424B3 1 d424b3.htm PROSPECTUS SUPPLEMENT Prospectus Supplement

FILED PURSUANT TO RULE 424(B)(3)

File Number 333-144884

ARAMARK CORPORATION

SUPPLEMENT NO. 2 TO

MARKET MAKING PROSPECTUS DATED

AUGUST 7, 2007

THE DATE OF THIS SUPPLEMENT IS NOVEMBER 14, 2007

ON NOVEMBER 14, 2007, ARAMARK CORPORATION FILED THE ATTACHED CURRENT REPORT ON FORM 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 14, 2007

 

ARAMARK CORPORATION

(Exact name of registrant as specified in charter)

 

 

Delaware   001-04762   95-2051630

(State or Other Jurisdiction

of Incorporation)

   (Commission File Number)  

(IRS Employer

Identification No.)

 

1101 Market Street

Philadelphia, Pennsylvania

   19107
(Address of Principal Executive Offices)   Zip Code

Registrant’s telephone, including area code: 215-238-3000

N/A

(Former name and former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following information, including the financial reports and schedules attached as an exhibit to this Form 8-K (which are incorporated by reference herein), is furnished pursuant to Item 2.02. Results of Operations and Financial Condition.

The information contained in this Current Report, including exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information contained in this Current Report shall not be incorporated by reference into any registration statement or other document or filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

On November 14, 2007, ARAMARK Corporation will hold a conference call announcing its financial results for the quarter and fiscal year ended September 28, 2007. A copy of the financial reports and schedules that are the subject of the conference call are attached hereto as exhibit 99.1.

ITEM 9.01. Financial Statements and Exhibits

(d) Exhibits.

 

Number  

Description

    Method of Filing
99.1   ARAMARK Corporation financial reports and schedules.    Furnished herewith

SIGNATURE

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

 

    ARAMARK CORPORATION
Date: November 14, 2007   By:  

/s/ L. FREDERICK SUTHERLAND

  Name:   L. Frederick Sutherland
  Title:   Executive Vice President and
    Chief Financial Officer

Index to Exhibits

 

Number  

Description

    Method of Filing
99.1   ARAMARK Corporation financial reports and schedules.    Furnished herewith

EXHIBIT 99.1

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands)

 

     Successor         Predecessor  
     Three Months Ended
September 28, 2007		         Three Months Ended
September 29, 2006		  

Sales

    $ 3,148,724       $ 2,932,112  
                  

Costs and Expenses:

         

Cost of services provided

      2,832,320         2,638,565  

Depreciation and amortization

      121,028         88,284  

Selling and general corporate expenses

      48,585         49,038  
                  
     3,001,933         2,775,887  
                  

Operating income

      146,791         156,225  

Interest and other financing costs, net

      128,258         34,402  
                  

Income from continuing operations before income taxes and cumulative effect of change in accounting principle

      18,533         121,823  

Provision for income taxes

      6,260         47,202  
                  

Income from continuing operations before cumulative effect of change in accounting principle

      12,273         74,621  

Income from discontinued operations, net

      —           3,093  

Cumulative effect of change in accounting principle, net

      —           (3,351 )
                  

Net income

    $ 12,273       $ 74,363  
                  

Notes:

The three month period of fiscal 2007 includes $1.1 million of merger-related expenses, $9.9 million of SFAS 123R stock-based compensation expense and $30.7 million of increased buyout-related intangibles amortization.

The three month period of fiscal 2006 includes $5.7 million of merger-related expenses and $5.0 million of SFAS 123R stock-based compensation expense.

