EX-99.1 2 dex991.htm PRESS RELEASE DATED MAY 11, 2005. Press Release dated May 11, 2005.

Exhibit 99.1

 

LOGO

 

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 SECOND QUARTER SALES

 

PHILADELPHIA, PA – May 11, 2005 – ARAMARK Corporation (NYSE: RMK), a world leader in managed services, today reported sales of $2.7 billion, a record for a second quarter, up 6 percent from the prior year quarter.

 

Second quarter net income increased 14 percent to $53.1 million and diluted earnings per share were $0.28, an increase of 17 percent from the prior year quarter.

 

These quarterly results include an after-tax gain of $0.04 per share from a real estate sale by an equity affiliate and a $0.02 per share charge from the company’s plan to exit its West Africa oil services business and management separation costs in the UK.

 

Year-to-Date Results

 

For the first six months of fiscal 2005, sales increased 8 percent to $5.4 billion, net income increased 10 percent to $125.5 million, and diluted earnings per share increased 12 percent to $0.66 from the prior year period.


Chief Executive Officer’s Comments

 

“With our strong first half performance, we are solidly on our way to achieving our planned objectives for the full year. Our performance is especially gratifying in view of the absence of NHL hockey for the full six months,” said Joseph Neubauer, Chairman and Chief Executive Officer of ARAMARK. “We are very focused on achieving sustained profitable growth in all of our businesses. I am particularly pleased with the second quarter margin improvement in our domestic food and support services and uniform rental segments. Through operational focus, financial discipline and strong execution, we are continuing to create value for our clients, customers and shareholders.”

 

Food and Support Services

 

In ARAMARK’s Food and Support Services – U.S. segment, second quarter sales were $1.7 billion, driven by solid growth in the healthcare and education sectors. Sales growth was 2 percent, and 5 percent after adjusting for acquisitions, the NHL lockout, and the Easter holiday’s impact on the Education business. Segment operating income was $77.6 million, up 27 percent from the prior year quarter and up 11 percent after adjusting for the real estate sale gain of $9.7 million. The operating margin improved 30 basis points to 4 percent, excluding the gain.

 

Sales for the Food and Support Services – International segment were $569 million, up 20 percent from the year-ago quarter, including a 6-percentage-point currency translation benefit. Organic growth was 2 percent. Segment operating income of $17.7 million was down from $23.2 million in the 2004 second quarter and includes a $7.4 million charge relating to the company’s planned exit of its oil services business in West Africa and management separation costs in the UK.

 

Uniform and Career Apparel

 

In ARAMARK’s Uniform Career Apparel – Rental segment, sales of $281 million were up 8 percent from the 2004 second quarter. Organic growth was 5 percent. Segment operating income was up 10 percent to $29.4 million and the operating margin improved 20 basis points.

 

 


In the Direct Marketing segment, sales were $103 million, a 5 percent decrease from the prior year quarter. Operating income was $1.2 million compared to $4.9 million for the 2004 second quarter, due principally to margin erosion at Wearguard-Crest.

 

Financial Guidance

 

ARAMARK anticipates third-quarter sales of $2.75 billion to $2.8 billion and diluted earnings per share between $0.36 and $0.38.

 

For fiscal year 2005, ARAMARK expects sales of $10.8 billion to $11.1 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 EPS to be between $1.50 and $1.56.

 

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 11, 2005 at 10:00 a.m. Eastern Time. Interested parties are invited to log on to http://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 2005 are attached to this press release and can also be found on the Investor Relations section of ARAMARK’s website at http://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, international and domestic corporations, as well as providing uniform and career apparel. ARAMARK was ranked number one in its industry in the 2005 FORTUNE 500 survey and was also named one of “America’s Most Admired Companies” by FORTUNE 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 19 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,” “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 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 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.

 

# # #


ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands, Except Per Share Amounts)

 

     Three Months Ended

     April 1, 2005

   April 2, 2004

Sales

   $ 2,659,142    $ 2,517,529
    

  

Costs and Expenses:

             

Cost of services provided

     2,429,619      2,303,392

Depreciation and amortization

     78,897      73,793

Selling and general corporate expenses

     34,744      33,095
    

  

       2,543,260      2,410,280
    

  

Operating income

     115,882      107,249

Interest and other financing costs, net

     33,360      32,311
    

  

Income before income taxes

     82,522      74,938

Provision for income taxes

     29,428      28,284
    

  

Net income

   $ 53,094    $ 46,654
    

  

Earnings Per Share:

             

Basic

   $ 0.28    $ 0.25

Diluted

   $ 0.28    $ 0.24

Weighted Average Shares Outstanding:

             

Basic

     187,388      190,410

Diluted

     189,583      194,840


ARAMARK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Thousands, Except Per Share Amounts)

 

