Exhibit 99.1
NEWS
RELEASE
Media Relations: | Investor Relations: | |
ARAMARK Corporation | ARAMARK Corporation | |
Michelle Davidson, 215-238-3523 | Gary Sender, 215-238-3361 | |
Davidson-michelle@aramark.com | Sender-gary@aramark.com |
ARAMARK REPORTS GROWTH IN SALES AND EARNINGS
FOR SECOND QUARTER FISCAL 2004
Sales rise 12 percent, diluted earnings per share up 26 percent
PHILADELPHIA, PA – May 12, 2004 – ARAMARK Corporation (NYSE:RMK), a world leader in managed services, today reported sales of $2.5 billion for its second quarter ended April 2, 2004, a 12 percent increase compared with the second quarter of 2003. Organic sales growth was 7 percent. Income from continuing operations for the quarter rose 23 percent to $46.7 million. Diluted earnings per share from continuing operations were $0.24, a 26 percent increase over the same period last year.
Year-to-Date Results
For the first half of fiscal 2004, sales increased 10 percent to $5.0 billion, representing organic sales growth of 5 percent. Organic sales growth excludes the impact of acquisitions, divestitures, foreign currency fluctuations, and for the second fiscal quarter, the impact of a calendar shift on ARAMARK’s domestic education businesses in fiscal 2004. Income from continuing operations rose 18 percent to $114.0 million and diluted earnings per share increased 23 percent.
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Chief Executive Officer’s Comments
“We are pleased with our performance for the quarter as well as for the first six months of fiscal 2004. ARAMARK delivered continued improvement in organic sales growth rates across the board in both economically sensitive and non-sensitive business,” said William Leonard, President and Chief Executive Officer of ARAMARK. “This performance demonstrates that our employees remain dedicated to driving our results and executing well on our Mission One growth strategy.”
Food and Support Services
In ARAMARK’sFood and Support Services – U.S. segment, second quarter sales of $1.7 billion were 9 percent higher than the same quarter a year ago, representing organic sales growth of 7 percent. Segment operating income increased 8 percent to $61.1 million.
Sales for theFood and Support Services – International segment rose 34 percent to $475 million compared with the same period last year. The impact of changes in currency translation rates increased reported sales by about 17 percentage points. Organic sales growth for the segment, which was in the high single digits, was strong across the board. Operating income in this segment rose to $23.1 million, a 35 percent increase compared with the prior year. Currency translation contributed about 18 percent.
Uniform and Career Apparel
In ARAMARK’sUniform Career Apparel – Rental segment, sales of $260 million for the second quarter were up 4 percent compared with the same period last year. Organic sales growth was 3 percent. Operating income of $26.7 million represented a 9 percent increase over the prior year quarter. Higher sales and lower merchandise costs, were somewhat offset by higher energy and labor-related expenses.
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In ARAMARK’sDirect Marketing segment, second quarter sales increased 3 percent to $108.4 million. Both WearGuard and Galls delivered low single-digit organic sales growth. Operating income was $4.9 million, an increase of 4 percent.
Financial Guidance for Third Quarter and Fiscal Year 2004
For the third quarter, ARAMARK expects to record sales of $2.5 billion to $2.6 billion and diluted earnings per share of $0.32 to $0.34 compared to $0.31 in the third quarter of fiscal 2003. The $0.31 diluted earnings per share in the third quarter of fiscal 2003 excludes a net $0.02 per share resulting from a tax settlement ($.04 per share), which was partially offset by a debt extinguishment charge ($.02 per share). Earnings for the third quarter are expected to be affected by one less service week in the Education business due to the previously mentioned calendar shift, increased labor-related expenses and on-going start-up efforts for large, new contracts.
For fiscal year 2004, ARAMARK now expects sales in the range of $9.9 billion to $10.1 billion due to a combination of acquisitions, favorable currency translation and improved organic sales growth. The company expects that organic sales growth will be between 5 and 6 percent. Diluted earnings per share from continuing operations are expected to be between $1.40 and $1.44.
Conference Call and Related Financial Information
In conjunction with its second quarter earnings release, ARAMARK will discuss its results in a conference call broadcast live over the Internet on May 12, 2004 at 10:00 a.m. EDT. Interested parties are invited to log on to www.aramark.com to listen to this webcast. A recording of the conference call will be available on that website.
The balance sheet, income statement and other financial information related to the second fiscal quarter of 2004 are attached to this press release and can also be found on the Investor Relations section of ARAMARK’s website atwww.aramark.com.
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Certain previously undisclosed financial information, as well as reconciliations of non-GAAP financial measures that are disclosed in the conference call will also be available on the Investor Relations section of ARAMARK’s website.
