UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~July 1~~December 29, ~~2005~~2006

Commission file number 001-16807

ARAMARK CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		23-3086414
(State or other jurisdiction ofincorporation or organization)		(I.R.S. EmployerIdentification Number)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
ARAMARK Tower 1101 Market Street Philadelphia, Pennsylvania		19107
(Address of principal executive offices)		(Zip Code)

(215) 238-3000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, ~~(as~~or ~~defined~~a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act). ~~Yes x No ¨~~(Check one):

~~Indicate~~Large ~~the~~accelerated ~~number~~filer ofx ~~shares~~Accelerated ~~outstanding~~filer of¨ ~~each~~Non-accelerated offiler ~~the issuer’s classes of common stock, as of the latest practicable date.~~ ¨

~~Class~~Indicate Aby ~~common~~check ~~stock~~mark ~~outstanding~~whether atthe ~~July~~registrant ~~29,~~is ~~2005:~~a ~~62,927,591~~shell ~~shares~~company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

~~Class~~Indicate Bthe ~~common~~number ~~stock~~of shares outstanding atof ~~July~~each ~~29,~~of ~~2005:~~the ~~119~~issuer’s classes of common stock,~~040,702~~ ~~shares~~as of the latest practical date.

Common stock outstanding at January 26, 2007: 900 shares

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands)

	July 1,2005			October 1,2004
	December 29,2006			September 29,2006
ASSETS
Current Assets:
Cash and cash equivalents	$	4241,~~320~~721		$	4547,~~319~~679
Receivables		~~748~~901,~~117~~804			~~759~~870,~~822~~909
Inventories, at lower of cost or market		~~471~~500,~~309~~651			~~471~~494,~~839~~176
Prepayments and other current assets		78119,~~049~~377			63114,~~035~~080
Total current assets		1,~~339~~563,~~795~~553			1,~~340~~526,~~015~~844
Property and Equipment, net		1,~~206~~192,~~734~~420			1,~~214~~196,~~382~~830
Goodwill		1,~~677~~791,~~610~~313			1,~~589~~747,~~144~~094
Other Intangible Assets		~~282~~310,~~201~~905			~~271~~297,~~343~~986
Other Assets		~~536~~502,~~310~~982			~~406~~494,~~689~~563
	$	5,~~042~~361,~~650~~173		$	45,~~821~~263,~~573~~317
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	4048,~~506~~812		$	2540,~~523~~203
Accounts payable		~~481~~583,~~261~~476			~~566~~642,~~474~~778
Accrued expenses and other liabilities		800,041			862,933
Accrued expenses and other current liabilities		754,430			903,715
Total current liabilities		1,~~321~~386,~~808~~718			1,~~454~~586,~~930~~696
Long-Term Borrowings		1,~~971~~962,~~674~~080			1,~~843~~763,~~200~~088
Deferred Income Taxes and Other Noncurrent Liabilities		~~491~~391,~~624~~302			~~373~~391,~~788~~941
Shareholders’ Equity:
Class A common stock, par value $.01		~~821~~708			~~893~~751
Class B common stock, par value $.01		1,~~454~~613			1,~~330~~562
Capital surplus		1,~~097~~236,~~641~~255			1,~~007~~210,~~687~~300
Earnings retained for use in the business		1,~~246~~613,~~630~~867			1,~~080~~538,~~020~~760
Accumulated other comprehensive loss		(955	)		(4,144	)
Accumulated other comprehensive income		13,150			12,524
Treasury stock		(1,~~088~~244,~~047~~520	)		(~~936~~1,~~131~~242,305	)
Total shareholders’ equity		1,~~257~~621,~~544~~073			1,~~149~~521,~~655~~592
	$	5,~~042~~361,~~650~~173		$	45,~~821~~263,~~573~~317

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

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands, Except Per Share Amounts)

For the Three Months Ended

~~For the Nine Months Ended~~

July 1,2005

July 2,2004

July 1,2005

July 2,2004

December 29,2006

December 30,2005

Sales

23,~~792~~110,~~366~~546

2,~~594~~925,~~924~~928

~~8,181,741~~

~~7,571,310~~

Costs and Expenses:

Cost of services provided

2,~~533~~804,~~272~~467

2,~~356~~641,~~471~~593

~~7,437,654~~

~~6,881,367~~

Depreciation and amortization

7987,~~410~~579

7481,~~781~~897

~~235,962~~

~~218,106~~

Selling and general corporate expenses

3546,~~752~~183

3143,~~722~~819

~~104,347~~

~~95,217~~

2,648,434

2,462,974

7,777,963

7,194,690

2,938,229

2,767,309

Operating income

~~143~~172,~~932~~317

~~131~~158,~~950~~619

~~403,778~~

~~376,620~~

Interest and Other Financing Costs, net

3235,~~222~~911

3034,~~873~~089

~~96,857~~

~~92,443~~

Income before income taxes

~~111~~136,~~710~~406

~~101~~124,~~077~~530

~~306,921~~

~~284,177~~

Provision for Income Taxes

4048,~~327~~675

3631,~~617~~409

~~109,998~~

~~105,711~~

Net income

7187,~~383~~731

6493,~~460~~121

~~196,923~~

~~178,466~~

Earnings Per Share:

Basic

0.3848

0.3451

~~1.06~~

~~0.94~~

Diluted

0.3847

0.3350

~~1.04~~

~~0.92~~

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

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

	For the Nine Months Ended
	For the Three Months Ended
	July 1,2005			July 2,2004
	December 29,2006			December 30,2005
Cash flows from operating activities:
Net income	$	~~196~~87,~~923~~731		$	~~178~~93,~~466~~121
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		~~235~~87,~~962~~579			~~218~~81,~~106~~897
Income taxes deferred		~~(3,055~~233	)		21(18,~~539~~325	)
Changes in noncash working capital		(~~124~~234,~~043~~646	)		(~~138~~218,~~381~~794	)
Net proceeds from sale of receivables		~~30,500~~200			—5,100
Other operating activities		(264,~~067~~474	)		~~(39~~2,~~618~~435	)
Net cash provided by operating activities		310,220			240,112
Net cash used in operating activities		(63,377	)		(54,566	)
Cash flows from investing activities:
Purchases of property and equipment and client contract investments		(~~227~~63,~~040~~995	)		(~~212~~64,~~710~~153	)
Disposals of property and equipment		133,~~522~~804			126,~~708~~863
Proceeds from sale of investment		—			8,500
Acquisition of certain businesses, net of cash acquired		(81,706	)		(6,190	)
Acquisition of certain businesses, net of cash acquired		(108,448	)		(141,286	)
Other investing activities		3,044			952
Other investing activities		18,688			4,718
Net cash used in investing activities		(138,853	)		(62,528	)
Net cash used in investing activities		(303,278	)		(328,070	)
Cash flows from financing activities:
Proceeds from additional long-term borrowings		~~380~~329,~~799~~238			~~352~~183,~~842~~369
Payment of long-term borrowings		(~~234~~131,~~932~~088	)		(~~167~~12,~~249~~502	)
Proceeds from issuance of common stock		308,~~997~~404			377,~~578~~186
Repurchase of stock		~~(147,069~~—	)		(~~118~~50,~~803~~310	)
Dividend payments		(30,313	)		(27,946	)
Payment of dividends		(12,624	)		(12,662	)
Other financing activities		(92,~~423~~342	)		11(5,~~824~~566	)
Net cash provided by (used in) financing activities		(9,941	)		88,246
Net cash provided by financing activities		196,272			109,515
Increase (decrease) in cash and cash equivalents		(2,999	)		288
Decrease in cash and cash equivalents		(5,958	)		(7,579	)
Cash and cash equivalents, beginning of period		4547,~~319~~679			4456,~~475~~066
Cash and cash equivalents, end of period	$	4241,~~320~~721		$	4448,~~763~~487

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

ARAMARK CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1)

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. ~~Certain prior period balances have been reclassified to conform to the current period classification. The effect of such reclassifications was not material.~~ In the opinion of the Company, the statements include all adjustments (which include only normal recurring adjustments) required for a fair statement of financial position, results of operations and cash flows for such periods. The results of operations for interim periods are not necessarily indicative of the results for a full year, due to the seasonality of some of our business activities and the possibility of changes in general economic conditions.

(2) ~~SUPPLEMENTAL CASH FLOW INFORMATION, ETC.~~MERGER:

~~The~~On ~~Company~~August 8, ~~made~~2006, ~~interest~~ARAMARK signed ~~payments~~a ofdefinitive ~~$99.6~~merger ~~million~~agreement ~~and~~under ~~$99.2~~which ~~million~~investment ~~and~~funds ~~income~~associated ~~tax~~with ~~payments~~GS ofCapital ~~$102~~Partners, CCMP Capital Advisors, J.8P. ~~million~~Morgan ~~and~~Partners, ~~$85~~Thomas H.7 ~~million~~Lee ~~during~~Partners and Warburg Pincus LLC (collectively, the ~~first~~“Sponsors”) ~~nine~~and Joseph ~~months~~Neubauer, ofChairman ~~fiscal~~and ~~2005~~Chief ~~and~~Executive ~~2004~~Officer, ~~respectively~~would acquire ARAMARK. ~~During~~Under the ~~first~~terms ~~quarter~~ of ~~fiscal~~the ~~2004~~agreement, ~~the~~ARAMARK ~~Company~~stockholders ~~completed~~would ~~the~~receive ~~sale~~$33.80 ofin ~~its~~cash ~~interest~~for ineach ashare ~~previously~~of ~~divested~~ARAMARK ~~periodicals~~common ~~distribution~~stock ~~business~~held. ~~and~~The ~~received~~Board ~~cash~~of ~~proceeds~~Directors of ~~$8.5~~ARAMARK, ~~million.~~on ~~Pension~~the ~~expense~~unanimous ~~related~~recommendation toof ~~defined~~a ~~benefit~~special ~~pension~~committee ~~plans~~comprised ~~was~~entirely ~~not~~of ~~material~~independent ~~for~~directors, approved the ~~three~~agreement and ~~nine~~recommended ~~month~~that ~~periods~~ARAMARK’s ofstockholders ~~both~~approve ~~fiscal~~the ~~2005~~merger. ~~and~~On ~~2004~~December 20, ~~and~~2006, ~~funding~~ARAMARK ~~requirements~~held ~~for~~a ~~such~~special ~~plans~~meeting ~~will~~of ~~not~~its stockholders, beat ~~material~~which 86 percent of the outstanding votes and 97 percent of the votes actually cast voted in ~~fiscal~~favor ~~2005~~of the adoption of the merger agreement.

~~Cash~~The ~~provided~~merger bywas ~~operating~~completed ~~activities~~on ~~includes~~January 26, ~~tax~~2007 ~~benefits~~and was valued at approximately $8.6 billion, including the assumption or repayment of approximately $2.0 billion of debt. The merger was financed by a combination of borrowings under a new $294.315 ~~million~~billion ~~and~~senior secured term loan facility, the issuance of $241.728 billion 8.50% senior notes due 2015 and $500 million ~~from~~senior ~~the~~floating ~~employee~~rate ~~exercise~~notes ofdue ~~non-qualified~~2015 ~~stock~~bearing ~~options~~interest ~~during~~equal ~~the~~to ~~first~~three-month ~~nine~~LIBOR ~~months~~(as defined) plus a spread of ~~fiscal~~3.50%, ~~2005~~the funding under the restated and ~~2004~~amended Receivables Facility, ~~respectively~~and the approximately $2.1 ~~Cash~~billion ~~flow~~equity ~~from~~investment of the Sponsors, Mr. Neubauer and certain other ~~investing~~members ~~activities~~of inARAMARK’s ~~fiscal~~management. ~~2005~~In ~~includes~~connection ~~approximately~~with the merger, a new $14600 million senior secured revolving credit facility with a six-year maturity and a synthetic letter of credit facility of up to $250 million were also signed.1 As of January 26, 2007, interest on borrowings under the $4.15 billion senior secured term loan facility was based on the relevant currency LIBOR plus a spread of 2.00% to 2.125% (as of January 26, 2007 – 2.125%), interest on borrowings under the $600 million ~~representing~~senior secured revolving credit facility was based on the relevant currency LIBOR plus a ~~special~~spread ~~distribution~~of 1.25% to 2.00% (as of ~~proceeds~~January 26, 2007 – 2.00%), and fees on the $250 million synthetic letter of credit facility range from a2.00% ~~real~~to ~~estate~~2.125% ~~sale~~(as byof January 26, 2007 – 2.125%). The spread is based on a ratio of Consolidated Secured Debt to EBITDA, as defined in the credit agreement. There is also an unutilized commitment fee on the $600 million senior secured revolving credit facility ranging from 0.375% to 0.50%~~-owned~~ (as ~~equity~~of ~~affiliate~~January 26, 2007 – 0.50%).

~~During~~As a result of completing the ~~third~~merger, ~~quarter~~in January 2007 the Company will record a compensation charge of ~~fiscal~~approximately ~~2005,~~$78 million ~~ARAMARK~~related ~~Services~~to the accelerated vesting and buyout of employee stock options and restricted stock units, ~~Inc.~~a ~~issued~~charge of approximately $~~250~~23 million ofrelated ~~5.00%~~to ~~guaranteed~~change ~~notes~~in ~~due~~control ~~June~~payments 1to certain executives, ~~2012~~and a charge for the cost of obtaining the bridge financing facility of approximately $13 million. ~~Proceeds~~In ~~from~~addition, the ~~offering were~~Company ~~used~~may ~~primarily~~report toadditional ~~repay~~legal ~~maturing~~fees ~~obligations~~and other transaction related expenses in January and subsequent periods.

~~(3)~~For ~~COMPREHENSIVE~~the ~~INCOME:~~three months ended December 29, 2006, the Company incurred approximately $2.6 million of merger-related costs, which are included in “Selling and general corporate expense” in the Condensed Consolidated Statement of Income.

Pursuant to 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. Components of comprehensive income include net income, changes in foreign currency translation adjustments, minimum pension liability and changes in the fair value of cash flow hedges (~~net of tax~~3). ~~Total~~SUPPLEMENTAL ~~comprehensive~~CASH ~~income~~FLOW was $64.1 million and $200.1 million for the three and nine months ended July 1, 2005, respectively, and $62.3 million and $186.7 million for the three and nine months ended July 2, 2004, respectively. INFORMATION:

(The Company made interest payments of $47.5 million and $38.6 million and income tax payments of $37.7 million and $29.4) ~~CAPITAL~~million ~~STOCK:~~during the first three months of fiscal 2007 and 2006, respectively. Pension expense related to defined benefit plans was not material for the first three months of fiscal 2007 and 2006, respectively.

During the first nine months of fiscal 2005, 2.7 million options were granted to purchase common stock under the 2001 Equity Incentive Plan (2001 EIP). The options vest ratably over four years, with an exercise price equal to the fair market value at the date of grant. During the first nine months of fiscal 2005, employees, through stock option exercises, purchased approximately 4.8 million shares of common stock for $45.8 million, of which $15.3 million was satisfied through the exchange of previously-owned shares. Also, during the first nine months of fiscal 2005, approximately 9.6 million Class A shares were converted to Class B shares. During the first nine months of fiscal 2005, the Company issued 0.4 million restricted stock units under the 2001 EIP, which vest ratably over four years. Compensation expense related to the restricted stock unit grants is recognized ratably over the vesting period based on the fair value of the shares at date of grant, and totaled $2.5 million during the first nine months of fiscal 2005.

During the first nine months of fiscal 2005, the Company repurchased 5.2 million shares of Class B common stock at an aggregate cost of approximately $136.6 million, leaving approximately $88 million available for common stock repurchases under the existing Board authorization.

During each of the first three quarters of fiscal 2005, the Company paid a cash dividend of $0.055 per share, which totaled $30.3 million. At its August 9, 2005 meeting, the Board of Directors declared a dividend in the amount of $0.055 per share, payable on September 8, 2005 to holders of record of the Company’s Class A and Class B common stock at the close of business on August 19, 2005.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(54) ~~GOODWILL~~COMPREHENSIVE ~~AND OTHER INTANGIBLE ASSETS~~INCOME:

~~The~~Pursuant ~~Company~~to ~~follows~~ the provisions of Statement of Financial Accounting Standards (“SFAS”) No. ~~142~~ 130, “~~Goodwill~~Reporting Comprehensive Income,” comprehensive income includes all changes to shareholders’ equity during a period, except those resulting from investment by and ~~Other~~distributions ~~Intangible~~to ~~Assets~~shareholders.” ~~Goodwill~~Components of comprehensive income include net income, ~~allocated~~changes byin ~~reportable~~foreign ~~segment~~currency translation adjustments (net of tax), ~~follows~~ changes in minimum pension liability (net of tax) and changes in ~~thousands~~the fair value of cash flow hedges (net of tax):. Total comprehensive income was $88.4 million and $94.8 million for the three months ended December 29, 2006 and December 30, 2005, respectively. As of December 29, 2006 and September 29, 2006, “Accumulated other comprehensive income” consists of minimum pension liability of ($17.9) million and ($17.9) million, respectively, foreign currency translation adjustment of $29.9 million and $27.5 million, respectively, and fair value of cash flow hedges of $1.1 million and $3.0 million, respectively.

	October 1, 2004		Acquisitions		Translationand Other			July 1, 2005
Food and Support Services – United States	$	1,081,205	$	1,183	$	(840	)	$	1,081,548
Food and Support Services – International		207,961		56,177		(1,202	)		262,936
Uniform and Career Apparel – Rental		190,559		33,148		—			223,707
Uniform and Career Apparel – Direct Marketing		109,419		—		—			109,419
	$	1,589,144	$	90,508	$	(2,042	)	$	1,677,610

(5)

CAPITAL STOCK:

~~Goodwill~~During ~~additions during~~ the ~~nine~~first three months ~~ended July 1, 2005 reflect (i) the increase~~ of ~~ownership~~fiscal ~~in our Irish foodservice company from 45% to 90%~~2007, ~~which~~approximately ~~is included in the Food and Support – International segment, and (ii) the acquisition of several regional uniform rental companies~~4.7 million ~~These~~Class A ~~amounts~~shares ~~may~~were beconverted ~~revised~~to ~~upon~~Class ~~final~~B ~~determination of the purchase price allocations~~shares.

~~Other~~During ~~intangible~~the ~~assets~~first ~~consist~~quarter of fiscal ~~(in~~2007, ~~thousands):~~the Company paid a cash dividend of $0.07 per share, which totaled $12.6 million.

