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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended October 1, 1999 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________ to __________
Commission file number: 1-8827
ARAMARK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2319139
(State of Incorporation) (I.R.S. Employer Identification No.)
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
(Address of principal executive offices)
Telephone Number: 215-238-3000
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Class B Common Stock,
$.01 par value
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
Aggregate market value of the voting stock held by nonaffiliates: $1.1 billion
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Common stock outstanding at October 29, 1999: Class A Common Stock 2,667,136 shares
Class B Common Stock 65,199,321 shares
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Documents incorporated by reference: Portions of the registrant's Proxy
Statement for the 2000 annual meeting of stockholders are incorporated by
reference in Part III of this Report.
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As used herein, references to the "Company" shall mean ARAMARK
Corporation and its subsidiaries (including ARAMARK Services, Inc.) unless the
context otherwise requires. References to "ARAMARK" shall mean ARAMARK Services,
Inc. and its subsidiaries unless the context otherwise requires.
PART 1
Item 1. Business
Description of Business Segments
The Company is engaged in providing or managing services, including
food and support services, in the United States and internationally, rental of
uniform and career apparel, direct marketing of uniform and career apparel and
educational resources. ARAMARK was organized in 1959 in Delaware. The Company
was formed in September 1984 by the management of ARAMARK and acquired ARAMARK
in December 1984 through a merger.
The Company derives most of its sales from services provided in the
United States. The Company's international services, primarily the management of
food and support services, are provided in Belgium, Canada, the Czech Republic,
Germany, Hungary, Japan, Korea, Mexico, Spain and the United Kingdom.
For financial reporting purposes, the Company is comprised of five
operating business segments. Financial information by business segment and
geographic area appears in note 11 to the consolidated financial statements. The
businesses of the Company have been grouped into the segments described below.
Food and Support Services - United States
The Company provides food, refreshment, specialized dietary and support
services (including facility maintenance and housekeeping) to businesses, and to
educational, governmental and healthcare institutions. Food, lodging and
merchandise services are also provided at sports and entertainment facilities
such as convention centers, stadiums, parks, arenas and other recreational
facilities.
Food, refreshment, specialized dietary and support services are
operated at customer locations generally under contracts of indefinite duration,
which may be subject to termination by either party. However, food and related
services at sports and entertainment facilities generally are for fixed contract
terms well in excess of one year. The Company's food and support services are
performed under various financial arrangements including management-fee and
profit-and-loss based agreements.
At most customer food service locations, the equipment and facilities
used in providing these services are owned by the customer. Vending machines and
related equipment, however, are generally owned by the Company. At most sports
and entertainment facilities, the equipment is owned by the Company.
There is a high level of competition in the food and support services
business from local, regional and national companies as well as from businesses
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and institutions which operate their own services. This competition takes a
number of different forms, including pricing, maintaining high food and service
standards, and innovative approaches to marketing with a strong emphasis on
securing and retaining customer accounts.
The Company believes that it is a significant provider of food and
support services, but that its volume of such business is small in relation to
the total market. See note 10 to the consolidated financial statements for
information relating to the seasonal aspects of this business segment.
Food and Support Services - International
The Company provides food, refreshment, specialized dietary and support
services (including facility maintenance and housekeeping) to businesses, and to
educational, governmental and healthcare institutions. Food services are also
provided at sports and entertainment facilities, such as stadiums, arenas, and
fairgrounds.
Food, refreshment, specialized dietary and support services are
operated at customer locations generally under contracts of varying duration.
Food and related services at sports and entertainment facilities generally are
for fixed contract terms well in excess of one year. The Company's food and
support services are performed under various financial arrangements including
management-fee and profit-and-loss based agreements.
At most customer food service locations, the equipment and facilities
used in providing these services are owned by the customer. Vending machines and
related equipment are generally owned by the Company, except in the United
Kingdom where that equipment is generally owned by the customer. At most sports
and entertainment facilities, the equipment is owned by the Company.
There is a high level of competition in the food and support services
business from numerous companies within each country, as well as from businesses
and institutions which operate their own services. This competition takes a
number of different forms, including pricing, maintaining high food and service
standards, and innovative approaches to marketing with a strong emphasis on
securing and retaining customer accounts.
The Company believes that it is a significant provider of food and
support services in Belgium, Canada, Germany, Spain and the United Kingdom, but
that its volume of such business is small in relation to the total market.
Uniform and Career Apparel - Rental
The Company rents, sells, cleans, maintains and delivers personalized
uniform and career apparel and other textile items for customers throughout the
United States on a contract basis. Also provided are walk-off mats, cleaning
cloths, disposable towels, and other environmental control items.
Service contracts for the rental and laundering of work apparel and
other textile items are for well in excess of one year and typically for an
initial term of three to five years.
The uniform rental service business is highly competitive in the areas
in which the Company operates, with numerous competitors in each major operating
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area. Although no one uniform rental services company is predominant in this
industry, the Company believes that it is a significant competitor.
The significant competitive factors in the uniform and career apparel
business are the quality of services provided to customers and the prices
charged for such services.
Uniform and Career Apparel - Direct Marketing
The Company is one of the largest direct marketers of personalized
uniforms, career apparel and related items and public safety equipment in the
United States. The direct marketing business is generally conducted under an
invoice arrangement with customers.
Competition in the direct marketing of work clothing, career apparel
and public safety equipment is from numerous retailers and other direct
marketers at local, regional and national levels. In this market, while the
Company is a significant competitor, the Company's volume of sales is small in
relation to the total market.
The significant competitive factors in the direct marketing of uniform
and career apparel are the quality of services provided to customers and the
prices charged for such services. See note 10 to the consolidated financial
statements for information relating to the seasonal nature of this business.
Educational Resources
The Company provides infant, toddler, pre-school, and school-age
learning programs. The Company operates community-based child care centers,
before and after school programs on the premises of elementary schools, private
elementary schools, and employer on-site child care centers. These services are
provided to, and are primarily paid for on a weekly or monthly basis directly by
individual families under short-term agreements. The Company leases a
significant number of its facilities under long-term arrangements.
The Company believes it is a significant provider of educational and
child care services in the United States.
Competition in all phases of this business segment is from both
national and local providers of educational services as well as from private and
public institutions which provide for their own educational services.
Significant competitive factors in the Company's educational services business
are the quality of care, reputation, physical appearance of facilities, the
types of programs offered to the users of these services and the prices charged
for such services.
General
The Company employs approximately 114,000 persons, both full and part
time in the United States, and approximately 38,000 employees internationally.
Approximately 27,000 employees in the United States are represented by various
labor unions.
The Company believes it recognizes benefits from its corporate name
recognition. Nonetheless, consistent with its businesses, the Company does not
have any material trademarks or patents, and its research and development
expenditures are not material in amount. Although the Company pursues strategies
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to increase the number and scope of the services it provides to existing
customers, no single customer of the Company accounts for more than 5% of its
sales. While the Company focuses its purchasing on selected suppliers and
vendors to realize pricing, quality and service benefits, generally, all
materials and services that the Company purchases are available from more than
one supplier, and the loss of any supplier would not have a material impact on
the Company's results of operations. The Company's businesses are subject to
various governmental environmental regulations, and the Company has adopted
policies designed to comply with such regulations. Such compliance has not had a
material impact on the Company's capital expenditures, earnings or competitive
position.
Item 2. Properties
The principal property and equipment of the Company are its service
equipment and fixtures (including vehicles) and real estate.
The service equipment and fixtures include vending, commissary,
warehouse and janitorial and maintenance equipment used primarily by the Food
and Support Services segments and laundry equipment used by the Uniform and
Career Apparel - Rental segment. The vehicles include automobiles and delivery
trucks used in the Food and Support Services and Uniform and Career Apparel -
Rental segments, and automobiles, vans and small buses used in the Educational
Resources segment. The service equipment and fixtures represent 57% of the net
book value of all fixed assets as of October 1, 1999.
The Company's real estate is comprised of educational and childcare
facilities, of which a significant number are held under long-term operating
leases. The Company also maintains other real estate and leasehold improvements,
which it uses in the Uniform and Career Apparel and Food and Support Services
segments. Additional information concerning property and equipment (including
leases and noncancelable lease commitments) is included in notes 1 and 8 to the
consolidated financial statements. No individual parcel of real estate owned or
leased is of material significance to the Company's total assets.
See note 11 to the consolidated financial statements for information
concerning the identifiable assets of the Company's business segments.
Item 3. Legal Proceedings
The Company and its subsidiaries are not parties to any lawsuits (other
than ordinary routine litigation incidental to its business) which are material
to the Company's business or financial condition. See note 8 to the consolidated
financial statements for additional information concerning legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
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Item 4A. Directors and Executive Officers of the Registrant
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Directors:
Name Principal Occupation
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Joseph Neubauer...................................... Chairman and Chief Executive Officer
ARAMARK Corporation
James E. Ksansnak.................................... Vice Chairman, ARAMARK Corporation
Lawrence T. Babbio, Jr............................... President and Chief Operating Officer
Bell Atlantic Corporation
Patricia C. Barron................................... Clinical Associate Professor,
Leonard N. Stern School of Business
New York University
Robert J. Callander.................................. Executive-in-Residence, Columbia University
Retired Vice Chairman, Chemical Banking Corporation
Ronald R. Davenport.................................. Chairman, Sheridan Broadcasting Corporation
Lee F. Driscoll, Jr.................................. Corporate Director
Mitchell S. Fromstein................................ Chairman Emeritus, Manpower Inc.
Edward G. Jordan..................................... Former Chairman and Chief Executive Officer
Consolidated Rail Corporation
Thomas H. Kean....................................... President, Drew University
Former Governor of New Jersey
James E. Preston..................................... Retired Chairman, Avon Products, Inc.
Officers: Officer
Name (Age as of November 1, 1999) Office Held Since
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Joseph Neubauer (58)................................. Chairman and Director................................ 1979
James E. Ksansnak (59)............................... Vice Chairman and Director........................... 1986
William Leonard (51)................................. President............................................ 1992
Charles E. Kiernan (54).............................. Executive Vice President............................. 1998
Brian G. Mulvaney (43)............................... Executive Vice President............................. 1993
Martin W. Spector (61)............................... Executive Vice President,
General Counsel and Secretary........................ 1976
L. Frederick Sutherland (47)......................... Executive Vice President and
Chief Financial Officer.............................. 1983
Barbara A. Austell (46).............................. Senior Vice President
and Treasurer........................................ 1996
Alan J. Griffith (45)................................ Vice President, Controller and
Chief Accounting Officer............................. 1994
Dean E. Hill (48).................................... Vice President....................................... 1993
Michael R. Murphy (42)................................ Director of Audit and Controls....................... 1995
Donald S. Morton (51)................................ Assistant Secretary and
Associate General Counsel............................ 1985
Richard M. Thon (44)................................. Assistant Treasurer.................................. 1994
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Except as set forth below, the principal occupation of each executive
officer throughout the past five years has been the performance of the functions
of the corporate offices shown above.
Mr. Ksansnak was elected vice chairman of the Company in May 1997. From
February 1991 to May 1997 he was executive vice president of the Company and
chief financial officer from May 1986 to May 1997.
Mr. Leonard has been president and chief operating officer of the
Company since May 1997. He was executive vice president of the Company from May
1992 until May 1997.
Mr. Kiernan was elected executive vice president of the Company in
October 1998. Between 1994 and 1997 he was president and chief operating officer
of Duracell International, Inc. and then was a private consultant.
Mr. Mulvaney was elected executive vice president of the Company in
August 1996. He was senior vice president of the Company from February 1995 to
August 1996 and vice president from February 1993 to February 1995.
Mr. Sutherland became chief financial officer of the Company in May
1997. He was elected executive vice president in May 1993.
Ms. Austell was elected senior vice president and treasurer of the
Company in August 1996. Prior to joining the Company in July 1996, she was a
managing director of J. P. Morgan & Co.
Mr. Griffith was elected vice president of the Company in February
1995. In December 1993 he became controller and chief accounting officer.
Mr. Murphy became director of audit and controls in September 1995. He
joined the Company as senior audit manager in January 1993.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
There are currently approximately 2800 record holders of Class B common
stock of the Company, all of whom are or were employees or directors of the
Company (or members of their families or trusts created by them). There are
currently 190 record holders of the Class A common stock of the Company, all of
whom are institutional investors, Company benefit plans or individuals not
employed by the Company.
The Company has not paid a cash dividend during the last two fiscal
years. From time to time, the Board of Directors may consider paying cash
dividends in the future, based upon the Company's circumstances at that time.
There is no established public trading market for the common stock of
the Company. However, employees of the Company are able to sell shares of common
stock through various programs maintained by the Company. See note 7 to the
consolidated financial statements for information regarding the Company's
shareholders' agreement.
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Item 6. Selected Financial Data
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The following table presents summary consolidated financial data for
the Company. The following data should be read in conjunction with the
consolidated financial statements and the related notes thereto and Management's
Discussion and Analysis of Results of Operations and Financial Condition, each
included elsewhere herein.
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ARAMARK Corporation and Subsidiaries
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Fiscal Year Ended on or near
September 30
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1999 1998 1997(1) 1996 1995
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(in millions, except per share amounts and ratios)
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Income Statement Data:
Sales (2).......................................... $6,718.4 $6,615.7 $6,555.6 $6,353.8 $5,828.2
Earnings before depreciation and
amortization, interest, and income taxes........ 568.9 528.9 523.6 478.0 433.9
Earnings before interest
and income taxes (3)............................ 375.2 333.1 331.8 295.2 277.0
Interest expense, net.............................. 135.8 117.3 116.0 116.0 109.4
Income before extraordinary item (4)............... 150.2 133.7 146.1 112.2 100.2
Net income......................................... 150.2 129.2 146.1 109.5 93.5
Earnings per share: (5)
Income before extraordinary item: (4)
Basic...................................... $1.59 $1.17 $1.16 $.84 $.71
Diluted.................................... 1.48 1.10 1.10 .79 .67
Net Income:
Basic...................................... 1.59 1.14 1.16 .82 .66
Diluted.................................... 1.48 1.06 1.10 .77 .63
Ratio of earnings to fixed charges (6)............. 2.2x 2.3x 2.3x 2.1x 2.1x
Balance Sheet Data (at period end):
Total assets....................................... $2,870.5 $2,741.3 $2,753.6 $2,844.8 $2,643.3
Long-term borrowings: (7)
Senior.......................................... 1,583.0 1,678.3 1,084.9 1,160.8 1,109.4
Subordinated ................................... 26.7 26.7 129.0 161.2 165.4
Common stock subject to potential
repurchase (8).................................. 20.0 20.0 23.3 18.6 19.1
Shareholders' equity (deficit) (9)................. 126.6 (78.9) 370.0 296.2 252.3
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(1) Fiscal 1997 is a fifty-three week period. See note 1 to the consolidated
financial statements.
(2) See note 1 to the consolidated financial statements.
(3) See note 2 to the consolidated financial statements.
(4) See note 3 to the consolidated financial statements.
(5) Fiscal 1995 through 1997 earnings per share amounts have been restated to
reflect the 3 for 1 stock split effective on September 1, 1998 and the
adoption of Statement of Financial Accounting Standards No. 128, "Earnings
per Share" which was effective beginning in fiscal 1998. See notes 1 and 7
to the consolidated financial statements.
(6) For the purpose of determining the ratio of earnings to fixed charges,
earnings include pre-tax income plus fixed charges (excluding capitalized
interest). Fixed charges consist of interest on all indebtedness (including
capitalized interest) plus that portion of operating lease rentals
representative of the interest factor (deemed to be one-third of operating
lease rentals).
(7) See note 4 to the consolidated financial statements.
(8) See note 7 to the consolidated financial statements.
(9) 1998 reflects the impact of the Common Stock Class A Tender Offer. See note
7 to the consolidated financial statements.
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Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
RESULTS OF OPERATIONS
During fiscal 1999 the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information" (see note 11 to the consolidated financial statements).
Management's discussion and analysis of results of operations for prior years
has been revised to conform with the current year segment presentation.
Fiscal 1999 Compared to Fiscal 1998
Overview. Sales for the fiscal year ended October 1, 1999 were $6.7
billion, an increase of 2% over fiscal 1998, with increases in all operating
segments being partially offset by the impact of the distribution business
transaction in fiscal 1998 (see note 2 to the consolidated financial
statements). Excluding the impact of the distribution business transaction,
sales increased 7% over the prior year. Operating income of $375.2 million
increased $42 million or 13% over the prior year. Total Company operating income
in fiscal 1998 includes other expense of $5 million as described in note 2 to
the consolidated financial statements. Excluding the impact of other expense and
the operating results of the distribution business, which are reflected in the
Corporate and Other segment, operating income increased 7% over the prior year
due to strong performances in the Food and Support Services - United States,
Uniform and Career Apparel - Rental, and Educational Resources segments,
partially offset by a decline in operating income in the Uniform and Career
Apparel - Direct Marketing segment and an increase in costs in the Corporate and
Other segment due in part to the impact in 1998 of a gain from the sale of
certain assets. Excluding other expense/income, the Company's operating income
margin increased to 5.6% from 5.1%, due primarily to the impact of the
distribution business transaction noted above.
Interest expense increased $18.4 million or 16% over the prior year due
primarily to increased debt levels resulting from the impact of the Tender Offer
in June 1998 (see note 7 to the consolidated financial statements).
Segment Results. Food and Support Services - United States segment
sales were 9% higher than the prior year due to increased volume (approximately
5%) and the acquisitions described in note 2 to the consolidated financial
statements (approximately 4%). Sales in the Food and Support Services -
International segment increased 4% versus the prior year due to new accounts
(approximately 3%) and increased volume (approximately 3%), partially offset by
the unfavorable impact of foreign currency translation (approximately 2%). Sales
in the Uniform and Career Apparel - Rental segment increased 6% over the prior
year period due to increased volume. Uniform and Career Apparel - Direct
Marketing sales increased 1% over the prior year period due to increased sales
of safety equipment and related accessories (approximately 4%) and the impact of
the Dyna Corporation acquisition (approximately 2%; see note 2 to the
consolidated financial statements), partially offset by a decline in sales of
uniforms and career apparel. Educational Resources segment sales increased 11%
versus the prior year due to pricing and new locations.
Food and Support Services - United States segment operating income
increased 14% due to the sales increases noted above and effective cost
controls. Food and Support Services - International segment operating income
decreased 1% versus the prior year as the impact of the increased volume noted
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above plus effective cost controls was offset by operating losses at one
subsidiary and the unfavorable impact of foreign currency translation. Excluding
the impact of the operating losses noted above and foreign currency translation,
operating income in the Food and Support Services - International segment
increased 19%. Uniform and Career Apparel - Rental segment operating income
increased 6% due to the increased volume noted above and gains on disposition of
assets, partially offset by costs related to the startup of certain
manufacturing operations and the implementation of a new marketing initiative.
Operating income in the Uniform and Career Apparel - Direct Marketing segment
decreased 62% versus the prior year period due to the decline in sales of
uniforms and career apparel noted above, a reduction in gross margin reflecting
product mix changes and increased operating costs. Educational Resources segment
operating income increased 11% due to the sales growth noted above.
Fiscal 1998 Compared to Fiscal 1997
Overview. Sales for the fiscal year ended October 2, 1998 were $6.6
billion, an increase of 1% over fiscal 1997, with increases in all operating
segments being partially offset by the impact of the distribution business
transaction in fiscal 1998 and the sale of Spectrum in fiscal 1997 (see note 2
to the consolidated financial statements). Excluding the impact of the Spectrum
and distribution business transactions, sales increased 5% over the prior year.
Operating income of $333.1 million increased $1.3 million over the prior year.
Total Company operating income includes other expense of $5 million in fiscal
1998 and other income of $11.7 million in fiscal 1997 as described in note 2 to
the consolidated financial statements. Excluding other expense/income and the
operating results of Spectrum and the distribution business, operating income
increased 7% over the prior year, due to strong performances in the Food and
Support Services segments, the Uniform and Career Apparel - Rental segment and
the Educational Resources segment, partially offset by a decline in operating
income in the Uniform and Career Apparel - Direct Marketing segment. Excluding
other expense/income, the Company's operating income margin increased to 5.1%
from 4.9%, due primarily to improved cost controls and leveraging of fixed
costs.
Interest expense increased $1.3 million or 1% over the prior year due
primarily to increased debt levels, including the impact of the Tender Offer in
June 1998 (see note 7 to the consolidated financial statements). The fiscal 1998
effective tax rate was 38% which includes the favorable impact resulting from
the September 1998 settlement of certain prior years' tax returns. The fiscal
1997 effective tax rate of 32% reflects the favorable impact of a permanent
difference in the book and tax basis of Spectrum, net of the unfavorable
permanent book/tax differences related to certain intangible asset write-offs.
Fiscal 1998 net income also includes an extraordinary item for early
extinguishment of debt of $4.5 million as described in note 3 to the
consolidated financial statements.
Segment Results. Food and Support Services - United States segment
sales were 5% higher than the prior year due to new accounts (approximately 3%)
and increased volume (approximately 2%). Sales in the Food and Support Services
- - International segment increased 3% versus the prior year due to new accounts
(approximately 5%) and increased volume (approximately 2%), partially offset by
the unfavorable impact of foreign currency translation (approximately 4%). Sales
in the Uniform and Career Apparel - Rental and Direct Marketing segments
increased 4% and 6%, respectively, due to increased volume. Educational
Resources segment sales increased 9% over the prior year period due to
enrollment growth, pricing and new locations.
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Food and Support Services - United States segment operating income
increased 13% over the prior year period due to the sales increases noted above
and effective cost controls. Operating income in the Food and Support Services -
International segment increased 27% versus the prior year due to the sales
increases noted above and effective cost controls, partially offset by the
unfavorable impact of foreign currency translation (approximately 3%). Uniform
and Career Apparel - Rental segment operating income increased 5% over the prior
year due to the increased sales noted above. Operating income in the Uniform and
Career Apparel - Direct Marketing segment decreased 59% as a result of the write
down of certain inventory to net realizable value and increased operating costs
which were partially offset by the impact of increased volume. Educational
Resources segment operating income increased 16% versus the prior year due to
the sales increased noted above. Included in the Corporate and Other segment in
fiscal 1998 are operating losses of approximately $14 million related to the
distribution business and in fiscal 1997 net operating losses of approximately
$11 million related to the distribution business and Spectrum (see notes 2 and
11 to the consolidated financial statements).
FINANCIAL CONDITION AND LIQUIDITY
Cash provided by operating activities was $293 million. Debt decreased
by $95 million as cash provided by operating activities exceeded cash used by
net investing activities. The Company expects to continue to fund capital
expenditures, acquisitions and other liquidity needs from cash provided by
operating activities, normal disposals of property and equipment and borrowings
available under its credit facilities. Currently, the Company has approximately
$525 million of unused committed credit availability under its credit
facilities. As of October 1, 1999, the Company had capital commitments of
approximately $36 million related to several long-term concession contracts.
