximum potential liability to the Company under such arrangements was approximately $110.9 million at June 28, 2013 if the terminal fair value of vehicles coming off lease was zero. Consistent with past experience, management does not expect any significant payments will be required pursuant to these arrangements. No amounts have been accrued for guarantee arrangements at June 28, 2013.

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

From time to time, the Company is a party to various legal actions and investigations involving claims incidental to the conduct of its business, including actions by clients, customers, employees, government entities and third parties, including under federal and state employment laws, wage and hour laws, immigration laws, human health and safety laws, import and export controls and customs laws, environmental laws, false claims statutes, minority business enterprise and women owned business enterprise statutes, contractual disputes, antitrust and competition laws and dram shop laws. Based on information currently available, advice of counsel, available insurance coverage, established reserves and other resources, the Company does not believe that any such actions are likely to be, individually or in the aggregate, material to its business, financial condition, results of operations or cash flows. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company’s business, financial condition, results of operations or cash flows.

In 2011, the Company was informed that an Illinois state civil action had been filed against a subsidiary of the Company by an unnamed Relator under the Illinois Whistleblower Reward and Protection Act in the Circuit Court of Cook County, Illinois County Department, Law Division. During the third quarter of fiscal 2013, this matter was settled, payments were made pursuant to the terms of the settlement, and the case was dismissed.

(15) FAIR VALUE OF ASSETS AND LIABILITIES:

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are classified based upon the level of judgment associated with the inputs used to measure their fair value. The hierarchical levels related to the subjectivity of the valuation inputs are defined as follows:


•	Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets


•	Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument

• Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement

Recurring Fair Value Measurements

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, borrowings and derivatives. Management believes that the carrying value of cash and cash equivalents, accounts receivable and accounts payable are representative of their respective fair values. In conjunction with the fair value measurement of the derivative instruments, the Company made an accounting policy election to measure the credit risk of its derivative instruments, that are subject to master netting agreements, on a net basis by counterparty portfolio. The fair value of the Company’s debt at June 28, 2013 and September 28, 2012 was $6,235.1 million and $5,440.9 million, respectively. The carrying value of the Company’s debt at June 28, 2013 and September 28, 2012 was $6,217.1 million and $5,413.3 million, respectively. 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. The inputs utilized in estimating the fair value of the Company's debt has been classified as level 2 in the fair value hierarchy levels.

The following table presents the changes in the Company's common stock subject to repurchase for which level 3 inputs were significant to their valuation for the nine months ended June 28, 2013 (in thousands):



	Common Stock Subject to Repurchase
Balance, September 28, 2012	$	167,461
Issuances of Parent Company common stock	1,904
Repurchases of Parent Company common stock	(26,324		)
Change in fair market value of Parent Company common stock	10,517
Balance, June 28, 2013	$	153,558

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(16)	ARAMARK HOLDINGS CORPORATION (PARENT COMPANY):

ARAMARK Holdings has 600.0 million common shares authorized, approximately 218.8 million common shares issued and approximately 201.4 million common shares outstanding as of June 28, 2013.

On April 18, 2011, the Parent Company completed a private placement of $600 million, net of a 1% discount, in aggregate principal amount of 8.625% / 9.375% Senior Notes due 2016 (the "Parent Company Notes"). Interest on the Parent Company Notes accrued at the rate of 8.625% per annum with respect to interest payments made in cash and 9.375% per annum with respect to any payment in-kind interest. The Parent Company Notes were obligations of the Parent Company, were not guaranteed by the Company and its subsidiaries and are structurally subordinated to all existing and future indebtedness and other liabilities of the Company and its subsidiaries.

On March 7, 2013, the Company used a portion of the aggregate proceeds of the Senior Notes offering and the borrowings under the new term loans pursuant to Amendment Agreement No. 4 (see Note 6) to advance funds to the Parent Company to fund the purchase of all Parent Company Notes tendered by March 6, 2013, the early tender date. On March 7, 2013, the Parent Company issued a redemption notice for the portion of the Parent Company Notes that remained outstanding as of March 7, 2013, including accrued and unpaid interest, which notices provided for the redemption of the Parent Company Notes on May 1, 2013 at a price of 101% of the principal amount thereof. The remaining Parent Company Notes were redeemed by the trustee on May 1, 2013.

As a result of the tender offer and redemption of the Parent Company Notes, ARAMARK Holdings has no operations other than ownership of the Company. For the nine months ended June 28, 2013, the Parent Company recorded Interest and Other Financing Costs, net, of $51.0 million, which includes $9.4 million of third party costs for the tender offer and call premiums and $9.9 million of non-cash charges for the write-off of deferred financing costs related to the tender offer and the Satisfaction and Discharge. During the nine months ended June 28, 2013, the Company advanced approximately $657.8 million to the Parent Company, which was used to pay the interest, call premiums and principal on the Parent Company Notes. During the nine months ended June 28, 2013, the advance was reduced by approximately $19.8 million attributable to the tax benefit related to the interest and other charges on the Parent Company Notes. Finally, $638.0 million was dividended by the Company to the Parent Company in order to pay down the remainder of the advance. During the nine months ended June 29, 2012, the Company advanced approximately $53.7 million to the Parent Company, which was used to pay the interest on the Parent Company Notes. During the nine months ended June 29, 2012, the advance was reduced by approximately $25.3 million attributable to the tax benefit related to the interest on the Parent Company Notes.

Table of Contents


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations for the three and nine months ended June 28, 2013 and June 29, 2012 should be read in conjunction with the Company’s audited consolidated financial statements, and the notes to those statements, included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2012.

The Company is a wholly-owned subsidiary of ARAMARK Intermediate Holdco Corporation, which is wholly-owned by ARAMARK Holdings Corporation (the “Parent Company” or "ARAMARK Holdings"). ARAMARK Holdings Corporation, ARAMARK Intermediate Holdco Corporation and RMK Acquisition Corporation were formed for the purpose of facilitating the Transaction.

Our discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, opinions, expectations, anticipations, intentions and beliefs. Actual results and the timing of events could differ materially from those anticipated in those forward-looking statements as a result of a number of factors, including those set forth under the Special Note About Forward-Looking Statements and elsewhere in this Quarterly Report on Form 10-Q. In the following discussion and analysis of financial condition and results of operations, certain financial measures may be considered “non-GAAP financial measures” under Securities and Exchange Commission (“SEC”) rules. These rules require supplemental explanation and reconciliation, which is provided elsewhere in this Quarterly Report on Form 10-Q.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s significant accounting policies are described in the notes to the consolidated financial statements included in our fiscal 2012 Annual Report on Form 10-K filed with the SEC. As described in such notes, the Company recognizes sales in the period in which services are provided pursuant to the terms of our contractual relationships with our clients. Sales from direct marketing activities are recognized upon shipment.

In preparing our financial statements, management is required to make estimates and assumptions that, among other things, affect the reported amounts of assets, liabilities, sales and expenses. These estimates and assumptions are most significant where they involve levels of subjectivity and judgment necessary to account for highly uncertain matters or matters susceptible to change, and where they can have a material impact on our financial condition and operating performance. We discuss below the more significant estimates and related assumptions used in the preparation of our condensed consolidated financial statements. If actual results were to differ materially from the estimates made, the reported results could be materially affected.

Asset Impairment Determinations

Goodwill and the ARAMARK trade name are indefinite lived intangible assets that are not amortizable and are subject to an impairment test that we conduct annually or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists, using discounted cash flows. The Company performs its assessment of goodwill at the reporting unit level. Within the Food and Support Services—International segment, each country is evaluated separately since such reporting units are relatively autonomous and separate goodwill balances have been recorded for each entity.