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands)

 

     Successor          Predecessor  
    

Period from
January 27, 2007

through
September 28, 2007

         

Period from
September 30, 2006

through
January 26, 2007

   

Fiscal Year

Ended
September 29, 2006

  

Sales

    $ 8,438,448        $ 3,945,868    $ 11,621,173  
                          

Costs and Expenses:

           

Cost of services provided

      7,623,684          3,586,961      10,537,383  

Depreciation and amortization

      322,480          116,438      339,337  

Selling and general corporate expenses

      126,874          173,934      178,922  

Goodwill impairment

      —            —        35,000  

Other (income) expense

      (21,177 )        —        —    
                          
     8,051,861          3,877,333      11,090,642  
                          

Operating income

      386,587          68,535      530,531  

Interest and other financing costs, net

      365,887          48,672      139,945  
                          

Income from continuing operations before income taxes and cumulative effect of change in accounting principle

      20,700          19,863      390,586  

Provision for income taxes

      4,641          5,063      129,230  
                          

Income from continuing operations before cumulative effect of change in accounting principle

      16,059          14,800      261,356  

Income from discontinued operations, net

      —            —        3,093  

Cumulative effect of change in accounting principle, net

      —            —        (3,351 )
                          

Net income

    $ 16,059        $ 14,800    $ 261,098  
                          

Notes:

The Successor period from January 27, 2007 through September 28, 2007 includes $5.7 million of merger-related expenses, $27.5 million of SFAS 123R stock-based compensation expense, $82.3 million of increased buyout-related intangibles amortization, a $12.8 million charge for the cost of obtaining a bridge financing facility for the merger and a $3.8 million currency transaction gain. The results for this period also include a $21.2 million gain related to the sale of our ownership stake in SMG.

The Predecessor period from September 30, 2006 through January 26, 2007 includes $112.1 million of merger-related expenses (inclusive of a $77.1 million charge for stock-based compensation expense) and $7.0 million of SFAS 123R stock-based compensation expense.

The twelve month period of fiscal 2006 includes $6.4 million of merger-related expenses and $22.0 million of SFAS 123R stock-based compensation expense. The twelve month period of fiscal 2006 also includes a pre-tax charge of $45.9 million to reflect a goodwill impairment charge, inventory write-downs and severance accruals. The twelve month period of fiscal 2006 also includes a $14.9 million favorable income tax adjustment based on the settlement of certain open tax years.

ARAMARK CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED BALANCE SHEET DATA

(Unaudited)

(In Thousands)

 

     Successor         Predecessor
     September 28, 2007         September 29, 2006
Assets         

Current Assets

    $ 1,643,901       $ 1,526,844

Property and Equipment, net

      1,205,121         1,196,830

Goodwill

      4,627,751         1,747,094

Other Intangible Assets

      2,375,571         297,986

Other Assets

      710,164         494,563
                
   $ 10,562,508       $ 5,263,317
                
Liabilities and Shareholders’ Equity         

Current Liabilities (1)

    $ 1,762,788       $ 1,586,696

Long-Term Borrowings

      5,839,123         1,763,088

Other Liabilities

      1,362,248         391,941

Common Stock Subject to Repurchase

      179,677         —  

Total Shareholders’ Equity

      1,418,672         1,521,592
                
   $ 10,562,508       $ 5,263,317
                

(1) - Includes $51.4 million and $40.2 million of current maturities of long-term borrowings as of September 28, 2007 and September 29, 2006, respectively.

ARAMARK CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED CASH FLOW DATA

(Unaudited)

(In Thousands)

 

     Successor          Predecessor  
     Period from
January 27, 2007
through
September 28, 2007		          Period from
September 30, 2006
through
January 26, 2007		    

Fiscal Year

Ended
September 29, 2006

  

Cash flows from operating activities:

          

Net income

    $ 16,059        $ 14,800     $ 261,098  

Less: Income from discontinued operations, net

      —            —         (3,093 )

Adjustments to reconcile net income to net cash provided by operating activities:

          

Depreciation and amortization

      322,480          116,438       339,337  

Cumulative effect of change in accounting principle, net

      —            —         3,351  

Income taxes deferred

      (118,668 )        (11,640 )     (53,722 )