During fiscal 1999, the Company repurchased $8 million of its Class A
Common Stock and $28 million of its Class B Common Stock for $29 million in cash
and $7 million in installment notes. Additionally, the Company issued $17
million of Class B Common Stock to eligible employees, primarily through the
exercise of installment stock purchase opportunities. In the third quarter of
fiscal 1999, the Company sold for cash, without recourse, approximately $44
million of notes receivable related to prior employee stock purchases. The sales
price approximated book value and the proceeds were used to repay borrowings
under the credit facility (see note 7 to the consolidated financial statements).
Subsequent to yearend, the Company repurchased 3,159,223 shares of its Class B
Common Stock and 157,470 shares of its Class A Common Stock for approximately
$40 million in cash and $27 million in installment notes.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 issue exists because many computer systems and
applications currently use two-digit date fields to designate a year. As a
result, on or near the change of the century, date-sensitive systems may
recognize the Year 2000 as 1900, or not at all, which may cause systems to fail
or process financial and operational information incorrectly.
For the past three years, the Company has been managing a project to
address its Year 2000 issues. The project has addressed three broad areas: (1)
internal information technology systems - including financial and operational
application systems, computer hardware and systems software; (2) non-information
technology systems - such as communication systems, building systems and devices
with embedded computer chips; and (3) third party compliance - which addresses
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Year 2000 compliance efforts of key vendors and suppliers. The project has
consisted of the following phases:
1) Organizational awareness - general awareness of Year 2000 issues
and ongoing communication of Year 2000 project status.
2) Inventory of current applications.
3) Risk assessment of inventoried systems, with identification of
mission-critical systems.
4) Replacement/remediation of systems.
5) Year 2000 testing.
6) Conversion of systems, including rollout of compliant
hardware/software to front line locations.
7) Contingency planning.
Program management offices, staffed with a combination of business unit
personnel and external consultants, were established to address Year 2000
issues. Additionally, a Corporate Compliance Task Force consisting of internal
audit, information technology, legal and risk management personnel, with
assistance from external consultants, was formed in 1997 to review and monitor
the Year 2000 compliance programs. The Task Force has met regularly to review
corporate-wide Year 2000 issues and progress. The Company's Year 2000 compliance
effort has been monitored by senior management on a regular basis and the Audit
and Corporate Practices Committee of the Board of Directors has received
progress reports at least quarterly.
Internal information technology systems. As of October 31, 1999, the
inventory, risk assessment, replacement/remediation and Year 2000 testing phases
for all mission-critical systems have been completed. For a few systems,
remaining rollout of compliant hardware and software to a relatively small
number of frontline locations is expected to continue through November 1999.
Based on current status, the Company believes that Year 2000 events caused by
the Company's internal financial and operational systems would not have a
material adverse impact on the Company's operations or financial condition.
Non-information technology systems. The Company has determined that
there were only a few mission-critical systems at a limited number of locations
with non-compliant date logic. Replacement of these systems is expected to be
completed by November 1999. Given the nature and geographic dispersion of the
Company's business units, the Company believes that any events caused by Year
2000 failures of non-information technology systems would be short-term in
nature and would not have a material adverse impact on the Company's operations
or financial condition.
Third party compliance. The Company has identified and communicated
with key third party suppliers and customers to determine the Company's
potential exposure in the event these third parties fail to remediate their own
Year 2000 issues. The Company has conducted on site reviews of key suppliers'
project status and issues. The Company continues to monitor suppliers' Year 2000
status and has developed contingency plans to address potential third party Year
2000 failures. The basic materials required to operate the Company's businesses
are generally available from a number of suppliers, and in the event of an
inability of a key supplier to deliver product, the Company believes alternative
sources will be available. However, an extended disruption of service by
utilities (electric, water, telephone, etc.), key suppliers or financial
institutions, while somewhat mitigated by the geographic dispersion of the
Company's businesses, could have material adverse impacts on the Company's
operations and financial condition.
12
<PAGE>
Contingency Plans
The Company has contingency plans for computer failures, power outages,
natural disasters, etc. Year 2000 contingency plans for mission-critical
systems, in the areas discussed above, are being developed or refined and will
be integrated with the existing contingency plans where appropriate by December
1999.
Costs
The Company currently estimates spending approximately $14 million,
excluding internal costs, to complete its Year 2000 compliance program, which
spending is substantially completed. Year 2000 costs related to systems or
equipment replacement are capitalized in accordance with the Company's
accounting policies. Year 2000 remediation costs are expensed as incurred.
The Company's ability to achieve Year 2000 compliance, the level of
costs associated therewith and the resultant impact on operations and financial
condition could be adversely impacted by, among other things, the disruption of
service by utilities, financial institutions or other key suppliers, or by
unanticipated problems identified in the ongoing compliance program.
[Space intentionally left blank]
13
<PAGE>
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
The Company is exposed to the impact of interest rate changes and
manages this exposure through the use of variable-rate and fixed-rate debt and
by utilizing interest rate swaps. The Company does not enter into contracts for
trading purposes and does not use leveraged instruments. The information below
summarizes the Company's market risks associated with debt obligations and other
significant financial instruments as of October 1, 1999 and October 2, 1998.
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 information presented below should be read in
conjunction with note 4 to the consolidated financial statements. For debt
obligations, the table presents principal cash flows and related interest rates
by expected fiscal year of maturity. Variable interest rates disclosed represent
the weighted-average rates of the portfolio at October 1, 1999 and October 2,
1998, respectively. For interest rate swaps, the table presents the notional
amounts and related weighted-average interest rates by fiscal year of maturity.
The variable rates presented are the average forward rates for the term of each
contract.
Expected Fiscal Year of Maturity
(US$ equivalent in millions)
<TABLE>
<CAPTION>
There- Fair
As of October 1, 1999 2000 2001 2002 2003 2004 after Total Value
- --------------------- ---- ---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt:
Fixed Rate $104 $25 $75 $25 $300(a) $615 (a) $1,144 $1,101
Average Interest Rate 9.3% 6.7% 7.6% 6.8% 6.8% 7.5% 7.4%
Variable Rate $25 $36 $4 $425 $490 $490
Average Interest Rate 5.8% 5.5% 6.6% 6.2% 6.2%
Interest Rate Swaps:
Receive Variable/Pay Fixed $75 $50 --
Average pay rate 6.1% 6.2%
Average receive rate 5.8% 6.2%
(a) Each balance includes $300 million of senior notes callable by the Company at any time.
There- Fair
As of October 2, 1998 1999 2000 2001 2002 2003 after Total Value
- --------------------- ---- ---- ---- ---- ---- ----- ----- -----
Debt:
Fixed Rate $104 $25 $75 $25 $985 (a) $1,214 $1,277
Average Interest Rate 9.3% 6.8% 7.6% 6.8% 7.3% 7.5%
Variable Rate $24 $5 $32 $455 $516 $516
Average Interest Rate 6.0% 6.0% 6.3% 6.2% 6.2%
Interest Rate Swaps:
Receive Variable/Pay Fixed $69 $75 $75 $(4)
Average pay rate 5.7% 6.1% 6.0%
Average receive rate 5.1% 4.9% 4.7%
(a) Balance includes $600 million of senior notes callable by the Company at any time.
</TABLE>
14
<PAGE>
The Company uses foreign currency debt as a hedge for its investment in
foreign subsidiaries. The tables above for fiscal 1999 and 1998 include $60
million of debt denominated in the functional currency of the Company's various
subsidiaries, primarily the Canadian dollar and the German deutschemark.
Item 8. Financial Statements and Supplementary Data
See Index to Financial Statements and Schedules at page S-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
PART III
Items 10, 11, 12, and 13 of Part III are incorporated by reference to
the Section titled "Election of Directors" in the registrant's Proxy Statement
for its annual meeting of stockholders, to be filed with the Commission pursuant
to Regulation 14A (except for the stock price performance graph and the
committee report on executive compensation in the Company's Proxy Statement).
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Index to Financial Statements
See Index to Financial Statements and Schedules at page S-1.
(b) Reports on Form 8-K
None.
(c) Exhibits Required by Item 601 of Regulation S-K
See Index to Exhibits.
(d) Financial Statement Schedules
See Index to Financial Statements and Schedules at page S-1.
Item 15. Cautionary Statement regarding Forward-Looking Statements
Certain statements made in this Form 10-K are forward-looking
statements. Because such statements include risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to, those discussed herein at Item 7,
"Management's Discussion and Analysis of Results of Operations and Financial
Condition".
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ARAMARK CORPORATION
By: Alan J. Griffith
-------------------------------
Alan J. Griffith
Vice President, Controller
and Chief Accounting Officer
November 24, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on November 24, 1999.
Signature Title
Joseph Neubauer Chairman and Director
- ------------------------------ (Principal Executive Officer)
Joseph Neubauer
L. Frederick Sutherland Executive Vice President
- ------------------------------ (Principal Financial Officer)
L. Frederick Sutherland
Alan J. Griffith Vice President, Controller
- ------------------------------ and Chief Accounting Officer
Alan J. Griffith (Principal Accounting Officer)
Lawrence T. Babbio, Jr.
Patricia C. Barron
Robert J. Callander
Ronald R. Davenport
Lee F. Driscoll, Jr. Directors
Mitchell S. Fromstein
Edward G. Jordan
Thomas H. Kean
James E. Ksansnak
James E. Preston
Martin W. Spector
- ------------------------------
Martin W. Spector
Attorney-in-Fact
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page
----
Report of Independent Public Accountants S-1
Consolidated Balance Sheets:
As of October 1, 1999 and October 2, 1998 S-2
Consolidated Statements of Income:
Fiscal Years 1999, 1998 and 1997 S-4
Consolidated Statements of Cash Flows:
Fiscal Years 1999, 1998 and 1997 S-5
Consolidated Statements of Shareholders' Equity:
Fiscal Years 1999, 1998 and 1997 S-6
Notes to Consolidated Financial Statements S-9
Consolidated Supporting Schedules Filed:
Schedule
Number
- --------
I Condensed Financial Information of Registrant S-27
II Valuation and Qualifying Accounts and Reserves S-31
All other schedules are omitted because they are not applicable, not
required, or the information required to be set forth therein is included in the
consolidated financial statements or in the notes thereto.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ARAMARK Corporation:
We have audited the accompanying consolidated balance sheets of ARAMARK
Corporation (a Delaware corporation) and subsidiaries as of October 1, 1999 and
October 2, 1998, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended October 1, 1999. These consolidated financial statements and the
schedules referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ARAMARK Corporation and
subsidiaries as of October 1, 1999 and October 2, 1998, and the results of their
operations and their cash flows for each of the three fiscal years in the period
ended October 1, 1999, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
November 8, 1999
S-1
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 1, 1999 and October 2, 1998
(dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 27,690 $ 20,614
Receivables (less allowances: 1999, $22,496 578,393 526,506
1998, $24,457)
Inventories 369,791 361,451
Prepayments and other current assets 68,492 60,734
- -----------------------------------------------------------------------------------------------------------------------------
Total current assets 1,044,366 969,305
- -----------------------------------------------------------------------------------------------------------------------------
Property and Equipment, at Cost:
Land, buildings and improvements 610,777 526,888
Service equipment and fixtures 1,272,322 1,212,369
Leased property under capital leases 6,857 8,958
- -----------------------------------------------------------------------------------------------------------------------------
1,889,956 1,748,215
Less-Accumulated depreciation 956,241 873,822
- -----------------------------------------------------------------------------------------------------------------------------
933,715 874,393
- -----------------------------------------------------------------------------------------------------------------------------
Goodwill 603,017 603,937
- -----------------------------------------------------------------------------------------------------------------------------
Other Assets 289,445 293,664
- -----------------------------------------------------------------------------------------------------------------------------
$2,870,543 $2,741,299
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-2
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term borrowings $ 24,761 $ 24,560
Accounts payable 387,127 373,696
Accrued payroll and related expenses 182,056 174,710
Other accrued expenses and current liabilities 331,809 327,772
- -----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 925,753 900,738
- -----------------------------------------------------------------------------------------------------------------------------
Long-Term Borrowings:
Senior 1,606,671 1,701,125
Subordinated 26,689 26,689
Obligations under capital leases 1,060 1,795
- -----------------------------------------------------------------------------------------------------------------------------
1,634,420 1,729,609
Less-current portion 24,761 24,560
- -----------------------------------------------------------------------------------------------------------------------------
Total long-term borrowings 1,609,659 1,705,049
- -----------------------------------------------------------------------------------------------------------------------------
Deferred Income Taxes and Other Noncurrent Liabilities 188,560 194,388
Common Stock Subject to Potential Repurchase Under
Provisions of Shareholders' Agreement 20,000 20,000
Shareholders' Equity/(Deficit) Excluding Common Stock
Subject to Repurchase:
Class A common stock, par value $.01; authorized:
25,000,000 shares; issued: 1999 - 2,719,453 shares;
1998 -2,516,081 shares 27 25
Class B common stock, par value $.01; authorized:
150,000,000 shares; issued: 1999 - 65,569,596 shares;
1998 - 62,927,645 shares 656 629
Capital surplus 57,356 -
Earnings retained for use in the business 93,376 (56,815)
Accumulated other comprehensive income (loss) (4,844) (2,715)
Impact of potential repurchase feature of common stock (20,000) (20,000)
- -----------------------------------------------------------------------------------------------------------------------------
Total 126,571 (78,876)
- -----------------------------------------------------------------------------------------------------------------------------
$2,870,543 $2,741,299
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-3
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Fiscal Years Ended October 1, 1999, October 2, 1998 and October 3, 1997
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $6,718,426 $ 6,615,749 $ 6,555,608
- ------------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of services provided 6,063,594 5,999,170 5,960,593
Depreciation and amortization 193,703 195,770 191,732
Selling and general corporate expense 85,963 82,680 83,079
Other expense (income), net - 5,000 (11,655)
- ------------------------------------------------------------------------------------------------------------------------------------
6,343,260 6,282,620 6,223,749
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income 375,166 333,129 331,859
Interest Expense, net 135,753 117,357 116,012
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 239,413 215,772 215,847
Provision For Income Taxes 89,222 82,062 69,739
- ------------------------------------------------------------------------------------------------------------------------------------
Income Before Extraordinary Item 150,191 133,710 146,108
Extraordinary Item Due to Early Extinguishment
of Debt (net of income taxes of $2,982) - 4,474 -
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income $ 150,191 $ 129,236 $ 146,108
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share:
Income before extraordinary item
Basic $1.59 $1.17 $1.16
Diluted $1.48 $1.10 $1.10
Net income
Basic $1.59 $1.14 $1.16
Diluted $1.48 $1.06 $1.10
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-4
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended October 1, 1999, October 2, 1998 and October 3, 1997
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $150,191 $129,236 $146,108
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 193,703 195,770 191,732
Income taxes deferred 10,845 11,542 (11,049)
Extraordinary item - 4,474 -
Changes in noncash working capital:
Receivables (47,599) (51,743) (19,934)
Inventories (1,951) (9,240) (32,428)
Prepayments (1,922) (754) (5,740)
Accounts payable (10,095) (49,943) (61,348)
Accrued expenses 25,371 60,905 48,364
Changes in other noncurrent liabilities (3,319) (3,914) (1,651)
Changes in other assets (8,429) (8,934) (9,727)
Other, net (13,635) (695) (14,261)
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 293,160 276,704 230,066
- ----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (207,223) (164,286) (197,835)
Disposals of property and equipment 23,999 22,204 27,641
Sale of investments 40,722 5,779 9,284
Divestiture of certain businesses 8,380 31,116 119,152
Acquisition of certain businesses:
Working capital other than cash acquired (1,742) 9,550 (74)
Property and equipment (20,325) (17,309) (4,163)
Additions to intangibles and other assets (40,672) (35,199) (5,688)
Other (19,318) (41,452) (8,020)
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (216,179) (189,597) (59,703)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from additional long-term borrowings 4,855 658,820 127,323
Payment of long-term borrowings including premiums (106,744) (167,942) (242,944)
Proceeds from issuance of common stock 60,731 22,303 14,338
Repurchase of common stock (28,563) (591,535) (65,463)
Other (184) (15,491) (1,548)
- ----------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (69,905) (93,845) (168,294)
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 7,076 (6,738) 2,069
Cash and cash equivalents, beginning of year 20,614 27,352 25,283
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 27,690 $ 20,614 $ 27,352
================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-5
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED OCTOBER 1, 1999
(in thousands)
<TABLE>
<CAPTION>
Impact of
Potential Accumulated
Class A Class B Repurchase Other
Common Common Capital Retained Feature of Comprehensive
Stock Stock Surplus Earnings Common Stock Income (Loss) Total
----------- --------- ------- -------- ------------ -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 2, 1998 $25 $629 $ - $(56,815) $(20,000) $(2,715) $(78,876)
Net income 150,191 150,191
Foreign currency translation adjustments (2,129) (2,129)
--------
Total comprehensive income 148,062
--------
Issuance of Class A common stock to
employee benefit plans 1 14,506 14,507
Conversion of Class B to Class A 2 (18) 16 -
Issuance of Class B common stock 61 35,623 35,684
Sale of deferred payment obligations 44,172 44,172
Retirement of common stock (1) (16) (36,961) (36,978)
--- ---- ------- ------- -------- ------- --------
Balance, October 1, 1999 $27 $656 $57,356 $93,376 $(20,000) $(4,844) $126,571
=== ==== ======= ======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-6
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED OCTOBER 2, 1998
(in thousands)
<TABLE>
<CAPTION>
Impact of
Potential Accumulated
Class A Class B Repurchase Other
Common Common Capital Retained Feature of Comprehensive
Stock Stock Surplus Earnings Common Stock Income (Loss) Total
-------- -------- ------- -------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 3, 1997 $20 $205 $ - $391,443 $(23,254) $1,633 $370,047
Net income 129,236 129,236
Foreign currency translation adjustments (1,701) (1,701)
Change in unrealized gain on available
for sale investments (2,647) (2,647)
--------
Total comprehensive income 124,888
--------
Issuance of Class A common stock to
employee benefit plans 397 397
Issuance of Class B common stock 25 38,975 39,000
Retirement of common stock (12) (23) (39,372) (577,055) (616,462)
Common stock split 17 422 (439) -
Change during the period 3,254 3,254
--- ---- ------- -------- -------- ------- --------
Balance, October 2, 1998 $25 $629 $ - $(56,815) $(20,000) $(2,715) $(78,876)
=== ==== ======= ======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-7
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED OCTOBER 3, 1997
(in thousands)
<TABLE>
<CAPTION>
Impact of
Potential Accumulated
Class A Class B Repurchase Other
Common Common Capital Retained Feature of Comprehensive
Stock Stock Surplus Earnings Common Stock Income (Loss) Total
-------- -------- ------- -------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 27, 1996 $20 $227 $ - $309,437 $(18,614) $5,131 $296,201
Net income 146,108 146,108
Foreign currency translation adjustments (6,145) (6,145)
Change in unrealized gain on available
for sale investments 2,647 2,647
--------
Total comprehensive income 142,610
--------
Issuance of Class A common stock to
employee benefit plans 384 384
Issuance of Class B common stock 24 25,025 25,049
Retirement of common stock (46) (25,409) (64,102) (89,557)
Change during the period (4,640) (4,640)
--- ---- ------- -------- -------- ------- --------
Balance, October 3, 1997 $20 $205 $ - $391,443 $(23,254) $ 1,633 $370,047
=== ==== ======= ======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-8
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
FISCAL YEAR
The Company's fiscal year is the fifty-two or fifty-three week period which ends
on the Friday nearest September 30th. The fiscal years ended October 1, 1999,
October 2, 1998 and October 3, 1997 are fifty-two, fifty-two and fifty-three
week periods, respectively.
PRINCIPLES OF CONSOLIDATION, ETC.
The consolidated financial statements include the accounts of the Company and
all its subsidiaries. All significant intercompany balances and transactions
have been eliminated. At fiscal 1999 yearend, the Company reclassified its
reporting of the reimbursement of direct costs under management fee contracts to
an element of sales rather than a reduction of the related expense item. The
change in classification, which was made to conform more closely to industry
practice, is not a change in revenue recognition policy and has no effect on
pre-tax or net income. Prior year amounts have been reclassified to conform with
the fiscal 1999 presentation.
In fiscal 2000, the Company is required to adopt Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." SOP 98-1 will not have a material effect on the consolidated
financial statements. In fiscal 2001, the Company is required to adopt Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The Company is currently assessing the
impact of this statement.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
COMPREHENSIVE INCOME
In the first quarter of fiscal 1999, the Company adopted the provisions of SFAS
No. 130, "Reporting Comprehensive Income". Comprehensive income includes all
changes to shareholders' equity during a period, except those resulting from
investments by and distributions to shareholders. The components of
comprehensive income are shown in the Consolidated Statements of Shareholders'
Equity.
CURRENCY TRANSLATION
Gains and losses resulting from the translation of financial statements of
non-U.S. subsidiaries are reflected as a component of comprehensive income in
shareholders' equity. Currency transaction gains and losses included in
operating results for fiscal 1999, 1998 and 1997 were not significant.
CURRENT ASSETS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
S-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
CURRENT ASSETS (Continued)
Inventories are valued at the lower of cost (principally the first-in, first-out
method) or market. The LIFO (last-in, first-out) method of determining cost is
used to value directly marketed career apparel and public safety clothing and
equipment. The stated value of inventories determined using the LIFO method is
not significantly different from replacement or current cost. Personalized work
apparel and linens in service are recorded at cost and are amortized over their
estimated useful lives, approximately two years.
The components of inventories are as follows:
1999 1998
- -------------------------------------------------------------------------------
Food 25.8% 22.0%
Career apparel, safety equipment and linens 69.0% 70.3%
Parts, supplies and novelties 5.2% 7.7%
- -------------------------------------------------------------------------------
100.0% 100.0%
- -------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated over their
estimated useful lives on a straight-line basis. Gains and losses on
dispositions are included in operating results. Maintenance and repairs are
charged to operations currently, and replacements and significant improvements
are capitalized. The estimated useful lives for the major categories of property
and equipment are 10 to 40 years for buildings and improvements and 3 to 10
years for service equipment and fixtures. Depreciation expense in fiscal 1999,
1998 and 1997 was $146.7 million $144.3 million and $136.1 million,
respectively.
GOODWILL
Goodwill, which represents the excess of cost over fair value of the net assets
of acquired businesses, is being amortized on a straight-line basis principally
over 40 years. The Company develops operating income projections for each of its
lines of business and evaluates the recoverability and amortization period of
goodwill using these projections. In fiscal 1997, the Company wrote off certain
intangible assets as discussed in Note 2. Based upon management's current
assessment, the estimated remaining amortization period of goodwill is
appropriate and the remaining balance is fully recoverable. Accumulated
amortization at October 1, 1999 and October 2, 1998 was $199.3 million and
$181.2 million, respectively.
OTHER ASSETS
Other assets consist primarily of investments in 50% or less owned entities,
contract rights, customer lists, computer software costs, and long-term
receivables. Investments in which the Company owns more than 20% but less than a
majority are accounted for using the equity method. Investments in which the
Company owns less than 20% are accounted for under the provisions of SFAS No.
115, "Accounting for Certain Investments in Debt and Equity Securities" or the
cost method, as applicable. Contract rights and customer lists are being
amortized on a straight-line basis over the expected period of benefit, 3 to 20
years.