	July 1, 2005							October 1, 2004
	GrossAmount		AccumulatedAmortization			NetAmount		GrossAmount		AccumulatedAmortization			NetAmount
Customer relationship assets	$	513,192	$	(232,216	)	$	280,976	$	479,660	$	(210,690	)	$	268,970
Other		21,598		(20,373	)		1,225		21,363		(18,990	)		2,373
	$	534,790	$	(252,589	)	$	282,201	$	501,023	$	(229,680	)	$	271,343

(6)

SHARE-BASED COMPENSATION:

~~All~~The ~~intangible~~Company ~~assets~~has ~~are~~various ~~amortizable~~share-based ~~and~~compensation ~~consist~~programs, ~~primarily~~which ofinclude ~~contract~~stock ~~rights,~~options ~~customer lists~~ and ~~non-compete~~restricted ~~agreements~~stock units. The ~~intangible~~ARAMARK ~~assets~~2001 ~~are~~Equity ~~being~~Incentive ~~amortized~~Plan on(2001 aEIP) ~~straight-line~~provided ~~basis~~for ~~over~~ the ~~expected~~initial ~~period~~issuance of ~~benefit~~up to 30 million shares of either Class A or Class B common stock, with an additional 3% toof 20the ~~years.~~Company’s ~~Intangible~~common ~~assets~~stock outstanding as of ~~approximately~~ ~~$48.6~~the ~~million~~end ~~were~~of ~~acquired~~the ~~through~~prior ~~business~~calendar ~~combinations~~year ~~during~~becoming available under the ~~first~~plan ~~nine~~on ~~months~~each January 1 following the adoption of ~~fiscal~~the ~~2005~~plan. ~~Amortization~~Pursuant ofto ~~intangible~~the ~~assets~~merger transaction ~~for~~(described in Note 2), all outstanding stock options and restricted stock units became fully vested and the ~~first~~holders ~~nine~~became ~~months~~entitled ofto ~~fiscal~~receive ~~2005~~cash ~~was~~consideration ~~approximately~~equal ~~$36.3~~to ~~million.~~the ~~Amortization~~difference ~~for~~between the ~~first~~ ~~nine~~exercise ~~months~~price ofand ~~fiscal~~$33.80 ~~2004~~per ~~was~~share ~~approximately~~for stock options and $3733.380 ~~million~~per share for restricted stock units.

As of December 29, 2006, the Company had reserved approximately 53.9 million shares of common stock for issuance pursuant to its employee ownership and benefit programs. Under all programs, the terms of the awards are fixed at the grant date.

Effective October 1, 2005, the Company adopted SFAS No. 123R, “Share-Based Payment,” and related interpretations and began expensing the grant-date fair value of employee stock options. Prior to October 1, 2005, the Company applied 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 was recognized for employee stock options, as options granted had an exercise price equal to the market value of the underlying common stock on the date of grant.

The Company adopted SFAS No. 123R using the modified prospective transition method. Under this transition method, compensation cost associated with employee stock options recognized in fiscal 2007 and 2006 includes amortization related to the remaining unvested portion of stock option awards granted prior to October 1, 2005, and amortization related to new awards granted on or after October 1, 2005.

SFAS No. 123R requires that cash flows resulting from tax deductions in excess of compensation cost recognized in the financial statements be classified as financing cash flows in the Condensed Consolidated Statements of Cash Flows. For the first three months of fiscal 2007 and 2006, $3.2 million and $2.6 million of tax benefits were included in “Other financing activities,” respectively.

The compensation cost charged to expense in the first three months of fiscal 2007 and 2006 for share-based compensation programs was $5.1 million, before taxes of $1.9 million, and $6.6 million, before taxes of $2.5 million, respectively. The compensation cost recognized is classified as “Selling and general corporate expenses” in the Condensed Consolidated Statements of Income. No cost was capitalized during the first three months of fiscal 2007 and 2006.

Information on the valuation and accounting for the various programs is provided below.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~(6)~~Stock ~~EARNINGS~~Options ~~PER SHARE:~~

Under various plans, executives, employees and outside directors receive awards of options to purchase common stock. The exercise price equals the market price of the Company’s ~~follows~~stock on the ~~provisions~~date of ~~SFAS~~the Nogrant. Options ~~128,~~under ~~“Earnings~~the ~~per~~plans ~~Share.”~~generally ~~Earnings~~vest ~~applicable~~ratably toover ~~common~~four ~~stock~~years, and ~~common~~remain ~~shares~~exercisable ~~used~~for inten years from the ~~calculation~~ date of ~~basic~~grant. ~~and~~Options ~~diluted~~issued ~~earnings~~to ~~per~~directors ~~share~~are ~~follow:~~fully vested and exercisable immediately upon grant.

	Three Months Ended				Nine Months Ended
	July 1,2005		July 2,2004		July 1,2005		July 2,2004
	(in thousands, except per share data)
Earnings:
Net income	$	71,383	$	64,460	$	196,923	$	178,466
Shares:
Weighted average number of common shares outstanding used in basic earnings per share calculations		186,264		189,446		186,425		189,131
Impact of unvested restricted stock units and potential exercise opportunities under the ARAMARK Ownership and Equity Incentive Plans		1,814		4,331		2,412		5,031
Total common shares used in diluted earnings per share calculations		188,078		193,777		188,837		194,162
Basic earnings per common share:	$	0.38	$	0.34	$	1.06	$	0.94
Diluted earnings per common share:	$	0.38	$	0.33	$	1.04	$	0.92

The fair value of options granted was estimated using the Black-Scholes option valuation model and the assumptions noted in the table below. Expected volatility and expected dividend yield are based on actual historical experience of the Company’s stock. The expected life represents the period of time that options granted are expected to be outstanding and was calculated using the simplified method prescribed by the SEC Staff Accounting Bulletin No. 107. The risk-free rate is based on the U.S. Treasury security with terms equal to the expected time of exercise as of the grant date.

Options to purchase 2,368,641 shares were outstanding at July 1, 2005, but were not included in the computation of diluted earnings per common share for the three months then ended, as the effect would have been antidilutive. Options to purchase 2,734,241 shares were outstanding at July 1, 2005, but were not included in the computation of diluted earnings per common share for the nine months then ended, as the effect would have been antidilutive.


	Three Months Ended December 29, 2006		Three Months Ended December 30, 2005
Expected volatility	20.00	%	20.00	%
Expected dividend yield	0.84	%	1.10	%
Expected life (in years)	5.00		6.25
Risk-free interest rate	4.70	%	4.35% - 4.55	%

~~Options~~The toweighted-average ~~purchase~~grant-date ~~172,580~~fair ~~shares~~value ~~were outstanding at July 2, 2004, but were not included in the computation~~ of ~~diluted earnings~~options ~~per~~granted ~~common~~during ~~share for~~ the first three months ~~then~~of fiscal ~~ended,~~2007 asand ~~the~~2006 ~~effect~~was ~~would~~$8.46 ~~have~~and ~~been antidilutive~~$6.89 ~~Options to purchase 553,920 shares were outstanding at July 2, 2004, but were not included in the computation of diluted earnings~~ per ~~common share for the nine months then ended~~option, ~~as the effect would have been antidilutive~~respectively.

A summary of stock option activity is presented below:


Options	Shares (000s)		Weighted Average Exercise Price		Aggregate Intrinsic Value ($000s)
Outstanding at September 29, 2006	10,593		$	23.91
Granted	10		$	33.45
Exercised	(487	)	$	21.82
Forfeited/Cancelled	(214	)	$	21.27

Outstanding at December 29, 2006 (weighted-average remaining term of 7.1 years)	9,902		$	24.08	$	92,782

Exercisable at December 29, 2006	6,156		$	23.46	$	61,476

The total intrinsic value of stock options exercised during the first three months of fiscal 2007 and 2006 was approximately $5.6 million and $8.0 million, respectively.

Compensation cost is recognized on a straight-line basis over the vesting period during which employees perform related services. Approximately $3.4 million and $5.0 million was charged to expense during the first three months of fiscal 2007 and 2006, respectively. The Company has applied a forfeiture assumption of 8.7% per annum in the calculation of such expense.

As of December 29, 2006, there was approximately $28 million of unrecognized compensation cost related to nonvested stock options. Pursuant to the merger transaction, all nonvested stock options immediately vested on January 26, 2007, which will result in the recognition of all unrecognized compensation cost.

Cash received from option exercises during the first three months of fiscal 2007 and 2006 was $8.4 million and $7.2 million, respectively. The total tax benefit generated from options which were exercised during the first three months of fiscal 2007 and 2006 was approximately $2.1 million and $2.6 million, respectively, which was credited to “Capital surplus.”

Restricted Stock Units

The grant-date fair value of restricted stock units is based on the market price of the stock, and compensation cost is amortized to expense on a straight-line basis over the vesting period during which employees perform related services, generally four years.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~(6)~~Since ~~EARNINGS~~fiscal ~~PER~~2004, ~~SHARE~~the ~~(CONTINUED):~~Company has issued restricted stock units to certain employees. Participants are entitled to additional restricted stock units, with a value equivalent to any cash dividends. The unvested units are subject to forfeiture if employment is terminated other than due to death, disability or retirement, and the units are nontransferable while subject to forfeiture.

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. 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 following pro forma amounts:


Restricted Stock Units	Units (000s)		Weighted Average Grant Date Fair Value
Nonvested at September 29, 2006	846		$	25.76
Granted	434		$	33.40
Vested	(412	)	$	29.63
Forfeited	(31	)	$	25.82

Nonvested at December 29, 2006	837		$	27.82

	Three Months Ended				Nine Months Ended
	July 1,2005		July 2,2004		July 1,2005		July 2,2004
	(in thousands, except per share data)
Net Income
As reported	$	71,383	$	64,460	$	196,923	$	178,466
Pro forma	$	67,442	$	60,817	$	185,500	$	168,354
Earnings per share
As reported:
Basic	$	0.38	$	0.34	$	1.06	$	0.94
Diluted	$	0.38	$	0.33	$	1.04	$	0.92
Pro forma:
Basic	$	0.36	$	0.32	$	1.00	$	0.89
Diluted	$	0.36	$	0.31	$	0.98	$	0.87

The compensation cost charged to expense the first three months of fiscal 2007 and 2006 for restricted stock unit awards was approximately $1.8 million and $1.5 million, respectively. As of December 29, 2006, there was approximately $17 million of unrecognized compensation cost related to restricted stock unit awards. Pursuant to the merger transaction, all nonvested restricted stock units immediately vested on January 26, 2007, which will result in the recognition of all unrecognized compensation cost.

(7) ~~ACCOUNTING~~GOODWILL ~~FOR~~AND ~~DERIVATIVE~~OTHER ~~INSTRUMENTS~~INTANGIBLE ASSETS:

The Company follows the provisions of SFAS No. ~~133~~ 142, “~~Accounting~~Goodwill ~~for Derivative Instruments~~ and ~~Hedging~~Other ~~Activities,”~~Intangible ~~and SFAS No~~Assets. ~~138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities—an Amendment of FASB Statement No. 133.~~” ~~Derivative financial instruments~~Goodwill, ~~such~~allocated asby ~~interest~~reportable ~~rate swaps and forward exchange contract agreements~~segment, ~~are~~follows ~~used to manage changes~~ (in ~~market~~thousands): conditions related to debt obligations and foreign currency exposures. All derivatives are recognized on the balance sheet at fair value at the end of each quarter. The counterparties to the Company’s derivative agreements are major international banks. The Company continually monitors its positions and the credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties.

As of July 1, 2005, the Company had $300 million and 93 million British pounds of interest rate swap agreements, which are designated as cash flow hedging instruments, fixing the rate on a like amount of variable rate borrowings and $300 million of swap agreements designated as fair-value hedging instruments. There were no material forward exchange contract agreements outstanding as of July 1, 2005. Changes in the fair value of a derivative that is designated as and meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive income (loss) and reclassified into earnings as the underlying hedged item affects earnings. Amounts reclassified into earnings related to interest rate swap agreements are included in interest expense. During the first nine months of fiscal 2005 and 2004, respectively, a charge of approximately $2.9 million (net of tax) and a credit of approximately $1.0 million (net of tax) related to interest rate swaps were recorded in comprehensive income. As of July 1, 2005, approximately $7.1 million of net unrealized losses related to interest rate swaps were included in “Accumulated other comprehensive income.” Changes in the fair value of a derivative that is designated as and meets all the required criteria for a fair value hedge are recognized currently in earnings, offset by recognizing currently in earnings the change in the fair value of the underlying hedged item. As of July 1, 2005, approximately $6.1 million has been included in “Other Non-current Liabilities,” with an offsetting decrease in “Long-term borrowings” in the consolidated balance sheet related to fair value hedges. The hedge ineffectiveness for cash flow and fair value hedging instruments for the first nine months of fiscal 2005 and 2004 was not material.


	September 29, 2006		Acquisitions		Translation		December 29, 2006
Food and Support Services – United States	$	1,113,767	$	—	$	—	$	1,113,767
Food and Support Services – International		318,661		—		7,593		326,254
Uniform and Career Apparel – Rental		240,247		36,626		—		276,873
Uniform and Career Apparel – Direct Marketing		74,419		—		—		74,419

	$	1,747,094	$	36,626	$	7,593	$	1,791,313

The increase in goodwill resulted principally from the acquisition of Overall Laundry Services, Inc., a regional uniform rental company. The amount may be revised upon final determination of the purchase price allocation.

Other intangible assets consist of (in thousands):


	December 29, 2006							September 29, 2006
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Customer relationship assets	$	603,111	$	(292,594	)	$	310,517	$	575,947	$	(278,359	)	$	297,588
Other		19,223		(18,835	)		388		19,205		(18,807	)		398

	$	622,334	$	(311,429	)	$	310,905	$	595,152	$	(297,166	)	$	297,986

Other intangible assets are amortizable and consist primarily of contract rights, customer lists and non-compete agreements. The intangible assets are being amortized on a straight-line basis over the expected period of benefit, 3 to 20 years, with a weighted average life of about 10 years. Intangible assets of approximately $24.8 million were acquired through business combinations during the first three months of fiscal 2007. Amortization of intangible assets for the first three months of fiscal 2007 and 2006 was approximately $13.6 million and $11.6 million, respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(8) ~~ACCOUNTS~~EARNINGS ~~RECEIVABLE~~PER ~~SECURITIZATION~~SHARE:

The Company ~~has~~follows ~~an agreement (~~the ~~Receivables Facility) with several financial institutions whereby it sells on a continuous basis an undivided interest~~ in all eligible trade accounts receivable, as defined in the Receivables Facility. Pursuant to the Receivables Facility, the Company formed ARAMARK Receivables, LLC, a wholly-owned, consolidated, bankruptcy-remote subsidiary. ARAMARK Receivables, LLC was formed for the sole purpose of buying and selling receivables generated by certain subsidiaries of the Company. Under the Receivables Facility, certain subsidiaries of the Company transfer without recourse all of their accounts receivable to ARAMARK Receivables, LLC. ARAMARK Receivables, LLC, in turn, has sold and, subject to certain conditions, may from time to time sell an undivided interest in these receivables up to $225 million. The Company amended the Receivables Facility during the first quarter of fiscal 2005 and increased the maximum sale amount from $200 million to $225 million. The Company has retained collection and administrative responsibility for the participating interest sold, and has retained an undivided interest in the transferred receivables of approximately $189.2 million and $286.4 million at July 1, 2005 and October 1, 2004, respectively, which is subject to a security interest. This two-step transaction is accounted for as a sale of receivables following the provisions of SFAS No. ~~140~~ 128, “~~Accounting~~Earnings ~~for~~per ~~Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a Replacement of FASB Statement No~~Share. ~~125.~~” AtEarnings ~~July~~applicable 1,to ~~2005~~common ~~and~~stock ~~October 1, 2004, respectively, $187.8 million~~ and ~~$157.3~~common ~~million~~shares ofused ~~accounts~~in ~~receivable were sold and removed from~~ the ~~condensed~~calculation ~~consolidated balance sheet. The loss on the sale~~ of ~~receivables~~basic ~~was $4.7 million~~ and ~~$2.1~~diluted ~~million~~earnings ~~for~~per ~~the~~share ~~first~~follow: ~~nine months of fiscal 2005 and 2004, respectively, and is included in “Interest and other financing costs, net.”~~

(9) SEGMENT INFORMATION:


	Three Months Ended
	December 29, 2006		December 30, 2005
	(in thousands, except per share data)
Earnings:
Net income	$	87,731	$	93,121

Shares:
Weighted average number of common shares outstanding used in basic earnings per share calculations		183,358		183,696
Impact of restricted stock units and potential exercise of stock options under the ARAMARK Ownership and Equity Incentive Plans		2,307		1,817

Total common shares used in diluted earnings per share calculations		185,665		185,513

Basic earnings per common share:	$	0.48	$	0.51

Diluted earnings per common share:	$	0.47	$	0.50

~~Sales~~Options ~~and~~to ~~operating~~purchase ~~income~~9,756 byshares ~~reportable~~were ~~segment~~outstanding ~~follow:~~at December 29, 2006, but were not included in the computation of diluted earnings per common share for the three months then ended, as the effect would have been antidilutive. Options to purchase 2,425,499 shares were outstanding at December 30, 2005, but were not included in the computation of diluted earnings per common share for the three months then ended, as the effect would have been antidilutive.

	Three Months Ended						Nine Months Ended
Sales	July 1,2005			July 2,2004			July 1,2005			July 2,2004
	(in thousands)
Food and Support Services—United States	$	1,815,272		$	1,752,173		$	5,297,508		$	5,085,759
Food and Support Services—International		594,035			475,595			1,715,328			1,366,679
Uniform and Career Apparel—Rental		282,879			262,312			839,853			778,480
Uniform and Career Apparel—Direct Marketing		100,180			104,844			329,052			340,392
	$	2,792,366		$	2,594,924		$	8,181,741		$	7,571,310
	Three Months Ended						Nine Months Ended
Operating Income	July 1,2005			July 2,2004			July 1,2005			July 2,2004
	(in thousands)
Food and Support Services—United States	$	97,670		$	89,361		$	269,952		$	239,793
Food and Support Services—International		21,250			19,172			60,084			58,836
Uniform and Career Apparel—Rental		31,329			29,124			91,355			84,741
Uniform and Career Apparel—Direct Marketing		2,576			2,428			12,135			18,752
		152,825			140,085			433,526			402,122
Corporate		(8,893	)		(8,135	)		(29,748	)		(25,502	)
Operating Income		143,932			131,950			403,778			376,620
Interest Expense, net		(32,222	)		(30,873	)		(96,857	)		(92,443	)
Income Before Income Taxes	$	111,710		$	101,077		$	306,921		$	284,177

(9)

ACCOUNTING FOR DERIVATIVE INSTRUMENTS:

The Company follows the provisions of SFAS No. 133, “~~Food~~Accounting for Derivative Instruments and ~~Support~~ ~~Services—United~~Hedging ~~States~~Activities,” ~~operating~~and ~~income~~SFAS No. 138, “Accounting for ~~the~~Certain ~~nine-month~~Derivative ~~period~~Instruments and Certain Hedging Activities—an Amendment of ~~fiscal~~FASB ~~2005~~Statement ~~included~~No. 133.” aDerivative ~~gain~~financial instruments, such as interest rate swaps, forward exchange contract agreements and natural gas swap agreements are used to manage changes in market conditions related to debt obligations, foreign currency exposures and exposure to fluctuating natural gas prices. All derivatives are recognized on the balance sheet at fair value at the end of ~~approximately~~each $9quarter.7 ~~million~~The ~~representing~~counterparties to the Company’s ~~share~~derivative ofagreements are generally major international banks. The Company continually monitors its positions and the ~~gain~~credit ~~from~~ratings aof ~~real~~its ~~estate~~counterparties, ~~sale~~and bydoes anot ~~50%-owned~~anticipate ~~equity affiliate~~nonperformance by the counterparties.

