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