Goodwill impairment

      —            —         35,000  

Stock-based compensation expense

      27,518          84,059       22,000  

Gain from sale of investment

      (21,177 )        —         —    

Changes in noncash working capital

      302,722          (269,729 )     7,989  

Net proceeds from sale of receivables

      22,000          —         —    

Other operating activities

      9,463          (10,079 )     (26,163 )
                           

Net cash provided by (used in) operating activities

      560,397          (76,151 )     585,797  
                           

Cash flows from investing activities:

          

Net purchases of property and equipment and client contract investments

      (235,791 )        (61,479 )     (270,734 )

Proceeds from sale of investment

      285,982          —         —    

Acquisition of ARAMARK Corporation

      (6,100,687 )        —         —    

Acquisitions and other investing activities

      (55,084 )        (78,473 )     (125,783 )
                           

Net cash used in investing activities

      (6,105,580 )        (139,952 )     (396,517 )
                           

Cash flows from financing activities:

          

Net proceeds of additional long-term borrowings

      3,787,339          285,970       (80,787 )

Proceeds from issuance of common stock

      —            9,666       45,251  

Capital contributions

      1,844,136          —         —    

Repurchase of stock

      (750 )        —         (113,460 )

Payment of dividend

      —            (12,624 )     (50,512 )

Other financing activities

      (138,508 )        22,016       1,841  
                           

Net cash provided by (used in) financing activities

      5,492,217          305,028       (197,667 )
                           

Increase (decrease) in cash and cash equivalents

    $ (52,966 )      $ 88,925     $ (8,387 )
                           

ARAMARK CORPORATION AND SUBSIDIARIES

SALES AND OPERATING INCOME BY SEGMENT

SUPPLEMENTAL DATA

(Unaudited)

(In Thousands)

 

     Successor          Predecessor  
    

Three Months Ended

September 28, 2007

         

Three Months Ended

September 29, 2006

  
Sales        

Food and Support Services - Domestic

    $ 2,153,016        $ 2,033,036  

Food and Support Services - International

      578,789          499,459  

Uniform and Career Apparel

      416,919          399,617  
                   
   $ 3,148,724        $ 2,932,112  
                   
Operating Income        

Food and Support Services - Domestic (1)

    $ 116,125        $ 129,718  

Food and Support Services - International (2)

      21,061          15,989  

Uniform and Career Apparel (3)

      29,748          30,257  

Corporate (4)

      (20,143 )        (19,739 )
                   
   $ 146,791        $ 156,225  
                   

Notes:

The reporting segments have been modified such that the results of our Canadian food and support services operations are now included in the Food and Support Services - Domestic segment as opposed to previously being included in the Food and Support Services - International segment. Additionally, our previous Uniform Rental and Uniform Direct Marketing segments have been combined into a single Uniform and Career Apparel segment. All prior period results have been adjusted to conform to this new presentation.

 

(1) The three month period of fiscal 2007 includes $23.4 million of increased buyout-related intangibles amortization.
(2) The three month period of fiscal 2007 includes $1.4 million of increased buyout-related intangibles amortization.
(3) The three month period of fiscal 2007 includes $5.9 million of increased buyout-related intangibles amortization.
(4) The three month period of fiscal 2007 includes $1.1 million of merger-related expenses and $9.9 million of SFAS 123R stock-based compensation expense. The three month period of fiscal 2006 includes $5.7 million of merger-related expenses and $5.0 million of SFAS 123R stock-based compensation expense.

ARAMARK CORPORATION AND SUBSIDIARIES

SALES AND OPERATING INCOME BY SEGMENT

SUPPLEMENTAL DATA

(Unaudited)

(In Thousands)

 

     Successor           Predecessor  
     Period from
January 27, 2007
through
September 28, 2007		           Period from
September 30, 2006
through
January 26, 2007		    

Fiscal Year

Ended
September 29, 2006

  
Sales            

Food and Support Services - Domestic

    $ 5,758,952          $ 2,674,435     $ 8,001,908  

Food and Support Services - International

      1,561,579            714,550       1,999,028  

Uniform and Career Apparel

      1,117,917            556,883       1,620,237  
                             
   $ 8,438,448          $ 3,945,868     $ 11,621,173  
                             
Operating Income            

Food and Support Services - Domestic (1)

