Exhibit 99.1
NEWS
RELEASE
Media Relations: | Investor Relations: | |
ARAMARK Corporation | ARAMARK Corporation | |
Kristine Grow, 215-238-3538 | Bobbi Chaville, 215-238-3726 | |
grow-kristine@aramark.com | chaville-bobbi@aramark.com |
ARAMARK REPORTS RECORD THIRD-QUARTER SALES OF $2.8 BILLION,
EARNINGS PER SHARE INCREASE 15 PERCENT TO $0.38
PHILADELPHIA, August 10, 2005 – ARAMARK Corporation (NYSE: RMK), a world leader in managed services, today reported record sales of $2.8 billion for the 2005 third quarter, up 8 percent from the prior year quarter.
Net income increased 11 percent over the 2004 third quarter to $71.4 million and diluted earnings per share increased 15 percent to $0.38.
Year-to-Date Results
Sales for the first nine months of the 2005 fiscal year increased 8 percent to a record $8.2 billion. Net income was up 10 percent to $196.9 million and diluted earnings per share increased 13 percent to $1.04.
Chief Executive Officer’s Comments
“Building on our solid year-to-date results, we saw continued improvement in both sales and margins in the third quarter,” said Joseph Neubauer, Chairman and Chief Executive Officer of ARAMARK. “I am very pleased that the operating margin in our U.S. food and support services segment increased by about 30 basis points. We are delivering on our financial objectives by generating record sales, strong cash flow and double-digit earnings per share growth. We are continuing to win significant new business and are adding value for our clients and customers.”
Food and Support Services
In ARAMARK’sFood and Support Services – U.S. segment, sales were $1.8 billion, up 4 percent from the year-ago quarter. Organic sales growth was also 4 percent, as solid base business growth was in part offset by the anticipated loss of two baseball stadiums. Segment operating income increased 9 percent to $97.7 million and the operating margin improved 30 basis points over the prior year quarter to 5.4 percent.
In theFood and Support Services – International segment, sales increased 25 percent to $594 million, including a 7 percentage point currency translation benefit. Organic growth was 8 percent, driven primarily by growth in Germany, Chile, Canada and Spain. Segment operating income was $21.3 million, up 11 percent from the year-ago quarter. Currency translation contributed approximately 5 percentage points to the operating income growth rate.
Uniform and Career Apparel
Sales in ARAMARK’sUniform and Career Apparel – Rental segment were $283 million, up 8 percent from the year-ago quarter. Organic growth was 5 percent. Segment operating income increased 8 percent to $31.3 million.
In theDirect Marketing segment, sales were $100 million, a decrease of 4 percent from the year-ago quarter. Operating income was $2.6 million, up 6 percent from the prior year quarter.
Financial Guidance
For fiscal year 2005, ARAMARK expects sales of $10.9 billion to $11 billion. Excluding the net impact of the second quarter’s real estate gain and International write-off, which increased earnings per share by $0.02, the company expects full-year diluted earnings per share between $1.52 and $1.55.
Conference Call and Related Financial Information
In conjunction with its third quarter earnings release, ARAMARK will discuss its results in a conference call broadcast live over the Internet on August 10, 2005 at 10:00 a.m. Eastern Time. Interested parties are invited to log on tohttp://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 third fiscal quarter of 2005 are attached to this press release and can also be found on the Investor Relations section of ARAMARK’s website athttp://www.aramark.com.
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, and corporations, as well as providing uniform and career apparel. ARAMARK was ranked number one in its industry in the 2005FORTUNE 500 survey and was also named one of “America’s Most Admired Companies” byFORTUNE magazine in 2005, 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 242,500 employees serving clients in 20 countries.
Forward-Looking Statements
Forward-looking statements speak only as of the date made. We undertake no obligation to update any forward-looking statements, including prior forward-looking statements, to reflect the events or circumstances arising after the date as of which they were made. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, us.
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,” “are confident,” “estimate,” “expect,” “will be,” “will continue,” “will likely result,” “project,” “intend,” “plan,” “believe,” “look to” 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 organizing activities; 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 risk that clients may become insolvent; 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 non-compliance with governmental regulations, including regulations pertaining to food service, the environment, Federal and state employment laws and wage and hour laws; import and export controls and customs laws; dram shop litigation; 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,” “Legal Proceedings” and “Management Discussion and Analysis of Results of Operations and Financial Condition” sections of and elsewhere in ARAMARK’s SEC filings, copies of which may be obtained by contacting ARAMARK’s investor relations department via its web site www.aramark.com.