With respect to our other long-lived assets, we are required to test for asset impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are present, the Company compares the sum of the future expected cash flows from the asset, undiscounted and without interest charges, to the asset’s carrying value. If the sum

Table of Contents

of the future expected cash flows from the asset is less than the carrying value, an impairment would be recognized for the difference between the estimated fair value and the carrying value of the asset.

In making future cash flow analyses of various assets, the Company makes assumptions relating to the following:


•	The intended use of assets and the expected future cash flows resulting directly from such use;


•	Comparable market valuations of businesses similar to ARAMARK’s business segments;


•	Industry specific economic conditions;


•	Competitor activities and regulatory initiatives; and


•	Client and customer preferences and behavior patterns.

We believe that an accounting estimate relating to asset impairment is a critical accounting estimate because the assumptions underlying future cash flow estimates are subject to change from time to time and the recognition of an impairment could have a significant impact on our consolidated statement of income.

Environmental Loss Contingencies

Accruals for environmental loss contingencies (i.e., environmental reserves) are recorded when it is probable that a liability has been incurred and the amount can reasonably be estimated. Management views the measurement of environmental reserves as a critical accounting estimate because of the considerable uncertainty surrounding estimation, including the need to forecast well into the future. We are involved in legal proceedings under federal, state, local and foreign environmental laws in connection with our operations or businesses conducted by our predecessors or companies that we have acquired. The calculation of environmental reserves is based on the evaluation of currently available information, prior experience in the remediation of contaminated sites and assumptions with respect to government regulations and enforcement activity, changes in remediation technology and practices, and financial obligations and creditworthiness of other responsible parties and insurers.

Litigation and Claims

The Company is a party to various legal actions and investigations including, among others, employment matters, compliance with government regulations, including import and export controls and customs laws, federal and state employment laws, including wage and hour laws, immigration laws, human health and safety laws, dram shop laws, environmental laws, false claim statutes, minority business enterprise and women owned business enterprise statutes, contractual disputes and other matters, including matters arising in the ordinary course of business. These claims may be brought by, among others, the government, clients, customers, employees and third parties. Management considers the measurement of litigation reserves as a critical accounting estimate because of the significant uncertainty in some cases relating to the outcome of potential claims or litigation and the difficulty of predicting the likelihood and range of potential liability involved, coupled with the material impact on our results of operations that could result from litigation or other claims. In determining legal reserves, management considers, among other issues:


•	Interpretation of contractual rights and obligations;


•	The status of government regulatory initiatives, interpretations and investigations;


•	The status of settlement negotiations;


•	Prior experience with similar types of claims;


•	Whether there is available insurance; and


•	Advice of counsel.

Allowance for Doubtful Accounts

We encounter risks associated with sales and the collection of the associated accounts receivable. We record a provision for accounts receivable that are considered to be uncollectible. In order to calculate the appropriate provision, management analyzes the creditworthiness of specific customers and the aging of customer balances. Management also considers general and specific industry economic conditions, industry concentrations, such as exposure to small and medium-sized businesses, the non-profit healthcare sector and the automotive, airline and financial services industries, and contractual rights and obligations. Management believes that the accounting estimate related to the allowance for doubtful accounts is a critical accounting estimate because the

Table of Contents

underlying assumptions used for the allowance can change from time to time and uncollectible accounts could potentially have a material impact on our results of operations.

Inventory Obsolescence

We record an inventory obsolescence reserve for obsolete, excess and slow-moving inventory, principally in the Uniform and Career Apparel segment. In calculating our inventory obsolescence reserve, management analyzes historical and projected data regarding customer demand within specific product categories and makes assumptions regarding economic conditions within customer specific industries, as well as style and product changes. Management believes that its accounting estimate related to inventory obsolescence is a critical accounting estimate because customer demand in certain of our businesses can be variable and changes in our reserve for inventory obsolescence could materially affect our results of operations.

Income Taxes

We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year and for deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our condensed consolidated financial statements or tax returns. We must make assumptions, judgments and estimates to determine our current provision for income taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset. Our assumptions, judgments and estimates relative to the current provision for income taxes take into account current tax laws, our interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or our interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts provided for income taxes in our condensed consolidated financial statements. Our assumptions, judgments and estimates relative to the amount of deferred income taxes take into account estimates of the amount of future taxable income, and actual operating results in future years could render our current assumptions, judgments and estimates inaccurate. Any of the assumptions, judgments and estimates mentioned above could cause our actual income tax obligations to differ from our estimates.

Share-Based Compensation

We value our employee share-based awards using the Black-Scholes option valuation model. The Black-Scholes option valuation model uses assumptions of expected volatility, the expected dividend yield of our stock, the expected term of the awards and the risk-free interest rate. Since our stock is not publicly traded, the expected volatility is based on an average of the historical volatility of our competitors’ stocks over the expected term of the share-based awards. The dividend yield assumption is based on our history and expected future dividend payouts. The expected term of share award represents the weighted-average period the share award is expected to remain outstanding. The expected term was calculated using the simplified method permitted under SEC rules and regulations due to the lack of history. The risk-free interest rate assumption is based upon the rate applicable to the U.S. Treasury security with a maturity equal to the expected term of the option on the grant date.

As share-based compensation expense recognized in the Condensed Consolidated Statements of Income is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. The authoritative accounting pronouncement for share-based compensation expense requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on our historical experience.

For the Performance-Based Options, management must assess the probability of the achievement of the earnings before interest and taxes (“EBIT”) targets, as defined in the ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan. If the EBIT targets are not probable of achievement, changes in the recognition of share-based compensation expense may occur. Management makes its probability assessments based on the Company’s actual and projected results of operations.

Management believes that the accounting estimate related to the expense of share-based awards is a critical accounting estimate because the underlying assumptions can change from time to time and, as a result, the compensation expense that we record in future periods may differ significantly from what we have recorded in the current period with respect to similar instruments.

Fair Value of Financial Assets and Financial Liabilities

Table of Contents


•	Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets


•	Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument


•	Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement

Management believes that the carrying value of cash and cash equivalents, accounts receivable and accounts payable are representative of their respective fair values. The fair value of the Company’s debt was computed using market quotes, if available, or based on discounted cash flows using market interest rates as of the end of the period. The fair values for interest rate swap agreements, foreign currency forward exchange contracts and natural gas, gasoline and diesel fuel agreements are based on quoted market prices from various banks for similar instruments, adjusted for the Company and the counterparties’ credit risk. The Company performs an independent review of these values to determine if they are reasonable. The fair value of our derivative instruments are impacted by changes in interest rates, foreign exchange rates, and the prices of natural gas, gasoline and diesel fuel. The fair value of our common stock subject to repurchase is derived principally from unobservable inputs. Management believes that the accounting estimate related to the fair value of our financial assets and financial liabilities is a critical accounting estimate due to its complexity and the significant judgments and estimates involved in determining fair value in the absence of quoted market prices.

*****

Critical accounting estimates and the related assumptions are evaluated periodically as conditions warrant, and changes to such estimates are recorded as new information or changed conditions require.

RESULTS OF OPERATIONS

The following tables present our sales and operating income from continuing operations, and related percentages, attributable to each operating segment, for the three and nine months ended June 28, 2013 and June 29, 2012 (dollars in millions).