    $ 267,457          $ 130,735     $ 433,855  

Food and Support Services - International (2)

      64,691            22,621       73,440  

Uniform and Career Apparel (3)

      82,029            51,161       89,701  
                             
     414,177            204,517       596,996  

Corporate (4)

      (48,767 )          (135,982 )     (66,465 )

Other income (expense) (5)

      21,177            —         —    
                             
   $ 386,587          $ 68,535     $ 530,531  
                             

Notes:

The reporting segments have been modified such that the results of our Canadian food and support services operations are now included in the Food and Support Services - Domestic segment as opposed to previously being included in the Food and Support Services - International segment. Additionally, our previous Uniform Rental and Uniform Direct Marketing segments have been combined into a single Uniform and Career Apparel segment. All prior period results have been adjusted to conform to this new presentation.

 

(1) The Successor period from January 27, 2007 through September 28, 2007 includes $63.3 million of increased buyout-related intangibles amortization.
(2) The Successor period from January 27, 2007 through September 28, 2007 includes $2.7 million of increased buyout-related intangibles amortization.
(3) The Successor period from January 27, 2007 through September 28, 2007 includes $16.3 million of increased buyout-related intangibles amortization. The twelve month period of fiscal 2006 includes a pre-tax charge of $45.9 million to reflect a goodwill impairment charge, inventory write-downs and severance accruals.
(4) The Successor period from January 27, 2007 through September 28, 2007 includes $5.7 million of merger-related expenses, $27.5 million of SFAS 123R stock-based compensation expense and a $3.8 million currency transaction gain. The Predecessor period from September 30, 2006 through January 26, 2007 includes $112.1 million of merger-related expenses (inclusive of a $77.1 million charge for stock-based compensation expense) and $7.0 million of SFAS 123R stock-based compensation expense. The twelve month period of fiscal 2006 includes $6.4 million of merger-related expenses and $22.0 million of SFAS 123R stock-based compensation expense.
(5) The Successor period from January 27, 2007 through September 28, 2007 includes a $21.2 million gain related to the sale of our stake in SMG.

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED CONSOLIDATED SALES GROWTH

(Unaudited)

(In thousands)

Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions, divestitures, the impact of currency translation and conforming the fiscal reporting period of a subsidiary to that of ARAMARK Corporation, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. Elimination of the currency translation effect provides constant currency comparisons without the distortion of currency rate fluctuations.

Although ARAMARK Corporation continued as the same legal entity after the going-private transaction (the “Transaction”), the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Three Months Ended    

%

Change

  
     September 28, 2007     September 29, 2006    

ARAMARK Corporation Consolidated Sales (as reported)

    $ 3,148,724     $ 2,932,112     7 %

Effect of Currency Translation

      —         42,818    

Effect of Acquisitions and Divestitures

      (13,201 )     (10,272 )  
                  

ARAMARK Corporation Consolidated Sales (as adjusted)

    $ 3,135,523     $ 2,964,658     6 %
                  
     Fiscal Year Ended    

%

Change

  
     September 28, 2007     September 29, 2006    

ARAMARK Corporation Consolidated Sales (as reported)

    $ 12,384,316     $ 11,621,173     7 %

Effect of Currency Translation

      —         152,801    

Effect of Acquisitions and Divestitures

      (79,646 )     (54,662 )  

Conforming the Fiscal Reporting Period of a Subsidiary to that of ARAMARK Corporation

      (25,223 )     —      
                  

ARAMARK Corporation Consolidated Sales (as adjusted)

    $ 12,279,447     $ 11,719,312     5 %
                  

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED CONSOLIDATED OPERATING INCOME

(Unaudited)

(In thousands)

Management believes that presentation of operating income, adjusted to eliminate the effects of items related to the going-private transaction (the “Transaction”), the gain on the sale of the Company’s 50% interest in SMG, a venue management company, and the other items described below, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.

Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Three Months Ended   

%

Change

  
     September 28, 2007     September 29, 2006   

ARAMARK Corporation Consolidated Operating Income (as reported)

    $ 146,791     $ 156,225   

Transaction-Related Charges

      1,146       5,678   

Stock-Based Compensation under SFAS 123R

      9,940       5,158   

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      30,747       —     

Goodwill Impairment and Related Adjustments in the Uniform and Career Apparel Segment

      —         3,010   
                 

ARAMARK Corporation Consolidated Operating Income (as adjusted)

    $ 188,624     $ 170,071    11 %
                 
     Fiscal Year Ended   

%

Change

  
     September 28, 2007     September 29, 2006   

ARAMARK Corporation Consolidated Operating Income (as reported)

    $ 455,122     $ 530,531   

Transaction-Related Charges

      117,825       6,428   

Gain on Sale of 50% Interest in SMG

      (21,177 )     —     

Currency Transaction Gain

      (3,804 )     —     

Stock-Based Compensation under SFAS 123R

      34,625       22,708   

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      82,332       —     

Goodwill Impairment and Related Adjustments in the Uniform and Career Apparel Segment

      —         45,947   
                 

ARAMARK Corporation Consolidated Operating Income (as adjusted)

    $ 664,923     $ 605,614    10 %
                 

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN

(Unaudited)

(In thousands)

Management believes that presentation of operating income, adjusted to eliminate the effects of items related to the the going-private transaction (the “Transaction”), the gain on the sale of the Company’s 50% interest in SMG, a venue management company, and the other items described below, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. The table below is presented to illustrate the effect of these adjustments on operating income margin, which we define as operating income expressed as a percentage of sales.

Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Fiscal Year Ended  
     September 28, 2007     September 29, 2006  

ARAMARK Corporation Consolidated Sales (as reported)

    $ 12,384,316     $ 11,621,173  
                

ARAMARK Corporation Consolidated Operating Income (as reported)

    $ 455,122     $ 530,531  
                

ARAMARK Corporation Consolidated Operating Income Margin (as reported)

      3.67 %     4.57 %
                

ARAMARK Corporation Consolidated Sales (as reported)

    $ 12,384,316     $ 11,621,173  
                

ARAMARK Corporation Consolidated Operating Income (as reported)

    $ 455,122     $ 530,531  

Transaction-Related Charges

      117,825       6,428  

Gain on Sale of 50% Interest in SMG

      (21,177 )     —    

Currency Transaction Gain

      (3,804 )     —    

Stock-Based Compensation under SFAS 123R

      34,625       22,708  

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      82,332       —    

Goodwill Impairment and Related Adjustments in the Uniform and Career Apparel Segment

      —         45,947  
                

ARAMARK Corporation Consolidated Operating Income (as adjusted)

    $ 664,923     $ 605,614  
                

ARAMARK Corporation Consolidated Operating Income Margin (as adjusted)

      5.37 %     5.21 %
                

 

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED FOOD AND SUPPORT SERVICES - DOMESTIC SALES GROWTH

(Unaudited)

(In thousands)

Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions, divestitures and the impact of currency translation, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. Elimination of the currency translation effect provides constant currency comparisons without the distortion of currency rate fluctuations.

Although ARAMARK Corporation continued as the same legal entity after the going-private transaction (the “Transaction”), the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Three Months Ended    

%

Change

  
     September 28, 2007     September 29, 2006    

Food and Support Services - Domestic Sales (as reported)

    $ 2,153,016     $ 2,033,036     6 %

Effect of Currency Translation

      —         8,825    

Effect of Acquisitions and Divestitures

      (2,161 )     (1,638 )  
                  

Food and Support Services - Domestic Sales (as adjusted)

    $ 2,150,855     $ 2,040,223     5 %
                  
     Fiscal Year Ended    

%

Change

  
     September 28, 2007     September 29, 2006    

Food and Support Services - Domestic Sales (as reported)