As of December 29, 2006, the Company had $300 million and 93 million British pounds of interest rate swap agreements, which are designated as cash flow hedging instruments, fixing the rate on a like amount of variable rate borrowings and $100 million of swap agreements designated as fair-value hedging instruments. Changes in the fair value of a derivative that is designated as and meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive income (loss) and reclassified into earnings as the underlying hedged item affects earnings. Amounts reclassified into earnings related to interest rate swap agreements are included in interest expense. During the first three months of fiscal 2007 and 2006, a charge of approximately $2.3 million (net of tax) and a credit of $2.0 million (net of tax) related to interest rate swaps were recorded in comprehensive income, respectively. As of December 29, 2006, approximately $4.1 million of net unrealized gains and $2.2 million of realized losses related to interest rate swaps were included in “Accumulated other comprehensive income.”

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~(9)~~Changes ~~SEGMENT~~in ~~INFORMATION~~the ~~(CONTINUED):~~fair value of a derivative that is designated as and meets all the required criteria for a fair value hedge are recognized currently in earnings, offset by recognizing currently in earnings the change in the fair value of the underlying hedged item. As of December 29, 2006, approximately $2.2 million has been included in “Other Noncurrent Liabilities,” with an offsetting decrease in “Long-Term Borrowings” in the Condensed Consolidated Balance Sheet related to fair value hedges. The hedge ineffectiveness for cash flow and fair value hedging instruments for the first three months of fiscal 2007 and 2006 was not material.

~~“Food~~As of December 29, 2006, the Company had foreign currency forward exchange contracts outstanding, with notional amounts of 9.1 million Euros and ~~Support~~8.0 million ~~Services—International”~~British ~~operating~~pounds, ~~income~~to ~~for~~mitigate the ~~nine-month~~risk ~~period~~ of ~~fiscal~~changes ~~2005~~in ~~included~~foreign acurrency ~~charge~~exchange ofrates ~~approximately~~on ~~$7.4~~short-term ~~million~~intercompany ~~related~~loans to ~~withdrawing~~certain international ~~from~~subsidiaries. ~~our~~Gains ~~offshore~~and ~~oil~~losses ~~service~~on ~~business~~these foreign currency exchange contracts are recognized in ~~West~~income ~~Africa~~currently, substantially offsetting currency transaction gains and ~~management~~losses ~~separation~~on ~~costs~~the inshort-term intercompany loans. As of December 29, 2006, the UKfair value of these foreign exchange contracts was immaterial. Net foreign currency transaction gains and losses were not material during the periods presented.

InDuring ~~the~~October ~~first and second fiscal quarters~~2005, ~~within~~ the ~~“Food~~Company ~~and~~terminated ~~Support~~$200 ~~Services—United~~million ~~States” segment, historically there has been a lower level~~ of ~~activity~~pay atfloating/receive ~~the~~fixed ~~higher~~interest ~~margin~~rate ~~sports,~~swaps ~~entertainment~~designated ~~and~~as ~~recreational~~fair ~~food~~value ~~service operations that is partly offset by increased activity in the educational operations~~hedges. ~~However,~~The ~~in the third and fourth~~realized ~~fiscal~~loss ~~quarters,~~of ~~historically~~approximately ~~there~~$6.5 million has been adeferred ~~significant increase at sports, entertainment~~ and ~~recreational~~will ~~accounts~~be ~~that~~amortized isto ~~partially~~interest ~~offset~~expense byover the ~~effect~~remaining life of ~~summer recess on~~ the ~~educational~~bonds ~~accounts.~~due ~~In addition, there is a seasonal increase~~ in ~~volume~~ ofFebruary ~~directly marketed work clothing during the first fiscal quarter~~2008.

~~The~~Beginning ~~National~~in ~~Hockey~~fiscal ~~League~~November ~~Collective~~2005, ~~Bargaining~~the ~~Agreement~~Company ~~expired~~has inentered ~~September~~into ~~2004~~a ~~and~~series ~~the~~of ~~National~~pay ~~Hockey~~fixed/receive ~~League~~floating ~~(“NHL”)~~natural ~~and~~gas ~~the~~swap ~~NHL~~agreements ~~Players’~~based ~~Association~~on ~~failed~~a NYMEX price in order to ~~agree~~limit onits ~~the~~exposure ~~terms~~to ofprice aincreases ~~new~~for natural ~~Collective~~gas, ~~Bargaining~~primarily ~~Agreement~~in the Uniform and Career Apparel – Rental segment. OnAs ~~September~~of 17December 29, ~~2004~~2006, the ~~owners~~Company ofhas ~~the~~contracts ~~NHL~~for ~~teams~~approximately ~~locked~~764,000 ~~out~~MMBtu’s outstanding for the ~~NHL~~remainder ~~players~~of fiscal 2007 and fiscal 2008. AsThe acontracts, designated ~~result~~as cash flow hedging instruments, ~~the~~are ~~Food~~recorded ~~and~~in ~~Support~~accumulated ~~Services—United~~other ~~States~~comprehensive ~~segment~~income ~~results~~(loss) ~~for~~and ~~2005~~reclassified dointo ~~not~~earnings ~~include~~as ~~operating~~the ~~results~~underlying ~~from~~hedged ~~NHL~~item ~~venues~~affects earnings. Amounts reclassified into earnings related to the natural gas Inswap ~~July~~agreements ~~2005,~~are included in “Cost of services provided.” The total realized loss reclassified into earnings during the ~~NHL~~first three months of fiscal 2007 and ~~the~~2006 ~~NHL~~was ~~Players’~~approximately ~~Association~~$0.7 ~~announced~~million ~~they~~and ~~have~~$0.1 ~~reached~~million, respectively. As of December 29, 2006, an ~~agreement~~unrecognized ~~which~~loss ~~will~~of beapproximately ~~effective~~$0.8 million was recorded in “Accumulated other comprehensive income.” There was no hedge ineffectiveness for the ~~2005/2006~~first ~~hockey~~three ~~season~~months of fiscal 2007 and 2006.

(10) ~~NEW/PROPOSED~~ACCOUNTS ~~ACCOUNTING~~RECEIVABLE ~~PRONOUNCEMENTS~~SECURITIZATION:

InThe Company ~~November~~has ~~2004~~an agreement (the Receivables Facility) with several financial institutions whereby it sells on a continuous basis an undivided interest in all eligible trade accounts receivable, as defined in the ~~Financial~~Receivables ~~Accounting~~Facility. ~~Standards~~Pursuant ~~Board~~to ~~(FASB)~~the Receivables ~~issued~~Facility, ~~Statement~~the ofCompany ~~Financial~~formed ~~Accounting~~ARAMARK ~~Standards~~Receivables, ~~(SFAS)~~LLC, Noa wholly-owned, consolidated, bankruptcy-remote subsidiary. ~~151~~ARAMARK Receivables, ~~“Inventory~~LLC ~~Costs~~was formed for the sole purpose of buying and selling receivables generated by certain -subsidiaries Anof ~~Amendment~~the Company. Under the Receivables Facility, certain subsidiaries of ~~ARB~~the NoCompany transfer without recourse all of their accounts receivable to ARAMARK Receivables, LLC. 43ARAMARK Receivables, ~~Chapter~~LLC, 4in turn, has sold and, subject to certain conditions, may from time to time sell an undivided interest in these receivables up to $225 million.” The Company has retained collection and administrative responsibility for the participating interest sold, and has retained an undivided interest in the transferred receivables of approximately $280.9 million and $306.1 million at December 29, 2006 and September 29, 2006, respectively, which is subject to a security interest. This two-step transaction is accounted for as a sale of receivables following the provisions of SFAS No. 140, ~~151~~“Accounting ~~will~~for beTransfers ~~effective~~and ~~for~~Servicing ~~inventory~~of ~~costs~~Financial ~~incurred~~Assets ~~during~~and ~~fiscal~~Extinguishments ~~years~~of ~~beginning~~Liabilities—a ~~after~~Replacement ~~June~~of 15FASB Statement No. 125.” At December 29, ~~2005~~2006 and September 29, 2006, $188.1 million and ~~are~~$187.8 ~~not~~million ~~expected~~of toaccounts ~~have~~receivable awere ~~material~~sold ~~effect~~and removed from the Condensed Consolidated Balance Sheets, respectively. The loss on the ~~Company’s~~sale of receivables was $3.1 million and $2.5 million for the ~~financial~~first ~~statements~~three months of fiscal 2007 and 2006, respectively, and is included in “Interest and Other Financing Costs, net.”

In December 2004, the FASB issued a revision of SFAS No. 123, “Accounting for Stock-Based Compensation,” which also supersedes APB Opinion No. 25, “Accounting for Stock Issued to its Employees,” and its related implementation guidance. This Statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, and recognize the cost over the period during which an employee is required to provide service in exchange for the award—the requisite service period. This Statement is effective for annual reporting periods beginning after June 15, 2005, and applies to all awards granted after the required effective date and to awards modified, repurchased, or cancelled after that date. The Company is currently evaluating the transitional and other provisions of this Statement. Adoption of the Statement will result in a reduction of reported earnings, which management believes, based on the analysis to date, will be similar to that reflected in the pro forma information included in Note 6.

On March 30, 2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations,” which clarifies the term “conditional asset retirement obligation” as used in FASB Statement No. 143. The Interpretation is effective for ARAMARK no later than the end of fiscal 2006. The Company is currently evaluating the Interpretation, but has not yet determined what effect adoption will have on the consolidated financial statements.

(11) ACQUISITIONS:

During the second quarter of fiscal 2005, the Company increased its ownership in its Irish food service affiliate from 45% to 90%, for approximately $61 million in cash. Also, during fiscal 2005, the Company acquired several regional uniform rental companies for a total of approximately $44 million in cash. The Company’s pro forma results of operations for the first nine months of fiscal 2005 and 2004 would not have been materially different than reported, assuming that these acquisitions had occurred at the beginning of the respective fiscal periods.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1211) ~~COMMITMENTS~~BUSINESS ~~AND CONTINGENCIES~~SEGMENTS:

~~Certain~~Sales ofand ~~the Company’s~~ operating ~~lease arrangements, primarily vehicle leases, with terms of one to eight years, contain provisions related to~~ ~~residual~~income ~~value~~by ~~guarantees.~~reportable ~~The~~segment ~~maximum~~follow: potential liability to ARAMARK under such arrangements was approximately $72.3 million at July 1, 2005 if the terminal fair value of vehicles coming off lease was zero. Consistent with past experience, management does not expect any significant payments will be required pursuant to these arrangements. No amounts have been accrued for guarantee arrangements at July 1, 2005.

The Company may be exposed to liability resulting from the non-performance of certain indemnification obligations by an entity currently in bankruptcy from which the Company acquired a business in fiscal 2000. The amount of such exposure cannot be quantified at the present time due to uncertainty with respect to the number and amount of claims, if any, originating from or relating to, the pre-acquisition period. The Company has $25 million of insurance coverage for such exposure with a $5 million retained loss limit.


	Three Months Ended
Sales	December 29, 2006			December 30, 2005
Food and Support Services—United States	$	1,972,836		$	1,882,447
Food and Support Services—International		706,401			623,158
Uniform and Career Apparel—Rental		318,864			295,721
Uniform and Career Apparel—Direct Marketing		112,445			124,602

	$	3,110,546		$	2,925,928


	Three Months Ended
Operating Income	December 29, 2006			December 30, 2005
Food and Support Services—United States	$	113,563		$	110,223
Food and Support Services—International		32,834			24,632
Uniform and Career Apparel—Rental		37,454			33,116
Uniform and Career Apparel—Direct Marketing		5,835			6,985

		189,686			174,956
Corporate		(17,369	)		(16,337	)

Operating Income		172,317			158,619
Interest, net		(35,911	)		(34,089	)

Income Before Income Taxes	$	136,406		$	124,530

In ~~connection~~the ~~with~~first ~~our~~and ~~acquisition~~second offiscal ~~certain~~quarters, ~~assets~~within ofthe ~~Fine~~“Food ~~Host~~and Support Services—United States” segment, wehistorically ~~have~~there ~~received~~has ~~and~~been ~~are~~a ~~cooperating~~lower ~~with~~level ~~document~~of ~~requests~~activity ~~from~~at the ~~U.S. Attorney’s~~higher ~~Office~~margin ~~for~~sports, ~~the~~entertainment ~~Southern~~and ~~District~~recreational offood ~~New~~service ~~York~~operations ~~and~~which ~~the~~is ~~U.S.~~partly ~~Department~~offset ofby ~~Agriculture’s~~increased ~~Office~~activity ofin ~~Inspector~~the ~~General~~educational ~~regarding~~operations. ~~certain~~However, ~~billing~~in the ~~practices~~third ~~that~~and ~~Fine~~fourth ~~Host~~fiscal ~~put~~quarters, inhistorically ~~place~~there ~~prior~~has tobeen ~~our~~a ~~acquisition~~significant ofincrease ~~the~~at ~~assets~~sports, ofentertainment ~~Fine Host.~~and Werecreational ~~are~~accounts ~~pursuing~~which ~~our~~is ~~indemnification~~partially ~~rights~~offset ~~under~~by the ~~purchase~~effect ~~agreement~~of ~~relating~~summer torecess on the ~~issues~~educational ~~raised~~accounts. byIn ~~the~~addition, ~~government~~there ~~document~~is ~~requests,~~a seasonal ~~the~~increase ~~costs~~in volume of ~~responding~~directly tomarketed ~~such~~work ~~requests~~clothing ~~and~~during ~~certain~~the ~~other~~first ~~matters~~fiscal quarter.

~~From~~Fiscal ~~time~~2006 tooperating ~~time,~~income wefor ~~are a party to various legal actions involving claims~~the ~~incidental~~“Food ~~to the conduct of our business, including actions by clients, customers, employees~~ and ~~third~~Support ~~parties,~~Services—United ~~including~~States” ~~under~~segment ~~federal~~includes ~~and~~approximately ~~state employment laws, wage and hour laws and customs, import and export control laws and dram shop laws~~$3. ~~Based~~7 onmillion ~~information currently available, advice~~ of ~~counsel, available~~ insurance ~~coverage,~~proceeds ~~established~~related ~~reserves and other resources, we do not believe that any such actions are likely~~ to ~~be, individually or in the aggregate, material to our~~ business, ~~financial~~disruptions ~~condition, results of operations or cash flows. However,~~ in the ~~event~~Gulf ofCoast ~~unexpected~~region ~~further~~caused ~~developments,~~by itHurricane ~~is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our business, financial condition, results of operations or cash flows~~Katrina.

On July 21, 2004, agents of the Department of Commerce, among others, executed a search warrant at the Lexington, Kentucky facilities of Galls, a division of the Company, to gather records in connection with record keeping and documentation of certain export sales, and two grand jury subpoenas were subsequently issued from the United States District Court in the District of Columbia seeking certain records at Galls’ California facilities and U.K. facilities, among others. The ~~investigation~~fiscal ~~surrounds~~2007 ~~the~~Corporate ~~possible~~expense ~~failure~~includes ~~to obtain proper export licenses or prepare accurate shipping declarations in connection with the export of Galls products~~$2.6 ~~Galls~~million ~~is continuing to provide records in response and is cooperating fully in the investigation. The Company can give no assurance as to the outcome~~ of ~~this~~merger-related ~~investigation~~expenses.

On(12) ~~January~~NEW 18ACCOUNTING and 19, 2005, a New Jersey jury found various ARAMARK entities liable for approximately $30 million in compensatory damages and $75 million in punitive damages in connection with an automobile accident caused by an intoxicated driver who attended a professional football game at which certain affiliates of the Company provided food and beverage service. ARAMARK filed certain post-trial motions, which the trial court denied on March 18, 2005, and the Company and its affiliates appealed the judgment to the Appellate Division of Superior Court of New Jersey on April 13, 2005. This process is likely to take considerable time. The Company believes that it has adequate insurance and other resources to address this matter. Based on the information currently available, and acknowledging the uncertainty of litigation, the July 1, 2005 consolidated balance sheet reflects the amount awarded and the related expected recovery should such liability be confirmed. Such amounts are included in “Other Noncurrent Liabilities” and “Other Assets,” respectively. PRONOUNCEMENTS:

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” which requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The funded status for defined-benefit pension plans will be measured as the difference between the fair value of plan assets and the projected benefit obligation on a plan-by-plan basis. This Statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. SFAS No. 158 is effective for ARAMARK as of the end of fiscal 2007 on a prospective basis. If SFAS No. 158 was adopted as of September 29, 2006, the Company would have recorded a reduction in “Other Assets” and “Other Intangible Assets” of $16.6 million and $1.8 million, respectively, an increase in “Other Noncurrent Liabilities” of $9.9 million, and a charge to “Accumulated other comprehensive income (loss)” of $28.3 million (before taxes).

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~(13)~~In ~~CONDENSED~~September ~~CONSOLIDATING~~2006, ~~FINANCIAL~~the ~~STATEMENTS~~FASB OFissued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 is effective for ARAMARK ~~CORPORATION~~beginning ~~AND~~in ~~SUBSIDIARIES:~~fiscal 2009. The Company is currently evaluating the Statement.

~~The~~In ~~following~~June ~~condensed~~2006, ~~consolidating~~the ~~financial~~FASB ~~statements~~issued ofFASB ~~ARAMARK~~Interpretation ~~Corporation~~No. (FIN) ~~and~~48, ~~subsidiaries~~“Accounting ~~have been prepared~~for ~~pursuant~~Uncertainty toin ~~Rule~~Income ~~3-10~~Taxes,” ofwhich ~~Regulation~~clarifies ~~S-X.~~the ~~These~~accounting ~~condensed~~for ~~consolidating~~uncertainty ~~financial~~in ~~statements~~income ~~have~~taxes ~~been~~recognized ~~prepared~~in ~~from~~an ~~the Company~~enterprise’s financial ~~information on the same basis of accounting as the condensed consolidated financial~~ statements. ~~ARAMARK Services,~~in ~~Inc.~~accordance iswith ~~the~~SFAS ~~borrower under the Credit Agreement and certain other senior debt and incurs interest expense thereunder~~No. ~~The interest expense and certain administrative costs are only partially allocated to all of the other subsidiaries of the Company~~ 109. The ~~Company~~Interpretation ~~has~~is ~~fully~~effective ~~and~~for ~~unconditionally guaranteed certain debt obligations of~~ ARAMARK ~~Services,~~beginning ~~Inc.,~~in fiscal ~~its wholly-owned subsidiary, which totaled $2~~2008.0 ~~billion as of July 1, 2005.~~ The ~~other subsidiaries do not guarantee any registered securities of the~~ Company oris ~~ARAMARK~~currently ~~Services,~~evaluating ~~Inc., although certain other subsidiaries guarantee, along with~~ the ~~Company, certain other unregistered debt~~Interpretation.

(13)

ACQUISITIONS:

During the three months ended December 29, 2006, the Company acquired Overall Laundry Services, Inc., a regional uniform rental company, for approximately $80 million in cash. The Company’s pro forma results of operations for the first three months of fiscal 2007 and 2006 would not have been materially different than reported, assuming that the acquisition had occurred at the beginning of the respective fiscal periods.