S-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
OTHER LIABILITIES
Other noncurrent liabilities consist primarily of deferred compensation,
insurance accruals, deferred gains arising from sale and leaseback transactions
and subordinated installment notes arising from repurchases of common stock.
The Company is self-insured for a limited portion of the risk retained under its
general liability and workers' compensation arrangements. Self-insurance
reserves are determined based on actuarial analyses. The self-insurance reserves
for workers' compensation insurance are accrued on a present value basis using a
discount rate which approximates a risk-free rate.
EARNINGS PER SHARE
Earnings per share is reported on a Common Stock, Class B equivalent basis
(which reflects Common Stock, Class A shares converted to a Class B basis, ten
for one -- see Note 7). Basic earnings per share is based on the weighted
average number of common shares outstanding during the respective periods.
Diluted earnings per share is based on the weighted average number of common
shares outstanding during the respective periods, plus the common equivalent
shares, if dilutive, that would result from the exercise of stock options.
Earnings applicable to common stock and common shares utilized in the
calculation of basic and diluted earnings per share are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
(in thousands, except per share data)
<S> <C> <C> <C>
Earnings:
Earnings available to common
stock before extraordinary item $150,191 $133,710 $146,108
-------- -------- --------
Shares:
Weighted average number of common
shares outstanding used in basic
earnings per share calculation 94,197 113,859 125,625
Impact of potential exercise opportunities
under the ARAMARK Ownership Plan 7,275 8,096 6,813
-------- -------- --------
Total common shares used in diluted
earnings per share calculation 101,472 121,955 132,438
======= ======= =======
Basic earnings per common share $1.59 $1.17 $1.16
===== ===== =====
Diluted earnings per common share $1.48 $1.10 $1.10
===== ===== =====
</TABLE>
S-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
SUPPLEMENTAL CASH FLOW INFORMATION
1999 1998 1997
---- ---- ----
(in millions)
Interest Paid $131.4 $109.5 $106.4
Income Taxes Paid $70.5 $54.9 $63.0
Significant noncash investing and financing activities are as follows:
o During fiscal 1999, 1998 and 1997, the Company contributed $14.5 million,
$0.4 million and $0.4 million, respectively, of Class A Common Stock to its
employee benefit plans to fund previously accrued obligations. In addition,
during fiscal 1999, 1998 and 1997, the Company contributed $2.0 million,
$1.9 million and $2.3 million, respectively, of stock units to its stock
unit retirement plan in satisfaction of its accrued obligations. See
Note 5.
o During fiscal 1998, the Company contributed assets and liabilities with a
net book value of $14 million into a newly formed joint venture. See
Note 2.
o During fiscal 1999, 1998 and 1997, the Company received $16.7 million,
$14.9 million and $10.5 million, respectively, of employee notes under its
Deferred Payment program as partial consideration for the issuance of
Common Stock, Class B. Also, during fiscal 1999, 1998 and 1997, the Company
issued installment notes of $6.7 million, $18.4 million and $21.9 million,
respectively, as partial consideration for repurchases of Common Stock. See
Note 7.
NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.:
During the second quarter of fiscal 1999, the Company acquired Restaura, Inc., a
provider of food and support services, and Dyna Corporation, a leading
distributor of emergency medical supplies for approximately $46 million and $13
million in cash, respectively. The acquisitions were accounted for under the
purchase method of accounting. The Company's pro forma results from operations
for fiscal 1999 and 1998 would not have been materially different assuming the
acquisitions had occurred at the beginning of the respective periods.
In the fourth quarter of fiscal 1998, the Company formed a joint venture between
its magazine and book distribution business and another leading magazine and
book wholesaler, Anderson News Corporation. The Company contributed
substantially all of its magazine and book distribution business assets and
liabilities in exchange for a minority interest in the venture. In connection
with the transaction, the Company recorded a $5 million pre-tax charge, which is
reflected as "Other expense/income" in the accompanying consolidated statements
of income. The Company accounts for its interest in the venture on the cost
basis.
S-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.: (Continued)
During the fourth quarter of fiscal 1998, the Company acquired Facilities
Resource Management Co., a provider of energy and facilities management
consulting services, for approximately $20 million in cash and common stock. The
acquisition was accounted for under the purchase method of accounting. The
Company's pro forma results of operations for fiscal 1998 and 1997 would not
have been materially different assuming the acquisition had occurred at the
beginning of the respective periods.
In the second quarter of fiscal 1997, the Company sold an approximate 83%
interest in its Spectrum Healthcare Services, Inc. subsidiary (Spectrum). Total
consideration was approximately $158 million and included cash ($125 million),
notes and a warrant. The transaction resulted in a pre-tax gain of $72.4
million, net of transaction costs and reserves established for indemnification
of certain matters related to insurance, legal and other matters ($20 million),
and is included in "Other expense/income" in the accompanying consolidated
statements of income. No income taxes were provided on the gain due to permanent
differences in the underlying book and tax basis of Spectrum. Also reflected in
other expense/income in fiscal 1997 are pre-tax charges of $69.8 million,
primarily to write off certain intangible assets in the Food and Support
Services segments and the magazine and book distribution business. These charges
were partially offset by a gain of $9.1 million on the sale of an investment in
Brylane, Inc., acquired in connection with a fiscal 1996 divestiture.
The amount of the fiscal 1997 charges applicable to the Food and Support
Services - United States segment was approximately $9 million, to reduce certain
assets to net realizable value. The amount of the fiscal 1997 charges applicable
to the Food and Support Services - International segment was approximately $21
million due primarily to recognize an impairment of goodwill in a European
operation. The goodwill impairment was determined based on a discounted cash
flow basis. The amount of the fiscal 1997 charges related to the Uniform and
Career Apparel - Rental segment was approximately $6 million related primarily
to asset realization. The amount of charges applicable to the magazine and book
distribution business was $34 million, reflecting an asset writedown which was
determined based on estimates of discounted future cash flows and an impairment
loss on operations to be divested, which was determined based on indications of
value for those operations.
S-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. EXTRAORDINARY ITEM:
During fiscal 1998, the Company exercised its option to redeem its $100 million
8.5% subordinated notes at a price of 104.25% of the principal amount and also
redeemed a $50 million 8% note due April 2002 for a premium. The resultant
extraordinary charge on these transactions was $4.5 million, or $0.04 per share.
NOTE 4. BORROWINGS:
Long-term borrowings at October 1, 1999 and October 2, 1998 are summarized in
the following table:
1999 1998
------ ------
(in thousands)
SENIOR:
Credit facility borrowings $425,000 $ 429,300
Canadian credit facility 35,579 31,728
6.75% notes, due August 2004 298,776 298,520
6.79% note, payable in installments through 2003 100,000 125,000
7.00% notes, due July 2006 299,933 299,921
7.10% notes, due December 2006 124,862 124,846
7.25% notes and debentures, due August 2007 32,160 32,160
8% notes, due April 2002 50,000 50,000
8.15% notes, due May 2005 150,000 150,000
10-5/8% notes, due August 2000 50,000 100,000
Other 40,361 59,650
- --------------------------------------------------------------------------------
1,606,671 1,701,125
- --------------------------------------------------------------------------------
SUBORDINATED:
10% exchangeable debentures and notes, due
August 2000 26,689 26,689
OBLIGATIONS UNDER CAPITAL LEASES 1,060 1,795
- --------------------------------------------------------------------------------
1,634,420 1,729,609
Less-current portion 24,761 24,560
- --------------------------------------------------------------------------------
$1,609,659 $1,705,049
================================================================================
S-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. BORROWINGS: (Continued)
The non-amortizing $1.0 billion revolving credit facility ("Credit Agreement")
is provided by a group of banks and matures in March 2005. Interest under the
Credit Agreement is based on the Prime Rate, LIBOR plus a spread of .18% to .70%
(as of October 1, 1999 - .30%) or the Certificate of Deposit Rate plus a spread
of .28% to .80% (as of October 1, 1999 - .40%), at the option of the Company.
There is a fee of .10% to .30% (as of October 1, 1999 - .15%) on the entire
credit facility. The spread and fee margins are based on certain financial
ratios as defined.
The non-amortizing C$80 million Canadian revolving credit facility provides for
either U.S. dollar or Canadian dollar borrowings and matures in June 2001.
Interest on this facility is based on the Canadian Bankers Acceptance Rate, U.S.
Prime Rate, Canadian Prime Rate or LIBOR plus a spread of up to 5/8%, as
defined. As of October 1, 1999, all borrowings under this facility are payable
in Canadian dollars, with a weighted average interest rate of 5.4%. There is a
fee of .17% on the entire credit facility.
The Company's ARAMARK Educational Resources, Inc. (AER) subsidiary also has a
$125 million revolving credit facility with a group of banks. The credit
facility matures in August 2003, with quarterly commitment reductions of $5
million starting in September 2001, which increase to $6.25 million starting
September 2002. Interest under the credit facility is based on the Prime Rate
plus a spread of 0% to 1/4% or LIBOR plus a spread of 1/2% to 1%, at the option
of AER. There is a fee of .20% to .375% (as of October 1, 1999 - .20%) on the
unborrowed portion of the credit facility. The spread and fee margins are based
on certain financial ratios as defined. As of October 1, 1999 there were no
borrowings outstanding under this credit facility.
The 6.75% and 7.0% notes may be redeemed, in whole or in part, at any time at
the Company's option. The redemption price equals the greater of (i) 100% of the
principal amount or (ii) an amount based on the discounted present value of
scheduled principal and interest payments, as defined.
The 6.79% note is payable in $25 million annual installments, with a final
maturity of January 2003.
The 7.25% notes and debentures may be exchanged, in whole or in part, at the
option of the holder, for 7.10% senior notes due December 2006. The Company has
the right to redeem these notes and debentures, at par, upon being presented
with a notice of conversion or at any time after June 2004.
The 10% subordinated exchangeable debentures and notes may be exchanged at any
time in whole or part, at the option of the holder, for 10-5/8% senior notes due
August 2000 at an exchange ratio of .93.
S-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. BORROWINGS: (Continued)
Debt repayments of $104 million, contractually due in fiscal 2000, have been
classified as non-current in the accompanying consolidated balance sheet as the
Company has the ability and intent to finance the repayments through additional
borrowings under the Credit Agreement. Accrued interest on borrowings totaling
$29.7 million at October 1, 1999 and $30.4 million at October 2, 1998 is
included in current liabilities as "Other accrued expenses."
The Company utilizes derivative financial instruments, such as interest rate
swap and forward exchange agreements to manage changes in market conditions
related to debt obligations and foreign currency exposures. At October 1, 1999
and October 2, 1998, the Company has $125 million and $219 million,
respectively, of interest rate swap agreements fixing the rate on a like amount
of borrowings under the Credit Agreement at an average effective rate of 6.5%
and 6.4%, respectively. As of October 1, 1999, interest rate swap agreements
remain in effect for periods ranging from 1 to 16 months. All interest rate
swaps are accounted for as hedges under the accrual method with the net payments
under the terms of the swap agreements recognized currently in income as a
component of interest expense. Gains or losses on the termination of interest
rate swaps are deferred and amortized over the remaining life of the terminated
swap agreement. Interest rate swaps, for which the designated debt instrument
being hedged is extinguished, are accounted for on the fair value method from
the extinguishment date, if not concurrently terminated, with gains and losses
recognized currently in the consolidated statement of income. The Company has a
$24 million foreign currency swap agreement maturing in August 2000. This swap
hedges the currency exposure of its net investment in Spain and accordingly,
gains and losses on the currency swap are recorded as a component of
comprehensive income in shareholders' equity. The counterparties to the above
derivative agreements are major international banks. The Company continually
monitors its positions and credit ratings of its counterparties, and does not
anticipate nonperformance by the counterparties.
The following summarizes the fair value of the Company's financial instruments
as of October 1, 1999 and October 2, 1998. 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.
<TABLE>
<CAPTION>
1999 1998
------------------------------ ----------------------------
Carrying Fair Carrying Fair
Asset/(Liability) in millions Amount Value Amount Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Long-term debt $(1,634.4) $(1,590.7) $(1,729.6) $(1,793.0)
Interest rate swap agreements - - - (3.9)
Foreign currency swap agreement 4.5 4.1 2.4 1.1
</TABLE>
The Credit Agreement contains restrictive covenants which provide, among other
things, limitations on liens, dispositions of material assets and repurchases of
capital stock. The terms of the Credit Agreement also require that the Company
maintain certain specified minimum ratios of cash flow to fixed charges and to
total borrowings and certain minimum levels of net worth (as defined). At
October 1, 1999, the Company was in compliance with all of these covenants.
Assets with a net book value of $2.2 million at October 1, 1999, are subject to
liens under several of the Company's borrowing arrangements.
S-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. BORROWINGS: (Continued)
Long-term borrowings maturing in the next five fiscal years, excluding capital
lease obligations, are as follows:
Amount
--------------
(in thousands)
2000 $24,293
2001 60,869
2002 75,290
2003 25,272
2004 304,186
NOTE 5. EMPLOYEE PENSION AND PROFIT SHARING PLANS:
In the United States, the Company maintains qualified contributory and
non-contributory retirement plans for eligible employees, with Company
contributions to the plans based on earnings performance or salary level.
Qualified non-contributory profit sharing plans are maintained by certain
businesses, with annual contributions determined by management. The Company has
a non-qualified stock unit retirement plan for certain employees. The total
expense of the above plans for fiscal 1999, 1998 and 1997 was $16.2 million,
$15.7 million and $15.5 million, respectively. During fiscal 1999, 1998 and
1997, the Company contributed 106,703 shares, 4,161 shares and 5,985 shares,
respectively, of Common Stock, Class A to these plans to partially fund
previously accrued obligations. In addition, during fiscal 1999, 1998 and 1997,
the Company contributed to the stock unit retirement plan 135,508 stock units,
163,873 stock units and 363,555 stock units, respectively, which are convertible
into Common Stock, Class B, in satisfaction of its accrued obligations. Shares
contributed to these plans have been adjusted to reflect the stock split
described in Note 7. The value of the stock units was credited to capital
surplus. The Company participates in various multi-employer union administered
pension plans. Contributions to these plans, which are primarily defined benefit
plans, result from contractual provisions of labor contracts and were $15.5
million, $14.8 million and $14.4 million for fiscal 1999, 1998 and 1997,
respectively.
Additionally, the Company maintains several contributory and non-contributory
defined benefit pension plans, primarily in Canada and the United Kingdom. The
projected benefit obligation of these plans as of October 1, 1999, which is
fully funded, was $58.3 million. Pension expense related to these plans is not
material to the consolidated financial statements.
NOTE 6. INCOME TAXES:
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires deferred tax assets or
liabilities to be recognized for the estimated future tax effects of temporary
differences between the financial reporting and tax bases of the Company's
assets and liabilities based on the enacted tax law and statutory tax rates
applicable to the periods in which the temporary differences are expected to
affect taxable income. In September 1998 the Company settled certain prior
years' tax returns.
S-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES: (Continued)
The components of income before income taxes, including the effects of other
expense/income (See Note 2), by source of income are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
United States $222,259 $188,132 $221,710
Non-U.S. 17,154 27,640 (5,863)
- -----------------------------------------------------------------------------------------------------------------
$239,413 $215,772 $215,847
=================================================================================================================
</TABLE>
The provision for income taxes, including the effects of other expense/income
(See Note 2), consists of:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Current:
Federal $60,402 $ 51,001 $60,370
State and local 13,016 7,643 13,366
Non-U.S. 4,959 11,876 7,052
- -----------------------------------------------------------------------------------------------------------------
78,377 70,520 80,788
- -----------------------------------------------------------------------------------------------------------------
Deferred:
Federal 8,453 9,369 (8,027)
State and local 1,624 2,171 (3,494)
Non-U.S. 768 2 472
- -----------------------------------------------------------------------------------------------------------------
10,845 11,542 (11,049)
- -----------------------------------------------------------------------------------------------------------------
$89,222 $82,062 $69,739
=================================================================================================================
</TABLE>
The provision for income taxes varies from the amount determined by applying the
United States Federal statutory rate to pre-tax income as a result of the
following:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
(% of pre-tax income)
<S> <C> <C> <C>
United States statutory income tax rate 35.0% 35.0% 35.0%
Increase (decrease) in taxes, resulting from:
State income taxes, net of Federal tax benefit 4.0 3.9 3.0
Foreign tax benefits (4.5) (.5) (.2)
Permanent book/tax difference related to the sale of Spectrum - - (11.3)
Permanent book/tax differences, primarily
resulting from purchase accounting 3.6 3.6 8.2
Favorable impact of tax settlements - (3.2) -
Tax credits and other (.8) (.8) (2.4)
- -----------------------------------------------------------------------------------------------------------------
Effective income tax rate 37.3% 38.0% 32.3%
=================================================================================================================
</TABLE>
S-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES: (Continued)
As of October 1, 1999 and October 2, 1998, the components of deferred taxes are
as follows:
<TABLE>
<CAPTION>
1999 1998
------ ------
(in thousands)
<S> <C> <C>
Deferred tax liabilities:
Property and equipment $77,929 $70,379
Inventory 6,431 5,428
Investments 10,161 13,520
Other 15,731 11,061
------- -------
Gross deferred tax liability 110,252 100,388
------- -------
Deferred tax assets:
Insurance $ 7,416 $ 8,694
Employee compensation and benefits 43,682 41,318
Accruals and allowances 30,744 29,917
Intangibles 3,182 5,458
Other 1,674 1,943
------- -------
Gross deferred tax asset 86,698 87,330
------- -------
Net deferred tax liability $23,554 $13,058
======= =======
</TABLE>
NOTE 7. CAPITAL STOCK:
There are two classes of common stock authorized and outstanding, Common Stock,
Class A and Common Stock, Class B. Each Class A and Class B Share is entitled to
one vote on all matters submitted to shareholders, voting together as a single
class except where otherwise required by law. Each Class A Share is entitled to
ten times the dividends and other distributions payable on each Class B Share.
On June 15, 1998, the Company completed a cash tender offer (the "Tender Offer")
for outstanding shares of its Class A common stock at a price of $500 per share
(pre-split). Pursuant to the Tender Offer, the Company repurchased 1,062,485
shares (pre-split) for an aggregate purchase price of $531.2 million plus
transaction costs. The purchase price was financed through additional borrowings
under the Credit Agreement.
On August 11, 1998, the Company's Board of Directors declared, effective
September 1, 1998, a three-for-one split of the Class B and Class A Common Stock
effected in the form of a stock dividend to shareholders of record on September
1, 1998. The stated par value of $.01 per share of Class B and Class A common
stock was not changed.
S-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. CAPITAL STOCK: (Continued)
As of October 1, 1999, the Company's stock option plans provided for the
issuance of up to 134,584,926 options to purchase shares of Common Stock, Class
B. The exercise price of each option is equal to the current fair market value
at the date of grant. The Company granted installment stock purchase
opportunities under its stock ownership program in fiscal 1999, 1998 and 1997,
which provide for the purchase of shares of Common Stock, Class B. Installment
stock purchase opportunities are exercisable in six annual installments with the
exercise price of each purchase opportunity equal to the current fair market
value at the time the purchase opportunity is granted. The Company has a program
to grant non-qualified stock options to additional qualified employees on an
annual basis. Under the program, options vest after three years and may be
exercised for a period of three years after vesting. In fiscal 1999, 1998 and
1997, the Company granted cumulative installment stock purchase opportunities
under its existing stock ownership program which are similar to the installment
stock purchase opportunities discussed above; however, any purchase
opportunities not exercised during an installment period may be carried forward
to subsequent installment periods. The Company has a Deferred Payment Program
which enables holders of installment purchase opportunities to defer a portion
of the total amount required to exercise the options. Interest currently accrues
on deferred payments at 7.75% and is payable when the deferred payments are due.
At October 1, 1999 and October 2, 1998, the receivables from individuals under
the Deferred Payment Program were $5.8 million and $35.7 million, respectively,
which are reflected as a reduction of Shareholders' Equity. The Company holds as
collateral all shares purchased in which any portion of the purchase price is
financed under the Deferred Payment Program until the deferred payment is
received from the individual by the Company. In the third quarter of fiscal
1999, the Company sold for cash, without recourse, approximately $44 million of
Deferred Payment Program notes receivable. The sales price approximated book
value and the proceeds were used to repay borrowings under the credit facility.
Status of the options under the various ownership programs, adjusted to reflect
the three-for-one stock split in fiscal 1998, follows:
<TABLE>
<CAPTION>
Number of Shares Average Option Price
--------------------------------------------- ----------------------------
1999 1998 1997 1999 1998 1997
------------- ------------- ------------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 24,701,205 26,832,636 31,103,952 $5.78 $4.74 $4.06
Options granted 4,912,500 9,634,800 10,371,000 $11.57 $7.47 $5.54
Options exercised 6,125,906 7,228,446 7,289,349 $5.28 $4.43 $3.23
Canceled/Forfeited 2,958,191 4,537,785 7,352,967 $6.50 $5.27 $4.31
Outstanding at end of year 20,529,608 24,701,205 26,832,636 $7.19 $5.78 $4.74
Exercisable at end of year 7,960 81,840 193,176 $13.05 $1.52 $2.96
</TABLE>
The exercise prices on outstanding options at October 1, 1999 range from $3.73
to $13.05, with a weighted average remaining life of approximately three years.
The Company has reserved 22,706,945 shares of Common Stock, Class B at October
1, 1999 for issuance of stock pursuant to its employee ownership and benefit
programs.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations in accounting for its
stock option plans. Accordingly, no compensation expense has been recognized
related to the plans described above. If compensation cost for these plans had
been determined using the fair-value method prescribed by SFAS No. 123,
"Accounting for Stock Based Compensation," the Company's net income and earnings
per share would have been reduced to the pro forma amounts indicated below.
S-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. CAPITAL STOCK: (Continued)
1999 1998 1997
---- ---- ----
Net Income
As reported $150,191 $129,236 $146,108
Pro forma $146,501 $125,658 $143,570
Earnings per share
As reported:
Basic $1.59 $1.14 $1.16
Diluted $1.48 $1.06 $1.10
Pro forma:
Basic $1.56 $1.10 $1.14
Diluted $1.44 $1.03 $1.08
Because the SFAS No. 123 method of accounting has not been applied to options
granted prior to fiscal 1996, the resulting pro forma compensation cost may not
be representative of that to be expected in future years.