	Three Months Ended										Nine Months Ended
	June 28, 2013					June 29, 2012					June 28, 2013					June 29, 2012
Sales by Segment	$			%		$			%		$			%		$			%
Food and Support Services – North America	$	2,405.9		69	%	$	2,319.6		70	%	$	7,217.8		69	%	$	7,053.4		70	%
Food and Support Services – International	727.5			21	%	673.9			20	%	2,154.6			21	%	2,030.5			20	%
Uniform and Career Apparel	356.6			10	%	342.6			10	%	1,057.3			10	%	1,020.4			10	%
	$	3,490.0		100	%	$	3,336.1		100	%	$	10,429.7		100	%	$	10,104.3		100	%

	Three Months Ended										Nine Months Ended
	June 28, 2013					June 29, 2012					June 28, 2013					June 29, 2012
Operating Income by Segment	$			%		$			%		$			%		$			%
Food and Support Services – North America	$	73.1		59	%	$	74.1		64	%	$	298.9		79	%	$	301.4		72	%
Food and Support Services – International	28.7			23	%	23.0			20	%	37.9			10	%	65.8			16	%
Uniform and Career Apparel	35.4			29	%	30.4			27	%	89.8			23	%	87.0			21	%
	137.2			111	%	127.5			111	%	426.6			112	%	454.2			109	%
Corporate	(13.6		)	-11	%	(12.2		)	-11	%	(46.7		)	-12	%	(38.3		)	-9	%
	$	123.6		100	%	$	115.3		100	%	$	379.9		100	%	$	415.9		100	%

Consolidated Overview

Sales of $3.5 billion for the third quarter of fiscal 2013 and $10.4 billion for the nine month period represented an increase of 5% and 3% over the prior year periods, respectively. This increase is primarily attributable to growth in the Healthcare and Education sectors and the B&I Facilities business of the Food and Support Services—North America segment, growth in Ireland, China, Chile and Argentina in our Food and Support Services—International segment and growth in the uniform rental business in our Uniform and Career Apparel segment. This increase was partially offset by a sales decline in the U.K. in our Food and Support Services—International segment. Sales for the nine month period of fiscal 2013 were negatively impacted as a result of the National Hockey League ("NHL") lockout and the impact of Hurricane Sandy in our Food and Support Services—North America segment.

Table of Contents

Operating income for the third quarter of fiscal 2013 was $123.6 million compared to $115.3 million in the prior year period as profit growth in our Business & Industry and Education sectors more than offset severance and related costs of approximately $6.6 million (see Note 4 to the condensed consolidated financial statements) and approximately $4.5 million of costs related to transformation initiatives. Operating income for the nine month period of fiscal 2013 was $379.9 million compared to $415.9 million in the prior year period. The decline in operating income for the nine month period of fiscal 2013 was primarily due to $47.4 million of severance and related costs as a result of the series of actions the Company initiated in the second quarter of fiscal 2013 to drive efficiency through the consolidation and centralization of its operations (see Note 4 to the condensed consolidated financial statements). During the nine month period of fiscal 2013, the Company also recorded approximately $11.7 million of goodwill impairment charges (see Note 5 to the condensed consolidated financial statements), other asset write-downs of approximately $11.4 million primarily related to the write-offs of certain client contractual investments and approximately $17.1 million of costs related to transformation initiatives. In addition, the nine month period of fiscal 2013 was also negatively affected by the NHL lockout and Hurricane Sandy. This profit decline was partially offset by profit growth in our Business & Industry and Education sectors and other income recognized of approximately $14.0 million relating to the recovery of the Company's investment (possessory interest) at one of the National Park Service ("NPS") sites in the Sports & Entertainment sector, which was terminated in the current year. The nine month period of fiscal 2012 includes a favorable risk insurance adjustment of $7.4 million related to favorable claims experience, of which $5.7 million relates to our uniform rental business, transition and integration costs of $4.3 million related to the Filterfresh acquisition and severance related charges of $6.1 million in the Uniform and Career Apparel segment and Food and Support Services—International segment.

Interest and Other Financing Costs, net, for the three and nine month periods of fiscal 2013 decreased approximately by $6.9 million and $24.8 million when compared to the prior year periods, respectively, primarily due to the maturity of interest rate swaps during fiscal 2012. Interest and Other Financing Costs, net, for the nine months ended June 28, 2013 includes charges of $20.5 million in connection with the tender offer and repayment of the 8.50% senior notes and senior floating rate notes (see Note 6 to the condensed consolidated financial statements), consisting of $3.5 million of third party costs for the tender offer premium and $17.0 million of non-cash charges for the write-off of deferred financing costs. Interest and Other Financing Costs, net, for the nine month period of fiscal 2013 also includes approximately $11.6 million of third-party costs incurred related to Amendment Agreement No. 3 to the senior secured credit agreement and approximately $3.2 million of hedge ineffectiveness related to the repayment of the Canadian subsidiary's term loan with a maturity date of January 26, 2014. Interest and Other Financing Costs, net, for the nine month period of fiscal 2012 includes $10.5 million of third-party costs related to Amendment Agreement No. 2 and the amendment of the Company's Canadian subsidiary cross currency swap.

The Company recorded a provision for income taxes of $14.7 million on pretax income of $42.7 million for the three months ended June 28, 2013 as compared to a provision for income taxes of $4.3 million on pretax income of $27.5 million in the prior year period. The change in the three months ended June 28, 2013 is primarily due to the tax benefit of discrete items included in the income tax provision in the third quarter of fiscal 2012. The effective income tax rate for the nine months of fiscal 2013 was 28.9% compared to 27.2% in the prior year period.

Net income for the three and nine month periods of fiscal 2013 was $28.0 million and $63.7 million, respectively, compared to $23.2 million and $73.6 million in the prior year periods, respectively. Net income attributable to noncontrolling interests for the three and nine month periods of fiscal 2013 was $0.2 million and $0.8 million, respectively, compared to $0.6 million and $2.4 million in the prior year periods, respectively.

Table of Contents

Segment Results

The following tables present a fiscal 2013/2012 comparison of segment sales and operating income from continuing operations together with the amount of and percentage change between periods (dollars in millions).



	Three Months Ended											Nine Months Ended
Sales by Segment	June 28, 2013			June 29, 2012			Change					June 28, 2013			June 29, 2012			Change
Sales by Segment	June 28, 2013			June 29, 2012			$			%		June 28, 2013			June 29, 2012			$			%
Food and Support Services – North America	$	2,405.9		$	2,319.6		$	86.3		4	%	$	7,217.8		$	7,053.4		$	164.4		2	%
Food and Support Services – International	727.5			673.9			53.6			8	%	2,154.6			2,030.5			124.1			6	%
Uniform and Career Apparel	356.6			342.6			14.0			4	%	1,057.3			1,020.4			36.9			4	%
	$	3,490.0		$	3,336.1		$	153.9		5	%	$	10,429.7		$	10,104.3		$	325.4		3	%
	Three Months Ended											Nine Months Ended
Operating Income by Segment	June 28, 2013			June 29, 2012			Change					June 28, 2013			June 29, 2012			Change
Operating Income by Segment	June 28, 2013			June 29, 2012			$			%		June 28, 2013			June 29, 2012			$			%
Food and Support Services – North America	$	73.1		$	74.1		$	(1.0	)	-1	%	$	298.9		$	301.4		$	(2.5	)	-1	%
Food and Support Services – International	28.7			23.0			5.7			25	%	37.9			65.8			(27.9		)	**
Uniform and Career Apparel	35.4			30.4			5.0			16	%	89.8			87.0			2.8			3	%
Corporate	(13.6		)	(12.2		)	(1.4		)	11	%	(46.7		)	(38.3		)	(8.4		)	22	%
	$	123.6		$	115.3		$	8.3		7	%	$	379.9		$	415.9		$	(36.0	)	-9	%

____________________

** - Not meaningful

Food and Support Services—North America Segment

Food and Support Services—North America segment sales for the three and nine month periods of fiscal 2013 increased 4% and 2% over the prior year periods, respectively, primarily due to growth in the Healthcare and Education sectors and in the B&I Facilities business. Sales for the three month period of fiscal 2013 were positively impacted by the timing of the Easter holiday. Sales for the nine month period of fiscal 2013 were negatively impacted by the NHL lockout and Hurricane Sandy. The negative impact of acquisitions and divestitures was approximately -1% in the three and nine month periods. The Business & Industry sector had flat sales for the third quarter and low-single digit sales decline for the nine month period of fiscal 2013 primarily due to the spin-off of Seamless North America, LLC ("Seamless") in October 2012 and the impact of Hurricane Sandy on our business dining operations offset by growth in our facilities business. The Education sector had high-single digit sales growth for the third quarter and mid-single digit sales growth for the nine month period of fiscal 2013, due to base and net new business growth in our Higher Education and K-12 food and facilities businesses. The Healthcare sector had mid-single digit sales growth for the third quarter and low-single digit sales growth for the nine month period of fiscal 2013 primarily due to base business growth. The Sports & Entertainment sector had low-single digit sales growth for the third quarter due to growth in our Major League Baseball venues. For the nine month period of fiscal 2013, sales in the Sports & Entertainment sector were flat as growth in our Major League Baseball venues were offset by the effect of the NHL lockout.