(14)

COMMITMENTS AND CONTINGENCIES:

Certain of the Company’s operating lease arrangements, primarily vehicle leases, with terms of one to eight years, contain provisions related to residual value guarantees. The maximum potential liability to ARAMARK under such arrangements was approximately $71.9 million at December 29, 2006 if the terminal fair value of vehicles coming off lease was zero. Consistent with past experience, management does not expect any significant payments will be required pursuant to these arrangements. No amounts have been accrued for these arrangements at December 29, 2006.

During the first quarter of fiscal 2006, the Company reduced the provision for income taxes by approximately $14.9 million, based upon the settlement of certain of its open tax years.

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

In July 2004, the Company learned that it was under investigation by the United States Department of Commerce, among others, relating to Galls, a division of the Company, in connection with record keeping and documentation of certain export sales. The Government obtained and received numerous records from the Company, which is cooperating in the investigation. The Company can give no assurance as to the outcome of this investigation.

On January 18 and 19, 2005, a New Jersey jury found ARAMARK Corporation and certain affiliates liable for approximately $30 million in compensatory damages and $75 million in punitive damages in connection with an automobile accident caused by an intoxicated driver who attended a professional football game at which certain affiliates of the Company provided food and beverage service. The Company and its affiliates appealed the judgment to the Appellate Division of Superior Court of New Jersey on April 13, 2005. On August 3, 2006, the Appellate Division of the Superior Court issued its decision reversing the entire verdict of the trial court, and remanded the matter back to the trial

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~ARAMARK~~ court ~~CORPORATION~~for ~~AND~~a ~~SUBSIDIARIES~~new trial. On September 6, 2006, the plaintiffs filed a petition for certification concerning the Appellate Division decision with the New Jersey Supreme Court. On January 31, 2007, the New Jersey Supreme Court denied plaintiffs’ petition for certification and the matter was remanded back to the trial court for a new trial pursuant to the decision of the Appellate Division. The Company and its affiliates intend to defend themselves vigorously in this matter.

~~CONDENSED~~In ~~CONSOLIDATING~~June ~~BALANCE~~2006, ~~SHEETS~~the Bermuda Monetary Authority (BMA) presented a winding up petition to the Supreme Court of Bermuda as to Hatteras Re, a Bermuda reinsurance company which participated in a portion of ARAMARK’s casualty insurance program, to place it into provisional liquidation. A Joint Provisional Liquidator (JPL) was appointed and authorized to assume control of Hatteras Re’s business. At an official meeting of creditors on November 9, 2006, the creditors elected to keep the JPL as a Permanent Liquidator (PL) and ARAMARK was elected to the creditor’s committee. The activities of the PL are currently underway and ARAMARK’s insurance claims are being paid by Hatteras Re under the direction of the PL. A preliminary analysis by ARAMARK and its insurance advisors indicates Hatteras Re has access to funds sufficient to pay ARAMARK’s estimated insurance claims for the relevant program periods. ARAMARK has reached an agreement in principle with the PL that will allow ARAMARK to pursue with other insurance carriers an alternative insurance solution for the covered periods, however, the terms and conditions of such an arrangement have not yet been finally determined. While the ultimate outcome of this matter is uncertain, and dependent in part on future developments, based on the information currently available, ARAMARK does not expect the final resolution will have a material adverse effect on the consolidated financial statements.

~~July~~On May 1, ~~2005~~2006, two cases were filed in the Court of Chancery of the State of Delaware in New Castle County against the Company and each of the Company’s directors. The two cases are putative class actions brought by stockholders alleging that the Company’s directors breached their fiduciary duties to the Company in connection with the proposal from a group of investors led by Mr. Neubauer to acquire all of the outstanding shares of the Company. On May 22, 2006, two additional cases making substantially identical allegations were brought against the Company and certain of its directors, one in the Court of Common Pleas in Philadelphia, Pennsylvania (in which only the Company and Mr. Neubauer were named as defendants) and another in the Court of Chancery of the State of Delaware in New Castle County (in which the Company and all directors were named as defendants). All of the cases make claims for monetary damages, injunctive relief and attorneys’ fees and expenses. On June 7, 2006, the Court of Chancery of the State of Delaware consolidated the three pending Delaware actions as In re: ARAMARK Corporation Shareholders Litigation.

(On or around August 11, 2006, a fourth putative class action complaint was filed in the Court of Chancery of the State of Delaware in New Castle County by the City of Southfield Police and Fire Retirement System purportedly on behalf of the Company’s stockholders. The complaint names the Company and each of the Company’s directors as defendants and alleges that the defendants breached their fiduciary duties to the stockholders in connection with the proposed acquisition of the Company’s outstanding shares and making claims for monetary damages, injunctive relief and attorneys’ fees and expenses. On August 25, 2006, the Court of Chancery of the State of Delaware consolidated this action with In ~~Millions~~re: ARAMARK Corporation Shareholders Litigation. The parties have entered into agreements in principle to settle the Delaware consolidated actions and the action pending in the Pennsylvania Court of Common Pleas. The agreements in principle remain subject to court approval. As part of the agreements in principle, each share of Class A common stock beneficially owned by members of ARAMARK’s management committee (Joseph Neubauer, L. Frederick Sutherland, Bart J. Colli, Timothy P. Cost, Andrew C. Kerin, Lynn B. McKee, Ravi K. Saligram and Thomas J. Vozzo) was counted as one vote for purposes of the additional vote to approve the adoption of the merger agreement. In connection with settling the Delaware action in principle, counsel for the plaintiffs has agreed to seek court approval of no more than $2.1 million in attorneys’ fees and expenses, which amount the Company has agreed not to oppose. In connection with settling the Pennsylvania action in principle, counsel for the plaintiffs has made a demand for attorneys’ fees and expenses, which amount has not yet been determined.

	ARAMARKServices,Inc. andSubsidiaries		OtherSubsidiaries			ARAMARKCorporation		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	31.7	$	10.5		$	0.1	$	—		$	42.3
Receivables		543.2		204.9			—		—			748.1
Inventories, at lower of cost or market		116.9		354.4			—		—			471.3
Prepayments and other current assets		55.2		18.5			4.3		—			78.0
Total current assets		747.0		588.3			4.4		—			1,339.7
Property and Equipment, net		439.7		764.9			2.1		—			1,206.7
Goodwill		1,153.6		524.0			—		—			1,677.6
Intercompany Receivables		1,693.9		—			—		(1,693.9	)		—
Investment in Subsidiaries		—		—			2,992.1		(2,992.1	)		—
Other Intangible Assets		229.2		53.0			—		—			282.2
Other Assets		316.4		217.5			2.5		—			536.4
	$	4,579.8	$	2,147.7		$	3,001.1	$	(4,686.0	)	$	5,042.6
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	29.3	$	11.2		$	—	$	—		$	40.5
Accounts payable		396.3		74.7			10.3		—			481.3
Accrued expenses and other liabilities		544.9		241.4			13.7		—			800.0
Total current liabilities		970.5		327.3			24.0		—			1,321.8
Long-Term Borrowings		1,948.9		22.8			—		—			1,971.7
Deferred Income Taxes and Other Noncurrent Liabilities		225.4		240.5			25.7		—			491.6
Intercompany Payable		415.0		(415.0	)		1,693.9		(1,693.9	)		—
Shareholders’ Equity		1,020.0		1,972.1			1,257.5		(2,992.1	)		1,257.5
	$	4,579.8	$	2,147.7		$	3,001.1	$	(4,686.0	)	$	5,042.6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(15) CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF ARAMARK CORPORATION AND SUBSIDIARIES :

~~CONDENSED~~The ~~CONSOLIDATING~~following ~~BALANCE~~condensed ~~SHEETS~~consolidating financial statements of ARAMARK Corporation and subsidiaries have been prepared pursuant to Rule 3-10 of Regulation S-X.

~~October~~These condensed consolidating financial statements have been prepared from the Company’s financial information on the same basis of accounting as the condensed consolidated financial statements. ARAMARK Services, Inc. is the borrower under the Credit Agreement and certain other senior debt and incurs interest expense thereunder. The interest expense and certain administrative costs are only partially allocated to all of the other subsidiaries of the Company. The Company has fully and unconditionally guaranteed certain debt obligations of ARAMARK Services, Inc., its wholly-owned subsidiary, which totaled $1.9 billion as of December 29, ~~2004~~2006. The other subsidiaries do not guarantee any registered securities of the Company or ARAMARK Services, Inc., although certain other subsidiaries guarantee, along with the Company, certain other unregistered debt.

(In Millions)

	ARAMARKServices,Inc. andSubsidiaries		OtherSubsidiaries		ARAMARKCorporation		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	33.8	$	11.4	$	0.1	$	—		$	45.3
Receivables		557.1		202.6		0.1		—			759.8
Inventories, at lower of cost or market		125.0		346.8		—		—			471.8
Prepayments and other current assets		53.0		7.9		2.2		—			63.1
Total current assets		768.9		568.7		2.4		—			1,340.0
Property and Equipment, net		450.1		762.1		2.2		—			1,214.4
Goodwill		1,099.3		489.9		—		—			1,589.2
Intercompany Receivables		1,585.1		765.8		—		(2,350.9	)		—
Investment in Subsidiaries		—		—		2,792.0		(2,792.0	)		—
Other Intangible Assets		224.2		47.1		—		—			271.3
Other Assets		298.3		105.9		2.5		—			406.7
	$	4,425.9	$	2,739.5	$	2,799.1	$	(5,142.9	)	$	4,821.6
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	17.9	$	7.6	$	—	$	—		$	25.5
Accounts payable		439.7		103.1		23.7		—			566.5
Accrued expenses and other liabilities		624.5		226.0		12.4		—			862.9
Total current liabilities		1,082.1		336.7		36.1		—			1,454.9
Long-Term Borrowings		1,823.9		19.3		—		—			1,843.2
Deferred Income Taxes and Other Noncurrent Liabilities		228.4		117.2		28.2		—			373.8
Intercompany Payable		446.5		319.3		1,585.1		(2,350.9	)		—
Shareholders’ Equity		845.0		1,947.0		1,149.7		(2,792.0	)		1,149.7
	$	4,425.9	$	2,739.5	$	2,799.1	$	(5,142.9	)	$	4,821.6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING ~~STATEMENTS~~BALANCE OFSHEETS ~~INCOME~~

~~For the three months ended July 1~~December 29, ~~2005~~2006

(In Millions)

	ARAMARKServices,Inc. andSubsidiaries			OtherSubsidiaries	~~OtherSubsidiaries~~		ARAMARKCorporation		Eliminations			Consolidated
Sales	$	2,035.4			$	757.0	$	—	$	—		$	2,792.4
ASSETS
Equity in Net Income of Subsidiaries		—				—		71.4		(71.4	)		—
Current Assets:
Management Fee Income		—				—		9.1		(9.1	)		—
Cash and cash equivalents	$	33.0		$	8.7		$	—	$	—		$	41.7
		2,035.4				757.0		80.5		(80.5	)		2,792.4
Receivables		657.9			243.9			—		—			901.8
Costs and Expenses:
Inventories, at lower of cost or market		128.5			372.2			—		—			500.7
Cost of services provided		1,911.6				630.2		—		(8.5	)		2,533.3
Prepayments and other current assets		76.8			42.6			—		—			119.4
Depreciation and amortization		47.2				32.2		—		—			79.4
Total current assets		896.2			667.4			—		—			1,563.6
Selling and general corporate expenses		17.6				9.7		9.1		(0.6	)		35.8
Property and Equipment, net		425.2			764.5			2.7		—			1,192.4
		1,976.4				672.1		9.1		(9.1	)		2,648.5
Goodwill		1,248.1			543.2			—		—			1,791.3
Operating income		59.0				84.9		71.4		(71.4	)		143.9
Intercompany Receivables		1,790.3			—			—		(1,790.3	)		—
Interest and Other Financing Costs, net:
Investment in Subsidiaries		—			—			3,446.6		(3,446.6	)		—
Interest expense, net		31.8				0.4		—		—			32.2
Other Intangible Assets		237.1			73.8			—		—			310.9
Intercompany interest, net		(20.8	)			20.8		—		—			—
Other Assets		369.7			130.8			2.5		—			503.0
Interest and Other Financing Costs, net		11.0				21.2		—		—			32.2
	$	4,966.6		$	2,179.7		$	3,451.8	$	(5,236.9	)	$	5,361.2
Income before income taxes		48.0				63.7		71.4		(71.4	)		111.7
LIABILITIES AND SHAREHOLDERS’ EQUITY
Provision for Income Taxes		13.0				27.3		—		—			40.3
Current Liabilities:
Net income	$	35.0			$	36.4	$	71.4	$	(71.4	)	$	71.4
Current maturities of long-term borrowings	$	37.6		$	11.2		$	—	$	—		$	48.8
Accounts payable		484.8			94.4			4.3		—			583.5
Accrued expenses and other liabilities		552.4			190.4			11.6		—			754.4
Total current liabilities		1,074.8			296.0			15.9		—			1,386.7
Long-Term Borrowings		1,933.8			28.3			—		—			1,962.1
Deferred Income Taxes and Other Noncurrent Liabilities		256.7			110.1			24.5		—			391.3
Intercompany Payable		475.6			(475.6	)		1,790.3		(1,790.3	)		—
Shareholders’ Equity		1,225.7			2,220.9			1,621.1		(3,446.6	)		1,621.1
	$	4,966.6		$	2,179.7		$	3,451.8	$	(5,236.9	)	$	5,361.2

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING ~~STATEMENTS~~BALANCE OFSHEETS ~~INCOME~~

~~For the three months ended July 2~~September 29, ~~2004~~ 2006

(In Millions)

	ARAMARKServices,Inc. andSubsidiaries			OtherSubsidiaries	~~OtherSubsidiaries~~		ARAMARKCorporation		Eliminations			Consolidated
Sales	$	1,833.8			$	761.1	$	—	$	—		$	2,594.9
ASSETS
Equity in Net Income of Subsidiaries		—				—		64.5		(64.5	)		—
Current Assets:
Management Fee Income		—				—		6.3		(6.3	)		—
Cash and cash equivalents	$	37.4		$	10.3		$	—	$	—		$	47.7
		1,833.8				761.1		70.8		(70.8	)		2,594.9
Receivables		640.0			230.9			—		—			870.9
Costs and Expenses:
Inventories, at lower of cost or market		130.0			364.2			—		—			494.2
Cost of services provided		1,720.0				644.4		—		(7.9	)		2,356.5
Prepayments and other current assets		65.6			48.4			—		—			114.0
Depreciation and amortization		44.7				30.0		—		—			74.7
Total current assets		873.0			653.8			—		—			1,526.8
Selling and general corporate expenses		15.8				8.0		6.3		1.6			31.7
Property and Equipment, net		424.3			769.8			2.7		—			1,196.8
		1,780.5				682.4		6.3		(6.3	)		2,462.9
Goodwill		1,240.5			506.6			—		—			1,747.1
Operating income		53.3				78.7		64.5		(64.5	)		132.0
Intercompany Receivables		1,798.2			—			—		(1,798.2	)		—
Interest and Other Financing Costs, net:
Investment in Subsidiaries		—			—			3,358.2		(3,358.2	)		—
Interest expense, net		30.7				0.2		—		—			30.9
Other Intangible Assets		246.2			51.8			—		—			298.0
Intercompany interest, net		(9.1	)			9.1		—		—			—
Other Assets		362.1			129.9			2.6		—			494.6
Interest and Other Financing Costs, net		21.6				9.3		—		—			30.9
	$	4,944.3		$	2,111.9		$	3,363.5	$	(5,156.4	)	$	5,263.3
Income before income taxes		31.7				69.4		64.5		(64.5	)		101.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Provision for Income Taxes		10.3				26.3		—		—			36.6
Current Liabilities:
Net income	$	21.4			$	43.1	$	64.5	$	(64.5	)	$	64.5
Current maturities of long-term borrowings	$	26.3		$	13.9		$	—	$	—		$	40.2
Accounts payable		528.8			110.4			3.6		—			642.8
Accrued expenses and other liabilities		646.8			241.4			15.5		—			903.7
Total current liabilities		1,201.9			365.7			19.1		—			1,586.7
Long-Term Borrowings		1,734.3			28.8			—		—			1,763.1
Deferred Income Taxes and Other Noncurrent Liabilities		258.9			108.4			24.6		—			391.9
Intercompany Payable		582.3			(582.3	)		1,798.2		(1,798.2	)		—
Shareholders’ Equity		1,166.9			2,191.3			1,521.6		(3,358.2	)		1,521.6
	$	4,944.3		$	2,111.9		$	3,363.5	$	(5,156.4	)	$	5,263.3

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the ~~nine~~three months ended ~~July~~ 1December 29, ~~2005~~2006

(In Millions)

	ARAMARKServices,Inc. andSubsidiaries			OtherSubsidiaries		ARAMARKCorporation		Eliminations			Consolidated
	ARAMARKServices, Inc.andSubsidiaries			OtherSubsidiaries		ARAMARKCorporation		Eliminations			Consolidated
Sales	$	62,~~220~~401.51		$	~~1,961~~709.24	$	—	$	—		$	83,~~181~~110.75
Equity in Net Income of Subsidiaries		—			—		~~196~~87.97		(~~196~~87.97	)		—
Management Fee Income		—			—		2816.1		(2816.1	)		—
		6,220.5			1,961.2		225.0		(225.0	)		8,181.7
		2,401.1			709.4		103.8		(103.8	)		3,110.5
Costs and Expenses:
Cost of services provided		52,~~824~~221.78			~~1,639~~599.60		—		(2616.63	)		72,~~437~~804.75
Depreciation and amortization		~~141~~52.29			9434.75		—		0.12			~~236~~87.06
Selling and general corporate expenses		4919.28			2810.62		2816.1		~~(1.6~~—	)		~~104~~46.31
		6,015.1			1,762.9		28.1		(28.1	)		7,778.0
		2,294.5			643.7		16.1		(16.1	)		2,938.2
Operating income		~~205~~106.46			~~198~~65.37		~~196~~87.97		(~~196~~87.97	)		~~403~~172.73
Interest and Other Financing Costs, net:
Interest expense, net		9535.86			1.0.3		—		—			9635.89
Intercompany interest, net		(6217.38	)		6217.38		—		—			—
Interest and Other Financing Costs, net		3317.58			6318.31		—		—			9635.89
Income before income taxes		~~171~~88.98			~~135~~47.06		~~196~~87.97		(~~196~~87.97	)		~~306~~136.94
Provision for Income Taxes		4630.81			6318.26		—		—			~~110~~48.07
Net income	$	~~125~~58.17		$	7129.80	$	~~196~~87.97	$	(~~196~~87.97	)	$	~~196~~87.97

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

For the ~~nine~~three months ended ~~July~~ 2December 30, ~~2004~~2005

(In Millions)