The weighted average fair value of options granted in fiscal 1999, 1998 and 1997
was $1.61, $1.12 and $0.88 per option, respectively. As the Company's stock is
not publicly traded, the fair value of each option was estimated on the grant
date using the minimum value method (which excludes a volatility assumption),
with the following assumptions:
1999 1998 1997
---------- ---------- ----------
Risk-free interest rate 4.5 - 4.8% 5.3 - 5.9% 5.2 - 6.1%
Expected life in years 3.3 3.2 3.2
Dividend yield 0% 0% 0%
The Company and its shareholders are parties to an Amended and Restated
Stockholders' Agreement. Pursuant to this agreement, holders of common stock who
are individuals, upon their death, complete disability or normal retirement, may
cause the Company to repurchase up to 30% of their shares for cash at the then
appraised value, but only to the extent such repurchase by the Company is
permitted under the Credit Agreement. Under this Credit Agreement restriction,
repurchases of capital stock cannot exceed an aggregate limit, which amount was
$20 million at October 1, 1999 and October 2, 1998. Pursuant to interpretations
of its rules related to "Redeemable Preferred Stock," the Securities and
Exchange Commission has requested that these amounts representing the Company's
potential repurchase of its Common Stock be presented as a separate item and
accordingly, the Company's Shareholders' Equity reflects this reclassification
in the consolidated financial statements. Also, the Shareholders' Agreement
provides that the Company may, at its option, repurchase shares from individuals
who are no longer employees. Such repurchased shares may be resold to others
including replacement personnel at prices equal to or greater than the
repurchase price. Generally, payment for shares repurchased can be, at the
Company's option, in cash or subordinated installment notes, which are
subordinated to all other indebtedness of the Company. Interest on these notes
is payable semi-annually and principal payments are made annually over varying
periods not to exceed ten years. The noncurrent portion of these notes ($25.1
million as of October 1, 1999 and $44.1 million as of October 2, 1998) is
included in the consolidated balance sheets as "Other Noncurrent Liabilities"
and the current portion of these notes ($18.9 million as of October 1, 1999 and
$26.0 million as of October 2, 1998) is included in the consolidated balance
sheets as "Accounts Payable." Subsequent to yearend, the Company repurchased
3,159,223 shares of its Class B common stock and 157,470 shares of its Class A
common stock for approximately $40 million in cash and $27 million in
installment notes.
S-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. COMMITMENTS AND CONTINGENCIES:
1999 1998
- -----------------------------------------------------------------------
(in thousands)
Facilities under capital leases $6,857 $8,958
Less-accumulated amortization 6,131 7,686
- -----------------------------------------------------------------------
$ 726 $1,272
=======================================================================
Rental expense for all operating leases was $146.5 million, $143.2 million and
$129.7 million for fiscal 1999, 1998 and 1997, respectively.
Following is a schedule of the future minimum rental commitments under all
noncancelable leases as of October 1, 1999:
Fiscal Year Operating Capital
- ---------------------------------------------------------------------------
(in thousands)
2000 $166,082 $523
2001 91,872 348
2002 69,137 128
2003 57,741 59
2004 45,192 44
Subsequent years 96,085 11
- ---------------------------------------------------------------------------
Total minimum rental obligations $526,109 1,113
=============================================================
Less-amount representing interest 53
- ---------------------------------------------------------------------------
Present value of capital leases 1,060
Less-current portion 468
- ---------------------------------------------------------------------------
Noncurrent obligations under capital leases $ 592
===========================================================================
The Company has capital commitments of approximately $36 million at October 1,
1999 in connection with several long-term concession contracts. The Company is
party to certain claims and litigation arising in the ordinary course of
business. The Company believes it has meritorious defenses to these claims and
is of the opinion that adequate reserves have been provided for the ultimate
resolution of these matters.
S-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. ARAMARK SERVICES, INC. AND SUBSIDIARIES:
The following financial information has been summarized from the separate
consolidated financial statements of ARAMARK Services, Inc. (a wholly owned
subsidiary of ARAMARK Corporation) and the subsidiaries which it currently owns.
ARAMARK Services, Inc. is the borrower under the Credit Agreement and certain
other senior debt described in Note 4 and incurs the interest expense
thereunder. This interest expense is only partially allocated to all of the
other subsidiaries of ARAMARK Corporation.
1999 1998 1997
------- ------ ------
(in thousands)
Sales $4,282,498 $3,910,124 $3,721,581
Cost of services provided 4,047,430 3,676,193 3,514,317
Net income 26,639 40,842 20,690
1999 1998
------ ------
(in thousands)
Current assets $ 519,356 $ 451,050
Noncurrent assets 2,072,161 2,079,782
Current liabilities 574,013 545,406
Noncurrent liabilities 1,815,161 1,823,868
S-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. QUARTERLY RESULTS (Unaudited):
The following table summarizes quarterly financial data for fiscal 1999 and
1998:
<TABLE>
<CAPTION>
Fiscal Quarter
----------------------------------------------------------
1999 First Second Third Fourth Year
- ------------------------------------------------------------------------------------------------------------------
(in thousands, except earnings per share)
<S> <C> <C> <C> <C> <C>
Sales $1,648,465 $1,658,845 $1,712,646 $1,698,470 $6,718,426
Cost of services provided 1,498,346 1,521,103 1,544,769 1,499,376 6,063,594
Net Income 30,083 19,427 41,859 58,822 150,191
Diluted earnings per share $.30 $.19 $.41 $.58 $1.48
Fiscal Quarter
----------------------------------------------------------
1998 First Second Third Fourth(1) Year
- ------------------------------------------------------------------------------------------------------------------
(in thousands, except earnings per share)
Sales $1,648,393 $1,648,641 $1,695,349 $1,623,366 $6,615,749
Cost of services provided 1,499,440 1,517,761 1,539,784 1,442,185 5,999,170
Income before extraordinary item 30,077 18,658 37,169 47,806 133,710
Extraordinary item (2) - 1,559 2,915 - 4,474
Net income 30,077 17,099 34,254 47,806 129,236
Diluted earnings per share:
Income before extraordinary item $.23 $.14 $.30 $.49 $1.10
Net income $.23 $.13 $.27 $.49 $1.06
</TABLE>
(1) Fiscal 1998 fourth quarter results reflect charges relating to the
contribution of the Company's magazine and book distribution business into a
joint venture. See Note 2.
(2) See Note 3.
In the first and second fiscal quarters, within the Food and Support Services -
United States segment, there is a lower level of activity at the higher margin
leisure and recreational food service operations which is partly offset by
increased activity in the educational market. In addition, there is a seasonal
increase in volume of directly marketed work clothing during the first quarter.
Whereas in the third and fourth fiscal quarters, there is a significant increase
at leisure and recreational accounts which is partially offset by the effect of
summer closings in the educational market.
S-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. BUSINESS SEGMENTS:
In fiscal 1999 the Company adopted the provisions of SFAS No. 131 "Disclosures
about Segments of an Enterprise and Related Information". Operating segment
information for fiscal 1998 and 1997 is also presented in accordance with SFAS
No. 131.
The Company provides or manages services in three strategic markets; Food and
Support Services, Uniform and Career Apparel and Educational Resources which are
organized and managed by the following reportable business segments:
Food and Support Services - United States - Food, refreshment, specialized
dietary and support services, including facility maintenance and housekeeping,
provided to business, educational, governmental and healthcare institutions and
in recreational and other facilities serving the general public.
Food and Support Services - International - Food, refreshment, specialized
dietary and support services, including facility maintenance and housekeeping,
provided to business, educational, governmental and healthcare institutions and
in recreational and other facilities serving the general public. Operations are
conducted in Belgium, Canada, the Czech Republic, Germany, Hungary, Japan,
Korea, Mexico, Spain and the United Kingdom.
Uniform and Career Apparel - Rental - Rental, sale, cleaning, maintenance and
delivery of personalized uniform and career apparel and other textile items on a
contract basis. Also provided are walk-off mats, cleaning cloths, disposable
towels and other environmental control items.
Uniform and Career Apparel - Direct Marketing - Direct marketing of personalized
uniforms and career apparel, public safety equipment and accessories to
businesses, public institutions and individuals.
Educational Resources - Provider of infant, toddler, pre-school and school-age
learning programs through community-based child care centers, before and after
school programs, employer on-site child care centers and private elementary
schools.
Corporate and Other - The corporate and other segment includes general corporate
expenses not specifically allocated to an individual segment and the sales and
operating results of the company's magazine and book distribution and Spectrum
Healthcare businesses which were divested in fiscal 1998 and 1997, respectively
(See Note 2). Included in the Corporate and Other segment in fiscal 1998 are
operating losses of approximately $14 million related to the distribution
business and in fiscal 1997 net operating losses of approximately $11 million
related to the distribution business and Spectrum.
Sales by segment are substantially comprised of services to unaffiliated
customers and clients. Operating income reflects expenses directly related to
individual segments plus an allocation of corporate expenses applicable to more
than one segment.
Net property and equipment by geography is as follows:
1999 1998
------ ------
(in millions)
United States $887.6 $829.3
International 46.1 45.1
------ ------
Total $933.7 $874.4
====== ======
S-25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. BUSINESS SEGMENTS: (Continued)
<TABLE>
<CAPTION>
Sales Depreciation and Amortization
------------------------------------- ----------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- --------- -------- ------- --------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Food and Support Services - United States $3,993.5 $3,653.0 $3,472.5 $93.6 $86.8 $83.1
Food and Support Services - International 975.2 938.0 912.8 16.0 16.0 17.1
Uniform and Career Apparel - Rental 911.9 863.5 832.0 43.4 42.4 40.8
Uniform and Career Apparel - Direct Marketing 438.1 434.6 411.5 18.7 17.7 17.6
Educational Resources 399.7 360.8 332.1 20.0 18.8 17.0
Corporate and Other - 365.8 594.7 2.0 14.1 16.1
-------- -------- -------- ------ ------ ------
Total $6,718.4 $6,615.7 $6,555.6 $193.7 $195.8 $191.7
======== ======== ======== ====== ====== ======
Operating Income
-----------------------------------------------------
1999 1998 1997
------ ------ ------
(in millions)
Food and Support Services - United States $222.3 $195.1 $173.3
Food and Support Services - International 32.0 32.4 25.6
Uniform and Career Apparel - Rental 106.9 100.9 96.4
Uniform and Career Apparel - Direct Marketing 3.9 10.1 24.7
Educational Resources 34.7 31.2 26.9
------ ------ ------
$399.8 $369.7 $346.9
Corporate and Other (24.6) (31.6) (26.7)
Other Income/(Expense) - (5.0) 11.7
------ ------ ------
Operating Income 375.2 333.1 331.9
Interest Expense, Net (135.8) (117.3) (116.0)
------ ------ ------
Income Before Income Taxes
and Extraordinary Item $239.4 $215.8 $215.9
====== ====== ======
Capital Expenditures Identifiable Assets
----------------------------- --------------------------------
1999 1998 1997 1999 1998 1997
------ ------ ------ ------ ------ ------
(in millions)
Food and Support Services - United States $94.6 $78.8 $81.7 $1,186.9 $1,069.7 $1,013.1
Food and Support Services - International 20.1 19.0 15.6 246.5 243.5 227.9
Uniform and Career Apparel - Rental 64.4 41.2 59.9 762.2 739.3 720.8
Uniform and Career Apparel - Direct Marketing 8.8 5.8 6.8 311.4 313.1 319.0
Educational Resources 39.6 24.0 36.0 234.7 218.3 207.9
Corporate and Other - 12.8 2.0 128.8 157.4 264.9
------ ------ ------ -------- -------- --------
$227.5 $181.6 $202.0 $2,870.5 $2,741.3 $2,753.6
====== ====== ====== ======== ======== ========
</TABLE>
S-26
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ARAMARK CORPORATION
BALANCE SHEETS
OCTOBER 1, 1999 AND OCTOBER 2, 1998
(in thousands)
<TABLE>
<CAPTION>
ASSETS
1999 1998
----------- ----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 200 $ -
Receivables 695 933
Inventories 23 23
Prepayments 1,840 1,565
---------- ----------
Total current assets 2,758 2,521
---------- ----------
Property & Equipment, net 2,140 2,947
Investment in Subsidiaries 1,379,139 1,214,682
Other Assets 2,048 1,669
---------- ----------
$1,386,085 $1,221,819
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 33,174 $ 29,963
Accrued expenses 13,027 24,689
---------- ----------
Total current liabilities 46,201 54,652
---------- ----------
Long-Term Borrowings 26,689 26,701
Other Noncurrent Liabilities 40,955 59,342
Payable to Subsidiaries 1,125,669 1,140,000
Common Stock Subject to Potential Repurchase Under
Provisions of Shareholders' Agreement 20,000 20,000
Shareholders' Equity/(Deficit) Excluding Common Stock
Subject to Repurchase:
Class A common stock, par value $.01 27 25
Class B common stock, par value $.01 656 629
Capital Surplus 57,356 -
Earnings retained for use in the business 93,376 (56,815)
Accumulated other comprehensive income (loss) (4,844) (2,715)
Impact of potential repurchase feature of
common stock (20,000) (20,000)
---------- ----------
Total 126,571 (78,876)
---------- ----------
$1,386,085 $1,221,819
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-27
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
STATEMENTS OF INCOME
FOR THE FISCAL YEARS ENDED OCTOBER 1, 1999, OCTOBER 2, 1998 AND OCTOBER 3, 1997
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Equity in Net Income of Subsidiaries $150,191 $129,236 $146,108
-------- -------- --------
Management Fee Income 25,371 34,853 35,342
-------- -------- --------
General and Administrative Expenses 20,593 24,885 27,320
-------- -------- --------
Interest (Income) Expense -
Intercompany interest income - (5,568) (8,663)
Interest expense 4,778 10,678 16,685
-------- -------- --------
Interest Expense, net 4,778 5,110 8,022
-------- -------- --------
Income before income taxes 150,191 134,094 146,108
Provision for Income Taxes - 1,943 -
-------- -------- --------
Income Before Extraordinary Item 150,191 132,151 146,108
Extraordinary Item Due to Early Extinguishments
of Debt (net of income taxes of $1,943) - 2,915 -
-------- -------- --------
Net income $150,191 $129,236 $146,108
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-28
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED OCTOBER 1, 1999, OCTOBER 2, 1998 AND OCTOBER 3, 1997
(in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $150,191 $ 129,236 $ 146,108
Equity in net income of subsidiaries (150,191) (129,236) (146,108)
Extraordinary item - 2,915 -
Other, primarily noncash working capital (26,819) 256 (6,204)
-------- --------- ---------
Net cash provided by (used in) operating activities (26,819) 3,171 (6,204)
-------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment (31) (732) (469)
Other (314) (117) (322)
-------- --------- ---------
Net cash used in investing activities (345) (849) (791)
-------- --------- ---------
Cash flows from financing activities:
Payment of long-term borrowings including
premiums - (106,563) (32,160)
Change in notes receivable from
ARAMARK Services, Inc. - 100,000 -
Change in intercompany payable to
subsidiaries (4,804) 573,473 90,280
Proceeds from issuance of common stock 60,731 22,303 14,338
Repurchase of common stock (28,563) (591,535) (65,463)
-------- --------- ---------
Net cash provided by (used in) financing activities 27,364 (2,322) 6,995
-------- --------- ---------
Change in cash $ 200 $ - $ -
Cash, beginning of period - - -
-------- --------- ---------
Cash, end of period $ 200 $ - $ -
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-29
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1.
These statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto beginning on page S-3.
Property and equipment are stated at cost and are depreciated over
their estimated useful lives on a straight-line basis.
Other noncurrent liabilities consist primarily of deferred compensation
and subordinated installment notes arising from repurchases of common stock.
Note 2.
The Company has guaranteed certain debt obligations of ARAMARK
Services, Inc., its wholly-owned subsidiary, which totaled $1.6 billion on
October 1, 1999. See Note 4 to the Company's consolidated financial statements.
S-30
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED OCTOBER 1, 1999, OCTOBER 2, 1998 AND OCTOBER 3, 1997
<TABLE>
<CAPTION>
Additions Reductions
-------------------------- --------------------------
Balance, Acquisition Divestiture Deductions Balance,
Beginning of of Charged to of from End of
Description Fiscal Year Businesses Income Businesses Reserves (1) Fiscal Year
- ----------- ------------ ----------- ---------- ---------- ---------- -----------
- - - - - - - - - -- - - - - - - -- - (in thousands) - - - - - - - - - - - - - - - - - -
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year 1999
- ----------------
Reserve for doubtful accounts,
advances & current notes receivable $24,457 $165 $13,413 $41 $15,498 $22,496
======= ==== ======= ==== ======= =======
Fiscal Year 1998
- ----------------
Reserve for doubtful accounts,
advances & current notes receivable $23,158 $779 $12,209 $3,739 $7,950 $24,457
======= ==== ======= ====== ====== =======
Fiscal Year 1997
- ----------------
Reserve for doubtful accounts,
advances & current notes receivable $16,973 $141 $16,287 $1,988 $8,255 $23,158
======= ==== ======= ====== ====== =======
</TABLE>
(1) Allowances granted and amounts determined not to be collectible.
S-31
<PAGE>
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation
3.2 Corporate By-Laws, as amended
4.1 Amended and Restated Stockholders' Agreement is incorporated by
reference to the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1994
4.2 Amended and Restated Registration Rights Agreement is incorporated by
reference to the Company's quarterly report on Form 10-Q for the fiscal
quarter ended April 1, 1988
4.3 7.0% Guaranteed Notes due July 15, 2006; Indenture dated July 15, 1991,
is incorporated by reference to the Company's Registration Statements on
Form S-3, Registration No. 33-525887, 33-64259 and 333-53161
4.4 6 3/4% Guaranteed Notes due August 1, 2004; Indenture dated July 15,
1991, is incorporated by reference to the Company's Registration
Statement on Form S-3, Registration No. 333-53161
Long-term debt instruments authorizing debt that does not exceed 10% of
the total consolidated assets of the Company are not filed herewith
but will be furnished on request of the Commission.
10.1 1999 Employment Agreement with Joseph Neubauer
10.2 Agreement relating to employment and post-employment competition dated
May 6, 1986 with James E. Ksansnak is incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended September
29, 1989
10.3 Agreement relating to employment and post-employment competition dated
October 4, 1991 with William Leonard is incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended October
1, 1993
10.4 Agreement relating to employment and post-employment competition dated
June 7, 1993 with L. Frederick Sutherland is incorporated by reference
to the Company's Annual Report on Form 10-K for the fiscal year ended
September 27, 1996
10.5 Agreement relating to employment and post-employment competition dated
December 14, 1998 with Charles Kiernan
10.6 Credit and Guaranty Agreement dated January 7, 1998 and amendments
thereto dated May 7, 1998 and September 10, 1998 are incorporated by
reference to the Company's Annual Report on Form 10-K for the fiscal
year ended October 2, 1998
12 Ratio of Earnings to Fixed Charges
21 Subsidiaries of Registrant
23 Consent of Arthur Andersen LLP, Independent Public Accountants
24 Powers of Attorney
27 Financial Data Schedule
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
ARAMARK CORPORATION
(Originally Incorporated on September 7, 1984
under the name "ARA Acquiring Company")
FIRST: The name of the Corporation is ARAMARK CORPORATION.
SECOND: The address of the Corporation's registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington, County of New
Castle. The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 185,000,000 shares, consisting
of (i) 10,000,000 shares of Series Preferred Stock, $1.00 par value per share
(the "Series Preferred Stock"), and (ii) 25,000,000 shares of Common Stock,
Class A, $.01 par value per share (the "Class A Common Stock"), and (iii)
150,000,000 shares of Common Stock, Class B, $.01 par value per share (the
"Class B Common Stock"). The Class A Common Stock and the Class B Common Stock
are referred to collectively as the "Common Stock".
The Board of Directors shall have the full authority permitted by law
to fix full or limited, or no voting power, and such other designations, powers,
preferences, and relative, participating, optional, special or other rights
(including, as examples and not as a limitation, multiple voting powers and
conversion rights), and qualifications, limitations or restrictions of any
series of the class of Series Preferred Stock that may be desired.
A statement of the designations, powers, preferences, and rights of
each class and series of stock, and the qualifications, limitations and
restrictions in respect thereof, is as follows:
4A. Common Stock
1. Classes.
The Common Stock shall be divided into two classes, the Class
A Common Stock and the Class B Common Stock. The powers, preferences and rights
of the Class A Common Stock and the Class B Common Stock, and the
qualifications, limitations and restrictions thereon, shall be in all respects
identical, except as otherwise provided in this Part 4A.
2. Dividends. Subject to any provision in this Article FOURTH
with respect to any stock of the Corporation to the contrary, out of the assets
of the Corporation which are by law available for the payment of dividends,
dividends and other distributions may be, but shall not be required to be,
declared and paid upon shares of Common Stock, and the holders of shares of
Class A Common Stock and Class B Common Stock shall be entitled to receive the
same dividends and other distributions, ratably with the holder of one share of
Class A Common Stock entitled to receive ten times what the holder of one share
of Class B Common Stock is entitled to receive; provided, however, that in the
case of dividends or other distributions payable in Common Stock, only shares of
Class B Common Stock shall be distributed with respect to Class B Common Stock
and only shares of Class A Common Stock shall be distributed with respect to
Class A Common Stock, and any such distribution shall be made ratably, with the
holder of one share of Class A Common Stock entitled to receive the same number
of shares of Class A Common Stock as the number of shares of Class B Common
Stock the holder of one share of Class B Common Stock shall be entitled to
receive; and provided further, that the Board of Directors may declare
<PAGE>
and pay dividends and other distributions with respect to the Class A Common
Stock without declaring or paying any dividend or other distribution with
respect to the Class B Common Stock.
3. Voting Rights.
(a) Subject to the special voting rights of the
holders of any other stock of the Corporation, the Common Stock (and any other
stock of the Corporation which may be entitled to vote with the holders of
Common Stock), voting as a single class except where the Class A Common Stock
and the Class B Common Stock (and such other stock) are required by law to vote
as separate classes or series on a particular matter, shall possess all of the
voting power of the Corporation with respect to the election of directors and
for all other purposes.
(b) Each share of Common Stock, whether Class A
Common Stock or Class B Common Stock, shall be entitled to one vote on all
matters submitted to a vote of the Corporation's stockholders.
4. Liquidation. Upon the liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, after provision
for the payment of creditors and after provision shall be made for holders of
all shares of stock of the Corporation having a preference upon liquidation,
dissolution or winding up, the remaining assets of the Corporation shall be
distributed among the holders of Common Stock, ratably, with the holder of one
share of Class A Common Stock entitled to receive ten times what the holder of
one share of Class B Common Stock is entitled to receive, and, to the extent
provided in this Article FOURTH, the holders of any other stock of the
Corporation which may be entitled to share in such distribution.
5. Conversion of Class B Common Stock.
(a) Optional Conversion. Each share of Class B Common
Stock may at any time, but only with the prior approval of the Board of
Directors, be converted at the election of the holder thereof into one-tenth of
a fully paid and nonassessable share of Class A Common Stock. Subject to the
terms of any such approval, the holder of shares of Class B Common Stock may
elect to convert any or all of such shares at one time or at various times in
such holder's discretion. Such right shall be exercised by delivering a written
notice of the election by the holder thereof to convert, in form satisfactory to
the agent for the registration of transfer of shares of Class B Common Stock and
to the Corporation, accompanied by any certificates representing the shares of
Class B Common Stock to be converted.
(b) Mandatory Conversion. At any time when the Board
of Directors authorizes and directs the conversion of all the Class B Common
Stock into Class A Common Stock, then, at the time designated by the Board for
the occurrence of such event, each outstanding share of Class B Common Stock
shall be converted into one-tenth of a share of Class A Common Stock and no
further shares of Class B Common Stock may be issued thereafter.