About ARAMARK
ARAMARK Corporation is a world leader in providing award-winning food and facilities management services to health care institutions, universities and school districts, stadiums and arenas, international and domestic corporations, as well as providing uniform and career apparel. ARAMARK was ranked number one in its industry in the 2004FORTUNE 500 survey and was also named one of “America’s Most Admired Companies” byFORTUNE magazine in 2004, consistently ranking since 1998 as one of the top three most admired companies in its industry as evaluated by peers. Headquartered in Philadelphia, ARAMARK has approximately 200,000 employees serving clients in 18 countries.
Forward-Looking Statements
This press release 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,” “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; currency risks and other risks associated with international markets; risks associated with acquisitions, including acquisition integration costs; our ability to integrate and derive the expected benefits from recent acquisitions; competition; decline in attendance at client facilities; unpredictability of sales and expenses due to contract terms and terminations; 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; liability associated with non-compliance with governmental regulations, including regulations pertaining to food service, the environment and Federal and state employment laws and wage and hour laws; inability to retain current clients and renew existing client contracts; determination by customers to reduce outsourcing and use of preferred vendors; seasonality and other risks that are set forth in the “Risk Factors” sections of ARAMARK’s SEC filings.
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For further information regarding risks and uncertainties associated with ARAMARK’s business, please refer to the “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Risk Factors” and other sections of ARAMARK’s SEC filings, including, but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting ARAMARK’s investor relations department via its web site www.aramark.com.
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 herein or that may be made elsewhere from time to time by, or on behalf of, us.
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5
ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
Three Months Ended | ||||||
April 2, 2004 | March 28, 2003 | |||||
Sales | $ | 2,517,529 | $ | 2,243,306 | ||
Costs and Expenses: | ||||||
Cost of services provided | 2,303,392 | 2,054,849 | ||||
Depreciation and amortization | 73,793 | 64,145 | ||||
Selling and general corporate expenses | 33,095 | 28,971 | ||||
2,410,280 | 2,147,965 | |||||
Operating income | 107,249 | 95,341 | ||||
Interest and other financing costs, net | 32,311 | 35,069 | ||||
Income from continuing operations before income taxes | 74,938 | 60,272 | ||||
Provision for income taxes | 28,284 | 22,462 | ||||
Income from continuing operations | 46,654 | 37,810 | ||||
Income from discontinued operations, net (1) | — | 5,988 | ||||
Net income | $ | 46,654 | $ | 43,798 | ||
Earnings Per Share—Basic: | ||||||
Income from continuing operations | $0.25 | $0.20 | ||||
Net income | $0.25 | $0.23 | ||||
Earnings Per Share—Diluted: | ||||||
Income from continuing operations | $0.24 | $0.19 | ||||
Net income | $0.24 | $0.22 | ||||
Weighted Average Shares Outstanding: | ||||||
Basic | 190,410 | 193,238 | ||||
Diluted | 194,840 | 199,633 |
(1) | The fiscal 2003 condensed consolidated statement of income has been presented to reflect ARAMARK Educational Resources, which was divested in May 2003, as a discontinued operation. |
ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
Six Months Ended | ||||||
April 2, 2004 | March 28, 2003 | |||||
Sales | $ | 4,976,386 | $ | 4,519,246 | ||
Costs and Expenses: | ||||||
Cost of services provided | 4,524,896 | 4,109,594 | ||||
Depreciation and amortization | 143,325 | 126,436 | ||||
Selling and general corporate expenses | 63,495 | 59,369 | ||||
4,731,716 | 4,295,399 | |||||
Operating income | 244,670 | 223,847 | ||||
Interest and other financing costs, net | 61,570 | 70,220 | ||||
Income from continuing operations before income taxes | 183,100 | 153,627 | ||||
Provision for income taxes | 69,094 | 57,401 | ||||
Income from continuing operations | 114,006 | 96,226 | ||||
Income from discontinued operations, net (1) | — | 10,271 | ||||
Net income | $ | 114,006 | $ | 106,497 | ||
Earnings Per Share—Basic: | ||||||
Income from continuing operations | $0.60 | $0.50 | ||||
Net income | $0.60 | $0.56 | ||||
Earnings Per Share—Diluted: | ||||||
Income from continuing operations | $0.59 | $0.48 | ||||
Net income | $0.59 | $0.53 | ||||