Operating income for the three and nine month periods of fiscal 2013 was $73.1 million and $298.9 million compared to $74.1 million and $301.4 million in the prior year periods, respectively. The decrease in the third quarter of fiscal 2013 is due to approximately $6.6 million for severance and related costs and approximately $3.3 million of costs related to transformation initiatives, which more than offset the profit growth in our Business & Industry and Education sectors. The nine month period of fiscal 2013 was negatively affected by approximately $33.7 million of severance and related costs, $6.8 million of asset write-offs and approximately $14.4 million of costs related to transformation initiatives, which more than offset the profit growth in our Business & Industry and Education sectors and the other income recognized of approximately $14.0 million relating to the recovery of the Company's investment (possessory interest) at one of the NPS sites in the Sports & Entertainment sector, which was terminated in the current year. The nine month period of fiscal 2013 was also negatively affected by the NHL lockout and Hurricane Sandy. Operating income for the nine month period of fiscal 2012 includes $4.3 million of transition and integration costs related to the Filterfresh acquisition.

Food and Support Services—International Segment

Sales in the Food and Support Services—International segment for the three and nine month periods of fiscal 2013 increased 8% and 6% compared to the prior year periods, respectively, as growth in Germany, Ireland, Chile, Argentina and China more than offset the sales decline in the U.K.

Table of Contents

Operating income for the third quarter of fiscal 2013 was $28.7 million compared to $23.0 million in the prior year period. This increase was due to the profit growth in Germany, Chile and Spain offset by the negative impact of foreign currency translation (approximately -3%) and $1.2 million of costs related to transformation initiatives. Operating income for the nine month period of fiscal 2013 was $37.9 million compared to $65.8 million in the prior year period. The nine month period of fiscal 2013 was negatively affected by $12.8 million of severance and related costs, $16.3 million of goodwill impairment charges and other asset write-offs and $2.6 million of costs related to transformation initiatives as well as the negative impact of foreign currency translation (approximately -1%). Operating income in the nine months ended of fiscal 2012 includes a favorable adjustment of $1.5 million related to a non-income tax settlement in the U.K. and $2.1 million of severance related expenses.

Uniform and Career Apparel Segment

Uniform and Career Apparel segment sales increased 4% for the three and nine month periods of fiscal 2013 compared to both prior year periods primarily due to growth in our uniform rental base business.

Operating income for the third quarter of fiscal 2013 was $35.4 million compared to $30.4 million in the prior year period. Operating income for the nine month period of fiscal 2013 was $89.8 million compared to $87.0 million in the prior year period. Operating income for the three and nine month periods of fiscal 2013 benefited from growth in the uniform rental business and operational efficiencies across the segment. Operating income for the nine month period of fiscal 2013 includes severance related expenses of $3.7 million and a net charge of approximately $3.5 million related to a multiemployer pension withdrawal and a preliminary settlement of wage and hour claims, net of a favorable risk insurance adjustment. Operating income for the nine month period of fiscal 2012 includes severance related charges of $4.0 million and a favorable risk insurance adjustment of $5.7 million.

Corporate

Corporate expenses, those administrative expenses not allocated to the business segments, were $13.6 million for the third quarter of fiscal 2013 compared to $12.2 million for the prior year period. The increase is primarily due to the reversal in the prior year period of share-based compensation expense previously recognized for the Performance Based Options. For the nine month period of fiscal 2013, corporate expenses were $46.7 million compared to $38.3 million for the prior year period. The nine month period of fiscal 2013 includes an accounting charge related to the retirement obligation to our current Chairman and former Chief Executive Officer and $0.9 million of severance and related costs.

*****

Our operating results continue to be affected by the economic uncertainty being experienced in the countries in which we operate. We anticipate that economic conditions, specifically in Europe, and unemployment levels will continue to remain challenging.

We are planning and executing both growth and cost control initiatives and are working to streamline and improve the efficiency and effectiveness of our general and administrative functions through increased standards, process improvements, and consolidation. As a result, we recorded certain costs during the second and third quarters of fiscal 2013 and estimate that we will incur an additional $40 to $65 million of costs over the next 18 months.

LIQUIDITY AND CAPITAL RESOURCES

Reference to the Condensed Consolidated Statements of Cash Flows will facilitate understanding of the discussion that follows.

Cash Flows Provided by Operating Activities

Cash provided by operating activities was $184.8 million in the nine month period of fiscal 2013 compared to cash provided by operating activities of $190.4 million in the comparable period of fiscal 2012. The principal components (in millions) of the net change of ($5.6) million were:



•	Decrease in the total of net income and noncash charges	$	(3.3	)
•	Increased working capital requirements	(5.5		)
•	Other, net	3.2
		$	(5.6	)

The decrease in the total of net income and noncash charges results mainly from the operating results of the Company as discussed above. As expected and consistent with historical patterns, working capital was a use of cash for us during the nine month period of

Table of Contents

fiscal 2013. The change in working capital requirements relates principally to changes in Accounts Receivable (approximately $14.2 million) primarily due to business growth and the timing of collections and Accounts Payable ($10.8 million) primarily due to business growth and the timing of disbursements, offset by changes in Inventory (approximately $23.0 million) due to less inventory purchases in our Uniform and Career Apparel segment and seasonality within some of our businesses. The “Other, net” caption reflects adjustments to net income in the current year and prior year periods related to nonoperating gains and losses, which are primarily non-cash and include goodwill impairments and other financing related charges and write-offs.

Cash Flows Used in Investing Activities

During the second quarter of fiscal 2013, the Company received proceeds of approximately $15.3 million related to the recovery of our investment (possessory interest) in certain assets at one of our NPS sites in our Sports & Entertainment sector, which was terminated in the current year. During the first quarter of fiscal 2012, ARAMARK Refreshment Services, LLC, a subsidiary of the Company, acquired all of the outstanding shares of common stock of Van Houtte USA Holdings, Inc. (doing business as “Filterfresh”), a refreshment services company, for approximately $145.2 million. The acquisition was financed with cash on hand and borrowings under the Company’s revolving credit facility. Under the terms of the purchase agreement, if a certain significant customer relationship was not maintained within a specific timeframe, the Company was entitled to a refund of a portion of the purchase price. During the second quarter of 2012, the Company received a refund of approximately $7.4 million related to the termination of this customer relationship.

Cash Flows Provided by Financing Activities

On October 29, 2012, the Company completed the spin-off of its majority interest in Seamless to the shareholders of ARAMARK Holdings. In the spin-off, the Company distributed all of the issued and outstanding shares of the common stock of Seamless Holdings Corporation (“Seamless Holdings”), an entity formed for the purpose of completing the spin-off and whose assets primarily consist of the Company's former interest in Seamless, to its parent company and sole stockholder, ARAMARK Intermediate Holdco Corporation (“ARAMARK Intermediate”). Thereafter, ARAMARK Intermediate distributed such shares to ARAMARK Holdings, its parent company and sole stockholder, who then distributed all of the shares of Seamless Holdings on a pro rata basis to the holders of ARAMARK Holdings common stock as of October 26, 2012, the record date, through a tax-free stock dividend. Each ARAMARK Holdings shareholder received one share of Seamless Holdings common stock for each share of ARAMARK Holdings common stock held as of the record date. The Company distributed cash of approximately $47.4 million to Seamless prior to the spin-off.