(c) Manner of Conversion. In the event of any such
conversion pursuant to paragraph (a) or (b), any certificate or certificates
representing shares of Class B Common Stock so converted shall thereupon and
thereafter be deemed to represent the number of shares of Class A Common Stock
issuable upon such conversion; all rights of such holder arising from ownership
of shares of Class B Common Stock shall cease at such time, and such holder
shall be treated for all purposes as having become the record holder of such
shares of Class A Common Stock at such time and shall have and may exercise all
the rights and powers appertaining thereto. No adjustments in respect of any
past dividends and other distributions shall be made upon the conversion of any
share of Class B Common Stock. The Corporation shall at all times reserve and
keep available, solely for the purpose of issue upon conversion of outstanding
shares of Class B Common Stock, such number of shares of Class A Common Stock as
may be issuable upon the conversion of all such outstanding shares of Class B
Common Stock.
4B. Series D Stock
<PAGE>
1. Designation. There shall be a series of Series
Preferred Stock which shall consist of 20,000 shares and shall be designated as
Adjustable Rate Callable Nontransferable Series D Preferred Stock (the "Series D
Stock"). The number of authorized shares of Series D Stock may be increased by
resolution of the Board of Directors.
2. Rank.
(a) Rank of Series D Stock. To the extent and in the
manner provided in this Part 4B, the Series D Stock shall, with respect to
dividend rights and rights on liquidation, rank (i) junior to or on parity with,
as the case may be, any other stock of the Corporation, the terms of which shall
specifically provide that such stock shall rank senior to, or on parity with, as
the case may be, the Series D Stock with respect to dividend rights or rights on
liquidation or both, and (iii) senior to any other stock of the Corporation.
(b) Certain Definitions. The following terms as used
in this Part 4B shall be deemed to have the meanings set forth in this section.
(1) The term "Participating Stock" shall mean the
Common Stock and any other stock of the Corporation of any class which has the
right to participate in the distribution of either earnings or assets of the
Corporation without limit as to the amount or percentage.
(2) The term "Parity Stock" with respect to
Series D Stock shall mean the Series D Stock and all other stock of the
Corporation ranking equally therewith as to the payment of dividends or the
distribution of assets upon liquidation. The term "Dividend Parity Stock" with
respect to Series D Stock shall mean the Series D Stock and all other stock of
the Corporation ranking equally therewith as to the payment of dividends. The
term "Liquidation Parity Stock" with respect to Series D Stock shall mean the
Series D Stock and all other stock of the Corporation ranking equally therewith
as to distribution of assets upon liquidation.
(3) The term "Junior Stock" with respect to
Series D Stock shall mean the Participating Stock and all other stock of the
Corporation ranking junior thereto as to the payment of dividends and the
distribution of assets upon liquidation. The term "Dividend Junior Stock" with
respect to Series D Stock shall mean the Participating Stock and all other stock
of the Corporation ranking junior thereto as to the payment of dividends. The
term "Liquidation Junior Stock" with respect to Series D Stock shall mean the
Participating Stock and all other stock of the Corporation ranking junior
thereto as to distribution of assets upon liquidation.
(4) The term "Senior Stock" with respect to
Series D Stock shall mean all stock of the Corporation ranking senior thereto as
to the payment of dividends or distribution of assets upon liquidation.
3. Dividends.
(a) Cumulative Dividends. The holders of record
of Series D Stock shall be entitled to receive, as and if declared by the Board
of Directors, cumulative cash dividends thereon at the per annum rate per share
equal to the Established Dividend Rate (as defined in paragraph (c)), and no
more, but only out of funds legally available for the payment of such
distributions under the General Corporation Law of the State of Delaware.
Dividends on the Series D Stock shall not be payable unless and until declared
by the Board of Directors. Dividends shall accrue from the date of original
issuance. Accumulations of dividends shall not bear interest.
(b) Limitations Upon Dividend Arrearage. Unless
dividends that have been declared and are payable upon the Series D Stock have
been paid, no dividend or other distribution (except in Junior Stock) shall be
declared or paid on Dividend Junior Stock and no amount shall be set aside for
or applied to the redemption, purchase or other acquisition of (i) any Dividend
Junior Stock or Liquidation Junior Stock other than by exchange therefor of
Junior Stock or out of the proceeds of a
<PAGE>
substantially concurrent sale of shares of Junior Stock or (ii) any Parity Stock
except in accordance with a purchase or exchange offer made simultaneously by
the Corporation to all holders of record of Parity Stock which, considering the
annual dividend rates and the other relative rights and preferences of such
shares, in the opinion of the Board of Directors (whose determination shall be
conclusive), will result in fair and equitable treatment among all such shares.
(c) The "Established Dividend Rate" shall
initially be $25.00, and shall be reset as provided in this paragraph. On each
December 16, beginning December 16, 1998 and continuing so long as any shares of
Series D Stock shall be outstanding, the Established Dividend Rate shall be
reset at a rate equal to $1,000 multiplied by 50% of the One Year Treasury Rate
that shall have been in effect at the close of business on the December 1 next
preceding (or if such December 1 shall not have been a business day, the
business day next preceding such December 1), rounded up to the nearest $1.00;
provided, however, that the Established Dividend Rate shall in no event be
greater than $50.00. For purposes of the preceding sentence, the "One Year
Treasury Rate" shall mean the rate for direct obligations of the United States
having a constant maturity of 1-year, as published in H.15(519) under the
heading "Treasury Constant Maturities", or, if not so published by such December
16, such rate as determined in good faith by the Corporation, which
determination absent manifest error shall be conclusive. The Corporation shall
file with the duly appointed transfer agent for the Series D Stock a certificate
stating the new Established Dividend Rate determined as provided in this
paragraph and showing the computation thereof, and will cause a notice stating
the new Established Dividend Rate and the computation thereof to be mailed to
the holders of shares of Series D Stock.
4. Liquidation Rights.
(a) Liquidation Value. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of Series D Stock shall be entitled to receive from the
assets of the Corporation, payment in cash, of $1,000 per share, plus a further
amount equal to unpaid cumulative dividends on Series D Stock accrued to the
date when such payments shall be made available to the holders thereof, and no
more, before any amount shall be paid or set aside for, or any distribution of
assets shall be made to the holders of Liquidation Junior Stock. If, upon such
liquidation, dissolution or winding up, the amounts available for distribution
to the holders of all Liquidation Parity Stock shall be insufficient to permit
the payment in full to such holders of the preferential amounts to which they
are entitled, then such amounts shall be paid ratably among the shares of
Liquidation Parity Stock in accordance with the respective preferential amounts
(including unpaid cumulative dividends, if any) payable with respect thereto if
paid in full.
(b) Actions Not Considered Liquidation. None of
the following shall be considered a liquidation, dissolution or winding up of
the Corporation within the meaning of this section: (1) a consolidation or
merger of the Corporation with or into any other corporation; (2) a merger of
any other corporation into the Corporation; (3) a reorganization of the
Corporation; (4) the purchase or redemption of all or part of the outstanding
shares of any class or classes of the Corporation; (5) a sale or transfer of all
or any part of the assets of the Corporation; or (6) a share exchange to which
the Corporation is a party.
5. Redemption.
(a) Optional Redemption. The Series D Stock may
be called for redemption and redeemed at the option of the Corporation by
resolution of the Board of Directors, in whole at any time or in part at any
time or from time to time upon the notice hereinafter provided for in paragraph
(c), by the payment therefor of the redemption price per share of $1,000 plus an
amount equal to the accrued and unpaid cumulative dividends thereon to the date
fixed by the Board of Directors as the redemption date. In addition, the
Corporation may so call for redemption at any time all, but not less than all,
of the shares of Series D Stock held by any person.
(b) No Mandatory Redemption. There is no mandatory
sinking fund for, or other required redemption of, the Series D Stock.
<PAGE>
(c) Manner of Redemption.
(1) If less than all of the outstanding shares
of Series D Stock shall be called for redemption (and such redemption is not
pursuant to the second sentence of paragraph (a)), the particular shares to be
redeemed shall be selected by lot or by such other equitable manner as may be
prescribed by resolution of the Board of Directors.
(2) Notice of redemption of any shares of Series
D Stock shall be given by the Corporation by first-class mail, not less than 10
nor more than 60 days prior to the date fixed by the Board of Directors of the
Corporation for redemption (the "redemption date"), to the holders of record of
the shares to be redeemed at their respective addresses then appearing on the
records of the Corporation. The notice of the redemption shall state: (1) the
redemption date; (2) the redemption price; (3) if less than all outstanding
shares of Series D Stock of the holder are to be redeemed, the identification of
the shares of Series D Stock to be redeemed; (4) that dividends on the shares to
be redeemed shall cease to accrue on the redemption date; and (5) the place or
places where such shares of Series D Stock to be redeemed are to be surrendered
for payment of the redemption price.
(3) Notice having been mailed as aforesaid, from
and after the redemption date (unless default shall be made by the Corporation
in providing money for the payment of the redemption price of the shares called
for redemption), dividends on the shares of Series D Stock so called for
redemption shall cease to accrue, and from and after the redemption date or such
earlier date as funds shall be set aside for payment of the redemption price
(unless default shall be made by the Corporation in providing money for the
payment of the redemption price of the shares called for redemption) said shares
shall no longer be deemed to be outstanding, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Corporation shall so
require and the notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price aforesaid.
(4) Shares of Series D Stock redeemed by the
Corporation shall be restored to the status of authorized and unissued shares of
Series Preferred Stock, undesignated as to series, and, except as otherwise
provided by the express terms of any outstanding series, may be reissued by the
Corporation as shares of one or more series of Series Preferred Stock.
6. Voting Rights.
(a) No Voting Rights Generally. Except as expressly
provided to the contrary in this Part 4B or as otherwise required by law, the
holders of Series D Stock shall have no right to vote at, or to participate in,
any meeting of stockholders of the Corporation, or to receive any notice of such
meeting.
(b) Rights Upon Dividend Arrearage.
(1) In the event dividends that have been
declared and are payable upon the Series D Stock shall be in arrears, the number
of directors constituting the full board shall be increased by two, and the
holders of the Series D Stock voting noncumulatively and separately as a single
series together with the holders of any other shares of Series Preferred Stock
having the right to elect directors as a series under circumstances when
dividends are in arrears, shall be entitled to elect two members of the Board of
Directors of the Corporation at the next annual meeting of stockholders of the
Corporation or at a special meeting called as hereinafter provided in this
section. Such voting rights of the holders of Series D Stock shall continue
until all declared and unpaid dividends thereon shall have been paid in full,
whereupon such special voting rights of the holders of Series D Stock shall
cease (and the respective terms of the two additional directors shall thereupon
expire and the number of directors constituting the full board shall be
decreased by two) subject to being again revived from time to time
<PAGE>
upon the recurrence of the conditions described in this section as giving rise
thereto.
(2) At any time when such right of holders of
Series D Stock to elect two additional directors shall have so vested, the
Corporation may, and upon the written request of the holders of record of not
less than 10% of the Series D Stock then outstanding (or 10% of all Series
Preferred Stock having the right to vote for such directors in case holders of
shares of other series of Series Preferred Stock shall also have the right to
elect directors as a class in circumstances when dividends are in arrears)
shall, call a special meeting of holders of such Series D Stock (and other
series of Series Preferred Stock, if applicable) for the election of directors.
In the case of such a written request, such special meeting shall be held within
60 days after the delivery of such request, and, in either case, at the place
and upon the notice provided by law and in the bylaws of the Corporation; except
that the Corporation shall not be required to call such a special meeting if
such request is received less than 120 days before the date fixed for the next
ensuing annual meeting of stockholders of the Corporation; provided, that the
holders of Series D Stock receive notice of such meeting and their right to vote
thereat.
(3) Whenever the number of directors of the
Corporation shall have been increased by two as provided in this section, the
number as so increased may thereafter be further increased or decreased in such
manner as may be permitted by the bylaws of the Corporation and without the vote
of the holders of Series D Stock. No such action shall impair the right of the
holders of Series D Stock to elect and to be represented by two directors as
provided in this section.
(4) The two directors elected as provided in
this section shall serve until the next annual meeting of stockholders of the
Corporation and until their respective successors shall be elected and qualified
or the earlier expiration of their terms as provided in this section. No such
director may be removed without the vote or consent of holders of a majority of
the shares of Series D Stock (or holders of a majority of shares of Series
Preferred Stock having the right to vote in the election of such director in
case holders of shares of other series of Series Preferred Stock shall also have
the right to elect such director as a class). If, prior to the expiration of the
term of any such director, a vacancy in the office of such director shall occur,
such vacancy shall, until the expiration of such term, in each case be filled by
appointment made by the remaining director elected as provided in this section.
7. Restrictions on Transfer. The shares of Series D
Stock shall not be transferable (other than by will or the laws of descent),
except that such shares may be transferred with the consent of the Board of
Directors of the Corporation.
8. No Conversion Rights. The holders of shares
of Series D Stock shall not have the right to convert such shares into other
securities of the Corporation.
FIFTH: Subject to the rights of holders of Series Preferred Stock to
elect additional directors under certain circumstances, the Corporation shall be
governed in accordance with the following provisions:
5A. Number of Directors The Board of Directors of the Corporation
shall consist of not less than nine and not more than 19 members and the Chief
Executive Officer of the Corporation shall always be one of the members. The
exact number of directors within such minimum and maximum shall be fixed by the
Board of Directors.
5B. Election Directors need not be elected by written ballot.
SIXTH: The By-Laws of the Corporation may be made, altered, amended,
changed, added to or repealed by the Board of Directors of the Corporation
without the assent or vote of the stockholders.
SEVENTH: Each person who was or is made a party or is threatened to be
made a party to or is involuntarily involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative ("proceeding"), by
reason of the fact that he or a person of whom he is the legal representative is
or was a director or officer of the Corporation or is or was serving at the
request of the
<PAGE>
Corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director, officer
or representative or in any other capacity while serving as a director, officer
or representative shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended, against all expenses, liability and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by him in connection therewith; provided, however, that the Corporation
shall indemnify any such person seeking indemnity in connection with an action,
suit or proceeding (or part thereof) initiated by such person only if action,
suit or proceeding (or part thereof) was authorized by the Board of Directors.
Such right shall be a contract right and shall include the right to be paid by
the Corporation expenses incurred in defending any such proceeding in advance of
its final disposition upon delivery to the Corporation of an undertaking, by or
on behalf of such person, to repay all amounts so advanced if it should be
determined ultimately that such person is not entitled to be indemnified under
this section or otherwise.
If a claim under this Article is not paid in full by the Corporation
within ninety days after a written claim has been received by the Corporation,
the claimant unpaid may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and if successful in whole
or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking
has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the amount
claim, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant had not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of conduct.
The rights conferred by this Article shall not be exclusive of any
other right which such person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-Laws, agreement, vote of
stockholders or disinterested directors or otherwise.
The Corporation may maintain insurance, at its expense, to protect
itself and any such director, officer or representative against any such
expense, liability or loss, whether or not the Corporation would have the power
to indemnify him against such expense, liability or loss under the Delaware
General Corporation Law.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Restated Certificate of Incorporation in
the manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are subject to this
reserved power.
NINTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed by the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said Court directs. If a majority in number
<PAGE>
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the Court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all stockholders or class of
stockholders of the Corporation, as the case may be, and also on the
Corporation.
TENTH: To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, a director of
this Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as director.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which
restates and integrates and also further amends the Corporation's Certificate of
Incorporation, as heretofore amended and restated, having been duly adopted
pursuant to the provisions of Sections 242 and 245 of the General Corporation
Law of the State of Delaware, has been duly executed this 9th day of February,
1999.
ARAMARK CORPORATION
By: /s/ Martin W. Spector
---------------------------
Martin W. Spector
Executive Vice President
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
ARAMARK CORPORATION
ARTICLE I
OFFICES
ss.1. REGISTERED OFFICE -- The registered office of the corporation
shall be established and maintained at the office of The Corporation Trust
Company at 1209 Orange Street in the City of Wilmington, in the County of New
Castle, in the State of Delaware, and said corporation shall be the registered
agent of this corporation, unless otherwise established by the Board of
Directors and a certificate certifying the change is filed in the manner
provided by statute.
ss.2. OTHER OFFICES -- The corporation may also have offices in the
City of Philadelphia, Commonwealth of Pennsylvania, and also offices at such
other place or places as the Board of Directors may from time to time appoint or
as the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
ss.1. PLACE OF MEETINGS -- All meetings of the stockholders shall be
held in the offices of the corporation in Philadelphia, Pennsylvania, or at such
other place as shall be determined by the Board of Directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
ss.2. ANNUAL MEETING -- An annual meeting of the stockholders, for the
election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall each year fix. A meeting shall be held within thirteen months
subsequent to the date of the last annual meeting of stockholders.
Nominations of persons for election to the Board and the proposal of
business to be transacted by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice with respect to such
meeting, (b) by or at the direction of the Board or (c) by any stockholder of
record of the Corporation who was a stockholder of record at the time of the
giving of the notice provided for in the following paragraph, who is entitled to
vote at the meeting and who has complied with the notice procedures set forth in
this section.
For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of the foregoing
paragraph, (1) the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation, (2) such business must be a proper matter
for stockholder action under the General Corporation Law of the State of
Delaware, (3) if the stockholder, or the beneficial owner on whose behalf any
such proposal or nomination is made, has provided the Corporation with a
Solicitation Notice, as that term is defined in subclause (c)(iii) of this
paragraph, such stockholder or beneficial owner must, in the case of a proposal,
have delivered a proxy statement and form of proxy to holders of at least the
percentage of the Corporation's voting shares required under applicable law to
carry any such proposal, or, in the case of a nomination or nominations, have
delivered a proxy statement and form of proxy to holders of a percentage of the
Corporation's voting shares reasonably believed by such stockholder or
beneficial holder to be sufficient to elect the nominee or nominees proposed to
be nominated by such stockholder, and must, in either case, have included in
such materials the Solicitation Notice and (4) if no Solicitation Notice
relating thereto has been timely provided pursuant to this section, the
stockholder or beneficial owner proposing such business or nomination must not
have solicited a number of proxies sufficient to have required the delivery of
such a Solicitation Notice under this section. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not less than 45 days prior to the first anniversary (the
"Anniversary")
<PAGE>
of the date on which the Corporation first mailed its proxy materials for the
preceding year's annual meeting of stockholders; provided, however, that if the
date of the annual meeting is advanced more than 30 days prior to or delayed by
more than 30 days after the anniversary of the preceding years annual meeting,
notice by the stockholder to be timely must be so delivered not later than the
close of business on the later of (i) the 90th day prior to such annual meeting
or (ii) the 10th day following the day on which public announcement of the date
of such meeting is first made. Such stockholder's notice shall set forth (a) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person as would be
required to be disclosed in solicitations of proxies for the election of such
nominees as directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and such person's written consent
to serve as a director if elected; (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of such
business, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial owner,
if any, on whose behalf the proposal is made; (c) as to the stockholder giving
the notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner, (ii) the class and number
of shares of the record by such stockholder and such beneficial owner, and (iii)
whether either such stockholder or beneficial owner intends to deliver a proxy
statement and form of proxy to holders of, in the case of a Corporation that are
owned beneficially and of proposal, at least the percentage of the Corporation's
voting shares required under applicable law to carry the proposal or, in the
case of a nomination or nominations, a sufficient number of holders of the
Corporation's voting shares to elect such nominee or nominees (an affirmative
statement of such intent, a "Solicitation Notice").
Only persons nominated in accordance with the procedures set forth in
this Section 2 shall be eligible to serve as directors and only such business
shall be conducted at an annual meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
section. The chair of the meeting shall have the power and the duty to determine
whether a nomination or any business proposed to be brought before the meeting
has been made in accordance with the procedures set forth in these Bylaws and,
if any proposed nomination or business is not in compliance with these Bylaws,
to declare that such defective proposed business or nomination shall not be
presented for stockholder action at the meeting and shall be disregarded.
Notwithstanding the foregoing provisions of this Section 2, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to matters set forth
in this Section 2. Nothing in this Section 2 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
ss.3. SPECIAL MEETINGS -- Special meetings of the stockholders, for any
purpose or purposes prescribed in the notice of the meeting, may be called by
the Board of Directors or the Chief Executive Officer. Such meetings shall be
held at the place, on the date and at the time as they or he shall fix. Business
transacted at all special meetings shall be confined to the purpose or purposes
stated in the notice.
ss.4. NOTICE OF MEETINGS -- Written notice of the place, date, and time
of the meeting, and the general nature of business to be considered, shall be
given, not less than ten nor more than sixty days before the date on which the
meeting is to be held, to each stockholder entitled to vote there at, except as
otherwise provided herein or required by law (meaning, here and hereinafter, as
required from time to time by the Delaware General Corporation Law or the
Certificate of Incorporation of the corporation).
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting at which the adjournment is
taken; provided, however, that if the date of any adjourned meeting is more than
thirty days after the date for which the meeting was originally noticed, or if a
new record date is fixed for the adjourned meeting, written notice of the place,
date, and time of the adjourned meeting shall be given in conformity herewith.
At any adjourned meeting, any business may be transacted which might have been
transacted at the original meeting; but only those stockholders entitled to vote
at the
<PAGE>
meeting as originally noticed shall be entitled to vote at any adjournment or
adjournments thereof, unless the Board of Directors shall fix a new record date
for the adjourned meeting pursuant to these By-laws.
ss.5. QUORUM -- At any meeting of the stockholders, the holders of a
majority of the voting rights of all of the shares of capital stock issued and
outstanding and entitled to vote thereat, represented in person by proxy, shall
constitute a quorum for all purposes, unless or except, and to the extent that,
the presence of a larger number may be required by law or these By-laws. Shares
of stock represented by a limited proxy (i.e., a proxy that by its terms,
withholds authority or does not empower its holder to vote on any or all of the
proposals to be considered at a meeting) contribute to the establishment of a
quorum at that meeting for all purposes.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the voting rights of the shares of stock
entitled to vote who are present, in person or by proxy, may adjourn the meeting
to another place, date, or time.
If a notice of any adjourned meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by law, those
present at such adjourned meeting, provided that they represent at least one
third of the voting rights of the shares entitled to vote at such meeting shall
constitute a quorum, and all matters shall be determined by a majority of the
votes cast at such meeting (unless a larger majority is required by the
Certificate of Incorporation).
ss.6. ORGANIZATION -- Such person as the Board of Directors may have
designated or, in the absence of, or upon the failure so to delegate, such a
person, the Chief Executive Officer of the corporation or, in his absence, such
person as maybe chosen by the holders of a majority of the voting rights of the
shares entitled to vote who are present, in person or by proxy, at any meeting,
shall call to order any meeting of the stockholders and act as chairman of the
meeting. In the absence of the Secretary of the corporation, the secretary of
the meeting shall be such person as the chairman appoints.
ss.7. CONDUCT OF BUSINESS -- The chairman of any meeting of
stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order.
ss.8. PROXIES AND VOTING -- At any meeting of the stockholders every
stockholder entitled to vote may vote in person or by proxy authorized by an
instrument in writing filed in accordance with the procedure established for the
meeting and bearing a date not more than three years prior to said meeting,
unless said instrument provides for a longer period.
Each stockholder shall be entitled to vote, in accordance with the
provisions of the Certificate of Incorporation relating to shares of stock, the
shares of stock registered in his name on the record date for the meeting,
except as otherwise provided herein or required by law.