Weighted Average Shares Outstanding: | ||||||
Basic | 188,973 | 191,700 | ||||
Diluted | 194,352 | 199,546 |
(1) | The fiscal 2003 condensed consolidated statement of income has been presented to reflect ARAMARK Educational Resources, which was divested in May 2003, as a discontinued operation. |
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
(In Thousands)
April 2, 2004 | October 3, 2003 | |||||
Assets | ||||||
Current Assets | $ | 1,274,232 | $ | 1,226,592 | ||
Property and Equipment, net | 1,181,139 | 1,184,320 | ||||
Goodwill | 1,557,160 | 1,422,639 | ||||
Other Assets | 644,605 | 634,026 | ||||
$ | 4,657,136 | $ | 4,467,577 | |||
Liabilities and Shareholders’ Equity | ||||||
Current Liabilities (1) | $ | 1,321,614 | $ | 1,415,789 | ||
Long-Term Borrowings | 1,884,060 | 1,711,705 | ||||
Other Liabilities | 316,638 | 301,111 | ||||
Total Shareholders’ Equity | 1,134,824 | 1,038,972 | ||||
$ | 4,657,136 | $ | 4,467,577 | |||
(1) | Includes $37.0 million and $18.2 million of current maturities of long-term borrowings as of April 2, 2004 and October 3, 2003, respectively. |
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW DATA
(Unaudited)
(In Thousands)
Six Months Ended | ||||||||
April 2, 2004 | March 28, 2003 | |||||||
Cash flows from operating activities from continuing operations: | ||||||||
Income from continuing operations | $ | 114,006 | $ | 96,226 | ||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 143,325 | 126,436 | ||||||
Income taxes deferred | 15,920 | 11,690 | ||||||
Changes in noncash working capital | (153,480 | ) | (164,134 | ) | ||||
Net proceeds from sale of receivables | 10,800 | — | ||||||
Other operating activities | (23,704 | ) | (11,715 | ) | ||||
Net cash provided by operating activities from continuing operations | 106,867 | 58,503 | ||||||
Cash flows from investing activities from continuing operations: | ||||||||
Net purchases of property and equipment and client contract investments | (129,863 | ) | (106,808 | ) | ||||
Proceeds from sale of investment | 8,500 | — | ||||||
Acquisitions and other investing activities | (125,610 | ) | (186,459 | ) | ||||
Net cash used in investing activities from continuing operations | (246,973 | ) | (293,267 | ) | ||||
Cash flows from financing activities from continuing operations: | ||||||||
Net proceeds from long-term borrowings | 178,044 | 314,077 | ||||||
Dividend payments | (18,616 | ) | — | |||||
Proceeds from issuance of common stock | 34,307 | 20,200 | ||||||
Repurchase of stock and other financing activities | (64,844 | ) | (111,205 | ) | ||||
Net cash provided by financing activities from continuing operations | 128,891 | 223,072 | ||||||
Net cash provided by discontinued operations (1) | — | 12,156 | ||||||
Increase in cash and cash equivalents | $ | (11,215 | ) | $ | 464 | |||
(1) | The fiscal 2003 statement of cash flows has been presented to reflect ARAMARK Educational Resources, which was divested in May 2003, as a discontinued operation. |
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
Three Months Ended | ||||||||
April 2, 2004 | March 28, 2003 | |||||||
Sales | ||||||||
Food and Support Services—United States | $ | 1,673,837 | $ | 1,533,074 | ||||
Food and Support Services—International | 474,902 | 353,827 | ||||||
Uniform and Career Apparel—Rental | 260,353 | 251,100 | ||||||
Uniform and Career Apparel—Direct Marketing | 108,437 | 105,305 | ||||||
$ | 2,517,529 | $ | 2,243,306 | |||||
Operating Income | ||||||||
Food and Support Services—United States | $ | 61,147 | $ | 56,371 | ||||
Food and Support Services—International | 23,075 | 17,113 | ||||||
Uniform and Career Apparel—Rental | 26,671 | 24,507 | ||||||
Uniform and Career Apparel—Direct Marketing | 4,899 | 4,703 | ||||||
Corporate and Other | (8,543 | ) | (7,353 | ) | ||||
$ | 107,249 | $ | 95,341 | |||||
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
Six Months Ended | ||||||||
April 2, 2004 | March 28, 2003 | |||||||
Sales | ||||||||
Food and Support Services—United States | $ | 3,335,254 | $ | 3,089,391 | ||||
Food and Support Services—International | 889,416 | 689,554 | ||||||
Uniform and Career Apparel—Rental | 516,168 | 505,764 | ||||||
Uniform and Career Apparel—Direct Marketing | 235,548 | 234,537 | ||||||
$ | 4,976,386 | $ | 4,519,246 | |||||
Operating Income | ||||||||
Food and Support Services—United States | $ | 150,800 | $ | 141,309 | ||||
Food and Support Services—International | 39,296 | 31,071 | ||||||
Uniform and Career Apparel—Rental | 55,591 | 51,999 | ||||||
Uniform and Career Apparel—Direct Marketing | 16,350 | 14,631 | ||||||
Corporate and Other | (17,367 | ) | (15,163 | ) | ||||
$ | 244,670 | $ | 223,847 | |||||
ARAMARK CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||||||||||||