On March 22, 2013, the Company entered into Amendment Agreement No. 5 (“Amendment Agreement No. 5”) to the Amended and Restated Credit Agreement dated as of March 26, 2010 (as amended, the “Credit Agreement”). The Amendment Agreement No. 5 increased the aggregate revolving loan commitments made available to the Company under the Credit Agreement by $55.0 million to $605.0 million.

On February 22, 2013, the Company entered into Amendment Agreement No. 4 (“Amendment Agreement No. 4”) to the Credit Agreement which provided for, among other things, additional term loans and the extension of a portion of the revolving credit facility. On March 7, 2013, the Company borrowed $1,400 million of term loans pursuant to Amendment Agreement No. 4. The new term loans were borrowed by the Company with an original issue discount of 0.50%. The term loans under Amendment Agreement No. 4 mature on September 7, 2019. These term loans have a Eurocurrency rate margin, with respect to the U.S. dollar denominated, Canadian dollar denominated and Euro denominated term loans, of 3.00% and base rate margin on U.S. dollar denominated base rate term loans of 2.00%. Eurrocurrency rate borrowings have a minimum LIBOR rate of 1.00% and base rate borrowings have a minimum rate of 2.00%. Amendment Agreement No. 4 also increases the applicable margins for the Company's existing term loans and the fee rates on letter of credit deposits with respect to the synthetic letter of credit facility. From and after the effective date of Amendment Agreement No. 4, (A) the Eurocurrency rate margin and letter of credit fees with respect to the U.S. dollar denominated, Canadian dollar denominated and Euro denominated term loans and extended maturity letter of credit deposits increased 0.25% to 3.50%, (B) the margin on U.S. dollar denominated base rate term loans increased 0.25% to 2.50% and (C) the margins on yen denominated term loans and sterling denominated term loans increased 0.125% to 3.50%. Amendment Agreement No. 4 also provides for an increase in the maximum Consolidated Secured Debt ratio to reflect the additional secured indebtedness associated with the new term loan borrowings and provides certain additional flexibility with respect to the restricted payments covenant. During the second quarter of fiscal 2013, approximately $14.0 million of third-party costs directly attributable to the term loans borrowed pursuant to Amendment Agreement No. 4 were capitalized and are included in “Other Assets” in the Condensed Consolidated Balance Sheets, of which approximately $6.2 million were paid to entities affiliated with GS Capital Partners and J.P. Morgan Partners. Amendment Agreement No. 4 also provides for the extension, from January 26, 2015 to January 26, 2017, of the maturity of $500 million in revolving lender commitments of the existing $550 million revolving credit facility. The maturity date of the extended revolving credit facilities would accelerate to April 26, 2016 if term loans under the Credit Agreement that are due on July 26, 2016 remain outstanding on April 26, 2016. Third party costs directly attributable to the revolving credit facility of approximately $2.8 million were capitalized and are included in “Other Assets” in the Condensed

Table of Contents

Consolidated Balance Sheets, of which approximately $0.6 million were paid to entities affiliated with GS Capital Partners and J.P. Morgan Partners.

On December 20, 2012, the Company amended the senior secured credit agreement ("Amendment Agreement No. 3") to, among other things, borrow $670 million of new term loans with a maturity date of July 26, 2016. The proceeds of the new term loans were used primarily to repay approximately $650 million of existing term loans with a maturity date of January 26, 2014 and to fund certain discounts, fees and costs associated with the amendment. The existing term loans that were repaid in connection with Amendment Agreement No. 3 included U.S. dollar denominated term loans as well as non-U.S. dollar term loans and consisted of the remaining balance of the un-extended term loans. The new term loans were borrowed by the Company with an original issue discount of 0.25%. During the first quarter of fiscal 2013, approximately $11.6 million of third-party costs directly attributable to the amendment were expensed and are included in “Interest and Other Financing Costs, net” in the Condensed Consolidated Statements of Income. Approximately $4.6 million of the third-party costs were paid to entities affiliated with Goldman Sachs Capital Partners and J.P. Morgan Partners.

On February 29, 2012, the Company entered into Amendment Agreement No. 2 (“Amendment Agreement No. 2”) to the Credit Agreement. Amendment Agreement No. 2 extended the maturity date of an aggregate U.S. dollar equivalent of approximately $1,231.6 million of the Company’s term loans and $66.7 million of letter of credit deposits securing the Company’s synthetic letter of credit facility to July 26, 2016. The term loans extended include (i) $858.1 million of U.S. dollar denominated term loans borrowed by the Company; (ii) ¥5,150.9 million of yen denominated term loans borrowed by the Company; (iii) $75.4 million of U.S. dollar denominated term loans borrowed by a Canadian subsidiary of the Company; (iv) €30.4 million of Euro denominated term loans borrowed by an Irish subsidiary of the Company; (v) £82.3 million of sterling denominated term loans borrowed by a U.K. subsidiary of the Company; and (vi) €46.1 million of Euro denominated term loans borrowed by German subsidiaries of the Company. Consenting lenders received a one-time amendment fee of approximately $3.2 million in the aggregate on their total loan commitments. During the second quarter of fiscal 2012, approximately $7.5 million of third-party costs directly attributable to the amendment were expensed and are included in “Interest and Other Financing Costs, net” in the Condensed Consolidated Statements of Income. Approximately $4.5 million of the third-party costs were paid to entities affiliated with GS Capital Partners and J.P. Morgan Partners.

In February 2013, the Company and the Parent Company commenced a tender offer to purchase for cash any and all of the 8.625% / 9.375% Senior Notes due 2016 (the "Parent Company Notes") and the 8.50% senior notes due 2015 (the "Fixed Rate Notes") and the senior floating rate notes due 2015 (the "Floating Rate Notes") (collectively, the "Notes"). On March 7, 2013, the Company used a portion of the aggregate proceeds of the Senior Notes offering and the borrowings under the new term loans pursuant to Amendment Agreement No. 4 to purchase all Notes tendered by March 6, 2013, the early tender date. On March 7, 2013, the Company issued redemption notices for the portions of the Company's Fixed Rate Notes and Floating Rate Notes that remained outstanding, including accrued and unpaid interest, as of March 7, 2013, which provided for the redemption of such notes on April 6, 2013 at prices of 100% of the principal amount thereof. On March 7, 2013, the Company deposited sufficient funds in trust with the trustee under the indenture governing the Fixed Rate Notes and Floating Rate Notes in full and complete satisfaction and discharge of the remaining aggregate principal amount of such notes, including accrued and unpaid interest (the “Satisfaction and Discharge”). As a result of the Satisfaction and Discharge, the trustee became the primary obligor for payment of the remaining Fixed Rate Notes and Floating Rate Notes on or about the redemption notice date of March 7, 2013. The Company had a contingent obligation for payment of the Fixed Rate Notes and Floating Rate Notes were the trustee to default on its payment obligations. The Company believed the risk of such default was remote and therefore had not recorded a related liability. The remaining Fixed Rate Notes and Floating Rate Notes were redeemed by the trustee on April 6, 2013. In connection with the tender offer and Satisfaction and Discharge of the Fixed Rate Notes and Floating Rate Notes, the Company recorded $20.5 million of charges to "Interest and Other Financing Costs, net” in the Condensed Consolidated Statements of Income for the nine months

Table of Contents

ended June 28, 2013, consisting of $3.5 million cash charges for the tender offer premium and $17.0 million of non-cash charges for the write-off of deferred financing costs.