All voting, including on the election of directors but excepting where
otherwise required herein or by law, may be by a stock vote. Every stock vote
shall be taken by ballots, each of which shall state the name of the stockholder
or proxy voting and such other information as may be required under the
procedure established for the meeting. Every vote taken by ballots shall be
counted by an inspector or inspectors appointed by the Board of Directors in
advance of the meeting or in the absence of, or upon the failure so to appoint
such person or persons, then by an inspector or inspectors appointed by the
chairman of the meeting.
When a quorum is present at any meeting, the vote of the holders of a
majority of the votes of the shares having voting power represented in person or
by proxy at the meeting and entitled to vote on any question brought before such
meeting shall decide such question, unless the question is one upon which, by
express provision of law, or these By-laws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question. Shares represented by a limited proxy (i.e., a proxy that by its
terms, withholds authority or does not empower the holder to vote on a
particular proposal) will not
<PAGE>
be considered as part of the voting power present and entitled to vote with
respect to that proposal for determining whether the proposal has a majority (or
other required percentage) approval of the voting power present and entitled to
vote. Abstentions (whether in person or by proxy) are counted as voting power
present and entitled to vote on any proposal to which they relate.
ss.9. STOCK LIST -- A complete list of stockholders entitled to vote at
any meeting of stockholders, arranged in alphabetical order for each class of
stock and showing the address of each such stockholder and the number of shares
registered in his name, shall be open to the examination of any such
stockholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting is to be held.
The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.
ss.10. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING -- Any action
required to be taken at any annual or special meeting of stockholders of the
corporation, or any action which may be taken at any annual or special meeting
of the stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
ss.1. NUMBER -- Except as otherwise provided in the Certificate of
Incorporation, the number of directors who shall constitute the whole board
shall be not less than nine or more than nineteen.
ss.2. ELECTION AND TERM -- Except as provided in Section 3 of this
Article III or as otherwise provided in the Certificate of Incorporation,
directors shall be elected at the annual meeting of the stockholders, and each
director shall be elected to serve until the next annual meeting and until his
successor shall be elected and shall qualify.
ss.3. RESIGNATION AND VACANCIES -- Any director or member of a
committee may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein and if no time is specified, at
the time of its receipt by the Chief Executive Officer or Secretary. The
acceptance of a resignation shall not be necessary to make it effective. Except
as otherwise provided in the Certificate of Incorporation, vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by vote of the directors then in office though less than
a quorum.
ss.4. INCREASE OF NUMBER -- The number of directors may be fixed or
increased by resolution of the Board of Directors, subject to the provisions of
the Certificate of Incorporation.
ss.5. COMMITTEES -- The Board of Directors may designate one or more
committees, each committee to consist of one or more directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee.
ss.6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent of all the directors.
<PAGE>
Regular meetings of the Board of Directors may be held without notice
at such places and times as shall be determined from time to time by resolution
of the Board of Directors. Special meetings of the Board of Directors may be
called by the Chief Executive Officer or by the Secretary and shall be called by
them on the written request of any two directors. Notice of the place, date, and
time of each such special meeting shall be given each director by whom it is not
waived by mailing notice not less than five days before the meeting or by
sending notice by guaranteed overnight carrier not less than forty-eight hours
before the meeting or by telephoning, hand delivering, telegraphing, faxing or
sending by similar form of telecommunication notice not less than twenty-four
hours before the meeting. Unless otherwise indicated in the notice thereof, any
and all business may be transacted at a special meeting.
Members of the Board of Directors, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors
(whether regular or special), or any committee, by means of conference telephone
calls or by means of similar communications equipment by which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
ss.7. QUORUM -- A majority of the directors in office shall constitute
a quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation or these by-laws shall require
the vote of a greater number.
ss.8. COMPENSATION -- Directors shall be entitled to such compensation
and fees (including reimbursement of reasonable expenses) for their services as
directors or as members of committees as shall be authorized by resolution of
the Board. Nothing herein contained shall be construed to preclude any director
from serving the corporation in any other capacity as an officer, agent or
otherwise, and receiving compensation therefor.
ss.9. ACTION WITHOUT MEETING -- Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee designated
by the Board of Directors, may be taken without a meeting, if a written consent
thereto is signed by all members of the Board or of such committee, as the case
may be, and such written consent is filed with the minutes of proceedings of the
Board or committee.
ss.10. POWERS -- The Board of Directors shall have full power to manage
the business and affairs of the Corporation; and all powers of the corporation,
except those specifically reserved or granted to the stockholders by statute,
the Certificate of Incorporation or these by-laws, are hereby granted to and
vested in the Board of Directors.
ARTICLE IV
OFFICERS
ss.1. OFFICERS -- The officers of the corporation shall be a Chief
Executive Officer, a President, one or more Vice Presidents, a Treasurer and a
Secretary, all of whom shall be elected by the Board of Directors and shall hold
office until their successors are elected and qualified. In addition, the Board
of Directors may elect a Chairman and a Vice-Chairman of the Board of Directors
and such Assistant Secretaries and Assistant Treasurers, as it may deem proper.
Except for the Chief Executive Officer, none of the officers of the corporation
need be directors. The officers shall be elected at the first meeting of the
Board of Directors after each annual meeting. Two or more offices may be held by
the same person.
ss.2. OTHER OFFICERS AND AGENTS -- The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold office
for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors.
ss.3. CHAIRMAN -- The Chairman of the Board of Directors, if one is
elected, shall preside at all meetings of the Board of Directors, and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
<PAGE>
ss.4. CHIEF EXECUTIVE OFFICER -- The Chief Executive Officer must at
all times be a stockholder of the corporation and a member of the Board of
Directors. He shall be, as Chief Executive Officer of the corporation,
responsible for the general supervision of the business and affairs of the
corporation and, except as set forth in these by-laws or a resolution of the
Board of Directors, of the corporation's other officers, and he shall have and
perform such other duties as from time to time may be assigned to him by the
Board of Directors. He may sign, execute and acknowledge, in the name of the
corporation, deeds, mortgages, bonds, contracts or other instruments authorized
by the Board of Directors, except in cases where the signing and execution
thereof shall be expressly and exclusively delegated by the Board of Directors,
or by these by-laws, to some other officer or agent of the corporation; and, in
general, shall perform all duties incident to the office of Chief Executive
Officer, and such other duties as from time to time may be assigned to him by
the Board of Directors.
ss.5. PRESIDENT -- The President shall have such powers and shall
perform such duties as from time to time shall be assigned to him by the Chief
Executive Officer or the Board of Directors.
ss.6. VICE-PRESIDENTS -- Each Vice-President shall have such powers and
shall perform such duties as from time to time shall be assigned to him by the
Chief Executive Officer or the Board of Directors.
ss.7. TREASURER -- The Treasurer shall provide for the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
collect and deposit all moneys and other valuables in the name and to the credit
of the corporation in such depositaries as may be designated by the Board of
Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the Chief Executive Officer, taking proper
vouchers for such disbursements. He shall render to the Chief Executive Officer,
and the Board of Directors at meetings of the Board of Directors, or whenever
the directors may request it, an account of all his transactions as Treasurer
and of the financial condition of the corporation. If required by the Board of
Directors, he shall give the corporation a bond for the faithful discharge of
his duties in such amount and with such surety as the Board of Directors shall
prescribe.
ss.8. SECRETARY -- The Secretary shall be present at and give, or cause
to be given, notice of all meetings of stockholders and directors, and all other
notices required by law or by these by-laws, and in case of his absence or
refusal or neglect so to do, any such notice may be given by any Assistant
Secretary or by any person thereunto directed by the Chief Executive Officer, or
by the Board of Directors. He shall record all the proceedings of the meetings
of the corporation and of the Board of Directors in books to be kept for such
purpose, and shall perform such other duties as may be assigned to him by the
Chief Executive Officer or the Board of Directors. He shall have the custody of
the seal of the corporation and shall affix the same to all instruments
requiring it, when authorized by the Board of Directors or the Chief Executive
Officer, and attest the same.
ss.9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall have such powers and shall
perform such duties as shall be assigned to them, respectively, by the Chief
Executive Officer or by the Board of Directors.
ARTICLE V
GENERAL PROVISIONS
ss.1. CERTIFICATES OF STOCK -- The stock of the corporation shall be
represented by certificates unless the Board of Directors shall by resolution
provide that some or all of any class or series of stock shall be uncertificated
shares.
ss.2. LOST CERTIFICATES -- Unless otherwise provided by the Certificate
of Incorporation, a new certificate of stock may be issued in the place of any
certificate theretofore issued by the corporation alleged to have been lost,
stolen, destroyed or mutilated, and (in the case of any certificate alleged to
be lost, stolen or destroyed) the Board of Directors may, in its discretion,
require the owner thereof or his legal representatives, to give the corporation
a bond, in such sum as the Board of Directors may direct, not
<PAGE>
exceeding double the value of the stock, or to indemnify the corporation against
any claim that may be made against it with respect to any such certificate,
prior to the issuance of any new certificate.
ss.3. TRANSFER OF SHARES -- Transfers of stock shall be upon the stock
transfer books of the corporation kept at an office of the corporation or by
transfer agents designated to transfer shares of the corporation.
ss.4. STOCKHOLDER RECORD DATE -- In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix a
record date, which shall not be more than sixty nor less than ten days before
the date of such meeting, nor more than sixty days prior to any such other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to an adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
ss.5. DIVIDENDS -- Subject to the provisions of law and the provisions
of the Certificate of Incorporation or any resolution or resolutions adopted by
the Board of Directors pursuant to authority expressly vested in it by the
Certificate of Incorporation and Section 151 of the Delaware General Corporation
Law, the Board of Directors may, out of funds legally available therefor at any
regular or special meeting, declare dividends upon the capital stock of the
corporation as and when it deems expedient. Before declaring any dividend there
may be set apart out of any funds of the corporation legally available for
dividends, such sum or sums as the Board of Directors from time to time in its
discretion deem proper for working capital, future capital needs or as a reserve
fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem appropriate or in the interests of
the corporation.
ss.6. SEAL -- The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its creation and the words
"CORPORATE SEAL DELAWARE". Such seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
ss.7. FACSIMILE SIGNATURES -- In addition to the provisions for use of
facsimile signatures elsewhere specifically authorized in these by-laws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.
ss.8. RELIANCE UPON BOOKS, REPORTS AND RECORDS -- Each director, each
member of any committee designated by the Board of Directors, and each officer
of the corporation shall, in the performance of his duties, be fully protected
in relying in good faith upon the books of account or other records of the
corporation, including reports made to the corporation by any of its officers,
by an independent certified public accountant, or by an appraiser selected with
reasonable care.
ss.9. FISCAL YEAR -- The fiscal year of the corporation shall end on
the Friday nearest September 30 in each year, and shall be subject to change, by
resolution of the Board of Directors.
ss.10. CHECKS -- All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner, as shall be determined from time to time by
resolution of the Board of Directors.
ss.11. NOTICE AND WAIVER OF NOTICE -- Except as otherwise provided in
this Section 11, whenever any notice is required by these by-laws to be given,
personal notice is not meant unless expressly so stated, and any notice so
required shall be deemed to be sufficient if deposited in the United States
mail, postage prepaid, addressed to the person entitled thereto at his address
as it appears on the records of the corporation, and such notice shall be deemed
to have been given on the day of such mailing. Stockholders not entitled to vote
shall not be entitled to receive notice of any meetings except as otherwise
provided by law. Whenever any notice is required with respect to a special
meeting of the Board of Directors, such notice
<PAGE>
to a director shall be deemed given when sent, if sent by guaranteed overnight
carrier or by hand delivery, telegram, fax or similar form of telecommunication,
to the last known address (business or residence) of such director.
Whenever any notice is required to be given under the provisions of any
law, or under the provisions of the Certificate of Incorporation or these
by-laws, a waiver thereof in writing, or by telegraph, fax or similar form of
telecommunication, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These by-laws may be made, altered, amended, changed, added to or
repealed by the Board of Directors to the extent provided in the Certificate of
Incorporation.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Each person who was or is made a party or is threatened to be made a
party to or is involuntarily involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative ("proceeding"), by reason of
the fact that he or a person of whom he is the legal representative is or was a
director or officer of the corporation or is or was serving at the request of
the corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director, officer
or representative or in any other capacity while serving as a director, officer
or representative, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the Delaware General Corporation Law, as the
same exists or may hereafter be amended, against all expenses, liability and
loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by him in connection therewith; provided, however, that the corporation
shall indemnify any such person seeking indemnity in connection with an action,
suit or proceeding (or part thereof) initiated by such person only if such
action, suit or proceeding (or part thereof) was authorized by the Board of
Directors. Such right shall be a contract right and shall include the right to
be paid by the corporation expenses incurred in defending any such proceeding in
advance of its final disposition upon delivery to the corporation of an
undertaking, by or on behalf of such person, to repay all amounts so advanced if
it should be determined ultimately that such person is not entitled to be
indemnified under this section or otherwise.
If a claim under this section is not paid in full by the corporation
within ninety days after a written claim has been received by the corporation,
the claimant may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim and if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law for the corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the corporation. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant had not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant had not
met the applicable standard of conduct.
The rights conferred by this section shall not be exclusive of any
other right which such persons may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-laws, agreement, vote of
stockholders or disinterested directors or otherwise.
<PAGE>
The corporation may maintain insurance, at its expense, to protect
itself and any director, officer or representative against any such expense,
liability or loss, whether or not the corporation would have the power to
indemnify him against such expense, liability or loss under the Delaware General
Corporation Law.
Amended February 9, 1999.
<PAGE>
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, made and entered into this ___ day of______, 1999
(the "Effective Date"), by and between ARAMARK Corporation, a Delaware
corporation ("ARAMARK"), and Joseph Neubauer ("Mr. Neubauer") (the "Agreement").
W I T N E S S E T H:
WHEREAS, Mr. Neubauer, prior to the Effective Date, has served
as Chairman and Chief Executive Officer of ARAMARK pursuant to the terms of an
employment agreement dated as of the 18th day of February, 1983, as amended and
restated on November 15, 1991 (the "Prior Agreement"); and
WHEREAS, ARAMARK and Mr. Neubauer desire to enter into this
Agreement, which will, except as otherwise set forth herein, supersede the Prior
Agreement and set forth the terms and conditions under which Mr. Neubauer will
serve in an executive capacity hereafter for ARAMARK and is affiliates;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Employment. ARAMARK hereby employs Mr. Neubauer, and Mr.
Neubauer hereby accepts such employment, upon the terms and conditions set forth
in this Agreement.
2. Position and Duties. During the Term (as hereinafter
defined), Mr. Neubauer (i) agrees to serve as the Chairman and Chief Executive
Officer of ARAMARK and to perform such duties in such capacity as may be
delineated in the By-Laws of ARAMARK and such other reasonable duties,
consistent with his positions as Chairman and Chief Executive Officer, as may be
assigned to him from time to time by the Board of Directors of ARAMARK (the
"Board"), (ii) shall report only to the Board, and (iii) shall be given such
authority as is appropriate to carry out the duties described above. During the
Term, ARAMARK shall make its best efforts to ensure Mr. Neubauer's election to,
and retention as a member of, the Board.
3. Exclusive Services. During the Term, and except for illness
or incapacity, Mr. Neubauer shall devote substantially all of his business time,
attention, skill and efforts exclusively to the business and affairs of ARAMARK
and its subsidiaries and affiliates, shall not be engaged in any other business
activity, and shall perform and discharge the duties that may be assigned to him
from time to time by the Board; provided, however, that nothing in this
Agreement shall preclude Mr. Neubauer from devoting time during reasonable
periods required for:
(i) serving, in accordance with ARAMARK's policies and with
the prior approval of the Board, as a director or member of a committee of any
company or organization, (it being understood that Mr. Neubauer may continue to
serve as a director or member of boards and committees on which he serves as of
the date of this Agreement);
(ii) delivering lectures and fulfilling speaking engagements;
(iii) engaging in charitable and community activities; and
(iv) investing his personal assets in a Passive Investment (as
hereinafter defined) in such form and in such manner as will not violate Section
12 below.
For purposes of this Agreement, a "Passive Investment" shall mean an investment
in a business or entity which does not require Mr. Neubauer to render any
services in the operations or affairs of such business or entity and which does
not materially interfere with the performance of Mr. Neubauer's duties and
obligations to ARAMARK or any of its subsidiaries or affiliates.
<PAGE>
4. Relocation. ARAMARK shall not relocate Mr. Neubauer's
principal place of business outside of Philadelphia, Pennsylvania, without the
written consent of Mr. Neubauer.
5. Term of Agreement. The term of this Agreement shall be the
period commencing on the Effective Date and ending on the second anniversary of
a notice of termination of the Agreement given by either party unless earlier
terminated pursuant to Section 10 (the "Term"). Upon expiration of the Term
pursuant to a two-year notice given pursuant to this Section 5, Mr. Neubauer
shall commence the consulting services described in Section 9.
6. Salary and Annual Bonus.
(a) Salary. Mr. Neubauer shall be paid base salary (the "Base
Salary") at the initial rate of $1,000,000 per annum. The Base Salary shall be
payable in accordance with the customary payroll practices for senior executives
of ARAMARK. The Board shall review the performance of Mr. Neubauer on a periodic
basis and, in its sole discretion, may (but is not required to) increase his
salary payable hereunder. Any such increased salary shall thereafter be Mr.
Neubauer's Base Salary.
(b) Annual Bonus. Mr. Neubauer shall be a participant in the
Senior Executives Annual Performance Bonus Arrangement or any successor plan, in
accordance with and subject to the terms and conditions of such arrangement or
as it may hereafter be amended (the amount payable thereunder, his "Bonus").
7. Stock Options; Stock Ownership; Other Equity Programs.
(a) Mr. Neubauer shall be eligible to participate in ARAMARK's
stock option and Installment Stock Purchase Opportunity ("ISPO") plans, or any
successor plans, in accordance with and subject to the terms and conditions of
such plans or as they may hereafter be amended, so long as they remain in
effect.
(b) ARAMARK agrees to apply to Mr. Neubauer's ISPOs, stock
options and shares of common stock, the terms of the ARAMARK Ownership Program
as currently in effect (including the Stockholders' Agreement and applicable
plans and policies) with only such changes, amendments and modifications as
shall not be, individually or in the aggregate, adverse to Mr. Neubauer, and to
waive any such changes, amendments and modifications that are so adverse.
(c) Mr. Neubauer is vested in his equity credit account in the
former Career Compensation Plan which is now called the Equity Credit
Arrangement in accordance with and subject to the terms and conditions of such
Arrangement. Granting of equity incentives under the plan was discontinued on
December 3, 1982. The Arrangement provides for accrual of interest, and payment
of those equity credit awards previously granted under the plan.
8. Retirement and Welfare Benefits.
(a) During the Term, unless otherwise specified herein, Mr.
Neubauer will be eligible to participate in all retirement and welfare plans,
programs and benefits that are from time to time applicable to senior executives
of ARAMARK at benefit levels applicable to such senior executives (including,
without limitation, each retirement plan, supplemental and excess retirement
plan, group life insurance, accident and death insurance, medical and dental
insurance, sick leave and disability plan and any other plan or program
providing fringe benefits or perquisites).
(b) ARAMARK shall pay Supplemental Retirement Benefits under
the terms and conditions set forth in Exhibit A.
<PAGE>
9. Consulting Period. In the event of a Voluntary Termination
with Notice or an Involuntary Termination with Notice (as described in Section
10), Mr. Neubauer shall for a period of two years serve as a consultant to
ARAMARK, and shall render as an independent contractor such consulting and
transition services, consistent with his former positions as Chairman and Chief
Executive Officer, as may be assigned to him from time to time by the Board or
the Chairman or Chief Executive Office of the Company. He shall not be required
to perform more than 20 hours of service as a consultant per month. As
consideration for such services, he shall receive the same Base Salary as he was
receiving immediately prior to the end of the Term, and shall continue to be
covered by such plans and arrangements described in Section 8 for which
independent contractor consultants to ARAMARK are eligible, if any. The
aggregate Base Salary payable to Mr. Neubauer under this Section 9 shall be
referred to as the "Consulting Compensation."
10. Termination of Employment.
(a) Termination for Cause; Resignation Without Good Reason.
(i) ARAMARK may terminate Mr. Neubauer's employment hereunder
for Cause in accordance with the provisions of Section 10(a)(ii), and the Term
shall end on the date of any such termination. Mr. Neubauer may voluntarily
terminate his employment hereunder without Good Reason. In such event, the Term
will end on the date of any such termination; provided that if such termination
occurs at least two years after Mr. Neubauer's notice to ARAMARK of his intent
to terminate his employment hereunder without Good Reason, it shall be
considered a "Voluntary Termination with Notice." In the event Mr. Neubauer's
employment is terminated by ARAMARK for Cause or Mr. Neubauer resigns from his
employment without Good Reason, Mr. Neubauer shall receive the following
amounts:
(A) Any Base Salary accrued but unpaid, and any accrued
vacation as of the effective date of termination (the "Accrued
Amounts");
(B) A prorated Bonus with respect to ARAMARK's fiscal year in
which termination occurs equal to the average annual Bonus
paid or accrued on behalf of Mr. Neubauer for the three full
fiscal years of ARAMARK that precede the year of Mr.
Neubauer's termination of employment (his "Average Bonus")
multiplied by the number of days employed over total days in
the year in which Mr. Neubauer's employment terminated (a
"Pro-Rata Bonus");
(C) Supplemental Retirement Benefits payable pursuant to
Exhibit A;
(D) All amounts otherwise payable or coverages otherwise
afforded pursuant to the terms of any employee benefit plan
maintained by ARAMARK (the "Plan Amounts"); and
(E) Mr. Neubauer may elect to continue at his sole expense the
Executive Health Plan (to the extent Mr. Neubauer and members
of his family are eligible for such benefit and, for this
purpose, Mr. Neubauer shall be deemed to be employed by
ARAMARK) for a period not to exceed three years. Equity Credit
Arrangement participation shall be as a terminated employee
under the Arrangement.
In addition, all of the options and ISPOs held by Mr. Neubauer
shall remain subject to the terms and conditions of the applicable plans, except
that, in the case of a Voluntary Termination with Notice, all of such stock
options and ISPOs shall also become vested and immediately exercisable on the
date of termination.
(ii) Termination for "Cause" shall mean termination by action
of the Board because of: (A) Mr. Neubauer's repeated and willful failure to
perform his duties hereunder in any material respect; (B) a felony conviction of
Mr. Neubauer; or (C) any willful misconduct by Mr. Neubauer that is materially
injurious to the financial condition or business reputation of ARAMARK and its
affiliates and subsidiaries taken as a whole, provided, however, that no event
or circumstance shall be considered to constitute Cause within the meaning of
clause (A) or (C) unless Mr. Neubauer has been given written notice of the
events or circumstances constituting Cause and has failed to effect a cure
thereof within 30 calendar days after his receipt of such notice.
<PAGE>
(iii) Resignation for "Good Reason" shall mean (A) the
resignation of Mr. Neubauer after (x) ARAMARK, without the express written
consent of Mr. Neubauer, materially breaches this Agreement or Mr. Neubauer is
not serving on the Board (other than with the express written consent of Mr.