    $ 8,433,387     $ 8,001,908     5 %

Effect of Currency Translation

      —         13,607    

Effect of Acquisitions and Divestitures

      (29,366 )     (15,138 )  
                  

Food and Support Services - Domestic Sales (as adjusted)

    $ 8,404,021     $ 8,000,377     5 %
                  

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED FOOD AND SUPPORT SERVICES - DOMESTIC OPERATING INCOME

(Unaudited)

(In thousands)

Management believes that presentation of operating income, adjusted to eliminate the effects of the incremental amortization of acquisition-related customer relationship intangible assets resulting from the going-private transaction (the “Transaction”), provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.

Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Three Months Ended   

%

Change

  
     September 28, 2007    September 29, 2006   

Food and Support Services - Domestic Operating Income (as reported)

    $ 116,125    $ 129,718   

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      23,410      —     
                

Food and Support Services - Domestic Operating Income (as adjusted)

    $ 139,535    $ 129,718    8 %
                
     Fiscal Year Ended   

%

Change

  
     September 28, 2007    September 29, 2006   

Food and Support Services - Domestic Operating Income (as reported)

    $ 398,192    $ 433,855   

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      63,324      —     
                

Food and Support Services - Domestic Operating Income (as adjusted)

    $ 461,516    $ 433,855    6 %
                

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED FOOD AND SUPPORT SERVICES - INTERNATIONAL SALES GROWTH

(Unaudited)

(In thousands)

Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions, divestitures, the impact of currency translation and conforming the fiscal reporting period of a subsidiary to that of ARAMARK Corporation, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. Elimination of the currency translation effect provides constant currency comparisons without the distortion of currency rate fluctuations.

Although ARAMARK Corporation continued as the same legal entity after the going-private transaction (the “Transaction”), the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Three Months Ended    

%

Change

  
     September 28, 2007     September 29, 2006    

Food and Support Services - International Sales (as reported)

    $ 578,789     $ 499,459     16 %

Effect of Currency Translation

      —         33,993    

Effect of Acquisitions and Divestitures

      —         (631 )  
                  

Food and Support Services - International Sales (as adjusted)

    $ 578,789     $ 532,821     9 %
                  
     Fiscal Year Ended    

%

Change

  
     September 28, 2007     September 29, 2006    

Food and Support Services - International Sales (as reported)

    $ 2,276,129     $ 1,999,028     14 %

Effect of Currency Translation

      —         139,194    

Effect of Acquisitions and Divestitures

      (12,383 )     (5,994 )  

Conforming the Fiscal Reporting Period of a Subsidiary to that of ARAMARK Corporation

      (25,223 )     —      
                  

Food and Support Services - International Sales (as adjusted)

    $ 2,238,523     $ 2,132,228     5 %
                  

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED FOOD AND SUPPORT SERVICES - INTERNATIONAL OPERATING INCOME

(Unaudited)

(In thousands)

Management believes that presentation of operating income, adjusted to eliminate the effects of the incremental amortization of acquisition-related customer relationship intangible assets resulting from the going-private transaction (the “Transaction”), provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.

Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Three Months Ended       
     September 28, 2007    September 29, 2006       

Food and Support Services - International Operating Income (as reported)

    $ 21,061    $ 15,989   

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      1,406      —     
                

Food and Support Services - International Operating Income (as adjusted)

    $ 22,467    $ 15,989   
                
     Fiscal Year Ended   

%

Change

  
     September 28, 2007    September 29, 2006   

Food and Support Services - International Operating Income (as reported)

    $ 87,312    $ 73,440   

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      2,705      —     
                

Food and Support Services - International Operating Income (as adjusted)

    $ 90,017    $ 73,440    23 %
                

 

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED UNIFORM AND CAREER APPAREL OPERATING INCOME

(Unaudited)

(In thousands)

Management believes that presentation of operating income, adjusted to eliminate the effects of the incremental amortization of acquisition-related customer relationship intangible assets resulting from the going-private transaction (the “Transaction”) and a charge for goodwill impairment and adjustments to asset and liability carrying values, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.