	ARAMARKServices,Inc. andSubsidiaries			OtherSubsidiaries		ARAMARKCorporation		Eliminations			Consolidated
	ARAMARKServices, Inc.andSubsidiaries			OtherSubsidiaries		ARAMARKCorporation		Eliminations			Consolidated
Sales	$	52,~~608~~235.59		$	~~1,962~~690.80	$	—	$	—		$	72,~~571~~925.39
Equity in Net Income of Subsidiaries		—			—		~~178~~93.51		(~~178~~93.51	)		—
Management Fee Income		—			—		2315.56		(2315.56	)		—
		5,608.5			1,962.8		202.0		(202.0	)		7,571.3
		2,235.9			690.0		108.7		(108.7	)		2,925.9
Costs and Expenses:
Cost of services provided		52,~~240~~078.2			~~1,666~~579.63		—		(2515.49	)		62,~~881~~641.46
Depreciation and amortization		~~129~~49.15			8832.84		—		~~0.2~~—			~~218~~81.19
Selling and general corporate expenses		4517.9			2410.10		2315.26		2.0.3			9543.28
		5,415.2			1,779.5		23.2		(23.2	)		7,194.7
		2,145.6			621.7		15.6		(15.6	)		2,767.3
Operating income		~~193~~90.3			~~183~~68.3		~~178~~93.81		(~~178~~93.81	)		~~376~~158.6
Interest and Other Financing Costs, net
Interest and Other Financing Costs, net:
Interest expense, net		9133.47			0.74		~~0.3~~—		—			9234.41
Intercompany interest, net		(2714.19	)		2714.49		—		~~(0.3~~—	)		—
Interest and Other Financing Costs, net		6418.38			2815.13		~~0.3~~—		~~(0.3~~—	)		9234.41
Income before income taxes		~~129~~71.05			~~155~~53.20		~~178~~93.51		(~~178~~93.51	)		~~284~~124.25
Provision for Income Taxes		4515.57			6015.27		—		—			~~105~~31.74
Net income	$	8355.58		$	9537.03	$	~~178~~93.51	$	(~~178~~93.51	)	$	~~178~~93.51

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the ~~nine~~three months ended ~~July 1~~December 29, ~~2005~~2006

(In Millions)

	ARAMARKServices,Inc. andSubsidiaries			OtherSubsidiaries			ARAMARKCorporation			Eliminations		Consolidated
	ARAMARKServices, Inc.andSubsidiaries			OtherSubsidiaries			ARAMARKCorporation			Eliminations		Consolidated
Net cash provided by operating activities	$	167.5		$	133.9		$	8.8		$	—	$	310.2
Net cash provided by (used in) operating activities	$	(56.1	)	$	(16.1	)	$	8.8		$	—	$	(63.4	)
Cash flows from investing activities:
Purchases of property and equipment and client contract investments		(~~145~~50.41	)		(8113.58	)		~~(0.1~~—	)		—		(~~227~~63.09	)
Disposals of property and equipment		102.03			31.5			—			—		133.58
Acquisitions of businesses, net of cash acquired		(631.9	)		(4479.68	)		—			—		(~~108~~81.57	)
Other investing activities		8(0.21	)		103.51			—			—		183.70
Net cash used in investing activities		(~~191~~49.18	)		(~~112~~89.10	)		~~(0.1~~—	)		—		(~~303~~138.38	)
Cash flows from financing activities:
Proceeds from additional long-term borrowings		~~380~~329.82			—			—			—		~~380~~329.82
Payment of long-term borrowings		(~~229~~127.8	)		(53.13	)		—			—		(~~234~~131.91	)
Proceeds from issuance of common stock		—			—			318.04			—		318.04
Repurchase of stock		—			—			(147.1	)		—		(147.1	)
Payment of dividends		—			—			(12.6	)		—		(12.6	)
Payment of dividends		—			—			(30.3	)		—		(30.3	)
Other financing activities		2.3			—			—			—		2.3
Other financing activities		(10.5	)		—			1.1			—		(9.4	)
Change in intercompany, net		(102.2	)		106.8			(4.6	)		—		—
Change in intercompany, net		(119.0	)		(17.6	)		136.6			—		—
Net cash provided by (used in) financing activities		101.5			103.5			(8.8	)		—		196.2
Net cash provided by (used in) financing activities		21.5			(22.7	)		(8.7	)		—		(9.9	)
Decrease in cash and cash equivalents		(4.4	)		(1.6	)		—			—		(6.0	)
Decrease in cash and cash equivalents		(2.1	)		(0.9	)		—			—		(3.0	)
Cash and cash equivalents, beginning of period		37.4			10.3			—			—		47.7
Cash and cash equivalents, beginning of period		33.8			11.4			0.1			—		45.3
Cash and cash equivalents, end of period	$	33.0		$	8.7		$	—		$	—	$	41.7
Cash and cash equivalents, end of period	$	31.7		$	10.5		$	0.1		$	—	$	42.3

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the ~~nine~~three months ended ~~July 2~~December 30, ~~2004~~2005

(In Millions)

	ARAMARKServices,Inc. andSubsidiaries			OtherSubsidiaries			ARAMARKCorporation			Eliminations		Consolidated
	ARAMARKServices, Inc.andSubsidiaries			OtherSubsidiaries			ARAMARKCorporation			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	96(49.87	)	$	~~150~~(17.5	)	$	(712.26	)	$	—	$	~~240~~(54.16	)
Cash flows from investing activities:
Purchases of property and equipment and client contract investments		(~~124~~51.15	)		(8812.75	)		(0.12	)		—		(~~212~~64.72	)
Disposals of property and equipment		83.80			3.9			—			—		126.79
Proceeds from sale of investment		—			8.5			—			—		8.5
Acquisitions of businesses, net of cash acquired		(2.7	)		(3.5	)		—			—		(6.2	)
Acquisitions of businesses, net of cash acquired		(119.3	)		(22.0	)		—			—		(141.3	)
Other investing activities		1.0			—			—			—		1.0
Other investing activities		0.7			4.0			—			—		4.7
Net cash used in investing activities		(50.2	)		(12.1	)		(0.2	)		—		(62.5	)
Net cash used in investing activities		(233.9	)		(94.3	)		0.1			—		(328.1	)
Cash flows from financing activities:
Proceeds from additional long-term borrowings		~~352~~183.64			~~0.2~~—			—			—		~~352~~183.84
Payment of long-term borrowings		(~~163~~9.08	)		(4.2.7	)		—			—		(~~167~~12.25	)
Proceeds from issuance of common stock		—			—			377.62			—		377.62
Repurchase of stock		—			—			(~~118~~50.83	)		—		(~~118~~50.83	)
Change in intercompany, net		(68.6	)		(46.0	)		114.6			—		—
Payment of dividends		—			—			(12.7	)		—		(12.7	)
Payment of dividend		—			—			(27.9	)		—		(27.9	)
Other financing activities		(8.2	)		—			2.6			—		(5.6	)
Other financing activities		10.2			—			1.6			—		11.8
Change in intercompany, net		(69.8	)		29.0			40.8			—		—
Net cash provided by (used in) financing activities		~~131~~95.26			~~(50~~26.03	)		7(12.14	)		—		88109.35
Increase (decrease) in cash and cash equivalents		(5.9	)		6.2			—			—		0.3
Decrease in cash and cash equivalents		(4.3	)		(3.3	)		—			—		(7.6	)
Cash and cash equivalents, beginning of period		4046.59			3.9.2			~~0.1~~—			—		4456.51
Cash and cash equivalents, end of period	$	3442.6		$	105.19		$	~~0.1~~—		$	—	$	4448.85

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

The following discussion and analysis of our results of operations and financial condition for the three ~~and nine~~ months ended ~~July 1~~December 29, ~~2005~~ ~~and~~2006 ~~July 2~~and December 30, ~~2004~~2005 should be read in conjunction with our audited consolidated financial statements, and the notes to those statements, for the fiscal year ended ~~October 1~~September 29, ~~2004~~2006. Our discussion contains forward-looking statements based ~~upon~~ upon current expectations that involve risks and uncertainties, such as our ~~estimates,~~ plans, objectives, opinions, expectations, anticipations, intentions and beliefs. Actual results and the timing of events could differ materially from those anticipated in those forward-looking statements as a result of a number of factors, including those set forth under the Special Note About Forward-Looking Statements and elsewhere in this quarterly report on Form 10-Q. In the following discussion and analysis of results of operations and financial condition, certain financial measures may be considered “non-GAAP financial measures” under Securities and Exchange Commission (“SEC”) rules. These rules require supplemental explanation and reconciliation, which is provided in Exhibit 99.1 to this quarterly report on Form 10-Q, and is incorporated by reference herein.

MERGER

On August 8, 2006, ARAMARK signed a definitive merger agreement under which investment funds associated with GS Capital Partners, CCMP Capital Advisors, J.P. Morgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC (collectively, the “Sponsors”) and Joseph Neubauer, Chairman and Chief Executive Officer, would acquire ARAMARK. Under the terms of the agreement, ARAMARK stockholders would receive $33.80 in cash for each share of ARAMARK common stock held. The Board of Directors of ARAMARK, on the unanimous recommendation of a special committee comprised entirely of independent directors, approved the agreement and recommended that ARAMARK’s stockholders approve the merger. On December 20, 2006, ARAMARK held a special meeting of its stockholders, at which 86 percent of the outstanding votes and 97 percent of the votes actually cast voted in favor of the adoption of the merger agreement.

The merger was completed on January 26, 2007 and was valued at approximately $8.6 billion, including the assumption or repayment of approximately $2.0 billion of debt. The merger was financed by a combination of borrowings under a new $4.15 billion senior secured term loan facility, the issuance of $1.28 billion 8.50% senior notes due 2015 and $500 million senior floating rate notes due 2015 bearing interest equal to three-month LIBOR (as defined) plus a spread of 3.50%, the funding under the restated and amended Receivables Facility, and the approximately $2.1 billion equity investment of the Sponsors, Mr. Neubauer and certain other members of ARAMARK’s management. In connection with the merger, a new $600 million senior secured revolving credit facility with a six-year maturity and a synthetic letter of credit facility of up to $250 million were also signed. As of January 26, 2007, interest on borrowings under the $4.15 billion senior secured term loan facility was based on the relevant currency LIBOR plus a spread of 2.00% to 2.125% (as of January 26, 2007 – 2.125%), interest on borrowings under the $600 million senior secured revolving credit facility was based on the relevant currency LIBOR plus a spread of 1.25% to 2.00% (as of January 26, 2007 – 2.00%), and fees on the $250 million synthetic letter of credit facility range from 2.00% to 2.125% (as of January 26, 2007 – 2.125%). The spread is based on a ratio of Consolidated Secured Debt to EBITDA, as defined in the credit agreement. There is also an unutilized commitment fee on the $600 million senior secured revolving credit facility ranging from 0.375% to 0.50% (as of January 26, 2007 – 0.50%).

As a result of completing the merger, in January 2007 we will record a compensation charge of approximately $78 million related to the accelerated vesting and buyout of employee stock options and restricted stock units, a charge of approximately $23 million related to change in control payments to certain executives, and a charge for the cost of obtaining the bridge financing facility of approximately $13 million. In addition, we may report additional legal fees and other transaction related expenses in January and subsequent periods.

For the three months ended December 29, 2006, the Company incurred approximately $2.6 million of merger-related costs, which are included in “Selling and general corporate expense” in the Condensed Consolidated Statement of Income.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company’s significant accounting policies are described in the notes to the consolidated financial statements included in our ~~2004~~fiscal 2006 Annual Report on Form 10-K filed with the ~~Securities and Exchange Commission~~SEC. As described in such notes, the Company recognizes sales in the period in which services are provided pursuant to the terms of our contractual relationships with our clients.

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

Asset Impairment Determinations

As a result of the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” goodwill is no longer amortized. Under this accounting standard, goodwill is subject to an impairment test that we conduct at least annually, using a discounted cash flow technique.

With respect to our other long-lived assets, we are required to test for asset impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. We apply ~~Statement~~SFAS ~~of Financial Accounting Standards~~ No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” in order to determine whether or not an asset was impaired. This standard requires an impairment analysis when indicators of impairment are present. If such indicators are present, the standard indicates that if the sum of the future expected cash flows from the asset, undiscounted and without interest charges, is less than the carrying value, an asset impairment must be recognized in the financial statements. The amount of the impairment is the difference between the fair value of the asset and the carrying value of the asset.

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

•

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

•

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

•

Industry specific economic conditions.

•

Competitor activities and regulatory initiatives.

•

Client and customer preferences and behavior patterns.

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

Environmental Loss Contingencies

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

Litigation and Claims

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

•

Interpretation of contractual rights and obligations.

•

The status of government regulatory initiatives, interpretations and investigations.

•

The status of settlement negotiations.

•

Prior experience with similar types of claims.

•

Whether there is available insurance.

•

Advice of counsel.

Allowance for Doubtful Accounts

We encounter risks associated with sales and the collection of the associated accounts receivable. We record a provision for accounts receivable that are considered to be uncollectible. In order to calculate the appropriate provision, management analyzes the creditworthiness of specific customers and the aging of customer balances. Management also considers general and specific industry economic conditions, industry concentrations, such as exposure to the non-profit healthcare sector and the airline industry, and contractual rights and obligations.

Management believes that the accounting estimate related to the allowance for doubtful accounts is a critical accounting estimate because the underlying assumptions used for the allowance can change from time to time and uncollectible accounts could potentially have a material impact on our results of operations.

Inventory Obsolescence

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

Income Taxes

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

Share-Based Compensation

On October 1, 2005, the Company adopted SFAS No. 123R, “Share-Based Payment.” Upon adoption of SFAS No. 123R, we elected to value our employee stock options using the Black-Scholes option valuation method that uses the assumptions described in our financial statements. These assumptions relate to the expected volatility of our stock, the expected dividend yield of our stock, the expected life of the options and the risk free interest rate.

The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding. The expected term was calculated using the simplified method permitted under SEC Staff Accounting Bulletin No. 107. We used historical volatility in deriving the expected volatility assumption. The selection of the historical, rather than the implied, volatility approach was based upon the paucity of relevant information relating to traded options on our stock. The risk-free interest rate assumption is based upon the rate applicable to the U.S. Treasury security with a maturity equal to the expected term of the option on the grant date. The dividend yield assumption is based on our history of dividend payouts.

As share-based compensation expense recognized in the Condensed Consolidated Statements of Income for the three months ended December 29, 2006 and December 30, 2005 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS No. 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on our historical experience.

Management believes that the accounting estimate related to the expense of stock options is a critical accounting estimate because the underlying assumptions can change from time to time and, as a result, the compensation expense that we record in future periods under SFAS No. 123R may differ significantly from what we have recorded in the current period with respect to similar instruments.

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

RESULTS OF OPERATIONS

These tables present our sales and operating income, and the related percentages attributable to each operating segment, for the three ~~and nine~~ months ended ~~July 1~~December 29, ~~2005~~ 2006 and ~~July 2~~December 30, ~~2004~~2005.

	Three Months Ended										~~Nine Months Ended~~
	July 1, 2005					July 2, 2004					July 1, 2005					July 2, 2004
	December 29, 2006					December 30, 2005
Sales by Segment	$			%		$			%		$			%		$			%
	(dollars in millions)
Food and Support Services - United States	$	1,972.8		63	%	$	1,882.4		65	%
Food & Support Services - United States	$	1,815.3		65	%	$	1,752.2		68	%	$	5,297.5		65	%	$	5,085.8		67	%
Food and Support Services - International		706.4		23	%		623.2		21	%
Food & Support Services - International		594.0		21	%		475.6		18	%		1,715.3		21	%		1,366.6		18	%
Uniform and Career Apparel - Rental		318.9		10	%		295.7		10	%
Uniform and Career Apparel - Rental		282.9		10	%		262.3		10	%		839.9		10	%		778.5		10	%
Uniform and Career Apparel - Direct Marketing		112.4		4	%		124.6		4	%
Uniform and Career Apparel - Direct Marketing		100.2		4	%		104.8		4	%		329.0		4	%		340.4		5	%
	$	3,110.5		100	%	$	2,925.9		100	%
	$	2,792.4		100	%	$	2,594.9		100	%	$	8,181.7		100	%	$	7,571.3		100	%
	Three Months Ended
	Three Months Ended										Nine Months Ended
	December 29, 2006					December 30, 2005
	July 1, 2005					July 2, 2004					July 1, 2005					July 2, 2004
Operating Income by Segment	$			%		$			%
Operating Income by Segment	$			%		$			%		$			%		$			%
Food and Support Services - United States	$	113.6		66	%	$	110.2		69	%
	(dollars in millions)
Food and Support Services - International		32.8		19	%		24.6		16	%
Food & Support Services - United States	$	97.7		67	%	$	89.4		68	%	$	270.0		67	%	$	239.8		64	%
Uniform and Career Apparel - Rental		37.5		22	%		33.1		21	%
Food & Support Services - International		21.2		15	%		19.2		14	%		60.1		15	%		58.8		16	%
Uniform and Career Apparel - Direct Marketing		5.8		3	%		7.0		4	%
Uniform and Career Apparel - Rental		31.3		22	%		29.1		22	%		91.3		22	%		84.7		22	%
		189.7		110	%		174.9		110	%
Uniform and Career Apparel - Direct Marketing		2.6		2	%		2.4		2	%		12.1		3	%		18.8		5	%
Corporate		(17.4	)	(10	)%		(16.3	)	(10	)%
Corporate		(8.9	)	-6	%		(8.1	)	-6	%		(29.7	)	-7	%		(25.5	)	-7	%
	$	172.3		100	%	$	158.6		100	%
	$	143.9		100	%	$	132.0		100	%	$	403.8		100	%	$	376.6		100	%

Consolidated Overview

Sales of $23.81 billion for the ~~fiscal~~first ~~2005 third~~ quarter ~~and~~of ~~$8.2~~fiscal ~~billion for~~2007 ~~the~~represented ~~nine-month~~an ~~period~~increase ~~increased~~of 86% over the ~~respective~~ prior year ~~periods~~period. Sales increased in both the three and nine-month periods in the two Food & Support Services segments and the Uniform and Career Apparel – Rental segment, while sales in the Uniform and Career Apparel – Direct Marketing segment were lower in both periods. Excluding the impact of acquisitions, divestitures and foreign currency translation, the consolidated sales ~~increased~~increase 4%was ~~for both the three and nine-month periods~~5%. Operating income was $~~143~~172.93 million for the ~~2005~~first ~~third~~ quarter ~~and~~of ~~$403.8~~fiscal ~~million for the nine-month period~~2007, ana ~~increase of~~ 9% ~~and~~increase ~~7%,~~over ~~respectively, compared to~~ the prior year ~~periods~~period. ~~Operating~~Excluding ~~income for~~ the ~~2005~~impact ~~nine-month period includes $9.7 million ($7.8 million net~~ of ~~tax)~~acquisitions, ~~representing~~divestitures ~~our~~and ~~share~~currency oftranslation, ~~the~~operating ~~gain~~income increased ~~on a real estate sale by a 50~~6%~~-owned~~, ~~equity affiliate. The 2005 nine-month period also includes a charge of $7.4 million ($4.8 million net of tax)~~ which ~~includes~~ ~~the~~was ~~effects~~driven ofprincipally ~~our~~by ~~decision~~growth toin ~~exit~~ the ~~West~~Food ~~African~~and ~~oil~~Support ~~services~~Services—International ~~business~~ and UKUniform ~~severance costs. Excluding acquisitions, divestitures~~ and ~~the~~Career ~~impact~~Apparel—Rental ofsegments. ~~foreign~~Consolidated ~~currency translation, consolidated~~ operating ~~income~~margin increased 8%slightly ~~and~~in ~~5% for~~ the ~~three~~current ~~and nine-month periods, respectively~~year. ~~Consolidated~~Fiscal ~~operating~~2007 ~~income~~Corporate expense ~~margins~~includes ~~were~~approximately ~~comparable~~$2.6 ~~during~~million ~~the~~of ~~periods~~merger-related expenses.