     Six Months Ended

     April 1, 2005

   April 2, 2004

Sales

   $ 5,389,375    $ 4,976,386
    

  

Costs and Expenses:

             

Cost of services provided

     4,904,382      4,524,896

Depreciation and amortization

     156,552      143,325

Selling and general corporate expenses

     68,595      63,495
    

  

       5,129,529      4,731,716
    

  

Operating income

     259,846      244,670

Interest and other financing costs, net

     64,635      61,570
    

  

Income before income taxes

     195,211      183,100

Provision for income taxes

     69,671      69,094
    

  

Net income

   $ 125,540    $ 114,006
    

  

Earnings Per Share:

             

Basic

   $ 0.67    $ 0.60

Diluted

   $ 0.66    $ 0.59

Weighted Average Shares Outstanding:

             

Basic

     186,506      188,973

Diluted

     189,215      194,352


ARAMARK CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED BALANCE SHEET DATA

(Unaudited)

(In Thousands)

 

     April 1, 2005

   October 1, 2004

Assets              

Current Assets

   $ 1,373,353    $ 1,340,015

Property and Equipment, net

     1,223,860      1,214,382

Goodwill

     1,685,782      1,589,144

Other Assets

     803,340      678,032
    

  

     $ 5,086,335    $ 4,821,573
    

  

Liabilities and Shareholders’ Equity              

Current Liabilities (1)

   $ 1,362,381    $ 1,454,930

Long-Term Borrowings

     1,981,051      1,843,200

Other Liabilities

     492,622      373,788

Total Shareholders’ Equity

     1,250,281      1,149,655
    

  

     $ 5,086,335    $ 4,821,573
    

  


(1) - Includes $43.7 million and $25.5 million of current maturities of long-term borrowings as of April 1, 2005 and October 1, 2004, respectively.


ARAMARK CORPORATION AND SUBSIDIARIES

SELECTED CONSOLIDATED CASH FLOW DATA

(Unaudited)

(In Thousands)

 

     Six Months Ended

 
     April 1, 2005

    April 2, 2004

 

Cash flows from operating activities:

                

Net income

   $ 125,540     $ 114,006  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization

     156,552       143,325  

Income taxes deferred

     (3,370 )     15,920  

Changes in noncash working capital

     (121,817 )     (153,480 )

Net proceeds from sale of receivables

     36,000       10,800  

Other operating activities

     (17,814 )     (23,704 )
    


 


Net cash provided by operating activities

     175,091       106,867  
    


 


Cash flows from investing activities:

                

Net purchases of property and equipment and client contract investments

     (142,653 )     (129,863 )

Proceeds from sale of investment

     —         8,500  

Acquisitions and other investing activities

     (82,632 )     (125,610 )
    


 


Net cash used in investing activities

     (225,285 )     (246,973 )
    


 


Cash flows from financing activities:

                

Net proceeds from long-term borrowings

     143,490       178,044  

Dividend payments

     (20,216 )     (18,616 )

Proceeds from issuance of common stock

     28,315       34,307  

Repurchase of stock and other financing activities

     (97,245 )     (64,844 )
    


 


Net cash provided by financing activities

     54,344       128,891  
    


 


Increase (decrease) in cash and cash equivalents

   $ 4,150     $ (11,215 )
    


 



ARAMARK CORPORATION AND SUBSIDIARIES

SALES AND OPERATING INCOME BY SEGMENT

SUPPLEMENTAL DATA

(Unaudited)

(In Thousands)

 

     Three Months Ended

 
     April 1, 2005

    April 2, 2004

 

Sales

                

Food and Support Services - United States

   $ 1,705,705     $ 1,673,028  

Food and Support Services - International

     569,283       475,711  

Uniform and Career Apparel - Rental

     280,800       260,353  

Uniform and Career Apparel - Direct Marketing

     103,354       108,437  
    


 


     $ 2,659,142     $ 2,517,529  
    


 


Operating Income

                

Food and Support Services - United States (1)

   $ 77,608     $ 60,996  

Food and Support Services - International (2)

     17,693       23,226  

Uniform and Career Apparel - Rental

     29,400       26,697  

Uniform and Career Apparel - Direct Marketing

     1,249       4,873  

Corporate

     (10,068 )     (8,543 )
    


 


     $ 115,882     $ 107,249  
    


 



(1) Includes $9.7 million gain on real estate sale by equity affiliate.
(2) Includes $7.4 million charge for exiting West Africa business and severance.