The Company’s 5.00% senior notes, contractually due in June 2012, were paid in full during fiscal 2012.

During the nine months ended June 28, 2013, the Company advanced approximately $657.8 million to the Parent Company, which was used to pay the interest, call premiums and principal on the Parent Company Notes (see Note 16 to the condensed consolidated financial statements). During the nine months ended June 29, 2012, the Company advanced approximately $53.7 million to the Parent Company, which was used to pay the interest on the Parent Company Notes.

Management believes that the Company’s cash and cash equivalents and the unused portion of our committed credit availability under our senior secured revolving credit facility (approximately $389.6 million and $447.0 million at July 26, 2013 and June 28, 2013, respectively) will be adequate to meet anticipated cash requirements to fund working capital, capital spending, debt service obligations, refinancings and other cash needs. We believe we enjoy a strong liquidity position overall and we will continue to seek to invest strategically but prudently in certain sectors and geographies. Over time, the Company has repositioned its service portfolio so that today a significant portion of the operating income in our Food and Support Services—North America segment comes from sectors such as education, healthcare and corrections, which we believe to be economically less sensitive. In addition, we have worked to further diversify our international business by geography and sector. The Company also monitors its cash flow and the condition of the capital markets in order to be prepared to respond to changing conditions.

As of June 28, 2013, the senior secured term loan facility consisted of the following subfacilities: a U.S. dollar denominated term loan to the Company in the amount of $4,327.4 million; a yen denominated term loan to the Company in the amount of ¥5,069.5 million; a U.S. dollar denominated term loan to a Canadian subsidiary in the amount of $75.5 million; a Euro denominated term loan to an Irish subsidiary in an amount of €30.4 million; a sterling denominated term loan to a U.K. subsidiary in an amount of £82.3 million; and a Euro denominated term loan to German subsidiaries in the amount of €46.1 million. As of June 28, 2013, there was approximately $355.9 million outstanding in foreign currency borrowings.

Covenant Compliance

The senior secured credit agreement contains a number of covenants that, among other things, restrict our ability to: incur additional indebtedness; issue preferred stock or provide guarantees; create liens on assets; engage in mergers or consolidations; sell assets; pay dividends, make distributions or repurchase our capital stock; make investments, loans or advances; repay or repurchase any notes, except as scheduled or at maturity; create restrictions on the payment of dividends or other amounts to us from our restricted subsidiaries; make certain acquisitions; engage in certain transactions with affiliates; amend material agreements governing the notes (or any indebtedness that refinances the notes); and fundamentally change the Company’s business. The indenture governing the Senior Notes contains similar provisions. As of June 28, 2013, we were in compliance with these covenants.

Under the senior secured credit agreement and the indenture governing the Senior Notes, we are required to satisfy and maintain specified financial ratios and other financial condition tests and covenants. Our continued ability to meet those financial ratios, tests and covenants can be affected by events beyond our control, and we cannot assure you that we will meet those ratios, tests and covenants.

EBITDA is defined for purposes of these covenants as net income (loss) plus interest and other financing costs, net, provision (benefit) for income taxes, and depreciation and amortization. Adjusted EBITDA is defined for purposes of these covenants as EBITDA, further adjusted to give effect to adjustments required in calculating covenant ratios and compliance under our senior secured credit agreement and the indenture. EBITDA and Adjusted EBITDA are not presentations made in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), are not measures of financial performance or condition, liquidity or profitability, and should not be considered as an alternative to (1) net income, operating income or any other performance measures determined in accordance with U.S. GAAP or (2) operating cash flows determined in accordance with U.S. GAAP. Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow for management’s discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements.

Our presentation of EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Because not all companies use identical calculations, these presentations of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. We believe that the presentation of EBITDA and Adjusted EBITDA is appropriate to provide additional information about the calculation of certain financial covenants in the senior secured credit agreement and the indenture. Adjusted EBITDA is a material component of these

Table of Contents

covenants. For instance, our senior secured credit agreement and the indenture contain financial ratios that are calculated by reference to Adjusted EBITDA. Non-compliance with the maximum Consolidated Secured Debt Ratio contained in our senior secured credit agreement could result in the requirement to immediately repay all amounts outstanding under such agreement, while non-compliance with the Interest Coverage Ratio contained in our senior secured credit agreement and the Fixed Charge Coverage Ratio contained in the indenture could prohibit us from being able to incur additional indebtedness, other than the additional funding provided for under the senior secured credit agreement and pursuant to specified exceptions, and make certain restricted payments.

The following is a reconciliation of net income (loss) attributable to ARAMARK shareholder, which is a U.S. GAAP measure of our operating results, to Adjusted EBITDA as defined in our debt agreements. The terms and related calculations are defined in the senior secured credit agreement and indenture.



(dollars in millions)	Three Months Ended June 28, 2013		Three Months Ended March 29, 2013			Three Months Ended December 28, 2012			Three Months Ended September 28, 2012			Twelve Months Ended June 28, 2013
Net income (loss) attributable to ARAMARK shareholder	$	27.8	$	(17.1	)	$	52.2		$	67.1		$	130.0
Interest and other financing costs, net	80.9		110.0			99.5			86.6			377.0
Provision (benefit) for income taxes	14.7		(13.2		)	24.4			11.4			37.3
Depreciation and amortization	135.8		135.3			133.4			133.2			537.7
EBITDA	259.2		215.0			309.5			298.3			1,082.0
Share-based compensation expense⁽¹⁾	3.5		4.8			4.0			3.1			15.4
Unusual or non-recurring (gains)/losses⁽²⁾	—		6.0			2.7			(6.7		)	2.0
Pro forma EBITDA for equity method investees⁽³⁾	5.4		5.7			6.4			5.2			22.7
Seamless North America, LLC EBITDA⁽⁴⁾	—		—			(1.6		)	(5.7		)	(7.3		)
Other⁽⁵⁾	8.8		41.0			7.2			1.3			58.3
Adjusted EBITDA	$	276.9	$	272.5		$	328.2		$	295.5		$	1,173.1


(1)	Represents share-based compensation expense resulting from the application of accounting for stock options, Installment Stock Purchase Opportunities and deferred stock unit awards (see Note 9 to the condensed consolidated financial statements).

(2)

The second quarter of fiscal 2013 includes: (a) goodwill impairment charges in Spain and Korea; (b) asset write-downs mainly related to client contract investments; (c) other income related to the Company's investment (possessory interest) at one of our National Park Service sites which was terminated in the current year and (d) insurance proceeds from the impact of Hurricane Sandy. The first quarter of fiscal 2013 includes business interruption losses from the impact of Hurricane Sandy. During the fourth quarter of fiscal 2012, the Company recognized other income related to our investment (possessory interest) at one of our National Park Service sites which was terminated in the prior year.


(3)	Represents our estimated share of EBITDA from our AIM Services Co., Ltd. equity method investment not already reflected in our EBITDA. EBITDA for this equity method investee is calculated in a manner consistent with consolidated EBITDA but does not represent cash distributions received from this investee.

(4)

During the third quarter of fiscal 2011, the Company sold a noncontrolling ownership interest in Seamless North America, LLC. The terms of the sale agreement stipulated that Seamless North America, LLC cease to qualify as a Restricted Subsidiary under the senior secured credit agreement, and as a result, its EBITDA for all periods presented must be excluded from the Company's consolidated Adjusted EBITDA. Effective October 29, 2012 Seamless North America, LLC earnings are no longer included in the Company's net income attributable to ARAMARK shareholder as a result of the spinoff.