Interest and other financing costs, net, for the ~~three~~first ~~and~~quarter ~~nine-month periods~~ of fiscal ~~2005~~ 2007 increased approximately $1.38 million ~~and $4.4 million, respectively,~~ from the prior year ~~periods~~period due principally to higher ~~average~~year-over-year ~~borrowing levels and higher~~ interest rates. The effective income tax rate for the ~~fiscal~~first ~~2005~~quarter ~~nine-month~~of ~~period~~fiscal 2007 was 35.87% compared to 3725.2% in fiscal ~~2004~~2006. ~~Higher~~The ~~employment~~favorable adjustment ~~related~~of ~~tax~~$14.9 ~~credits~~million ~~and~~in the ~~tax effect~~2006 first quarter, related to the ~~real~~settlement ~~estate~~of ~~sale~~certain ~~gain~~open ~~were~~tax ~~the~~years, ~~principal~~reduced ~~factors~~the ~~resulting~~2006 ~~in a lower~~ effective rate ~~for the 2005 period~~.

~~Net~~23 income for the three and nine-months of fiscal 2005 was $71.4 million and $196.9 million, compared to $64.5 million and $178.5 million in the prior year periods, an increase of 11% and 10%, respectively. Third quarter 2005 diluted earnings per share were $0.38, on a weighted average share base of 188.1 million shares, an increase of 15% over the $0.33 per share reported last year on a share base of 193.8 million shares. For the nine-month periods, diluted earnings per share were $1.04 in 2005 and $0.92 in 2004 on a weighted average share base of 188.8 million and 194.2 million, respectively.

22Net income for the first quarter of fiscal 2007 was $87.7 million compared to $93.1 million in the prior year period. First quarter fiscal 2007 diluted earnings per share were $0.47, on a weighted average share base of 185.7 million shares, as compared to the $0.50 per share (which includes $0.08 related to the income tax adjustment) reported last year on a share base of 185.5 million shares.

Segment Results

The following tables present a fiscal ~~2005~~2007/~~2004~~2006 comparison of segment sales and operating income together with the amount of and percentage change between periods.

	Three Months Ended											~~Nine Months Ended~~
	July 1,2005			July 2,2004			Change					July 1,2005			July 2,2004			Change
	December 29,2006			December 30,2005			Change
Sales by Segment							$			%								$			%
	(dollars in millions)
Food and Support Services - United States	$	1,972.8		$	1,882.4		$	90.4		5	%
Food & Support Services - United States	$	1,815.3		$	1,752.2		$	63.1		4	%	$	5,297.5		$	5,085.8		$	211.7		4	%
Food and Support Services - International		706.4			623.2			83.2		13	%
Food & Support Services - International		594.0			475.6			118.4		25	%		1,715.3			1,366.6			348.7		26	%
Uniform and Career Apparel - Rental		318.9			295.7			23.2		8	%
Uniform and Career Apparel - Rental		282.9			262.3			20.6		8	%		839.9			778.5			61.4		8	%
Uniform and Career Apparel - Direct Marketing		112.4			124.6			(12.2	)	(10	)%
Uniform and Career Apparel - Direct Marketing		100.2			104.8			(4.6	)	-4	%		329.0			340.4			(11.4	)	-3	%
	$	3,110.5		$	2,925.9		$	184.6		6	%
	$	2,792.4		$	2,594.9		$	197.5		8	%	$	8,181.7		$	7,571.3		$	610.4		8	%
	Three Months Ended
	Three Months Ended											Nine Months Ended
	December 29,2006			December 30,2005			Change
	July 1, 2005			July 2, 2004			Change					July 1,2005			July 2,2004			Change
Operating Income by Segment							$			%
Operating Income by Segment							$			%								$			%
Food and Support Services - United States	$	113.6		$	110.2		$	3.4		3	%
	(dollars in millions)
Food and Support Services - International		32.8			24.6			8.2		33	%
Food & Support Services - United States	$	97.7		$	89.4		$	8.3		9	%	$	270.0		$	239.8		$	30.2		13	%
Uniform and Career Apparel - Rental		37.5			33.1			4.4		13	%
Food & Support Services - International		21.2			19.2			2.0		11	%		60.1			58.8			1.3		2	%
Uniform and Career Apparel - Direct Marketing		5.8			7.0			(1.2	)	(16	)%
Uniform and Career Apparel - Rental		31.3			29.1			2.2		8	%		91.3			84.7			6.6		8	%
Corporate		(17.4	)		(16.3	)		(1.1	)	6	%
Uniform and Career Apparel - Direct Marketing		2.6			2.4			0.2		6	%		12.1			18.8			(6.7	)	-35	%
	$	172.3		$	158.6		$	13.7		9	%
Corporate		(8.9	)		(8.1	)		(0.8	)	9	%		(29.7	)		(25.5	)		(4.2	)	17	%
	$	143.9		$	132.0		$	11.9		9	%	$	403.8		$	376.6		$	27.2		7	%

Food and Support Services—United States Segment

Food and Support Services – —United States segment sales for the ~~three~~first ~~and~~quarter ~~nine-month~~of ~~periods~~fiscal 2007 increased 45% over the ~~respective~~ prior year ~~periods~~period due principally to ~~increased~~growth ~~volume~~in ~~(base~~the Education ~~business)~~and Healthcare businesses. The ~~2004/2005~~sales ~~nine-month~~increase, ~~comparison~~excluding the impact of acquisitions and divestitures, was ~~affected~~also by5%. For the ~~cancellation~~first ofquarter, the ~~National~~ ~~Hockey~~Business ~~League~~Services ~~season.~~sector ~~The~~reported ~~National~~mid ~~Hockey~~single ~~League~~digit ~~Collective~~sales ~~Bargaining~~growth, ~~Agreement~~due ~~expired~~principally into ~~September~~growth ~~2004~~in the Corrections and onRefreshment ~~September~~Services ~~17,~~businesses. ~~2004~~The ~~the~~Education ~~owners~~sector experienced high single digit sales growth as a result of ~~the~~base ~~NHL~~business ~~teams~~growth ~~locked~~in ~~out~~Higher ~~the~~Education ~~NHL~~and ~~players~~K-12. ~~Sales~~The ~~from~~Healthcare ~~NHL~~sector ~~venues~~also ~~were~~reported ~~approximately~~a ~~$73~~high single digit sales increase ~~million~~primarily indue ~~the~~to ~~2004~~base ~~nine-month~~business ~~period~~growth. InThe ~~July~~Sports & ~~2005,~~Entertainment ~~the~~sector ~~NHL~~experienced ~~and~~a ~~the~~slight ~~NHL~~sales ~~Players’~~decrease ~~Association~~as ~~announced~~lower ~~they~~business ~~have~~from ~~reached~~stadiums, anarenas ~~agreement~~and ~~which~~parks ~~will~~was beonly ~~effective~~partially ~~for~~offset ~~the~~by ~~2005/2006~~increases ~~hockey~~in ~~season.~~our Convention Center business.

~~For~~Segment ~~the~~operating ~~2005~~income ~~third quarter, sales growth in the Business Services sector~~ was in$113.6 ~~the~~million ~~mid single~~compared ~~digits,~~to ~~driven primarily by base business growth~~$110.2 ~~Sales~~million ~~growth~~ in the ~~Education~~2006 ~~sector~~first ~~was~~quarter. inThe ~~the~~2006 ~~high~~first ~~single~~quarter ~~digits,~~operating ~~also~~income ~~reflecting~~included approximately ~~base~~$3.7 ~~business~~million ~~growth, and to a lesser extent, the positive effect~~ of ~~the~~insurance ~~timing~~proceeds ofrelated ~~the Easter holiday. The Healthcare sector reported mid single digits sales growth due~~ to ~~base~~the ~~business~~Hurricane ~~growth~~Katrina ~~and net new business~~claim. ~~Sports~~In &fiscal ~~Entertainment~~2007, ~~sector~~operating ~~sales~~income ~~declined~~increases ~~approximately~~in 7%the asEducation ~~improved performance at convention centers~~ and ~~existing~~Healthcare ~~stadiums~~businesses ~~and arenas~~were ~~was more than~~ offset by ~~the loss of two Major League Baseball clients,~~ a ~~weaker~~substantial ~~concert~~decline ~~schedule~~from inthe ~~our~~Stadiums ~~amphitheaters~~ and ~~the NHL lockout~~Arenas business.

Segment operating income for the three and nine-month periods increased 9% and 13%, respectively, compared to the prior year. The 2005 nine-month period includes approximately $9.7 million representing our share of the gain from a real estate sale by a 50%-owned equity affiliate. Excluding the $9.7 million, operating income increased 9% for the nine-month period. Fiscal 2005 nine-month operating income increased despite the effect of the NHL lockout, due primarily to strong performances in the Education sector and the Healthcare sector, where prior year results were lowered by start-up costs at new accounts and high labor and material costs in the clinical equipment services business. The 2005 third quarter was also positively affected by improved Sports & Entertainment results, due principally to convention center growth and improved results at existing stadiums and arenas and our parks and resorts. Operating income margin for the 2005 third quarter was 5.4%, an increase of approximately 30 basis points as compared to the 2004 third quarter.

Food and Support Services—International Segment

Sales in the Food and Support Services – —International segment for the ~~three~~first ~~and nine-month~~quarter ~~periods~~of ~~increased~~fiscal ~~25%~~2007 ~~and~~increased 2613% compared to the prior year period due to ~~foreign currency translation (approximately 7% and 8%, respectively),~~ acquisitions (approximately 101% ~~and 13%, respectively~~), ~~net~~increased ~~new accounts~~ volume (approximately 15% ~~and 1%, respectively~~), and ~~increased~~foreign ~~volume~~currency translation (approximately 7% ~~and 4%, respectively~~). InThe ~~the~~increase ~~2005~~reflects ~~third quarter,~~ strong ~~sales~~ growth in Canada, Germany, ~~Spain~~Ireland and Chile ~~was offset by sales declines in the UK due to challenging trading conditions and lost business~~.

~~Segment~~24 operating income for the three and nine-month periods increased 11% and 2%, respectively, compared to the prior year, of which approximately 5% represented currency translation in both periods. The 2005 nine-month period includes a charge of $7.4 million representing the estimated cost of exiting the West African oil services business and a management separation charge in the UK. During the second quarter, the decision was made to cease operations in West Africa. This business has been operating at a loss and efforts to renegotiate a client contract have proved unsuccessful. We are working towards an orderly withdrawal and expect to exit the region before calendar year end. Provision has been made for the losses, principally asset write-offs, expected to be incurred during the withdrawal. For the 2005 three-month period, operating income increased $2.0 million to $21.2 million reflecting profit improvement in most major countries, offset by lower profits in the UK due to the challenging trading environment and lost business. The fiscal 2004 nine-month period includes currency transaction gains of approximately $0.8 million.

Segment operating income was $32.8 million compared to $24.6 million in the prior year first quarter. Currency translation accounted for approximately $1.6 million of the increase. Most operations reported increased operating income with a particularly strong performance in Canada driven by the remote camps business.

Uniform and Career Apparel—Rental Segment

Uniform and Career Apparel – —Rental segment sales increased 8% for the ~~three~~first ~~and~~quarter ~~nine-month~~of ~~periods~~fiscal 2007 compared to the prior year ~~periods~~. ~~Organic~~Sales ~~sales~~ growth, ~~which~~excluding ~~excludes~~ the effects of acquisitions and divestitures, was 56% infor ~~both~~the ~~periods.~~quarter ~~Growth~~due into ~~the~~new ~~sales~~business ofsold ~~apparel~~(13%), ~~and~~lost business ~~ancillary~~(-8%), ~~products~~price toincreases ~~rental~~(3%) and ~~customers~~a ~~contributed~~decline toin ~~this~~base ~~performance~~business (-2%).

Operating income increased 813% ~~for~~(12% ~~both~~excluding acquisitions) in the ~~three~~first quarter ~~and~~of ~~nine-month~~fiscal ~~periods~~2007, due principally to the increased sales, ~~lower garment costs~~ and afavorable ~~gain~~merchandise oncosts. ~~the~~Operating ~~sale~~income ofmargins aimproved ~~dormant~~approximately ~~property, partially~~55 ~~offset~~basis bypoints ~~higher~~reflecting ~~energy~~the ~~costs~~impact ~~and~~of ~~labor-related~~lower ~~expenses,~~fuel ~~new systems implementation~~ costs ~~and~~in ~~increased~~the ~~selling~~2007 ~~expense~~quarter. ~~Operating income margins were comparable during the periods.~~

Uniform and Career Apparel—Direct Marketing Segment

Uniform and Career Apparel – —Direct Marketing segment sales decreased 410% ~~and 3%, respectively,~~ for the ~~three~~first ~~and~~quarter ~~nine-month~~of ~~periods~~fiscal as2007, compared to the prior year ~~periods.~~due to the exit from the healthcare uniform line and continued softness in other WearGuard-Crest channels. ~~continued~~Operating income decreased compared to ~~experience~~the ~~softness~~prior inyear due primarily to the ~~quick~~decreased ~~service~~sales ~~restaurant~~at ~~channel~~WearGuard-Crest and ~~demand~~continuing ~~for~~margin ~~safety~~pressures ~~products~~at ~~remained soft~~Galls.

Segment operating income for the 2005 third quarter increased slightly to $2.6 million compared to $2.4 million in the prior year period. For the current nine-month period, operating income was $12.1 million compared to $18.8 million in the prior year period. Operating income has decreased due to lower sales volume and gross margin erosion at WearGuard-Crest. Margins have been negatively affected by the roll-out of a new program in the quick service restaurant channel. For the nine months, ongoing costs of the Gall’s investigation have also contributed to the lower income. We expect these conditions to continue for the remainder of 2005.

Corporate

Corporate expenses, those administrative expenses not allocated to the business segments, were $817.94 million ~~and $29.7 million~~ for the first ~~three~~quarter ~~and nine-month periods~~ of fiscal ~~2005~~2007, compared to $816.13 million ~~and $25.5 million~~ for the ~~comparable~~ prior year ~~periods~~period. ~~Restricted~~The ~~stock~~increase ~~unit~~was ~~expense and~~due ~~the~~principally ~~increased~~to ~~costs~~$2.6 million of ~~regulatory~~transaction ~~initiatives, specifically the~~ costs ofrelated ~~complying with Sarbanes-Oxley requirements, contributed~~ to the ~~increase~~merger.

OUTLOOK

Looking forward to the remainder of fiscal 2005, we expect the business environment in both the U.S. and Europe to remain competitive. We will continue to focus on improving operating results in our UK business, including our planned withdrawal from West Africa. We also expect the profit pressures being experienced by our Uniform and Career Apparel – Direct Marketing segment to continue. In the Uniform and Career Apparel – Rental segment, margins will continue to be pressured if energy costs remain at historically high levels.

FINANCIAL CONDITION AND LIQUIDITY

Reference to the ~~condensed~~Condensed ~~consolidated~~Consolidated ~~statements~~Statements of ~~cash~~Cash ~~flows~~Flows will facilitate understanding of the discussion that follows.

Cash ~~provided~~used byin operating activities ~~for the nine-month periods~~ was $~~310~~63 million ~~in fiscal~~and ~~2005 compared to~~ $~~240~~55 million induring ~~fiscal~~the ~~2004,~~first anthree ~~increase~~ months of ~~$70~~fiscal ~~million~~2007 and 2006, respectively. The principal components (in millions) of the net change were:

• Increase in net income and noncash charges	$	12
Increase in net income and noncash charges	$	19
• Increase in accounts receivable sale proceeds, due principally to increasing the size of the sale facility		31
Reduction in accounts receivable sale proceeds		(5	)
• Reduced working capital requirements		14
Increased working capital requirements		(16	)
• Other, net		13
Other, net		(6	)
	$	70(8	)

~~Although~~Working ~~net~~capital ~~income~~requirements increased, ~~net noncash charges (depreciation and deferred income taxes) decreased approximately $6.7 million for the nine-month period of fiscal 2005 compared to the prior year period~~slightly, ~~due~~reflecting togrowth ~~the lower deferred tax provision. A recent change~~ in the ~~tax depreciation~~business ~~rules~~and ~~is expected to reduce~~ the ~~annual~~timing ~~tax~~of disbursements, ~~depreciation~~principally ~~deduction~~payroll ~~resulting in the lower deferred tax provision~~related. ~~The accounts receivable sale facility (see Note 8) was increased by $25.0 million in December 2004.~~

Total debt increased $~~143~~208 million ~~since~~during ~~October~~the 1,first ~~2004~~quarter due principally to the normal seasonal ~~working~~ working capital needs, ~~stock repurchases~~ and the acquisition ~~activities~~of a regional uniform company.

During the first ~~nine~~quarter ~~months~~ of ~~fiscal 2005~~2007, the Company ~~repurchased~~extended ~~5.2~~its Japanese denominated loan and $20 million ~~shares~~bank ofterm ~~Class~~loan Bto ~~common~~March 31, ~~stock~~2007. atInterest anon ~~aggregate~~the ~~cost~~loans ofis ~~approximately~~based ~~$136.6~~on ~~million,~~the ~~leaving~~relevant ~~approximately~~currency ~~$88~~LIBOR ~~million~~plus ~~available~~a ~~for~~spread ~~common~~of ~~stock~~0.50% ~~repurchases~~as ~~under~~determined ~~the existing~~by ~~Board~~ARAMARK ~~authorization~~Corporation’s credit rating, as defined.

During the first ~~nine~~quarter ~~months~~ of fiscal ~~2005~~2007, the Company ~~increased~~amended its ~~ownership~~existing inU.S. ~~its~~and ~~Irish~~Canadian ~~food~~Credit ~~service~~Agreement ~~affiliate from 45%~~ to ~~90%,~~increase ~~paying~~the ~~approximately~~total ~~$61 million in cash~~U.S. ~~The~~dollar ~~Company~~credit ~~also~~capacity ~~acquired~~of ~~several~~its facility ~~regional~~thereunder ~~uniform~~(the ~~rental~~“U.S. ~~companies~~Credit ~~for~~Facility”) afrom ~~total~~$800 ofmillion ~~approximately~~to $44950 million ~~in cash~~. ~~These~~ ~~acquisitions were funded through borrowings under the revolving credit facilities.~~

During ~~each of~~ the first ~~three~~quarter ~~quarters~~ of fiscal ~~2005~~2007, the Company borrowed ~~paid a cash dividend of~~ $~~0.055~~125 ~~per share, which totaled $30.3~~ million. Atunder its ~~August 9, 2005 meeting, the Board of Directors declared a dividend in the amount of $0~~U.~~055~~S. ~~per~~Credit ~~share,~~Facility ~~payable on September 8, 2005~~ to ~~holders~~repay ~~of record of~~ the Company’s ~~Class~~7.10% Anotes ~~and~~that ~~Class~~matured ~~B common stock at the close of business~~ on ~~August 19~~December 1, ~~2005~~2006.