Although ARAMARK Corporation continued as the same legal entity after the Transaction, the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Three Months Ended   

%

Change

  
     September 28, 2007    September 29, 2006   

Uniform and Career Apparel Operating Income (as reported)

    $ 29,748    $ 30,257   

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      5,931      —     

Goodwill Impairment and Related Adjustments

      —        3,010   
                

Uniform and Career Apparel Operating Income (as adjusted)

    $ 35,679    $ 33,267    7 %
                
     Fiscal Year Ended   

%

Change

  
     September 28, 2007    September 29, 2006   

Uniform and Career Apparel Operating Income (as reported)

    $ 133,190    $ 89,701   

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      16,303      —     

Goodwill Impairment and Related Adjustments

      —        45,947   
                

Uniform and Career Apparel Operating Income (as adjusted)

    $ 149,493    $ 135,648    10 %
                

 

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED UNIFORM AND CAREER APPAREL OPERATING INCOME MARGIN

(Unaudited)

(In thousands)

Management believes that presentation of operating income, adjusted to eliminate the effects of the incremental amortization of acquisition-related customer relationship intangible assets resulting from the going-private transaction (the “Transaction”) and a charge for goodwill impairment and adjustments to asset and liability carrying values, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. The table below is presented to illustrate the effect of this adjustment on operating income margin, which we define as operating income expressed as a percentage of sales.

 

     Three Months Ended  
     September 28, 2007     September 29, 2006  

Uniform and Career Apparel Sales (as reported)

    $ 416,919     $ 399,617  
                

Uniform and Career Apparel Operating Income (as reported)

    $ 29,748     $ 30,257  
                

Uniform and Career Apparel Operating Income Margin (as reported)

      7.14 %     7.57 %
                

Uniform and Career Apparel Sales (as reported)

    $ 416,919     $ 399,617  
                

Uniform and Career Apparel Operating Income (as reported)

    $ 29,748     $ 30,257  

Incremental Amortization of Acquisition-Related Customer Relationship Intangible Assets Resulting from the Transaction

      5,931       —    

Goodwill Impairment and Related Adjustments

      —         3,010  
                

Uniform and Career Apparel Operating Income (as adjusted)

    $ 35,679     $ 33,267  
                

Uniform and Career Apparel Operating Income Margin (as adjusted)

      8.56 %     8.32 %
                

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED CORPORATE EXPENSES

(Unaudited)

(In thousands)

Management believes that presentation of corporate expenses, adjusted to eliminate the effects of charges related to the going-private transaction (the “Transaction”), a currency transaction gain and stock-based compensation expense under SFAS 123R, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.

Although ARAMARK Corporation continued as the same legal entity after the going-private transaction (the “Transaction”), the consolidated statements of income are presented for two periods: Predecessor and Successor, which relate to the period preceding the Transaction and the period succeeding the Transaction, respectively. The Company refers to the operations of ARAMARK Corporation and subsidiaries for both the Predecessor and Successor periods. We have prepared our discussion of the results of operations for the fiscal year ended September 28, 2007 by comparing the mathematical combination of the Successor and Predecessor periods in the fiscal year ended September 28, 2007 to the Predecessor fiscal year ended September 29, 2006. Although this presentation does not comply with U.S. generally accepted accounting principles (GAAP), we believe that it provides a meaningful method of comparison. The combined operating results have not been prepared as pro forma results under applicable regulations and may not reflect the actual results we would have achieved absent the Transaction and may not be predictive of future results of operations.