Neubauer); (y) Mr. Neubauer notifies ARAMARK in writing of the nature of such
material breach or failure to be a member of the Board and (z) ARAMARK does not
correct such material breach or failure within 30 calendar days after its
receipt of such notice; or (B) resignation by Mr. Neubauer within 12 months
after a Change of Control (as defined below in this Section). ARAMARK
acknowledges and agrees that a material breach for purposes of this Section 10
shall include, but not be limited to, any material reduction in Mr. Neubauer's
duties or authority (whether or not accompanied by a change in title), any
diminution in Mr. Neubauer's title, any failure to pay Mr. Neubauer's Base
Salary and any relocation of Mr. Neubauer's principal place of business outside
of Philadelphia, Pennsylvania.
(iv) For this purpose, "Change of Control" shall occur if (i)
a "person"as defined in Section 3(a)(9) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and as used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) of the Exchange Act but
excluding ARAMARK and any subsidiary and any employee benefit plan sponsored or
maintained by ARAMARK or any subsidiary (including any trustee of such plan
acting as trustee), shall become the beneficial owner, directly or indirectly,
of securities of ARAMARK representing 35% or more of the combined voting power
of ARAMARK's then outstanding voting securities, (ii) at any time individuals
who within the prior two years constituted the Board (together with any new
directors whose election by the Board or whose nomination for election by
ARAMARK's shareholders was approved by a vote of the majority of the Directors
then still in office who were either (x) Directors immediately prior to such two
year period or (y) whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Directors then in
office; (iii) there occurs any sale, exchange or other disposition, in one
transaction, or in a series of related transactions, of substantially all of
ARAMARK's income producing assets or property; (iv) there is consummated any
transaction or series of transactions under which ARAMARK is merged or
consolidated with any other company, other than a merger or consolidation which
results in the shareholders of ARAMARK immediately prior thereto continuing to
own (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of ARAMARK or such surviving entity outstanding
immediately after such merger or consolidation; or (v) there occurs a change in
control of a nature that would be required to be reported in reference to Item
1(a) of Current Report on Form 8-K pursuant to Section 13 or 15(d) of the
Exchange Act; provided, however, that no Change of Control shall occur if Mr.
Neubauer is a member of a group (i.e. a "person," as above defined) whose
transaction with ARAMARK or its shareholders would result in a Change of
Control.
(b) Termination Without Cause; Resignation for Good Reason.
ARAMARK may terminate Mr. Neubauer's employment hereunder
without Cause, in which case the Term will end on the date of any such
termination; provided that if such termination occurs at least two years after
ARAMARK's notice to him of its intent to terminate his employment hereunder
without Cause, it shall be considered an "Involuntary Termination with Notice."
Mr. Neubauer may terminate his employment hereunder for Good Reason, and the
Term shall end upon such termination of employment.
In the event Mr. Neubauer's employment is terminated by
ARAMARK without Cause or if Mr. Neubauer should resign for Good Reason, Mr.
Neubauer shall receive the following amounts, and ARAMARK shall have no further
obligation to Mr. Neubauer under this Agreement, except as specifically set
forth in this Agreement:
(i) The Accrued Amounts;
(ii) In the case of an Involuntary Termination with Notice,
the Pro-Rata Bonus;
<PAGE>
(iii) Except in the case of an Involuntary Termination with
Notice, a lump sum payment equal to two times Mr. Neubauer's
Base Salary, payable within 10 business days after the
effective date of termination of employment;
(iv) Except in the case of an Involuntary Termination with
Notice, a lump sum payment equal to the Pro-Rata Bonus plus
two times Mr. Neubauer's Average Bonus payable within 10
business days after the effective date of termination of
employment;
(v) Except in the case of an Involuntary Termination with
Notice (in which case the consulting period in Section 9 shall
be applicable), a lump sum payment equal to the Consulting
Compensation, payable within 10 business days after
termination of employment;
(vi) Supplemental Retirement Benefits shall be payable
pursuant to Exhibit A;
(vii) Except in the case of an Involuntary Termination with
Notice, Survivor Income Protection Plan, other health and
welfare plan participation, and other perquisites shall
continue for three years from the effective date of
termination.
(viii) Mr. Neubauer may elect to continue at his sole expense
the Executive Health Plan (to the extent Mr. Neubauer and
members of his family are eligible for such benefit and, for
this purpose, Mr. Neubauer shall be deemed to be employed by
ARAMARK) for a period not to exceed three years. Equity Credit
Arrangement participation shall be as a terminated employee
under the Arrangement; and
(ix) The Plan Amounts.
In addition, all of the options and ISPOs to purchase shares
of Stock of ARAMARK held by Mr. Neubauer shall become vested and immediately
exercisable but will in all respects otherwise remain subject to the terms and
conditions of the applicable plans.
(c) No Duty to Mitigate. Anything contained herein to the
contrary notwithstanding, if Mr. Neubauer's employment terminates for any
reason, Mr. Neubauer shall in no event be required to seek any other employment
or take any other action by way of mitigation or otherwise with respect to the
amounts payable to Mr. Neubauer under this Agreement. In addition, any amounts
earned by Mr. Neubauer, whether from self-employment, as a common law employee
or otherwise, shall not reduce any amounts otherwise payable to him under this
Agreement.
(d) Death. If Mr. Neubauer's Employment terminates by reason
of Mr. Neubauer's death, the Term shall end and Mr. Neubauer's estate shall
receive the following amounts:
(i) The Accrued Amounts;
(ii) The Pro-Rata Bonus;
(iii) Supplemental Retirement Benefits shall be payable to the
extent set forth in Exhibit A;
(iv) Equity Credit Arrangement participation shall be as a
terminated employee under the Arrangement; and
(v) The Plan Amounts.
Stock options and ISPOs shall be treated in accordance with
the terms of the applicable plans.
<PAGE>
(e) Permanent Disability. In the event that Mr. Neubauer is
unable to perform his duties hereunder by reason of illness or incapacity for a
continuous period of more than six (6) months, or for an aggregate of more than
eight (8) months in any twelve (12) month period, ARAMARK shall have the right
to terminate Mr. Neubauer's employment by reason of disability ("Permanent
Disability"). If ARAMARK terminates Mr. Neubauer's employment pursuant to this
Section 10(d), the Term shall end and Mr. Neubauer shall receive the following
amounts:
(i) The Accrued Amounts;
(ii) Base Salary shall continue for a period of three years
from the effective date of termination, offset by any payments
due to Mr. Neubauer pursuant to the Survivor Income Protection
Plan and all other disability income protection plans of
ARAMARK;
(iii) The Pro-Rata Bonus;
(iv) Supplemental Retirement Benefits shall be payable
pursuant to Exhibit A;
(v) Equity Credit Arrangement participation shall be as a
terminated employee under the Arrangement; and
(vi) The Plan Amounts.
In addition, all of the stock options and ISPOs held by Mr.
Neubauer shall become vested and immediately exercisable but will in all
respects otherwise remain subject to the terms and conditions of the applicable
plans. Mr. Neubauer may elect to continue at his sole expense any or all of the
benefits provided by the Executive Health Plan (to the extent Mr. Neubauer and
members of his family are eligible for such benefit and, for this purpose, Mr.
Neubauer shall be deemed to be employed by ARAMARK) for a period not to exceed
three years.
11. Trade Secrets. ARAMARK may, pursuant to Mr. Neubauer's
employment hereunder, provide and confide to Mr. Neubauer business methods and
systems ("Systems"), techniques and methods of operation developed at great
expense by ARAMARK and which Mr. Neubauer recognizes to be unique assets of
ARAMARK's business. Mr. Neubauer shall not, ever, during or after the Term,
directly or indirectly, in any manner utilize or disclose to any person, firm,
corporation, association or other entity, except to directors, consultants,
lawyers, auditors, advisors, agents or employees of ARAMARK in the course of his
duties or where required by law: (i) any such Systems, techniques and methods of
operation, or (ii) any sales prospects, customer lists, products, research or
data of any kind, or (iii) any information relating to strategic plans, sales
costs, profits or the financial condition of ARAMARK or any of its customers or
prospective customers, which are not generally known to the public or recognized
as standard practice in the industries in which ARAMARK shall be engaged.
<PAGE>
12. Non-Competition Agreement.
(a) Subject to the geographic limitation of Section 12(b), Mr.
Neubauer, for a period commencing on the date hereof and ending two (2) years
following (i) if there is no consulting period pursuant to Section 9, the end of
the Term and (ii) if there is such a consulting period, the end of such
consulting period pursuant to Section 9, shall not, without ARAMARK's written
permission, directly or indirectly, on his behalf or on behalf of any other
person, firm, corporation, association or other entity, engage in, or in any way
be concerned with or negotiate for, or acquire or maintain any ownership
interest in any business or activity which is the same, similar to or
competitive with that conducted by, engaged in or developed for later
implementation by ARAMARK at any time during the Term of this Agreement and any
subsequent consulting period; provided that the provision of this Section 12
shall not be deemed breached merely because Mr. Neubauer owns not more than 1%
of the outstanding stock of a corporation, if, at the time of its acquisition by
Mr. Neubauer, such stock is listed on a national securities exchange or quoted
on an inter-dealer quotation system and provided further that Mr. Neubauer shall
not be required to cease any activity that did not violate this Agreement (or
any predecessor agreement) when such activity commenced.
(b) Mr. Neubauer acknowledges that ARAMARK is engaged in
business in each of the 50 states and several foreign countries and that ARAMARK
intends to expand the geographic scope of its activities. Accordingly and in
view of the nature of his position and responsibilities, Mr. Neubauer agrees
that the provisions of Section 12(a) shall be applicable to all 50 states and,
addition, to each foreign country, possession or territory in which ARAMARK (as
defined in Section 16) may be engaged in business from time to time during the
Term and as of the expiration of the Term and any subsequent consulting period.
(c) Mr. Neubauer agrees that for a period of two (2) years
following (i) if there is no consulting period pursuant to Section 9, the end of
the Term and (ii) if there is such a consulting period, the end of such
consulting period, he will not, directly or indirectly, at any time in any
manner, induce or attempt to influence any employees of ARAMARK to terminate
their employment with ARAMARK.
(d) As used in Sections 11 and 12 of this Agreement, the
"Company" shall be deemed to include any entity twenty percent (20%) of the
equity of which during the period for which he is receiving payments under this
Agreement and during any subsequent consulting period, is directly or indirectly
owned by ARAMARK.
13. Equitable Remedies. Mr. Neubauer acknowledges that, in the
event of any violation by Mr. Neubauer of the provisions of Sections 11 or 12 of
this Agreement, ARAMARK will sustain serious, irreparable and substantial harm
to its business, the extent of which will be difficult to determine and
impossible to remedy by an action at law for money damages. Accordingly, Mr.
Neubauer agrees that, in the event of such violation or threatened violation by
Mr. Neubauer, ARAMARK shall be entitled to an injunction before trial from any
court of competent jurisdiction as a matter of course and upon the posting of
not more than a nominal bond in addition to all such other legal and equitable
remedies as may be available to ARAMARK. Mr. Neubauer further agrees that, in
the event any of the provisions of Sections 11 and 12 of this Agreement are
determined by a court of competent jurisdiction to be contrary to any applicable
statute, law or rule, or for any reason to be unenforceable as written, such
court may modify any of such provisions so as to permit enforcement thereof as
thus modified.
14. Deferred Compensation. Mr. Neubauer has entered into a
series of deferred compensation agreements with ARAMARK. Such agreements shall
remain in full force and effect, and shall not be affected by ARAMARK and Mr.
Neubauer entering into this Agreement.
15. Additional Provisions. The provisions of Exhibit B are
part of this Agreement.
16. Substitution of Benefits. If any of the items of
compensation, bonus or perquisites provided for in this Agreement shall
hereafter be prohibited by governmental regulations, corporate law, ARAMARK
policies or ARAMARK plans, payment or benefit of equivalent value shall be
substituted by ARAMARK.
<PAGE>
17. Entire Agreement. This Agreement (with the exhibits hereto
and agreements referred to in Sections 7 and 14) constitutes the full and
complete understanding and agreement of Mr. Neubauer and ARAMARK respecting the
subject matter hereof, and supersedes all prior understandings and agreements,
oral or written, express or implied. This Agreement may not be modified or
amended orally, but only by agreement in writing, signed by the party against
whom enforcement of any waiver, change, modification, extension or discharge is
sought.
18. Notices. All notices and other communications hereunder
will be in writing and will be given by hand delivery to the other party or by
next-day delivery service or registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Mr. Neubauer:
210 West Rittenhouse Square
#3106
Philadelphia, PA 19103
If to ARAMARK:
ARAMARK Corporation
1101 Market Street
Philadelphia, PA 19107
Attn.: Corporate Secretary
or to such other address as either party will have furnished to the other in
writing. All notices and communications shall be deemed to have been duly given
and received: (a) on the date of receipt, if delivered by hand; (b) three (3)
business days after being sent by first class certified mail, return receipt
requested, postage prepaid; or (c) one (1) business day after sending by
next-day delivery service with confirmation of receipt. As used herein, the term
"business day" means any day that is not Saturday, Sunday or legal holiday in
the State of Pennsylvania.
19. Waiver of Breach. No waiver by either party of any
condition or of the breach by the other of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one or more instances
shall be deemed or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition, or of the breach of any
other term or covenant set forth in this Agreement. Moreover, the failure of
either party to exercise any right hereunder shall not bar the later exercise
thereof.
20. Assignment. This Agreement shall inure to the benefit of
and be binding on the parties and their respective successors in interest, and
shall not be assignable by either party without the written consent of the
other. ARAMARK will require any successor in interest to all or substantially
all of ARAMARK (whether direct or indirect, by purchase, merger, or
consolidation or otherwise) to expressly assume this Agreement, but ARAMARK
shall remain liable if such successor in interest shall default on any of its
obligations hereunder.
21. Governing Law. This Agreement is entered into and shall be
construed in accordance with the laws of the Commonwealth of Pennsylvania.
22. Continuation of Covenants. The covenants and agreements of
Mr. Neubauer set forth in Sections 11 through 13 shall survive termination of
employment, shall continue thereafter, and shall not expire unless and except as
may be expressly set forth in said Sections.
<PAGE>
23. Invalidity or Unenforceability. If any term or provision
of this Agreement is held to be invalid or unenforceable, for any reason, such
invalidity or unenforceability shall not affect any other term or provision
hereof and this Agreement shall continue in full force and effect as if such
invalid or unenforceable term or provision (to the extent of the invalidity or
unenforceability) had not been contained herein.
24. Arbitration. Except as provided in Section 13, any
controversy or claim arising out of or relating to this Agreement, or the breach
hereof, shall be settled by arbitration in Philadelphia, Pennsylvania, before
one arbitrator in accordance with rules then in effect of the American
Arbitration Association. ARAMARK shall pay Mr. Neubauer's legal expenses should
Mr. Neubauer prevail on any substantial issue.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written.
MR. NEUBAUER
/s/Joseph Neubauer
--------------------------
Joseph Neubauer
ARAMARK Corporation
By: /s/ Robert J. Callander
---------------------------
<PAGE>
Exhibit A
1. The annual Supplemental Retirement Benefits ("SRB"), payable in
substantially equal monthly installments, shall equal the sum of: 50% of Mr.
Neubauer's Base Salary, plus 50% of an amount equal to one times Mr.
Neubauer's Average Bonus minus the benefit payable from the Survivor Income
Protection Plan.
2. Unless otherwise provided below the SRB shall commence on the first day of
the month following the expiration of the Term.
3. In all events the SRB shall terminate upon Mr. Neubauer's death, provided
that one-half of the SRB amount that would otherwise be payable to Mr.
Neubauer shall continue to be paid to Mr. Neubauer's then surviving spouse,
if any, for her lifetime, provided that the surviving spouse benefit
described in this item 3 shall only apply to the individual who is Mr.
Neubauer's spouse at the time of his termination of employment hereunder.
4. In the event of termination of Mr. Neubauer's employment due to Permanent
Disability, payments shall commence upon the earlier of Mr. Neubauer's
attainment of age 65 or expiration of Mr. Neubauer's eligibility to receive
Company Long Term Disability Plan (or any successor plan) benefit
<PAGE>
Exhibit B
Excise Tax Gross Up
-------------------
(a) In the event that any payment or benefit received or to be
received by Mr. Neubauer pursuant to the terms of this Agreement (the "Contract
Payments") or in connection with Mr. Neubauer's termination of employment or
contingent upon a Change in Control of ARAMARK pursuant to any plan or
arrangement or other agreement with ARAMARK (or any affiliate) ("Other Payments"
and, together with the Contract Payments, the "Payments") would be subject to
the excise tax (the "Excise Tax") imposed by Section 4999 of the Code, as
determined as provided below, ARAMARK shall pay to Mr. Neubauer, at the time
specified in (b) below, an additional amount (the "Gross-Up Payment") such that
the net amount retained by Mr. Neubauer, after deduction of the Excise Tax on
the Payments and any federal, state and local income or other tax and Excise Tax
upon the payment provided for by this Section (a), and any interest, penalties
or additions to tax payable by Mr. Neubauer with respect thereto, shall be equal
to the value of the Payments at the time such Payments are to be made as if the
Excise Tax imposed by Section 4999 did not apply. For purposes of determining
whether any of the Payments will be subject to the Excise Tax and the amounts of
such Excise Tax, (1) the total amount of the Payments shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax, except to the extent that,
in the opinion of independent tax counsel selected by ARAMARK's independent
auditors and reasonably acceptable to Mr. Neubauer ("Tax Counsel"), a Payment
(in whole or in part) does not constitute a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code, or such "excess parachute payments"
(in whole or in part) are not subject to the Excise Tax, (2) the amount of the
Payments that shall be treated as subject to the Excise Tax shall be equal to
the lesser of (A) the total amount of the Payments or (B) the amount of "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code (after
applying clause (1) hereof), and (3) the value of any noncash benefits or any
deferred payment or benefit shall be determined by Tax Counsel in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, Mr. Neubauer shall be deemed to
pay federal income tax at the highest marginal rates of federal income taxation
applicable to individuals in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes at the highest effective rates of
taxation applicable to individuals as are in effect in the state and locality of
Mr. Neubauer's residence or place of employment in the calendar year in which
the Gross-Up Payment is to be made, net of the maximum reduction in federal
income taxes that can be obtained from deduction of such state and local taxes,
taking into account any limitations applicable to individuals subject to federal
income tax at the highest marginal rates.
(b) The Gross-Up Payments provided for in Section (a) hereof
shall be made upon the imposition upon Mr. Neubauer or payment by Mr. Neubauer
of any Excise Tax.
(c) Mr. Neubauer shall notify ARAMARK in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by ARAMARK of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after Mr. Neubauer is informed in
writing of such claim and shall apprise ARAMARK of the nature of such claim and
the date on which such claim is requested to be paid. Mr. Neubauer shall not pay
such claim prior to the expiration of the 30 day period following the date on
which Mr. Neubauer gives such notice to ARAMARK (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If
ARAMARK notifies Mr. Neubauer in writing prior to the expiration of such period
that it desires to contest such claim, Mr. Neubauer shall:
i give ARAMARK any information reasonably requested
by ARAMARK relating to such claim;
<PAGE>
ii take such action in connection with contesting
such claim as ARAMARK shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by
ARAMARK and reasonably satisfactory to Mr. Neubauer;
iii cooperate with ARAMARK in good faith in order to
effectively contest such claim; and
iv permit ARAMARK to participate in any proceedings
relating to such claim;
provided, however, that ARAMARK shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold Mr. Neubauer harmless, on an after-tax
basis, for any Excise Tax or other tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses.
(d) ARAMARK shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Mr. Neubauer to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Mr. Neubauer agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as ARAMARK shall determine;
provided, however, that if ARAMARK directs Mr. Neubauer to pay such claim and
sue for a refund, ARAMARK shall advance the amount of such payment to Mr.
Neubauer on an interest-free basis, and shall indemnify and hold Mr. Neubauer
harmless, on an after-tax basis, from any Excise Tax or other tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and
provided, further, that if Mr. Neubauer is required to extend the statute of
limitations to enable ARAMARK to contest such claim, Mr. Neubauer may limit this
extension solely to such contested amount. ARAMARK's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and Mr. Neubauer shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority. In addition, no position may be taken nor any final
resolution be agreed to by ARAMARK without Mr. Neubauer's consent if such
position or resolution could reasonably be expected to adversely affect Mr.
Neubauer (including any other tax position of Mr. Neubauer unrelated to the
matters covered hereby).
(e) As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by ARAMARK or
the Tax Counsel hereunder, it is possible that Gross-Up Payments which will not
have been made by ARAMARK should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that ARAMARK
exhausts its remedies and Mr. Neubauer thereafter is required to pay to the
Internal Revenue Service an additional amount in respect of any Excise Tax, the
Tax Counsel shall determine the amount of the Underpayment that has occurred and
any such Underpayment shall promptly be paid by ARAMARK to or for the benefit of
Mr. Neubauer.
(f) If, after the receipt by Mr. Neubauer of the Gross-Up
Payment or an amount advanced by ARAMARK in connection with the contest of an
Excise Tax claim, Mr. Neubauer receives any refund with respect to such claim,
Mr. Neubauer shall promptly pay to ARAMARK the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by Mr. Neubauer of an amount advanced by ARAMARK in connection
with an Excise Tax claim, a determination is made that Mr. Neubauer shall not be
entitled to any refund with respect to such claim and ARAMARK does not notify
Mr. Neubauer in writing of its intent to contest the denial of such refund prior
to the expiration of 30 days after such determination, such advance shall be
forgiven and shall not be required to be repaid.
<PAGE>
EXHIBIT 10.5
ARAMARK CORPORATION
AGREEMENT RELATING TO EMPLOYMENT AND
POST-EMPLOYMENT COMPETITION
This Agreement is between the undersigned individual ("Employee") and ARAMARK
CORPORATION ("ARAMARK").
RECITALS
A. ARAMARK is the leading provider of managed services to business and
industry, private and public institutions, and the general public, in the
following business segments: food, leisure and support services; health and
education services; magazine and book services; and uniform services.
B. ARAMARK has a proprietary interest in its business and financial plans and
systems, methods of operation and other secret and confidential
information, knowledge and data ("Proprietary Information") which includes,
but is not limited to, annual and strategic business plans; financial
plans, reports and systems including, profit and loss statements and other
information regarding costs, profits, sales and the financial condition of
ARAMARK and its business units; management development reviews, including
information regarding the capabilities and experience of ARAMARK employees;
information regarding ARAMARK's relationships with its clients, customers,
and suppliers and prospective clients, customers and suppliers; and
technical data and know-how, including policy and procedure manuals,
computer programs, recipes, accounting forms and procedures and human
resource policies and procedures, all of which information is not publicly
disclosed and is considered by ARAMARK to be confidential trade secrets,
C. Employee shall be employed in a senior management position and shall have
access to ARAMARK's Proprietary Information, directly in the course of
Employee's employment, and indirectly through interaction with and
presentations by other senior ' managers at the Executive Leadership
Institute, Executive Leadership Council meetings, President's Council
meetings, Chairman's Council meetings and the like, and ARAMARK will
encourage Employee to develop personal relationships with ARAMARK's
clients, prospective clients and suppliers.