During the ~~third~~first ~~quarter~~three months of fiscal ~~2005~~2007, ~~ARAMARK Services, Inc. issued $250 million of 5.00% guaranteed notes due June 1, 2012. Proceeds from~~ the offering were used primarily to repay maturing obligations. At July 29, 2005, there was approximately $600 million of unused committed credit availability under our U.S. Credit Facility. Additionally, the Company ~~has~~did anot ~~shelf~~repurchase ~~registration statement~~any onshares ~~file with the SEC for the issuance~~ of upClass toB ~~$150~~common ~~million of debt securities~~stock. The Company currently expects to fund acquisitions, capital expenditures, dividends and additional share repurchases and other liquidity needs from cash provided from operating activities, normal disposals of property and equipment, and borrowings available under our credit facilities or registered or private note issuances. As of July 1, 2005, there was approximately $453 million outstanding in foreign currency borrowings.

~~The~~During ~~following table summarizes~~ the ~~Company’s future~~first ~~obligations~~quarter ~~for~~of ~~debt~~fiscal ~~repayments~~2007, ~~capital~~the ~~leases,~~Company ~~future~~paid ~~minimum~~a ~~rental~~cash dividend ~~and similar commitments under noncancelable operating leases as well as contingent obligations related to outstanding letters~~ of ~~credit~~$0.07 ~~and~~per ~~guarantees~~share, aswhich oftotaled ~~October~~$12.6 ~~1, 2004~~million.

	Payments Due by Period
Contractual Obligations as of October 1, 2004	Total		Less than1 year		1-3 years		3-5 years		More than5 years
Long-term borrowings	$	1,827,405	$	18,191	$	830,764	$	968,350	$	10,100
Capital lease obligations		41,318		7,332		10,794		8,516		14,676
Operating leases		541,755		148,901		121,663		83,773		187,418
Purchase obligations (1)		161,543		129,720		17,743		7,585		6,495
Other long-term liabilities reflected on the balance sheet (2)		124,303		—		30,114		—		94,189
	$	2,696,324	$	304,144	$	1,011,078	$	1,068,224	$	312,878

	Amount of Commitment Expiration Per Period
Other Commercial Commitments as of October 1, 2004	TotalAmountsCommitted		Less than1 year		1-3 years		3-5 years		Over 5 years
Letters of credit	$	60,869	$	60,369	$	500	$	—	$	—
Guarantees		8,992		8,992		—		—		—
	$	69,861	$	69,361	$	500	$	—	$	—

At December 29, 2006, there was approximately $330 million of unused committed credit availability under our U.S. Credit Facility. As of December 29, 2006, there was approximately $516 million outstanding in foreign currency borrowings.

~~(1)~~The ~~Represents~~following ~~capital~~table summarizes ~~commitments~~the inCompany’s ~~connection~~future ~~with~~obligations ~~several~~for ~~long-term~~debt ~~concession~~repayments, ~~contracts~~capital leases, ~~client~~estimated ~~contract~~interest ~~commitments~~payments, future minimum rental and asimilar ~~commitment~~commitments tounder ~~increase~~noncancelable ~~our~~operating ~~ownership~~leases inas ~~our~~well ~~Irish~~as ~~food~~contingent obligations related to outstanding letters of credit and ~~support~~guarantees ~~venture.~~as of September 29, 2006 (in thousands):

(2) Primarily represents certain unfunded employee retirement obligations and $30 million related to the Fine Host holdback (See Note 3 to the consolidated financial statements of our fiscal 2004 Annual Report on Form 10-K).


	Payments Due by Period
Contractual Obligations as of September 29, 2006	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term borrowings	$	1,748,982	$	25,063	$	582,394	$	891,549	$	249,976
Capital lease obligations		54,309		15,140		19,082		15,800		4,287
Estimated interest payments(1)		258,500		98,800		101,900		45,300		12,500
Operating leases		573,157		166,681		141,011		100,808		164,657
Purchase obligations(2)		388,685		210,211		130,102		29,934		18,438
Other long-term liabilities reflected on the balance sheet(3)		100,307		—		—		—		100,307

	$	3,123,940	$	515,895	$	974,489	$	1,083,391	$	550,165

As noted above, debt levels have increased since October 1, 2004, and the Company increased its ownership in its Irish food service affiliate. The Company is also committed to increase its ownership in its Chilean subsidiary at a price to be determined based on future operating results of the subsidiary. Further, since October 1, 2004, the Company has issued letters of credit in support of insurance arrangements of $77.0 million, and was released from a debt guarantee of approximately $9.0 million. Other than those changes, through July 1, 2005, there has been no material change in the Company’s future obligations since October 1, 2004.


	Total Amounts Committed		Amount of Commitment Expiration Per Period
Other Commercial Commitments as of September 29, 2006	Total Amounts Committed		Less than 1 year		1-3 years		3-5 years		More than 5 years
Letters of credit	$	73,307	$	73,307	$	—	$	—	$	—
Guarantees		—		—		—		—		—

	$	73,307	$	73,307	$	—	$	—	$	—

~~The~~(1) ~~Company~~These ~~has~~amounts anrepresent ~~agreement~~future ~~(the~~interest ~~Receivables~~payments ~~Facility)~~related ~~with~~to ~~several~~our ~~financial~~existing ~~institutions~~debt ~~whereby~~obligations itbased ~~sells~~ on afixed ~~continuous~~and ~~basis~~variable ~~an undivided~~ interest inrates ~~all~~specified ~~eligible trade accounts receivable, as defined~~ in the ~~Receivables~~associated ~~Facility~~debt agreements. ~~Pursuant~~Payments related to ~~the~~variable ~~Receivables~~debt ~~Facility,~~are ~~the~~based ~~Company~~on ~~formed~~applicable ~~ARAMARK~~rates ~~Receivables,~~at ~~LLC,~~September ~~a wholly-owned~~29, ~~consolidated,~~2006 ~~bankruptcy-remote~~plus ~~subsidiary.~~the ~~ARAMARK~~specified ~~Receivables,~~margin ~~LLC~~in ~~was formed for~~ the ~~sole~~associated ~~purpose~~debt ofagreements ~~buying~~for ~~and~~each ~~selling~~period ~~receivables generated by certain subsidiaries of the Company~~presented. ~~Under~~The ~~the~~amounts ~~Receivables~~provided ~~Facility,~~relate ~~certain~~only ~~subsidiaries of the Company transfer without recourse all of their accounts receivable~~ to ~~ARAMARK Receivables,~~existing ~~LLC.~~debt ~~ARAMARK~~obligations ~~Receivables, LLC, in turn, has sold~~ and, ~~subject~~do tonot ~~certain~~assume ~~conditions,~~the ~~may~~refinancing ~~from~~or ~~time~~replacement toof ~~time~~such ~~sell an undivided interest in these receivables up to $225 million~~debt. The ~~Company~~average ~~amended~~debt ~~the~~balance ~~Receivables~~for ~~Facility~~each ~~during the first quarter of~~ fiscal ~~2005~~year ~~and~~from ~~increased~~2007 ~~the~~through ~~maximum~~2012 ~~sale~~is ~~amount from~~ $~~200~~1,411,800, ~~million to~~ $~~225 million. The Company has retained collection and administrative responsibility for the participating interest sold~~978,400, ~~and has retained an undivided interest in the transferred receivables of approximately~~ $~~189.2~~782,000, ~~million and~~ $~~286.4~~576,700, ~~million at July 1~~$293,900, ~~2005~~ and ~~October 1~~$166, ~~2004~~700, respectively,. ~~which~~The isaverage ~~subject~~interest torate a(including ~~security~~ interest. ~~This~~rate ~~two-step~~swaps) ~~transaction is accounted~~ for aseach afiscal ~~sale~~year offrom ~~receivables~~2007 ~~following~~through ~~the provisions~~2012 ofis ~~SFAS No~~6.07%, ~~140~~5.75%, ~~“Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a Replacement of FASB Statement No~~5.50%, ~~125~~5.”24%, ~~At July 1~~5.07%, ~~2005~~ and ~~October 1~~5.00%, ~~2004,~~ respectively~~, $187~~.8 ~~million~~Refer ~~and $157.3~~to ~~million~~Note 6 of ~~accounts receivable were sold and removed from~~ the ~~condensed~~ consolidated ~~balance~~financial ~~sheet.~~statements ~~The~~for ~~loss on~~ the ~~sale~~terms ~~of receivables was $4.7 million~~ and ~~$2.1~~maturities ~~million for the first nine months~~ of ~~fiscal~~existing ~~2005~~debt ~~and 2004, respectively, and is included in “Interest and other financing costs, net~~obligations.”

~~The Company’s~~(2) ~~business~~Represents ~~activities~~commitments dofor ~~not~~capital ~~include~~projects, ~~the~~client ~~use~~contract ofinvestments ~~unconsolidated special purpose entities,~~ and ~~there are no significant~~ business ~~transactions that have not been reflected in the accompanying financial statements~~acquisitions. ARAMARK may be exposed to liability resulting from the non-performance of certain indemnification obligations by an entity currently in bankruptcy from which ARAMARK acquired a business in fiscal 2000. The amount of such exposure cannot be quantified at the present time due to uncertainty with respect to the number and amount of claims, if any, originating from or relating to the pre-acquisition period. ARAMARK has $25 million of insurance coverage for such exposure with a $5.0 million retained loss limit. The Company retains a limited portion of the risk under its general liability and workers’ compensation arrangements. When required, reserves are recorded based on actuarial analyses.

On(3) ~~January~~Includes ~~18 and 19, 2005, a New Jersey jury found various ARAMARK entities liable for approximately $30 million in compensatory damages and $75 million in punitive damages. The Company filed~~ certain ~~post-trial~~unfunded ~~motions,~~employee ~~which~~retirement ~~the trial court denied on March 18, 2005, and the Company appealed the judgment to the Appellate Division of Superior Court of New Jersey on April 13, 2005~~obligations. This process is likely to take considerable time. The Company believes that it has adequate insurance and other resources to address this matter. Based on the information currently available, and acknowledging the uncertainty of litigation, the July 1, 2005 consolidated balance sheet reflects the amount awarded and the related expected recovery should such liability be confirmed. Such amounts are included in “Other Noncurrent Liabilities” and “Other Assets,” respectively.

Debt levels have increased through the first quarter. As of December 29, 2006, the Company increased its letters of credit, primarily in support of insurance arrangements, by approximately $138 million. Other than these changes and the effects of the Merger discussed under “Merger” above, since September 29, 2006, there has been no material change in the Company’s future obligations.

The Company has an agreement (the Receivables Facility) with several financial institutions whereby it sells on a continuous basis an undivided interest in all eligible trade accounts receivable, as defined in the Receivables Facility. Pursuant to the Receivables Facility, the Company formed ARAMARK Receivables, LLC, a wholly-owned, consolidated, bankruptcy-remote subsidiary. ARAMARK Receivables, LLC was formed for the sole purpose of buying and selling receivables generated by certain subsidiaries of the Company. Under the Receivables Facility, certain subsidiaries of the Company transfer without recourse all of their accounts receivable to ARAMARK Receivables, LLC. ARAMARK Receivables, LLC, in turn, has sold and, subject to certain conditions, may from time to time sell an undivided interest in these receivables up to $225 million. The Company has retained collection and administrative responsibility for the participating interest sold, and has retained an undivided interest in the transferred receivables of approximately $280.9 million and $306.1 million at December 29, 2006 and September 29, 2006, respectively, which is subject to a security interest. This two-step transaction is accounted for as a sale of receivables following the provisions of SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a Replacement of FASB Statement No. 125.” At December 29, 2006 and September 29, 2006, respectively, $188.1 million and $187.8 million of accounts receivable were sold and removed from the Condensed Consolidated Balance Sheets.

The Company’s business activities do not include the use of unconsolidated special purpose entities, and there are no significant business transactions that have not been reflected in the accompanying financial statements. ARAMARK may be exposed to

~~NEW/PROPOSED~~ liability ~~ACCOUNTING~~resulting ~~PRONOUNCEMENTS~~from the non-performance of certain indemnification obligations by an entity currently in bankruptcy from which ARAMARK acquired a business in fiscal 2000. The amount of such exposure cannot be quantified at the present time due to uncertainty with respect to the number and amount of claims, if any, originating from or relating to the pre-acquisition period. ARAMARK has $25 million of insurance coverage for such exposure with a $5.0 million retained loss limit. The Company is self-insured for a limited portion of the risk retained under its general liability and workers’ compensation arrangements. When required, self-insurance reserves are recorded based on actuarial analyses.

In ~~November~~July 2004, the ~~Financial~~Company ~~Accounting~~learned ~~Standards~~that ~~Board~~it ~~(FASB)~~was ~~issued~~under ~~Statement~~investigation ofby ~~Financial~~the ~~Accounting~~United ~~Standards~~States Department ~~(SFAS)~~of ~~No.~~Commerce, ~~151~~among others, ~~“Inventory~~ ~~Costs~~relating –to AnGalls, ~~Amendment~~a division of ~~ARB~~the ~~No. 43~~Company, ~~Chapter~~in ~~4.”~~connection ~~The~~with ~~provisions~~record ofkeeping ~~SFAS~~and ~~No.~~documentation ~~151~~of ~~will~~certain beexport ~~effective~~sales. ~~for~~The ~~inventory~~Government ~~costs~~obtained ~~incurred~~and ~~during~~received ~~fiscal~~numerous ~~years~~records ~~beginning~~from ~~after~~the ~~June 15~~Company, ~~2005,~~which ~~and~~is cooperating ~~are~~in ~~not~~the ~~expected~~investigation. toThe ~~have~~Company acan ~~material~~give ~~effect on~~no assurance as to the ~~Company’s~~outcome ~~financial~~of ~~statements~~this investigation.

InOn ~~December~~January 18 ~~2004~~and 19, ~~the~~2005, ~~FASB~~a ~~issued~~New Jersey ajury ~~revision~~found ofARAMARK ~~SFAS~~Corporation ~~No.~~and ~~123,~~certain ~~“Accounting~~affiliates liable for ~~Stock-Based~~approximately ~~Compensation,”~~$30 ~~which~~million ~~also~~in ~~supersedes~~compensatory ~~APB~~damages ~~Opinion~~and ~~No.~~$75 ~~25,~~million ~~“Accounting~~in ~~for~~punitive ~~Stock~~damages ~~Issued~~in toconnection ~~its~~with ~~Employees,”~~an ~~and~~automobile ~~its~~accident ~~related~~caused ~~implementation~~by ~~guidance.~~an ~~This~~intoxicated ~~Statement~~driver ~~requires~~who attended a ~~public~~professional ~~entity~~football togame ~~measure~~at ~~the~~which ~~cost~~certain affiliates of ~~employee~~the ~~services~~Company ~~received~~provided infood ~~exchange~~and ~~for~~beverage anservice. ~~award~~The ofCompany ~~equity~~and ~~instruments~~its ~~based~~affiliates onappealed the ~~grant-date~~judgment ~~fair~~to ~~value of~~ the ~~award,~~Appellate ~~and~~Division ~~recognize~~of ~~the~~Superior ~~cost~~Court ~~over~~of ~~the~~New ~~period~~Jersey ~~during~~on ~~which~~April 13, an2005. ~~employee is required to provide~~On ~~service~~August 3, in2006, ~~exchange for~~ the ~~award—the~~Appellate ~~requisite~~Division ~~service~~of ~~period.~~the ~~This~~Superior ~~Statement~~Court isissued ~~effective~~its ~~for~~decision ~~annual~~reversing ~~reporting~~the ~~periods~~entire ~~beginning~~verdict ~~after~~of ~~June~~the ~~15,~~trial ~~2005~~court, and ~~applies~~remanded tothe ~~all~~matter ~~awards~~back ~~granted~~to ~~after~~ the ~~required~~trial ~~effective~~court ~~date~~for ~~and~~a tonew ~~awards~~trial. ~~modified~~On September 6, ~~repurchased~~ 2006, orthe ~~cancelled~~plaintiffs ~~after~~filed ~~that~~a petition ~~date.~~for ~~The~~certification ~~Company~~concerning isthe ~~currently~~Appellate ~~evaluating~~Division ~~the~~decision ~~transitional~~with ~~and~~the ~~other~~New ~~provisions~~Jersey ofSupreme ~~this Statement~~Court. ~~Adoption~~On ofJanuary 31, ~~the Statement~~2007, ~~which~~the isNew ~~required~~Jersey inSupreme ~~the~~Court ~~first~~denied ~~quarter~~plaintiffs’ ofpetition ~~fiscal~~for ~~2006,~~certification ~~will~~and ~~result~~the inmatter awas ~~reduction~~remanded ofback to ~~reported~~the ~~earnings,~~trial ~~which~~court ~~management~~for ~~believes,~~a ~~based~~new ontrial pursuant to the ~~analysis~~decision toof ~~date,~~the ~~will~~Appellate beDivision. ~~similar~~The toCompany ~~that~~and ~~reflected~~its inaffiliates ~~the~~intend ~~pro~~to ~~forma~~defend ~~information~~themselves ~~included~~vigorously in ~~Note~~this 6matter.

OnIn ~~March~~June 302006, ~~2005,~~the Bermuda Monetary Authority (BMA) presented a winding up petition to the ~~FASB~~Supreme ~~issued~~Court ~~FASB~~of ~~Interpretation~~Bermuda ~~No.~~as 47to Hatteras Re, ~~“Accounting~~a ~~for~~Bermuda ~~Conditional~~reinsurance ~~Asset~~company ~~Retirement~~which ~~Obligations~~participated in a portion of ARAMARK’s casualty insurance program,” ~~which~~to ~~clarifies~~place ~~the~~it ~~term~~into provisional liquidation. A Joint Provisional Liquidator (JPL) was appointed and authorized to assume control of Hatteras Re’s business. At an official meeting of creditors on November 9, 2006, ~~“conditional~~the ~~asset~~creditors ~~retirement~~elected ~~obligation”~~to keep the JPL as ~~used~~a inPermanent ~~FASB~~Liquidator ~~Statement~~(PL) ~~No.~~and ~~143~~ARAMARK was elected to the creditor’s committee. The ~~Interpretation~~activities isof ~~effective~~the ~~for~~PL are currently underway and ARAMARK’s noinsurance ~~later~~claims ~~than~~are being paid by Hatteras Re under the ~~end~~direction of ~~fiscal~~the ~~2006~~PL. ~~The~~A ~~Company~~preliminary isanalysis ~~currently~~by ~~evaluating~~ARAMARK and its insurance advisors indicates Hatteras Re has access to funds sufficient to pay ARAMARK’s estimated insurance claims for the ~~Interpretation,~~relevant ~~but~~program periods. ARAMARK has reached an agreement in principle with the PL that will allow ARAMARK to pursue with other insurance carriers an alternative insurance solution for the covered periods, however, the terms and conditions of such an arrangement have not yet been finally determined. ~~what~~While ~~effect~~the ~~adoption~~ultimate outcome of this matter is uncertain, and dependent in part on future developments, based on the information currently available, ARAMARK does not expect the final resolution will have a material adverse effect on the consolidated financial statements.