(5)

Other includes certain other miscellaneous items (The three months ended June 28, 2013 includes $6.6 million of severance and other related costs (see Note 4 to the condensed consolidated financial statements). The three months ended March 29, 2013 includes $40.8 million of severance and related costs (see Note 4 to condensed consolidated financial statements). The three months ended December 28, 2012 includes $6.0 million of severance and other related costs incurred by the Food and Support Services–International and Uniform and Career Apparel segments. The three months ended September 28, 2012 includes a gain of approximately $1.6 million resulting from the change in fair value on gasoline and diesel contracts).

Table of Contents

Our covenant requirements and actual ratios for the twelve months ended June 28, 2013 are as follows:



	Covenant Requirements	Actual Ratios
Maximum Consolidated Secured Debt Ratio (1)	5.75x	4.35x
Interest Coverage Ratio (Fixed Charge Coverage Ratio) (2)	2.00x	3.46x

(1)

Our senior secured credit agreement requires us to maintain a maximum Consolidated Secured Debt Ratio, defined as consolidated total indebtedness secured by a lien to Adjusted EBITDA, of 5.875x, being reduced over time to 5.125x by the end of 2016. Consolidated total indebtedness secured by a lien is defined in the senior secured credit agreement as total indebtedness outstanding under the senior secured credit agreement, capital leases, advances under the Receivables Facility and any other indebtedness secured by a lien reduced by the lesser of the amount of cash and cash equivalents on our balance sheet that is free and clear of any lien and $75 million. Non-compliance with the maximum Consolidated Secured Debt Ratio could result in the requirement to immediately repay all amounts outstanding under such agreement, which, if the Company’s revolving credit facility lenders failed to waive any such default, would also constitute a default under our indenture.

(2)

Our senior secured credit agreement establishes an incurrence-based minimum Interest Coverage Ratio, defined as Adjusted EBITDA to consolidated interest expense, the achievement of which is a condition for us to incur additional indebtedness and to make certain restricted payments. If we do not maintain this minimum Interest Coverage Ratio calculated on a pro forma basis for any such additional indebtedness or restricted payments, we could be prohibited from being able to incur additional indebtedness, other than the additional funding provided for under the senior secured credit agreement and pursuant to specified exceptions, and make certain restricted payments, other than pursuant to certain exceptions. The minimum Interest Coverage Ratio is 2.00x for the term of the senior secured credit agreement. Consolidated interest expense is defined in the senior secured credit agreement as consolidated interest expense excluding interest income, adjusted for acquisitions and dispositions, further adjusted for certain non-cash or nonrecurring interest expense and our estimated share of interest expense from one equity method investee. The indenture includes a similar requirement which is referred to as a Fixed Charge Coverage Ratio.

The Company and its subsidiaries, affiliates or significant shareholders may from time to time, in their sole discretion, purchase, repay, redeem or retire any of the Company’s outstanding debt securities (including any publicly issued debt securities), in privately negotiated or open market transactions, by tender offer or otherwise, or extend or refinance any of the Company’s outstanding indebtedness.

During the second quarter of fiscal 2013, the Company had a material change to its debt structure in which the Company replaced the Fixed Rate Notes, the Floating Rate Notes and the Parent Company Notes with $1.4 billion of new term loan borrowings and the issuance of $1.0 billion of 5.75% Senior Notes due 2020 (see Note 6 to the Condensed Consolidated Financial Statements). As a result of this material change in debt structure, the Company's future obligations of long-term borrowings as of June 28, 2013 is as follows (excluding the original issue discount on the senior secured term loan facilities): $71.1 million due in less than one year, $416.9 million due in 1-3 years, $3,387.5 million due in 3-5 years and $2,349.7 million due in more than 5 years.

The Company has an agreement (the "Receivables Facility") with several financial institutions whereby it sells on a continuous basis an undivided interest in all eligible accounts receivable, as defined in the Receivables Facility. The maximum amount available under the Receivables Facility is $300 million, which expires in January 2015. Pursuant to the Receivables Facility, the Company formed ARAMARK Receivables, LLC, a wholly-owned, consolidated, bankruptcy-remote subsidiary. ARAMARK Receivables, LLC was formed for the sole purpose of transferring receivables generated by certain subsidiaries of the Company. Under the Receivables Facility, the Company and certain of its subsidiaries transfer without recourse all of their accounts receivable to ARAMARK Receivables, LLC. As collections reduce previously transferred interests, interests in new, eligible receivables are transferred to ARAMARK Receivables, LLC, subject to meeting certain conditions. As of June 28, 2013, approximately $300.0 million was outstanding under the Receivables Facility and is included in “Long-Term Borrowings” in the

Table of Contents

Condensed Consolidated Balance Sheets. Amounts borrowed under the Receivables Facility fluctuate monthly based on the Company’s funding requirements and the level of qualified receivables available to collateralize the Receivables Facility.

The Company’s business activities do not include the use of unconsolidated special purpose entities, and there are no significant business transactions that have not been reflected in the accompanying financial statements. The Company is self-insured for a limited portion of the risk retained under its general liability and workers’ compensation arrangements. Self-insurance reserves are recorded based on actuarial analyses.

RECENT DEVELOPMENTS

In July 2013, the Parent Company commenced preparations for a potential initial public offering and listing of its common stock. To the extent that the offering is ultimately pursued and completed by the Parent Company, it is currently anticipated that all or a substantial portion of the net proceeds received by the Parent Company would be utilized towards repayment of the Company's outstanding indebtedness. There can be no assurance that the Parent Company will elect to proceed with such an offering or, if it does elect to proceed, when such offering would ultimately be completed.

LEGAL PROCEEDINGS

Our business is subject to various federal, state and local laws and regulations governing, among other things, the generation, handling, storage, transportation, treatment and disposal of water wastes and other substances. We engage in informal settlement discussions with federal, state, local and foreign authorities regarding allegations of violations of environmental laws in connection with our operations or businesses conducted by our predecessors or companies that we have acquired, the aggregate amount of which and related remediation costs we do not believe should have a material adverse effect on our financial condition or results of operations.

From time to time, we are a party to various legal actions and investigations involving claims incidental to the conduct of our business, including actions by clients, customers, employees, government entities and third parties, including under federal and state employment laws, wage and hour laws, immigration laws, human health and safety laws, import and export controls and customs laws, environmental laws, false claims statutes, minority business enterprise and women owned business enterprise statutes, contractual disputes, antitrust and competition laws and dram shop laws. Based on information currently available, advice of counsel, available insurance coverage, established reserves and other resources, we do not believe that any such current actions are likely to be, individually or in the aggregate, material to our business, financial condition, results of operations or cash flows. However, in the event of unexpected future developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our business, financial condition, results of operations or cash flows.