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ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
Three Months Ended | ||||||
July 1, 2005 | July 2, 2004 | |||||
Sales | $ | 2,792,366 | $ | 2,594,924 | ||
Costs and Expenses: | ||||||
Cost of services provided | 2,533,272 | 2,356,471 | ||||
Depreciation and amortization | 79,410 | 74,781 | ||||
Selling and general corporate expenses | 35,752 | 31,722 | ||||
2,648,434 | 2,462,974 | |||||
Operating income | 143,932 | 131,950 | ||||
Interest and other financing costs, net | 32,222 | 30,873 | ||||
Income before income taxes | 111,710 | 101,077 | ||||
Provision for income taxes | 40,327 | 36,617 | ||||
Net income | $ | 71,383 | $ | 64,460 | ||
Earnings Per Share: | ||||||
Basic | $ | 0.38 | $ | 0.34 | ||
Diluted | $ | 0.38 | $ | 0.33 | ||
Weighted Average Shares Outstanding: | ||||||
Basic | 186,264 | 189,446 | ||||
Diluted | 188,078 | 193,777 |
ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
Nine Months Ended | ||||||
July 1, 2005 | July 2, 2004 | |||||
Sales | $ | 8,181,741 | $ | 7,571,310 | ||
Costs and Expenses: | ||||||
Cost of services provided | 7,437,654 | 6,881,367 | ||||
Depreciation and amortization | 235,962 | 218,106 | ||||
Selling and general corporate expenses | 104,347 | 95,217 | ||||
7,777,963 | 7,194,690 | |||||
Operating income | 403,778 | 376,620 | ||||
Interest and other financing costs, net | 96,857 | 92,443 | ||||
Income before income taxes | 306,921 | 284,177 | ||||
Provision for income taxes | 109,998 | 105,711 | ||||
Net income | $ | 196,923 | $ | 178,466 | ||
Earnings Per Share: | ||||||
Basic | $ | 1.06 | $ | 0.94 | ||
Diluted | $ | 1.04 | $ | 0.92 | ||
Weighted Average Shares Outstanding: | ||||||
Basic | 186,425 | 189,131 | ||||
Diluted | 188,837 | 194,162 |
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
(In Thousands)
July 1, 2005 | October 1, 2004 | |||||
Assets | ||||||
Current Assets | $ | 1,339,795 | $ | 1,340,015 | ||
Property and Equipment, net | 1,206,734 | 1,214,382 | ||||
Goodwill | 1,677,610 | 1,589,144 | ||||
Other Assets | 818,511 | 678,032 | ||||
$ | 5,042,650 | $ | 4,821,573 | |||
Liabilities and Shareholders’ Equity | ||||||
Current Liabilities (1) | $ | 1,321,808 | $ | 1,454,930 | ||
Long-Term Borrowings | 1,971,674 | 1,843,200 | ||||
Other Liabilities | 491,624 | 373,788 | ||||
Total Shareholders’ Equity | 1,257,544 | 1,149,655 | ||||
$ | 5,042,650 | $ | 4,821,573 | |||
(1) | Includes $40.5 million and $25.5 million of current maturities of long-term borrowings as of July 1, 2005 and October 1, 2004, respectively. |
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW DATA
(Unaudited)
(In Thousands)
Nine Months Ended | ||||||||
July 1, 2005 | July 2, 2004 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 196,923 | $ | 178,466 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 235,962 | 218,106 | ||||||
Income taxes deferred | (3,055 | ) | 21,539 | |||||
Changes in noncash working capital | (124,043 | ) | (138,381 | ) | ||||
Net proceeds from sale of receivables | 30,500 | — | ||||||
Other operating activities | (26,067 | ) | (39,618 | ) | ||||
Net cash provided by operating activities | 310,220 | 240,112 | ||||||
Cash flows from investing activities: | ||||||||
Net purchases of property and equipment and client contract investments | (213,518 | ) | (200,002 | ) | ||||
Proceeds from sale of investment | — | 8,500 | ||||||
Acquisitions and other investing activities | (89,760 | ) | (136,568 | ) | ||||
Net cash used in investing activities | (303,278 | ) | (328,070 | ) | ||||
Cash flows from financing activities: | ||||||||
Net proceeds from long-term borrowings | 145,867 | 185,593 | ||||||
Dividend payments | (30,313 | ) | (27,946 | ) | ||||
Proceeds from issuance of common stock | 30,997 | 37,578 | ||||||
Repurchase of stock and other financing activities | (156,492 | ) | (106,979 | ) | ||||
Net cash provided by (used in) financing activities | (9,941 | ) | 88,246 | |||||
Increase (decrease) in cash and cash equivalents | $ | (2,999 | ) | $ | 288 | |||