D. ARAMARK will be vulnerable to unfair post-employment competition by
Employee since Employee will have access to and knowledge of ARAMARK's
Proprietary Information and will have a personal relationship with
ARAMARK's clients, prospective clients and suppliers.
E. In consideration of continued employment, the severance and other
post-employment benefits provided for herein, Employee is willing to enter
into this Agreement with ARAMARK as a condition of employment pursuant to
which Employee will limit Employee's right to compete against ARAMARK
following termination of employment on the terms set forth in this
Agreement.
NOW, THEREFORE, intending to be legally bound, the parties agree as follows:
ARTICLE 1. NON-DISCLOSURE AGREEMENT: ARAMARK shall, in the course of employment,
provide and confide to Employee ARAMARK's Proprietary Information developed at
great expense by ARAMARK and which Employee recognizes to be unique assets of
ARAMARK's business. Employee shall not, during or after the term of employment,
directly or indirectly, in any manner utilize or disclose to any person, firm,
corporation, association or other entity, except
<PAGE>
where required by law, any such Proprietary Information which is not generally
known to the public or recognized as standard practice in the industries in
which ARAMARK is engaged.
ARTICLE 2. NON-COMPETITION AGREEMENT:
A. Subject to Article 2. B. below, Employee, for a period of two years
following the voluntary or involuntary termination of employment, shall
not, without ARAMARK's written permission, directly or indirectly, become
employed by (as an employee, consultant or otherwise), or acquire or
maintain any ownership interest in any Business which is similar to or
competitive with that conducted by or developed for later implementation by
ARAMARK at any time during the term of Employee's employment, provided,
however, if Employee's employment is involuntarily terminated by ARAMARK
for any reason other than good and sufficient cause, the term of the
non-competition provision set forth herein, will be modified to the longer
of (i) one year, (ii) the number of months Employee receives severance
payments or (iii) the number of months Employee is entitled to receive
severance payments pursuant to Article 5a below. For purposes of this
Agreement, "Business" shall be defined as a person, corporation, firm,
partnership, joint venture or other entity.
B. The provision set forth in Article 2. A. above, shall apply to (i) all
fifty states, and (11) each foreign country, possession or territory in
which ARAMARK may be engaged in business as of the effective date of
termination or at any time during the twelve month period prior thereto.
Further, notwithstanding anything in this Agreement to the contrary,
Article 2, A. above shall not limit Employee's right to engage in any
business or activity if such business or activity is unrelated to the type
of business or activity conducted by the business segment or segments for
which Employee directly or indirectly provided services during the
twenty-four month period preceding Employee's effective date of termination
unless Employee otherwise directly or indirectly acquired knowledge of
Proprietary information for such business segment or segments at any time
during the twenty-four month period preceding Employee's effective date of
termination. By way of example, but not limitation, if Employee provided
services to one of the business units of ARAMARK Food and Support Services
Group, Employee would be precluded during the applicable time period from
being employed by any Business providing food, leisure and support services
(irrespective of the particular ARAMARK business unit that employed
Employee) but Employee would not be precluded from working for a competitor
in the magazine and book distribution business or uniform rental business,
unless Employee had acquired knowledge of Proprietary Information for
ARAMARK's Magazine and Book Distribution business or Uniform Rental
businesses within twenty-four months prior to termination, as a result of
task force assignments, special projects, attendance at the Executive
Leadership Institute, Executive Leadership Council meetings, Presidents'
Council meetings, Chairman's Council meetings, and the like.
C. Employee acknowledges that enforcement of the provisions set forth in this
Article 2 will not unduly impair Employee's ability to obtain other
employment following the termination (voluntary or involuntary) of
Employee's employment with ARAMARK. Further, Employee acknowledges that the
provisions set forth in this Article 2 shall apply if Employee is
involuntarily terminated for good and sufficient cause; as a result of the
elimination of employee's position; for performance related issues; or for
any other reason or no reason at all.
ARTICLE 3. NON-SOLICITATION OF EMPLOYEES. Employee shall not for a period of two
years following the voluntary or involuntary termination of employment, directly
or indirectly, at any time, in any manner, induce or attempt to influence any
employees of ARAMARK to terminate their employment with ARAMARK.
<PAGE>
ARTICLE 4. REMEDIES: Employee acknowledges that in the event of any violation by
Employee of the provisions set forth in Articles 1, 2 or 3 above, ARAMARK will
sustain serious, irreparable and substantial harm to its business, the extent of
which will be difficult to determine and impossible to fully remedy by an action
at law for money damages. Accordingly, Employee agrees that, in the event of
such violation or threatened violation by Employee, ARAMARK shall be entitled to
an injunction before trial before any court of competent jurisdiction as a
matter of course upon the posting of not more than a nominal bond, in addition
to all such other legal and equitable remedies as may be available to ARAMARK.
If ARAMARK is required to enforce the provisions set forth in Articles 2 and 3
above by seeking an injunction, Employee agrees that the relevant time periods
set forth in Articles 2 and 3 shall commence with the entry of the injunction.
Employee further agrees that, in the event any of the provisions of this
Agreement are determined by a court of competent jurisdiction to be contrary to
any applicable statute, law or rule, or for any reason unenforceable as written,
such court may modify any such provisions so as to permit enforcement thereof as
modified.
ARTICLE 5. POST-EMPLOYMENT BENEFITS:
A. If Employee is terminated by ARAMARK for any reason other than good and
sufficient cause, Employee shall be entitled to the following
post-employment benefits:
I. Severance Pay: Employee shall receive severance payments equivalent to
Employee's monthly base salary as of the effective date of termination for
a period of one (1) year until Executive Leadership Council Agreement
payout schedule exceeds one year, then the employee shall receive the
number of months set forth on the following schedule:
Years of ARAMARK Continuous Service
Completed From Last Hire Date
----------------------------------------------
7 8 9 10 or more
----------------------------------------------
13 14 16 18
----------------------------------------------
Employee shall receive severance payments equivalent Severance payments shall
commence with the Employee's effective date of termination and shall be made in
accordance with ARAMARK's normal payroll cycle. The period during which employee
receives severance payments shall be referred to as the "Severance Pay Period."
2. Other Post-Employment Benefits
a. Basic Group medical and life insurance coverages shall continue under then
prevailing terms during the Severance Pay Period. Employee's share of the
premiums will be deducted from Employee's severance payments, Basic Group
medical coverage provided during such period shall be applied against
ARAMARK's obligation to continue group medical coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). Upon
termination of basic group medical and life coverages, Employee may convert
such coverages to individual policies to the extent allowable under plan
provisions.
b. Employee's leased vehicle shall be made available to Employee through the
Severance Pay Period at which time Employee has the option to either
purchase the vehicle in accordance with the Executive Leadership Council
plan then in effect or return it to ARAMARK.
c. Employee's eligibility to receive or participate in all other benefit and
compensation plans, including, but not limited to the Management Incentive
Bonus, Long Term Disability, Stock Unit Retirement and any stock option or
ownership plans, shall terminate as of the effective date of Employee's
termination unless provided otherwise under the terms of a
<PAGE>
particular plan, provided, however, participation in plans and programs
made available solely to Executive Leadership Council members, including,
but not limited to the Executive Leadership Council Medical Plan, shall
cease as of the effective date of termination or the date Employee's
Executive Leadership Council membership ceases, whichever occurs first.
Employee, however, shall have certain rights to continue the Executive
Leadership Council Medical Plan under COBRA.
B. Termination for "Good and sufficient cause" shall be defined as termination
for such things as fraud or dishonesty, willful failure to perform assigned
duties, willful violation of ARAMARK's Business Conduct Policy, or
intentionally working against the best interest of ARAMARK.
C. If Employee is terminated by ARAMARK for reasons other than good and
sufficient cause, Employee will receive the severance payments and other
post-employment benefits during the Severance Pay Period even if Employee
commences other employment during such period provided such employment does
not violate the terms of Article 2.
D. ARAMARK reserves the right to terminate all severance payments and other
post-employment benefits if Employee violates the covenants set forth in
Articles 1, 2 and 3 above.
E. ARAMARK expressly reserves the rights to revoke or amend, in whole or in
part, the severance provisions set forth in this agreement at any time, for
any reason, provided, however, in the event Employee is terminated for
reasons other than good and sufficient cause subsequent to such revocation
or amendment, Employee shall be entitled to no less than the monthly
severance payments which Employee would have received under this Agreement
had he been terminated by ARAMARK on the date ARAMARK elected to revoke or
amend the severance provisions.
ARTICLE 6. TERM OF EMPLOYMENT: Employee acknowledges that ARAMARK has the right
to terminate Employee's employment at any time for any reason whatsoever,
provided, however, that any termination by ARAMARK for reasons other than good
and sufficient cause shall result in the severance and the post-employment
benefits described in Article 5 above, to become due in accordance with the
terms of this Agreement subject to the conditions set forth in this Agreement.
Employee further acknowledges that the severance payments made and other
benefits provided by ARAMARK are in full satisfaction of any obligations ARAMARK
may have resulting from ARAMARK's exercise of its right to terminate Employee's
employment, except for those obligations which are intended to survive
termination such as the payments to be made pursuant to retirement plans and
conversion of insurance.
ARTICLE 7. MISCELLANEOUS:
A. As used throughout this Agreement, ARAMARK includes ARAMARK CORPORATION and
its subsidiaries and affiliates or any corporation, joint venture, or other
entity in which ARAMARK CORPORATION or its subsidiaries or affiliates has
an equity interest in excess of ten percent (10%).
B. This Agreement shall supersede and substitute for any previous
postemployment or severance agreement between Employee and ARAMARK, and is
entered into in consideration of the mutual undertakings of the parties and
the cancellation of all previous agreements, The terms of this Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania.
C. Employee and ARAMARK acknowledge that for purposes of Article 5, Employee's
last hire date with ARAMARK is October 19, 1998.
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound, hereto
have caused this Agreement to be signed.
Date: December 14, 1998 ARAMARK CORPORATION
By:/s/ Brian G. Mulvaney
----------------------------
Brian G. Mulvaney
By:/s/ Charles E. Kiernan
----------------------------
Charles E. Kiernan
<PAGE>
EXHIBIT 12
ARAMARK CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (A)
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------------------------
October 1, October 2, October 3, September 27, September 29,
1999 1998 1997 1996 1995
---------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Income before income taxes
and minority interest $239,413 $215,772 $215,847 $179,159 $167,577
Fixed charges, excluding
capitalized interest 188,184 169,997 163,404 160,740 152,991
Other, net (3,845) (2,063) (67) (371) 1,502
-------- -------- -------- -------- --------
Earnings, as adjusted $423,752 $383,706 $379,184 $339,528 $322,070
======== ======== ======== ======== ========
Interest expense $139,829 $122,681 $119,284 $117,856 $111,605
Capitalized interest 412 3 223 414 79
Portion of operating lease
rentals representative
of interest factor 48,355 47,316 44,120 42,884 41,386
--------- -------- -------- -------- --------
Fixed charges $188,596 $170,000 $163,627 $161,154 $153,070
======== ======== ======== ======== ========
Ratio of earnings to
fixed charges 2.2x 2.3x 2.3x 2.1x 2.1x
======== ======== ======== ======== ========
</TABLE>
(A) For the purpose of determining the ratio of earnings to fixed charges,
earnings include pre-tax income plus fixed charges (excluding capitalized
interest). Fixed charges consist of interest on all indebtedness (including
capitalized interest) plus that portion of operating lease rentals
representative of the interest factor (deemed to be one-third of operating
lease rentals).
<PAGE>
EXHIBIT 21
<TABLE>
<CAPTION>
Subsidiary Jurisdiction of Incorporation
---------- -----------------------------
<S> <C>
United States:
Advertising & Display Services, Inc. Delaware
ARAMARK Bay Area Group, Inc. Delaware
ARAMARK Business Dining Services of Texas, Inc. Texas
ARAMARK Cleanroom Services, Inc. Delaware
ARAMARK Consumer Discount Company Pennsylvania
ARAMARK Correctional Services, Inc. Delaware
ARAMARK Delaware, Inc. Delaware
ARAMARK Educational Group, Inc. Delaware
ARAMARK Educational Resources, Inc. Delaware
ARAMARK Educational Services of Texas, Inc. Texas
ARAMARK Educational Services of Vermont, Inc. Vermont
ARAMARK Educational Services, Inc. Delaware
ARAMARK Facilities Management, Inc. Delaware
ARAMARK Facility Services, Inc. Maryland
ARAMARK Food and Support Services Group, Inc. Delaware
ARAMARK Healthcare Support Services of Puerto Rico, Inc. Delaware
ARAMARK Healthcare Support Services of Texas, Inc. Texas
ARAMARK Healthcare Support Services of the Virgin Islands, Inc. Delaware
ARAMARK Healthcare Support Services, Inc. Delaware
ARAMARK Industrial Services, Inc. Delaware
ARAMARK Kitty Hawk, Inc. Idaho
ARAMARK Magazine & Book Services, Inc. Delaware
ARAMARK Marketing Services Group, Inc. Delaware
ARAMARK Organizational Services, Inc. Delaware
ARAMARK Pittsburgh Limited Delaware
ARAMARK Pittsburgh Stadium Concessions, Inc. Pennsylvania
ARAMARK RBI, Inc. Delaware
ARAMARK Refreshment Services, Inc. Delaware
ARAMARK Resource Services, Inc. Delaware
ARAMARK Senior Notes Company Delaware
ARAMARK Services Management of AK, Inc. Alaska
ARAMARK Services Management of AL, Inc. Alabama
ARAMARK Services Management of AR, Inc. Arkansas
ARAMARK Services Management of AZ, Inc. Arizona
ARAMARK Services Management of CA, Inc. California
ARAMARK Services Management of CO, Inc. Colorado
ARAMARK Services Management of CT, Inc. Connecticut
ARAMARK Services Management of DC, Inc. District of Columbia
ARAMARK Services Management of DE, Inc. Delaware
ARAMARK Services Management of FL, Inc. Florida
ARAMARK Services Management of GA, Inc. Georgia
ARAMARK Services Management of HI, Inc. Hawaii
ARAMARK Services Management of IA, Inc. Iowa
ARAMARK Services Management of ID, Inc. Idaho
ARAMARK Services Management of IL, Inc. Illinois
ARAMARK Services Management of IN, Inc Indiana
ARAMARK Services Management of KS, Inc. Kansas
ARAMARK Services Management of KY, Inc. Kentucky
ARAMARK Services Management of LA, Inc. Louisiana
ARAMARK Services Management of MA, Inc. Massachusetts
ARAMARK Services Management of MD, Inc. Maryland
ARAMARK Services Management of ME, Inc. Maine
ARAMARK Services Management of MI, Inc. Michigan
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARAMARK Services Management of MN, Inc. Minnesota
ARAMARK Services Management of MO, Inc. Missouri
ARAMARK Services Management of MS, Inc. Mississippi
ARAMARK Services Management of MT, Inc. Montana
ARAMARK Services Management of NC, Inc. North Carolina
ARAMARK Services Management of ND, Inc. North Dakota
ARAMARK Services Management of NE, Inc. Nebraska
ARAMARK Services Management of NH, Inc. New Hampshire
ARAMARK Services Management of NJ, Inc. New Jersey
ARAMARK Services Management of NM, Inc. New Mexico
ARAMARK Services Management of NV, Inc. Nevada
ARAMARK Services Management of NY, Inc. New York
ARAMARK Services Management of OH, Inc. Ohio
ARAMARK Services Management of OK, Inc. Oklahoma
ARAMARK Services Management of OR, Inc. Oregon
ARAMARK Services Management of PA, Inc. Pennsylvania
ARAMARK Services Management of RI, Inc. Rhode Island
ARAMARK Services Management of SC, Inc. South Carolina
ARAMARK Services Management of SD, Inc. South Dakota
ARAMARK Services Management of TN, Inc. Tennessee
ARAMARK Services Management of TX, Inc. Texas
ARAMARK Services Management of UT, Inc. Utah
ARAMARK Services Management of VA, Inc. Virginia
ARAMARK Services Management of VT, Inc. Vermont
ARAMARK Services Management of WA, Inc. Washington
ARAMARK Services Management of WI, Inc. Wisconsin
ARAMARK Services Management of WV, Inc. West Virginia
ARAMARK Services Management of WY, Inc. Wyoming
ARAMARK Services of Kansas, Inc. Kansas
ARAMARK Services of Puerto Rico, Inc. Delaware
ARAMARK Services, Inc. Delaware
ARAMARK Sports and Entertainment Group, Inc. Delaware
ARAMARK Sports and Entertainment Services of Texas, Inc. Texas
ARAMARK Sports and Entertainment Services, Inc. Delaware
ARAMARK Summer Games 1996, Inc. Delaware
ARAMARK Uniform & Career Apparel, Inc. Delaware
ARAMARK Uniform Manufacturing Company Delaware
ARAMARK Venue Services, Inc. Delaware
ARAMARK/HMS Company Delaware
Aurora Educational Resources Company Colorado
CWLC Brokerage, Inc. Colorado
D.G. Maren II, Inc. Delaware
Davre's Inc. Delaware
Delsac VI, Inc. Delaware
Delsac VII, Inc. Delaware
Delsac VIII, Inc. Delaware
DYNA Corporation California
Fashion-Tex Services, Inc. California
Gall's, Inc. Delaware
H.M.S. Delaware, Inc. Delaware
Harry M. Stevens, Inc. New York
Harry M. Stevens, Inc. of New Jersey New Jersey
Harry M. Stevens, Inc. of Penn. Pennsylvania
Landy Textile Rental Services, Inc. Pennsylvania
Linen Supply Service, Inc. Illinois
Main, Inc. Florida
Merced News Company California
Restaura, Inc. Michigan
Smithsub, Inc. Virginia
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL:
<S> <C>
Administracion De Servicios Hosteleros S.A. Spain
ARAMARK (Asia) Pte Limited Singapore
ARAMARK Canada Facility Services Ltd. Canada
ARAMARK Canada Recycling Services Ltd. Canada
ARAMARK Canada, Ltd. Canada
ARAMARK Canadian Investments, Inc. Canada
ARAMARK Cleaning S.A. Belgium
ARAMARK GmbH Germany
ARAMARK Holdings GmbH Germany
ARAMARK Holdings Ltd. United Kingdom
ARAMARK Investments BV Amsterdam
ARAMARK Investments Limited United Kingdom
ARAMARK Mexico, S.A. de C.V. Mexico
ARAMARK Plc United Kingdom
ARAMARK Restaurations GmbH Germany
ARAMARK S.A. Belgium
ARAMARK S.A. de C.V. Mexico
ARAMARK S.R.O. Czech Republic
ARAMARK Services of Canada, Inc. Canada
ARAMARK Servicios de Catering, S.L. Spain
ARAMARK Servicios Integrales, S.A. Spain
ARAMARK Slovak Republic S.R.O. Slovak Republic
ARAMARK Szolgaltato Es Kereskedelmi KFT. Hungary
ARAMARK Uniform Manufacturing de Mexico, S.A. de C.V. Mexico
ARAMARK Worldwide Investments Limited United Kingdom
ARAMONT Company Ltd. Bermuda
DynaMed UK Limited United Kingdom
Services D'Entretrien Versabec, Inc. Canada
Versabec Inc. Canada
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated November 8, 1999 included in this Form 10-K for the fiscal year
ended October 1, 1999 into the Company's previously filed Registration
Statements on Form S-8, Registration Nos. 33-11818, 33-30879, 33-33329,
33-44002, 33-57825, and 333-53163, and on Form S-3, Registration Nos. 33-47564,
333-53161, and 333-63427.
Philadelphia, Pennsylvania
November 24, 1999
<PAGE>
EXHIBIT 24
JOSEPH NEUBAUER
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints L. Frederick Sutherland, Martin W. Spector and
Donald S. Morton as his Attorney-in-Fact and hereby grants to each of them
acting alone without the others, for him and in his name as such director, full
power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to
the requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ Joseph Neubauer
-------------------------------
Joseph Neubauer
<PAGE>
EXHIBIT 24
LAWRENCE T. BABBIO, JR.
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to
the requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ Lawrence T. Babbio, Jr.
----------------------------------
Lawrence T. Babbio, Jr.
<PAGE>
EXHIBIT 24
ROBERT J. CALLANDER
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to
the requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 9, 1999 /s/ Robert J. Callander
----------------------------------
Robert J. Callander
<PAGE>
EXHIBIT 24
RONALD R. DAVENPORT
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to
the requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 9, 1999 /s/ Ronald R. Davenport
---------------------------------
Ronald R. Davenport
<PAGE>
EXHIBIT 24
PATRICIA C. BARRON
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as her Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for her and in her name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ Patricia C. Barron
----------------------------------
Patricia C. Barron
<PAGE>
EXHIBIT 24
LEE F. DRISCOLL, JR.
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ Lee F. Driscoll, Jr.
------------------------------------
Lee F. Driscoll, Jr.
<PAGE>
EXHIBIT 24
MITCHELL S. FROMSTEIN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ Mitchell S. Fromstein
-----------------------------------
Mitchell S. Fromstein
<PAGE>
EXHIBIT 24
EDWARD G. JORDAN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ Edward G. Jordan
--------------------------------
Edward G. Jordan
<PAGE>
EXHIBIT 24
THOMAS H. KEAN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ Thomas H. Kean
-------------------------------
Thomas H. Kean
<PAGE>
EXHIBIT 24
JAMES E. PRESTON
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ James E. Preston
--------------------------------
James E. Preston
<PAGE>
EXHBIT 24
JAMES E. KSANSNAK
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, L. Frederick Sutherland, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 1, 1999, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action, which any such Attorney-in-fact
may deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
Dated: November 8, 1999 /s/ James E. Ksansnak
--------------------------------
James E. Ksansnak
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from the Consolidated
Balance Sheet and Consolidated Statement of Income filed as part of Form 10-K
and is qualified in its entirety by reference to such Form 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-01-1999
<PERIOD-START> OCT-03-1998
<PERIOD-END> OCT-01-1999
<CASH> 27,690
<SECURITIES> 0
<RECEIVABLES> 578,393
<ALLOWANCES> 22,496
<INVENTORY> 369,791
<CURRENT-ASSETS> 1,044,366
<PP&E> 1,889,956
<DEPRECIATION> 956,241
<TOTAL-ASSETS> 2,870,543
<CURRENT-LIABILITIES> 925,753
<BONDS> 1,609,659
0
0
<COMMON> 683
<OTHER-SE> 125,888
<TOTAL-LIABILITY-AND-EQUITY> 2,870,543
<SALES> 0
<TOTAL-REVENUES> 6,718,426
<CGS> 0
<TOTAL-COSTS> 6,063,594
<OTHER-EXPENSES> 193,703
<LOSS-PROVISION> 13,413
<INTEREST-EXPENSE> 135,753
<INCOME-PRETAX> 239,413
<INCOME-TAX> 89,222
<INCOME-CONTINUING> 150,191
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150,191
<EPS-BASIC> 1.59
<EPS-DILUTED> 1.48
</TABLE>