ORGANIC GROWTH | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands)
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Management believes that presentation of organic sales growth in the fiscal 2004 and 2003 second quarter and six-month periods, as adjusted to eliminate the effects of acquisitions, divestitures, the forward shift in our fiscal calendar (fiscal 2003 was a 53 week year) and the impact of currency translation, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods. Elimination of the currency translation effect provides constant currency comparisons without the distortion of currency rate fluctuations. The fiscal calendar shift adjustment is made since fiscal 2003 was a 53 week year, resulting in fiscal 2004 starting one week later than normal. This results in a lack of service day comparability in the Education sector when comparing quarterly operating results between fiscal years. Adjusting sales for this difference in the fiscal calendar enhances comparability between the quarterly and year-to-date periods. | ||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||
April 2, 2004 | March 28, 2003 | % Change | April 2, 2004 | March 28, 2003 | % Change | |||||||||||||||
ARAMARK Corporation Consolidated Sales (as reported) | $ | 2,517,529 | $ | 2,243,306 | 12% | $ | 4,976,386 | $ | 4,519,246 | 10% | ||||||||||
Effect of Calendar Shift | (33,000 | ) | — | 7,000 | — | |||||||||||||||
Effect of Currency Translation | — | 50,706 | — | 98,295 | ||||||||||||||||
Effect of Acquisitions and Divestitures | (49,498 | ) | (12,116 | ) | (143,938 | ) | (12,116 | ) | ||||||||||||
ARAMARK Corporation Consolidated Sales (as adjusted) | $ | 2,435,031 | $ | 2,281,896 | 7% | $ | 4,839,448 | $ | 4,605,425 | 5% | ||||||||||
Food and Support Services—United States—Sales (as reported) | $ | 1,673,837 | $ | 1,533,074 | 9% | |||||||||||||||
Effect of Calendar Shift | (33,000 | ) | — | |||||||||||||||||
Effect of Acquisitions and Divestitures | (9,230 | ) | (10,002 | ) | ||||||||||||||||
Food and Support Services—United States—Sales (as adjusted) | $ | 1,631,607 | $ | 1,523,072 | 7% | |||||||||||||||
Food and Support Services—International—Sales (as reported) | $ | 474,902 | $ | 353,827 | 34% | |||||||||||||||
Effect of Currency Translation | — | 50,706 | ||||||||||||||||||
Food and Support Services—International—Sales, Excluding Translation | 474,902 | 404,533 | 17% | |||||||||||||||||
Effect of Acquisitions | (35,318 | ) | — | |||||||||||||||||
Food and Support Services—International—Sales (as adjusted) | $ | 439,584 | $ | 404,533 | 9% | |||||||||||||||
Food and Support Services—International—Operating Income (as reported) | $ | 23,075 | $ | 17,113 | 35% | |||||||||||||||
Effect of Currency Translation | — | 2,569 | ||||||||||||||||||
Food and Support Services—International—Operating Income, Excluding Translation | $ | 23,075 | $ | 19,682 | 17% | |||||||||||||||
ARAMARK CORPORATION AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF NON-GAAP MEASURES | ||||||||||
PROJECTED ORGANIC GROWTH | ||||||||||
(Unaudited) | ||||||||||
(In thousands)
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Management believes that presentation of organic sales growth as currently projected for fiscal 2004, as adjusted to eliminate the effects of acquisitions, divestitures, the forward shift in our fiscal calendar (fiscal 2003 was a 53 week year) and the impact of currency translation, provides useful information to investors because it enhances comparability between the current year and prior year reporting periods (core business growth). Elimination of the currency translation effect provides constant currency comparisons without the distortion of currency rate fluctuations. The fiscal calendar shift adjustment is made since fiscal 2003 was a 53 week year, resulting in fiscal 2004 starting one week later than normal. This results in a lack of service day comparability in the Education sector when comparing quarterly operating results between fiscal years. Additionally, fiscal 2003 contains an additional week of sales. Adjusting sales for these differences in the fiscal calendar enhances comparability between the quarterly and year-to-date periods. | ||||||||||
Fiscal Year Ended | ||||||||||
October 1, 2004 | October 3, 2003 | % Change | ||||||||
Projected | Actual | |||||||||
ARAMARK Corporation Consolidated Sales (as reported) | $ | 10,000,000 | $ | 9,447,815 | 6% | |||||
Estimated Effect of Calendar Shift/53rd week | 31,000 | (187,000 | ) | |||||||
Estimated Effect of Currency Translation | — | 150,000 | ||||||||
Estimated Effect of Acquisitions and Divestitures | (210,000 | ) | (32,000 | ) | ||||||
ARAMARK Corporation Consolidated Sales (as adjusted) | $ | 9,821,000 | $ | 9,378,815 | 5% | |||||