On May 1, 2006, two cases were filed in the Court of Chancery of the State of Delaware in New Castle County against the Company and each of the Company’s directors. The two cases are putative class actions brought by stockholders alleging that the Company’s directors breached their fiduciary duties to the Company in connection with the proposal from a group of investors led by Mr. Neubauer to acquire all of the outstanding shares of the Company. On May 22, 2006, two additional cases making substantially identical allegations were brought against the Company and certain of its directors, one in the Court of Common Pleas in Philadelphia, Pennsylvania (in which only the Company and Mr. Neubauer were named as defendants) and another in the Court of Chancery of the State of Delaware in New Castle County (in which the Company and all directors were named as defendants). All of the cases make claims for monetary damages, injunctive relief and attorneys’ fees and expenses. On June 7, 2006, the Court of Chancery of the State of Delaware consolidated the three pending Delaware actions as In re: ARAMARK Corporation Shareholders Litigation.

On or around August 11, 2006, a fourth putative class action complaint was filed in the Court of Chancery of the State of Delaware in New Castle County by the City of Southfield Police and Fire Retirement System purportedly on behalf of the Company’s stockholders. The complaint names the Company and each of the Company’s directors as defendants and alleges that the defendants breached their fiduciary duties to the stockholders in connection with the proposed acquisition of the Company’s outstanding shares and making claims for monetary damages, injunctive relief and attorneys’ fees and expenses. On August 25, 2006, the Court of Chancery of the State of Delaware consolidated this action with In re: ARAMARK Corporation Shareholders Litigation. The parties have entered into agreements in principle to settle the Delaware consolidated actions and the action pending in the Pennsylvania Court of Common Pleas. The agreements in principle remain subject to court approval. As part of the agreements in principle, each share of Class A common stock beneficially owned by members of ARAMARK’s management committee (Joseph Neubauer, L. Frederick Sutherland, Bart J. Colli, Timothy P. Cost, Andrew C. Kerin, Lynn B. McKee, Ravi K. Saligram and Thomas J. Vozzo) was counted as one vote for purposes of the additional vote to approve the adoption of the merger agreement. In connection with settling the Delaware action in principle, counsel for the plaintiffs has agreed to seek court approval of no more than $2.1 million in attorneys’ fees and expenses, which amount the Company has agreed not to oppose. In connection with settling the Pennsylvania action in principle, counsel for the plaintiffs has made a demand for attorneys’ fees and expenses, which amount has not yet been determined.

NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 is effective for ARAMARK beginning in fiscal 2009. The Company is currently evaluating the Statement.

In June 2006, the FASB issued FASB Interpretation No. (FIN) 48, “Accounting for Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109. The Interpretation is effective for ARAMARK beginning in fiscal 2008. The Company is currently evaluating the Interpretation.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

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

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause such a difference include: unfavorable economic conditions; ramifications of any future terrorist attacks or increased security alert levels; increased operating costs, including labor-related and energy costs; shortages of qualified personnel or increases in labor costs; costs and possible effects of ~~union~~further ~~organizing~~unionization ~~activities~~of our workforce; currency risks and other risks associated with international markets; risks associated with acquisitions, including acquisition integration issues and costs; our ability to integrate and derive the expected benefits from our recent acquisitions; competition; decline in attendance at client facilities; unpredictability of sales and expenses due to contract terms and terminations; the impact of natural disasters on our sales and operating results; the risk that clients may become insolvent; the risk that our insurers may become insolvent or may liquidate; the contract intensive nature of our business, which may lead to client disputes; high leverage; claims relating to the provision of food services; costs of compliance with governmental regulations and government investigations; liability associated with noncompliance with governmental regulations, including regulations pertaining to food services, the environment, the Federal school lunch program, Federal and state employment and wage and hour laws and import and export controls and customs laws; dram shop compliance and litigation; contract compliance and administration issues, inability to retain current clients and renew existing client contracts; determination by customers to reduce their outsourcing and use of preferred vendors; seasonality; merger related risks; the effect on our operations of increased leverage and limitations on our flexibility as a result of increased restrictions in our debt agreements; potential future conflicts of interest between our investors and other stakeholders; the impact on our business if were are unable to generate sufficient cash to service all of our indebtedness; the inability of our subsidiaries to generate enough cash flow to repay our debt; risks related to the structuring of our debt; the impact on our senior notes of release of guarantors under our senior secured credit agreement and our inability to make payment on our senior notes because of a court-ordered voiding of guarantees pursuant to state fraudulent transfer laws; and other risks that are set forth in the “Risk Factors,” ~~section, the~~ “Legal Proceedings” ~~section,~~and ~~the~~ “Management’s Discussion and Analysis of Results of Operations and Financial Condition” ~~section~~sections and other sections of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to the impact of interest rate changes and manage this exposure through the use of variable-rate and fixed-rate debt and by utilizing interest rate swaps. We do not enter into contracts for trading purposes and do not use leveraged instruments. The market risk associated with debt obligations and other significant instruments as of ~~July 1~~December 29, ~~2005~~2006, has not materially changed from ~~October 1~~September 29, ~~2004~~2006 (See ~~Item~~ Item 7A of the Annual Report on Form 10-K), except for the effects of the Merger described above under “Management’s Discussion and Analysis of Results of Operations and Financial Condition.”

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

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

(bc) Change in Internal Control over Financial Reporting

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

2829

PART II— - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are a party to various legal actions involving claims incidental to the conduct of our business, including actions by clients, customers, employees and third parties, including under federal and state employment laws, wage and hour laws, ~~and~~ customs, import and export control laws and dram shop laws. Based on information currently available, advice of counsel, available insurance coverage, established reserves and other resources, we do not believe that any such current actions are likely to be, individually or in the aggregate, material to our business, financial condition, results of operations or cash flows. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to our business, financial condition, results of operations or cash flows.

OnIn July ~~21,~~ 2004, ~~agents~~the ofCompany learned that it was under investigation by the United States Department of Commerce, among others, ~~executed~~relating ato ~~search warrant at the Lexington, Kentucky facilities of~~ Galls, a division of the Company, ~~to gather records~~ in connection with record keeping and documentation of certain export sales,. ~~and~~The ~~two~~Government ~~grand~~obtained ~~jury~~and ~~subpoenas~~received ~~were~~numerous ~~subsequently~~records ~~issued~~ from the ~~United States District Court in the District of Columbia~~ ~~seeking certain records at Galls’ California facilities and U.K. facilities~~Company, ~~among~~which ~~others. The investigation surrounds the possible failure to obtain proper export licenses or prepare accurate shipping declarations in connection with the export of Galls products. Galls~~ is ~~continuing to provide records in response and is~~ cooperating ~~fully~~ in the investigation. ~~The Company can give no assurance as to the outcome of this investigation.~~

In March 2000, Antonia Verni, by guardian ad litem, and Fazila Verni sued ~~certain affiliates of~~ the Company and certain affiliates, along with Ronald Verni, David Lanzaro, the New Jersey Sports & Exposition Authority, the N.Y. Giants, Harry M. Stevens, Inc. of New Jersey, Shakers, The Gallery, Toyota Motors of North America, Inc. and the National Football League, for monetary damages for injuries they suffered. On January 18 and 19, 2005, a New Jersey jury found ARAMARK Corporation and certain affiliates liable for approximately $30 million in compensatory damages and $75 million in punitive damages in connection with an automobile accident caused by an intoxicated driver who attended a professional football game at which certain affiliates of the Company provided food and beverage service. OnThe ~~January~~Company 18 and ~~19,~~its ~~2005,~~affiliates aappealed the judgment to the Appellate Division of Superior Court of New Jersey ~~jury~~on ~~found~~April 13, ~~various~~2005. ~~ARAMARK~~On ~~entities~~August 3, ~~liable~~2006, ~~for~~the ~~approximately~~Appellate ~~$30~~Division ~~million~~of inthe ~~compensatory~~Superior ~~damages~~Court ~~and~~issued ~~$75~~its ~~million~~decision inreversing ~~punitive~~the ~~damages.~~entire ~~ARAMARK~~verdict ~~filed~~of ~~certain~~the ~~post-~~trial ~~motions,~~court. ~~which~~The Appellate Division cited multiple errors by the trial court ~~denied~~ onand ~~March~~reversed ~~18,~~the ~~2005,~~finding ~~and~~of liability against the Company and its affiliates. ~~appealed~~The Appellate Division reversed both the ~~judgment~~compensatory and punitive damage awards and remanded the matter back to the trial court for a new trial. On September 6, 2006, the plaintiffs filed a petition for certification concerning the Appellate Division ofdecision ~~Superior~~with the New Jersey Supreme Court. ofOn January 31, 2007, the New Jersey onSupreme ~~April~~Court ~~13,~~denied plaintiffs’ ~~2005.~~petition ~~This~~for ~~process~~certification isand ~~likely~~the matter was remanded back to ~~take~~the ~~considerable~~trial ~~time.~~court ~~The~~for ~~Company~~a ~~believes~~new ~~that~~trial itpursuant ~~has adequate~~to ~~insurance~~the decision of the Appellate Division. The Company and ~~other~~its ~~resources~~affiliates intend to ~~address~~defend themselves vigorously in this matter.

~~ITEM~~On 2May 1, 2006, two cases were filed in the Court of Chancery of the State of Delaware in New Castle County against the Company and each of the Company’s directors. ~~CHANGES~~The INtwo ~~SECURITIES~~cases are putative class actions brought by stockholders alleging that the Company’s directors breached their fiduciary duties to the Company in connection with the proposal from a group of investors led by Mr. Neubauer to acquire all of the outstanding shares of the Company. On May 22, ~~USE~~2006, OFtwo ~~PROCEEDS~~additional ~~AND~~cases ~~ISSUER~~making ~~PURCHASES~~substantially OFidentical ~~EQUITY~~allegations ~~SECURITIES~~were brought against the Company and certain of its directors, one in the Court of Common Pleas in Philadelphia, Pennsylvania (in which only the Company and Mr. Neubauer were named as defendants) and another in the Court of Chancery of the State of Delaware in New Castle County (in which the Company and all directors were named as defendants). All of the cases make claims for monetary damages, injunctive relief and attorneys’ fees and expenses. On June 7, 2006, the Court of Chancery of the State of Delaware consolidated the three pending Delaware actions as In re: ARAMARK Corporation Shareholders Litigation.

ITEM 1A. RISK FACTORS

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under our senior notes.

On January 26, 2007, ARAMARK Corporation completed its merger (the “Merger”) with RMK Acquisition Corporation pursuant to which the Company has been acquired by a private investor group including GS Capital Partners V Fund, L.P., J.P. Morgan Partners (BHCA), L.P., CCMP Capital Investors II, L.P., Thomas H. Lee Equity Fund VI, L.P. and Warburg Pincus Private Equity IX, L.P. (collectively, the “Sponsor Funds”) and Joseph Neubauer, our Chairman of the Board of Directors and Chief Executive Officer. As a result of the Merger and transactions contemplated thereby (including the sale of our senior notes and our entry into certain credit facilities and a term loan agreement (the “Transactions”)), we are highly leveraged. On a pro forma basis as of September 29, 2006, our total indebtedness would have been $6,494.0 million. We also would have had an additional $600.0 million available for borrowing under our revolving credit facility at that date. In addition, $211.0 million of funding would have been outstanding under our receivables facility on the same pro forma basis.

Our high degree of leverage could have important consequences, including:

•

making it more difficult for us to make payments on our senior notes;

•

increasing our vulnerability to general economic and industry conditions;

•

requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

•

exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under our senior secured credit facilities and our receivables facility will be at variable rates of interest;

•

restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

•

limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and

•

limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.

We and our subsidiaries also may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in our senior secured credit facilities and the indenture governing our senior notes. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify. Our pro forma cash interest expense (and yield charges associated with our amended and restated receivables facility) for the twelve months ended September 29, 2006 would have been $516.1 million. At September 29, 2006, on a pro forma basis, we would have had $4,150.0 million of funded debt under our senior secured credit agreement (the interest rate of $1,500 million of which has been fixed pursuant to interest rate swap agreements) in addition to $211.0 million outstanding under our receivables facility, which are based on a floating rate index. A 0.125% increase in these floating rates would increase annual interest expense by approximately $3.6 million. In addition, the interest rate on our senior floating rate notes was based on a floating rate index.

Our major investors may have conflicts of interest with us or you in the future.

The Sponsor Funds and Joseph Neubauer will initially own approximately 95% of the issued and outstanding shares of the common stock of our parent company. Accordingly, except for rights reserved in the Stockholders Agreement they will have the ability to control the Company. There can be no assurance that the interests of the Sponsors and Joseph Neubauer will not conflict with the interests of our other stakeholders.

We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our senior secured credit agreement and the indenture governing our senior notes will restrict our ability to dispose of assets, use the proceeds from any disposition of assets and to refinance our indebtedness. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due.

Repayment of our debt is dependent on cash flow generated by our subsidiaries.

Our subsidiaries own a significant portion of our assets and conduct a significant portion of our operations. Accordingly, repayment of our indebtedness is dependent, to a significant extent, on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of our senior notes, our subsidiaries do not have any obligation to pay amounts due on our senior notes or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the indenture governing our senior notes will limit the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.

The lenders under our senior secured credit facilities will have the discretion to release the guarantors under our senior secured credit agreement in a variety of circumstances, which will cause those guarantors to be released from their guarantees of our notes.

While any obligations under our senior secured credit facilities remain outstanding, any guarantee of our notes may be released without action by, or consent of, any holder of our notes or the trustee under the indenture governing our notes, at the discretion of lenders under the senior secured credit facilities, if the related guarantor is no longer a guarantor of obligations under the senior secured credit facilities or any other indebtedness. The lenders under our senior secured credit facilities will have the discretion to release the guarantees under our senior secured credit facilities in a variety of circumstances. Our noteholders will not have a claim as a creditor against any of our subsidiaries that is no longer a guarantor of our notes, and the indebtedness and other liabilities, including trade payables, whether secured or unsecured, of those subsidiaries will effectively be senior to claims of our noteholders.

Federal and state fraudulent transfer laws may permit a court to void the guarantees, and, if that occurs, our noteholders may not receive any payments on our notes.

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of our notes and the incurrence of the guarantees. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, our notes or guarantees could be voided as a fraudulent transfer or conveyance if (1) we or any of the guarantors, as applicable, issued the notes or incurred the guarantees with the intent of hindering, delaying or defrauding creditors or (2) we or any of the guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for either issuing the notes or incurring the guarantees and, in the case of (2) only, one of the following is also true at the time thereof:

•

we or any of the guarantors, as applicable, were insolvent or rendered insolvent by reason of the issuance of our notes or the incurrence of the guarantees;

•

the issuance of our notes or the incurrence of the guarantees left us or any of the guarantors, as applicable, with an unreasonably small amount of capital to carry on the business;

•

we or any of the guarantors intended to, or believed that we or such guarantor would, incur debts beyond our or such guarantor’s ability to pay as they mature; or

•

we or any of the guarantors was a defendant in an action for money damages, or had a judgment for money damages docketed against us or such guarantor if, in either case, after final judgment, the judgment is unsatisfied.

If a court were to find that the issuance of our notes or the incurrence of the guarantee was a fraudulent transfer or conveyance, the court could void the payment obligations under our notes or such guarantee or further subordinate our notes or such guarantee to presently existing and future indebtedness of ours or of the related guarantor, or require the holders of our notes to repay any amounts received with respect to such guarantee. In the event of a finding that a fraudulent transfer or conveyance occurred, our noteholders may not receive any repayment on our notes. Further, the voidance of our notes could result in an event of default with respect to our and our subsidiaries’ other debt that could result in acceleration of such debt.

As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied. A debtor will generally not be considered to have received value in connection with a debt offering if the debtor uses the proceeds of that offering to make a dividend payment or otherwise retire or redeem equity securities issued by the debtor.

We cannot be certain as to the standards a court would use to determine whether or not we or the guarantors were solvent at the relevant time or, regardless of the standard that a court uses, that the issuance of the guarantees would not be further subordinated to our or any of our guarantors’ other debt.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ISSUER PURCHASES OF EQUITY SECURITIES

(~~Third~~First Quarter ~~2005~~2007)

Period	(a) TotalNumber ofSharesPurchased(1)	(b) AveragePrice Paidper Share		(c) Total ~~Number~~Numberof ~~ofShares~~SharesPurchased ~~Purchased~~ as aresult of ~~PubliclyAnnounced~~PubliclyAnnouncedPlans ~~Plans~~ orPrograms(2)	(d) Maximum Number (~~orApproximate~~or ~~Dollar~~ApproximateDollar Value) ~~ofShares~~of ~~that~~Sharesthat May Yet bePurchased Under ~~the~~thePlans ~~Plans~~or ~~orPrograms~~Programs
Month 1 (April 2, 2005 – April 29, 2005)	1,166	$	26.69	0	$	140,157,008
Month 1 (September 30, 2006 – October 27, 2006)	0	$	0.00	0	$	138,115,177
Month 2 (April 30, 2005 – May 27, 2005)	760,000	$	25.63	760,000	$	120,674,499
Month 2 (October 28, 2006 – November 24, 2006)	0	$	0.00	0	$	138,115,177
Month 3 (May 28, 2005 – July 1, 2005)	1,230,000	$	26.60	1,230,000	$	87,957,112
Month 3 (November 25, 2006 – December 29, 2006)	0	$	0.00	0	$	138,115,177

(1) The numbers in this column include shares of the Company’s common stock surrendered by stock option holders to pay the exercise price of stock options as follows: ~~1,166~~0 for Month 1, ~~zero~~0 for Month 2 and ~~zero~~0 for Month 3.

(2) On May 28, 2002, the Company announced the establishment of a Stock Repurchase Program. Under the Stock Repurchase Program, the Board of Directors approved the use of up to $200 million to repurchase shares of the Company’s Class A or Class B common stock. On May 8, 2003, the Company announced the addition of $150 million to the repurchase program and on February 3, 2004, the Company announced the addition of another $150 million to the repurchase program. On November 2, 2004, the Company announced the addition of $200 million to the repurchase program. On November 15, 2005, the Company announced an addition of another $200 million to the repurchase program. The repurchase program will expire when all monies authorized for use in the program have been utilized.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

ARAMARK Corporation’s special meeting of stockholders (“Special Meeting”) was held on December 20, 2006. At the Special Meeting, the stockholders voted to adopt the Agreement and Plan of Merger, dated as of August 8, 2006 among the Company, RMK Acquisition Corporation and RMK Finance LLC (the “Merger Agreement”). The results of that vote were as follows:


For	Against	Abstentions	Broker non-votes
609,378,579	13,494,855	976,444	N/A

ARAMARK’s stockholders also voted to approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the Merger Agreement. The results of that vote were as follows:


For	Against	Abstentions	Broker non-votes
594,235,874	28,389,027	1,224,977	N/A

ITEM 6. EXHIBITS

10.1		Master Distribution Agreement made as of November 25, 2006, between SYSCO Corporation and ARAMARK Food and Support Services Group, Inc. *
31.1		Certification of Joseph Neubauer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of L. Frederick Sutherland pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Joseph Neubauer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of L. Frederick Sutherland pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1		Reconciliation of non-GAAP financial measures.

30* Portions omitted pursuant to a request for confidential treatment.

SIGNATURE

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

	ARAMARK CORPORATION	~~ARAMARK CORPORATION~~
August 10, 2005		/s/ JOHN M. LAFFERTY
February 7, 2007	/s/ John M. Lafferty
	John M. Lafferty	~~John M. Lafferty~~
		Senior Vice President, Controller and Chief Accounting Officer
	Senior Vice President, Controller
	and Chief Accounting Officer

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