Exhibit 99.1
For further information contact:
Steve Bono (Com) 630.271. 2150
Steve Preston (CFO) 630.271.2637
Bruce Byots (IR) 630.271.2906
SERVICEMASTER TO SELL MANAGEMENT SERVICES GROUP
TO ARAMARK CORPORATION FOR $800 MILLION
Strategic Review Results in Highly Focused Consumer Oriented Company
DOWNERS GROVE, IL, October 4, 2001 - The ServiceMaster Company (NYSE:SVM)
announced today it will sell its Management Services business, which serves
institutional customers, to ARAMARK Corporation for $800 million, with net after
tax cash proceeds of approximately $600 million. The Company plans to use the
proceeds to pay down debt in the near term. The all-cash transaction is expected
to close by mid-November after obtaining regulatory approvals. The Company
expects to report an after-tax accounting gain of approximately $385 million.
ServiceMaster also announced that it will wind-down certain non-strategic
and unprofitable businesses including TruGreen LandCare Construction and
Certified Systems Inc. (CSI), as well as certain other small operations. The
Company expects to record a non-recurring after-tax restructuring charge in the
range of $300 million to $365 million in the fourth quarter 2001. The majority
of the charge relates to non-cash asset impairments, while the cash component of
the wind-down is expected to be approximately $45 million.
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"The sale of Management Services is a transformational event for our
company," said Jonathan Ward, president and CEO of ServiceMaster. "The actions
announced today recognize that ServiceMaster is in a unique position to serve
the residential consumer in U.S. markets, where we have the greatest opportunity
to increase shareholder value. We will have the ability to leverage the common
competencies of our businesses across this focused, competitive platform. And it
significantly strengthens our financial flexibility, providing us with greater
latitude to invest in the growth of our core businesses."
The events announced today are the culmination of an extensive portfolio
review process which was initiated this spring. The goal of the portfolio review
was to increase shareholder value by creating a focused and aligned company that
provides the greatest return and growth potential.
"Over time we will be able to enhance our growth and invest in high-return
opportunities as a result of our stronger balance sheet," said Ward. "In
addition, we remain committed to our current dividend policy, which is important
to our current shareholders."
On a pro-forma basis, the Company would expect dilution of $.04/share in
2001 under current accounting standards. However, under SFAS 142 "Goodwill and
Other Intangible Assets," which the Company will adopt in 2002, the estimated
pro forma dilution would be $.06/share.
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"Our line of market-leading brands uniquely positions us as America's Home
Services Company - Terminix, TruGreen, American Home Shield, American
Residential Services, Rescue Rooter, ServiceMaster Clean, Merry Maids,
AmeriSpec, Furniture Medic and ServiceMaster Home Service Center," Ward added.
"Management Services has historically been a good business for
ServiceMaster and now is a better fit with ARAMARK. Both companies will enhance
their ability to service their customers as a result of this transaction," Ward
noted.
"ServiceMaster and its management team are recognized as industry leaders,"
said Joseph Neubauer, Chairman and CEO of ARAMARK. "This acquisition will enable
us to further strengthen our `Unlimited Partnerships' with an outstanding base
of customers in the healthcare, education and business sectors. With ARAMARK's
resources and expertise and ServiceMaster's experience and quality management
team, we will be better positioned to provide broader solutions to all of our
customers," he said.
Management Services, which serves institutional healthcare, education and
business sectors, has 18,000 employees and manages a workforce of 69,000 on
behalf of its customers. As part of the transaction, ServiceMaster has licensed
its trade name for a period of up to three years. Management Services reported
revenues of $1.9 billion and operating income of $66 million in fiscal 2000.
In addition, ServiceMaster has entered into an agreement with Environmental
Industries, Inc. and its Valley Crest subsidiary, the nation's largest landscape
construction company, to manage the current backlog of LandCare Construction
contracts and acquire selected landscape operations.
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The TruGreen LandCare Construction business had revenues of approximately
$168 million in 2000 and approximately 2,500 employees. ServiceMaster will
retain the LandCare Maintenance business that provides ongoing maintenance
services to the commercial market and has recently expanded into residential
landscaping.
CSI is a Mesquite, Texas-based professional employer organization operating
in 41 states. CSI employs 100 people and provides out-sourced human resources
support to 10,000 people. CSI reported 2000 revenues of approximately $300
million.
ServiceMaster currently provides outsourcing services to more than 12
million customers in the United States and in 45 countries around the world,
with customer level revenue of $7.6 billion. The core service capabilities of
the Company include lawn care and landscaping, termite and pest control,
plumbing, heating and air conditioning maintenance and repair, cleaning, plant
maintenance and supportive management. These services are provided through a
network of over 5,500 company-owned and franchised service centers and business
units.
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Conference Call Details
The Company will provide commentary on the actions announced today at 10:30
a.m. CT on October 4, 2001. Interested parties may listen at 877-313-1275 and
enter passcode 1030104. The conference call will include Jon Ward, President and
Chief Executive Officer, and Steven Preston, Chief Financial Officer.
The call will be broadcast live and can be accessed at www.svm.com. The
call will be archived and available on this site or by calling 800-642-1687,
using Conference #1994740, for 30 days.
The Company notes that statements that look forward in time, which include
everything other than historical information involve risks and uncertainties
that affect the Company's results of operations. Factors which could cause
actual results to differ materially from those expressed or implied in a
forward-looking statement include the following (among others): weather
conditions adverse to certain of the Company's consumer and commercial services
businesses; the entry of additional competitors in any of the markets served by
the Company; labor shortages; unexpected changes in operating costs; the
condition of the U.S. economy; the cost and length of time associated with
integrating or winding down businesses; and other factors listed from time to
time in the Company's filing with the Securities and Exchange Commission.
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