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
Three Months Ended | ||||||||
July 1, 2005 | July 2, 2004 | |||||||
Sales | ||||||||
Food and Support Services - United States | $ | 1,815,272 | $ | 1,752,173 | ||||
Food and Support Services - International | 594,035 | 475,595 | ||||||
Uniform and Career Apparel - Rental | 282,879 | 262,312 | ||||||
Uniform and Career Apparel - Direct Marketing | 100,180 | 104,844 | ||||||
$ | 2,792,366 | $ | 2,594,924 | |||||
Operating Income | ||||||||
Food and Support Services - United States | $ | 97,670 | $ | 89,361 | ||||
Food and Support Services - International | 21,250 | 19,172 | ||||||
Uniform and Career Apparel - Rental | 31,329 | 29,124 | ||||||
Uniform and Career Apparel - Direct Marketing | 2,576 | 2,428 | ||||||
Corporate | (8,893 | ) | (8,135 | ) | ||||
$ | 143,932 | $ | 131,950 | |||||
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
Nine Months Ended | ||||||||
July 1, 2005 | July 2, 2004 | |||||||
Sales | ||||||||
Food and Support Services - United States | $ | 5,297,508 | $ | 5,085,759 | ||||
Food and Support Services - International | 1,715,328 | 1,366,679 | ||||||
Uniform and Career Apparel - Rental | 839,853 | 778,480 | ||||||
Uniform and Career Apparel - Direct Marketing | 329,052 | 340,392 | ||||||
$ | 8,181,741 | $ | 7,571,310 | |||||
Operating Income | ||||||||
Food and Support Services - United States (1) | $ | 269,952 | $ | 239,793 | ||||
Food and Support Services - International (2) | 60,084 | 58,836 | ||||||
Uniform and Career Apparel - Rental | 91,355 | 84,741 | ||||||
Uniform and Career Apparel - Direct Marketing | 12,135 | 18,752 | ||||||
Corporate | (29,748 | ) | (25,502 | ) | ||||
$ | 403,778 | $ | 376,620 | |||||
(1) | Includes $9.7 million gain on real estate sale by equity affiliate that was recorded in the second quarter of fiscal 2005. |
(2) | Includes $7.4 million charge for exiting West Africa business and severance that was recorded in the second quarter of fiscal 2005. |
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ORGANIC SALES GROWTH
(Unaudited)
(In thousands)
Management believes that presentation of sales growth in the quarterly periods adjusted to eliminate the effects of acquisitions, divestitures and the impact of currency translation (organic growth), 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.
Three Months Ended | % Change | |||||||||
July 1, 2005 | July 2, 2004 | |||||||||
Food and Support Services - International Sales (as reported) | $ | 594,035 | $ | 475,595 | 25 | % | ||||
Effect of Currency Translation | — | 25,951 | ||||||||
Food and Support Services - International Sales (excluding currency translation) | 594,035 | 501,546 | 18 | % | ||||||
Effect of Acquisitions and Divestitures | (51,862 | ) | — | |||||||
Food and Support Services - International Sales (as adjusted) | $ | 542,173 | $ | 501,546 | 8 | % | ||||
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
FULL YEAR DILUTED EARNINGS PER SHARE GUIDANCE
(Unaudited)
From time to time, ARAMARK provides guidance with respect to its estimate of diluted earnings per share. In the second quarter of fiscal 2005, the Company recorded a gain on a real estate sale by an equity affiliate of $9.7 million ($7.8 million net of tax; $0.04 per share). Additionally, the Company recorded charges of $7.4 million ($4.8 million net of tax; $0.02 per share) related to the plan to exit its oil services business in West Africa and management separation charges in the UK. These items have been excluded in the analysis that follows due to the size and unusual nature of these items.
Fiscal Year Ended September 30, | ||||||||||
Estimated Range of Full Year Diluted Earnings Per Share (before adjustment) | $ | 1.54 | - | $ | 1.57 | |||||
Less: Gain from Real Estate Sale by Equity Affiliate | (0.04 | ) | (0.04 | ) | ||||||
Add: Charges for Exiting West Africa and UK Management Separation Costs | 0.02 | 0.02 | ||||||||
Estimated Range of Full Year Diluted Earnings Per Share (as adjusted) | $ | 1.52 | - | $ | 1.55 | |||||