 

     Three Months Ended  
     September 28, 2007     September 29, 2006  

Corporate Expenses (as reported)

    $ 20,143     $ 19,739  

Transaction-Related Charges

      (1,146 )     (5,678 )

Stock-Based Compensation under SFAS 123R

      (9,940 )     (5,158 )
                

Corporate Expenses (as adjusted)

    $ 9,057     $ 8,903  
                
     Fiscal Year Ended  
     September 28, 2007     September 29, 2006  

Corporate Expenses (as reported)

    $ 184,749     $ 66,465  

Transaction-Related Charges

      (117,825 )     (6,428 )

Currency Transaction Gain

      3,804       —    

Stock-Based Compensation under SFAS 123R

      (34,625 )     (22,708 )
                

Corporate Expenses (as adjusted)

    $ 36,103     $ 37,329  
                

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED EBITDA

(Unaudited)

(In millions)

The following is a reconciliation of income from continuing operations before cumulative effect of change in accounting principle, which is a GAAP measure of our operating results, to Adjusted EBITDA as defined in our debt agreements. The terms and related calculations are defined in the Company’s senior secured credit agreement and indenture.

 

    

Twelve Months

Ended

September 28, 2007

  

Income from continuing operations before cumulative effect of change in accounting principle

    $ 30.9  

Interest and other financing costs, net

      414.6  

Provision for income taxes

      9.7  

Depreciation and amortization

      438.9  
        

EBITDA

      894.1  

Stock-based compensation expense

      111.6  

Unusual or non-recurring gains and losses

      (23.7 )

Pro forma EBITDA for equity method investees

      1.8  

Pro forma EBITDA for current year acquisitions

      1.4  

Costs related to the merger transaction

      40.4  

Other

      4.6  
        

Adjusted EBITDA

    $ 1,030.2  
        

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED EBITDA

(Unaudited)

(In millions)

The following is a reconciliation of income from continuing operations before cumulative effect of change in accounting principle, which is a GAAP measure of our operating results, to Adjusted EBITDA as defined in our debt agreements. The terms and related calculations are defined in the Company’s senior secured credit agreement and indenture.

 

    

Twelve Months

Ended

June 29, 2007

  

Income from continuing operations before cumulative effect of change in accounting principle

    $ 93.2  

Interest and other financing costs, net

      320.7  

Provision for income taxes

      50.7  

Depreciation and amortization

      406.1  
        

EBITDA

      870.7  

Stock-based compensation expense

      107.1  

Unusual or non-recurring gains and losses

      (25.1 )

Pro forma EBITDA for equity method investees

      0.2  

Pro forma EBITDA for current year acquisitions

      0.7  

Costs related to the merger transaction

      45.0  

Other

      10.4  
        

Adjusted EBITDA

    $ 1,009.0  
        

ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED EBITDA

(Unaudited)

(In millions)

The following is a reconciliation of income from continuing operations before cumulative effect of change in accounting principle, which is a GAAP measure of our operating results, to Adjusted EBITDA as defined in our debt agreements. Our share of EBITDA from SMG, a venue management company, that was previously included in Adjusted EBITDA has been eliminated due to the sale of our 50% interest in SMG in June 2007. The terms and related calculations are defined in the Company’s senior secured credit agreement and indenture.

 

    

Twelve Months

Ended

September 29, 2006

  

Income from continuing operations before cumulative effect of change in accounting principle

    $ 261.4  

Interest and other financing costs, net

      139.9  

Provision for income taxes

      129.2  

Depreciation and amortization

      339.3  
        

EBITDA

      869.8  

Stock-based compensation expense

      22.8  

Unusual or non-recurring gains and losses

      43.7  

Pro forma EBITDA for equity method investees (1)

     (1.7 )

Pro forma EBITDA for current year acquisitions

      6.8  

Costs related to the merger transaction

      6.4  

Other

      13.8  
        

Adjusted EBITDA

    $ 961.6  
        
________________   

(1)    Pro forma EBITDA for equity method investees as reported in the Company’s Current Report on Form 8-K filed on January 8, 2007

    $ 20.0  

Elimination of our share of EBITDA for the SMG equity method investment

      (21.7 )
        
   $ (1.7 )