NEW ACCOUNTING STANDARD UPDATES

See Note 13 to the Condensed Consolidated Financial Statements for a full description of recent accounting standard updates, including the expected dates of adoption.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views as to future events and financial performance with respect to our operations. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “aim,” “anticipate,” “are confident,” “estimate,” “expect,” “will be,” “will continue,” “will likely result,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause such a difference include: unfavorable economic conditions, including ramifications of any future terrorist attacks or increased security alert levels; increased operating costs, including increased food costs, labor-related, energy or product sourcing and distribution costs; shortages of qualified personnel or increases in labor costs; the impact on our business of healthcare reform legislation; costs and possible effects of further unionization of our workforce; liability resulting from our participation in multi-employer defined benefit pension plans; currency risks and other risks associated with international markets; risks associated with acquisitions, including acquisition integration issues and costs; our ability to integrate and derive the expected benefits from our recent acquisitions; competition; a decline in attendance at client facilities; the unpredictability of sales and expenses due to contract terms and terminations; the impact of natural disasters or a flu pandemic on our sales and operating results; the risk that clients may become insolvent; the risk that our insurers may become insolvent or may liquidate; the contract intensive nature of our business, which may lead to client disputes; high leverage; claims

Table of Contents

relating to the provision of food services; costs of compliance with governmental regulations and government investigations; liability associated with noncompliance with our business conduct policy and governmental regulations, including regulations pertaining to food services, the environment, the Federal school lunch program, Federal and state employment and wage and hour laws, minority business enterprise and women-owned business enterprise statutes, human health and safety laws and import and export controls and customs laws; dram shop compliance and litigation; contract compliance and administration issues, inability to retain current clients and renew existing client contracts; a determination by customers to reduce their outsourcing and use of preferred vendors; seasonality; our competitor’s activities or announced planned activities; the Company's ability to successfully execute its growth and cost control initiatives; the timing of the Company's execution of its growth and cost control initiatives; the effect on our operations of increased leverage and limitations on our flexibility as a result of increased restrictions in our debt agreements; potential future conflicts of interest between our Sponsors and other stakeholders; the impact on our business if we are unable to generate sufficient cash to service all of our indebtedness; the inability of our subsidiaries to generate enough cash flow to repay our debt; risks related to the structuring of our debt; our potential inability to repurchase our notes upon a change of control; and other risks that are set forth in the “Risk Factors,” “Legal Proceedings” and “Management Discussion and Analysis of Financial Condition and Results of Operations” sections and other sections of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Forward-looking statements speak only as of the date made. We undertake no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date as of which they are made. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on the forward-looking statements included in this report or that may be made in other filings with the Securities and Exchange Commission or elsewhere from time to time by, or on behalf of, us.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to the impact of interest rate changes and manage this exposure through the use of variable-rate and fixed-rate debt and by utilizing interest rate swaps. We do not enter into contracts for trading purposes and do not use leveraged instruments. The information below summarizes our market risks associated with debt obligations and other significant financial instruments as of June 28, 2013 (See Notes 6 and 7 to the Condensed Consolidated Financial Statements). 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. For debt obligations, the table presents principal cash flows and related interest rates by contractual fiscal year of maturity. Variable interest rates disclosed represent the weighted-average rates of the portfolio at June 28, 2013. For interest rate swaps, the table presents the notional amounts and related weighted-average interest rates by the fiscal year of maturity. The variable rates presented are the average forward rates for the term of each contract.



	Expected Fiscal Year of Maturity
As of June 28, 2013	2013				2014				2015				2016				2017				Thereafter				Total			Fair Value
	(US$ equivalent in millions)
Debt:
Fixed rate	$	3			$	15			$	10			$	7			$	6			$	1,013		^(a)	$	1,054		$	1,074
Average interest rate	5.0		%		5.0		%		5.0		%		5.0		%		5.0		%		5.7		%		5.7		%
Variable rate	$	28		^(b)	$	43		^(b)	$	350		^(b)(c)	$	3,246		^(b)	$	156		^(b)(d)	$	1,348		^(b)	$	5,171		$	5,161
Average interest rate	8.9		%		4.4		%		2.0		%		3.8		%		4.5		%		4.0		%		3.8		%
Interest Rate Swaps:
Receive variable/pay fixed					$	582							$	574			$	150			$	150						$	(54	)
Average pay rate					3.5		%						2.8		%		1.0		%		1.6		%
Average receive rate					0.3		%						0.3		%		0.3		%		0.3		%



(a)	Balance includes $1,000 million of senior notes callable by us at any time with any applicable prepayment penalty.



(b)	Balance includes $35 million for fiscal 2014, $47 million for fiscal 2015, $3,243 million for fiscal 2016, $14 million for fiscal 2017 and $1,348 million thereafter of senior secured term loan facilities callable by us at any time.



(c)	Balance includes $300 million of borrowings under the Receivables Facility.



(d)	Balance includes $142 million of senior secured revolving credit facility.


ITEM 4.	CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

No change in the Company’s internal control over financial reporting occurred during the Company’s third fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Legal Proceedings” for a description of the Company’s legal proceedings.

ITEM 6. EXHIBITS



3.1	Certificate of Incorporation of ARAMARK Corporation (incorporated by reference to Exhibit 3.1 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on April 5, 2007, pursuant to the Exchange Act (file number 001-04762)).
3.2	By-laws of ARAMARK Corporation (incorporated by reference to Exhibit 3.2 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on April 5, 2007, pursuant to the Exchange Act (file number 001-04762)).
10.1	Agreement Relating to Employment and Post Employment Competition dated July 1, 2013 between ARAMARK Corporation and Christina Morrison.
10.2	Fourth Amended and Restated ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.3	Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.2 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.4	Form of time-based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.5	Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.6	Form of Replacement Stock Option Award Agreement (incorporated by reference to Exhibit 10.5 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.7	Amendment dated June 25, 2013 to Employment Letter Agreement dated May 7, 2012 between ARAMARK Corporation and Eric J. Foss (incorporated by reference to Exhibit 10.6 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
31.1	Certification of Eric Foss pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of L. Frederick Sutherland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Eric Foss and L. Frederick Sutherland pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from ARAMARK Corporation’s Quarterly Report on Form 10-Q for the period ended June 28, 2013 formatted in XBRL: (i) Condensed Consolidated Balance Sheets as of June 28, 2013 and September 28, 2012; (ii) Condensed Consolidated Statements of Income for the three months ended June 28, 2013 and June 29, 2012; (iii) Condensed Consolidated Statements of Income for the nine months ended June 28, 2013 and June 29, 2012; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended June 28, 2013 and June 29, 2012; (v) Condensed Consolidated Statements of Equity for the nine months ended June 28, 2013 and June 29, 2012; and (vi) Notes to Condensed Consolidated Financial Statements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	ARAMARK CORPORATION

August 7, 2013	/s/ JOSEPH MUNNELLY
	Joseph Munnelly
	Senior Vice President, Controller and Chief Accounting Officer

EXHIBIT INDEX



3.1	Certificate of Incorporation of ARAMARK Corporation (incorporated by reference to Exhibit 3.1 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on April 5, 2007, pursuant to the Exchange Act (file number 001-04762)).
3.2	By-laws of ARAMARK Corporation (incorporated by reference to Exhibit 3.2 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on April 5, 2007, pursuant to the Exchange Act (file number 001-04762)).
10.1	Agreement Relating to Employment and Post Employment Competition dated July 1, 2013 between ARAMARK Corporation and Christina Morrison.
10.2	Fourth Amended and Restated ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.3	Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.2 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.4	Form of time-based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.5	Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.4 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.6	Form of Replacement Stock Option Award Agreement (incorporated by reference to Exhibit 10.5 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
10.7	Amendment dated June 25, 2013 to Employment Letter Agreement dated May 7, 2012 between ARAMARK Corporation and Eric J. Foss (incorporated by reference to Exhibit 10.6 to ARAMARK Corporation's Current Report on Form 8-K filed with the SEC on June 26, 2013, pursuant to the Exchange Act (file number 001-04762)).
31.1	Certification of Eric Foss pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of L. Frederick Sutherland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Eric Foss and L. Frederick Sutherland pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial information from ARAMARK Corporation’s Quarterly Report on Form 10-Q for the period ended June 28, 2013 formatted in XBRL: (i) Condensed Consolidated Balance Sheets as of June 28, 2013 and September 28, 2012; (ii) Condensed Consolidated Statements of Income for the three months ended June 28, 2013 and June 29, 2012; (iii) Condensed Consolidated Statements of Income for the nine months ended June 28, 2013 and June 29, 2012; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended June 28, 2013 and June 29, 2012; (v) Condensed Consolidated Statements of Equity for the nine months ended June 28, 2013 and June 29, 2012; and (vi) Notes to Condensed Consolidated Financial Statements.

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Avg

Aramark Services 10-Q2013 Q3 Quarterly report

Content analysis