ARAMARK CORPORATION AND SUBSIDIARIES

SALES AND OPERATING INCOME BY SEGMENT

SUPPLEMENTAL DATA

(Unaudited)

(In Thousands)

 

     Six Months Ended

 
     April 1, 2005

    April 2, 2004

 
Sales                 

Food and Support Services - United States

   $ 3,482,236     $ 3,333,586  

Food and Support Services - International

     1,121,293       891,084  

Uniform and Career Apparel - Rental

     556,974       516,168  

Uniform and Career Apparel - Direct Marketing

     228,872       235,548  
    


 


     $ 5,389,375     $ 4,976,386  
    


 


Operating Income                 

Food and Support Services - United States (1)

   $ 172,282     $ 150,432  

Food and Support Services - International (2)

     38,834       39,664  

Uniform and Career Apparel - Rental

     60,026       55,617  

Uniform and Career Apparel - Direct Marketing

     9,559       16,324  

Corporate

     (20,855 )     (17,367 )
    


 


     $ 259,846     $ 244,670  
    


 



(1) Includes $9.7 million gain on real estate sale by equity affiliate.
(2) Includes $7.4 million charge for exiting West Africa business and severance.


ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED SALES GROWTH

(Unaudited)

(In thousands)

 

Management believes that presentation of sales growth in the quarterly periods adjusted to eliminate the effects of acquisitions, divestitures, the impact of currency translation (organic growth) and, for fiscal 2005, the effect of the National Hockey League strike and the estimated effect of the Easter holiday timing on the Education Sector sales, 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


 
     April 1, 2005

    April 2, 2004

   

Food and Support Services - U.S. Sales (as reported)

   $ 1,705,705     $ 1,673,028     2 %

Effect of Acquisitions and Divestitures

     (109 )     —          
    


 


     
       1,705,596       1,673,028        

NHL Strike

     —         (34,636 )      

Estimated Effect of Timing of Easter Holidays on Education Sector

     7,048       —          
    


 


     

Food and Support Services - U.S. Sales (as adjusted)

   $ 1,712,644     $ 1,638,392     5 %
    


 


     

Food and Support Services - International Sales (as reported)

   $ 569,283     $ 475,711     20 %

Effect of Currency Translation

     —         24,595        
    


 


     

Food and Support Services - International Sales (excluding currency translation)

     569,283       500,306     14 %

Effect of Acquisitions and Divestitures

     (87,563 )     (26,079 )      
    


 


     

Food and Support Services - International Sales (as adjusted)

   $ 481,720     $ 474,227     2 %
    


 


     


ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED OPERATING INCOME

(Unaudited)

(In thousands)

 

Management believes that presentation of operating income growth in the quarterly periods adjusted to eliminate the effect of the gain from a real estate sale by an equity affiliate ($9.7 million), provides useful information to investors because it enhances comparability between the current year and prior year reporting periods.

 

     Three Months Ended

  

%

Change


 
     April 1, 2005

    April 2, 2004

  

Food and Support Service - U.S. Operating Income (as reported)

   $ 77,608     $ 60,996    27 %

Gain from Real Estate Sale by Equity Affiliate

     (9,737 )     —         
    


 

      

Food and Support Services - U.S. Operating Income (as adjusted)

   $ 67,871     $ 60,996    11 %
    


 

      


ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

ADJUSTED OPERATING INCOME MARGIN

(Unaudited)

(In thousands)

 

In the second quarter of fiscal 2005, ARAMARK recorded a $9.7 million gain related to a real estate sale by an equity affiliate. The table below is presented to illustrate the effect of this gain on operating income margin, which we define as operating income expressed as a percentage of sales.

 

     Three Months Ended

   

Change


 
     April 1, 2005

    April 2, 2004

   

Food and Support Services - U.S. Sales (as reported)

   $ 1,705,705     $ 1,673,028        
    


 


     

Food and Support Services - U.S. Operating Income (as reported)

   $ 77,608     $ 60,996        
    


 


     

Food and Support Services - U.S. Operating Margin (as reported)

     4.5 %     3.6 %      
    


 


     

Food and Support Services - U.S. Sales (as reported)

   $ 1,705,705     $ 1,673,028        
    


 


     

Food and Support Services - U.S. Operating Income (as reported)

   $ 77,608     $ 60,996        

Less: Gain on Sale

     (9,737 )     —          
    


 


     

Food and Support Services - U.S. Operating Income (as adjusted)

   $ 67,871     $ 60,996        
    


 


     

Food and Support Services - U.S. Operating Margin (as adjusted)

     4.0 %     3.6 %   0.33 %
    


 


     

 

 


ARAMARK CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASURES

FORECASTED FULL YEAR DILUTED EARNINGS PER SHARE

(Unaudited)

 

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 from the comparisons of forecasted earnings per share due to the size and unusual nature of these items.

 

     Fiscal Year Ended
September 30, 2005


 

Forecasted Range of Diluted Earnings Per Share

   $ 1.52     -   $ 1.58  

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  
    


     


Forecasted Range of Diluted Earnings Per Share (as adjusted)

   $ 1.50     -   $ 1.56