ARAMARK Reports Continued Growth in Sales and Earnings for First Quarter Fiscal 2004; Sales rise 8 percent, earnings per share up 21 percent.Business Editors PHILADELPHIA--(BUSINESS WIRE)--Feb. 11, 2004 ARAMARK Aramark Corporation is a private company that is a professional services organization, providing food services, facilities management, hospitality services, uniforms and career apparel to large public and private institutions worldwide. Corporation (NYSE NYSE See: New York Stock Exchange :RMK RMK Remark (Weather METAR) RMK Rocky Mountain King (Polaris Snowmobiles) RMK Remarks RMK Resource Manager Kernel ), a world leader in managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality , today reported sales from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $2.5 billion for its first fiscal quarter ended January January: see month. 2, 2004, an 8 percent increase compared with the year-ago quarter. Income from continuing operations for the quarter was $67.4 million, an increase of 15 percent when compared to the $58.4 million recorded in the prior year quarter. Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share were $0.35 per share, a 21 percent increase over the same period last year. Chief Executive Officer's Comments "We are pleased with our continuing high client retention rates, higher levels of net new sales, encouraging levels of organic sales growth and overall positive growth trends in our Facilities Services, International, Education and Healthcare businesses," said William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack Leonard Leon·ard , Ray Charles Known as "Sugar Ray." Born 1956. American boxer who won the 1976 Olympic light welterweight title. He held five world titles as both a welterweight and middleweight between 1979 and 1987. Noun 1. , President and Chief Executive Officer of ARAMARK. "Our 200,000 employees and their deep commitment to meeting our customers' needs drove our performance this quarter." Food and Support Services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services In ARAMARK's Food and Support Services - U.S. segment, first quarter sales of $1.7 billion were 7 percent higher than the same quarter a year ago, representing a 4 percent organic increase. Solid growth in non-economically sensitive areas such as Education and Healthcare was partially offset by flat growth in services to clients that are employment-sensitive. Segment operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 6 percent to $89.7 million. Sales for the Food and Support Services - International segment rose 23 percent to $414.5 million compared with the same period last year. The impact of changes in currency translation rates increased reported sales by about 14 percentage points. Organic growth for the segment was 6 percent. Operating income in this segment rose to $16.2 million, a 16 percent increase compared with the prior year due to foreign currency translation. Uniform and Career Apparel In ARAMARK's Uniform Career Apparel - Rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. segment, sales of $255.8 million for the first quarter were flat compared with the year-ago period. Operating income of $28.9 million represented a 5 percent increase over the prior year primarily due to cost controls and a small divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). gain. Net new business growth, modest price increases and solid client retention were offset by a contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction in base business related to continuing weak U.S. employment levels. In ARAMARK's Direct Marketing segment, first quarter sales declined 2 percent to $127.1 million. Increased sales of safety products were offset by weak demand in work clothing. Operating income was $11.5 million, an increase of 15 percent compared with the year-ago quarter. Effective cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. drove the improvement. Internal Cash Flow Internal cash flow, defined as net income plus non cash charges such as depreciation, amortization and deferred taxes, less all capital expenditures, was $80 million for the quarter, up 7 percent over the prior year's first quarter. Financial Guidance for the Second Quarter For the second fiscal quarter of 2004, ARAMARK expects to record sales in the range of $2.3 billion to $2.4 billion and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of from continuing operations are expected to be between $0.22 and $0.24 compared to $0.19 for the same period a year ago. Conference Call and Related Financial Information In conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with its first quarter earnings release, ARAMARK will discuss its results in a conference call broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the on February February: see month. 11, 2004 at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . 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 first fiscal quarter of 2004 can be found on the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of ARAMARK's website at www.aramark.com. Reconciliations of non-GAAP disclosures that are disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). 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 Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" food and facilities management The management of a user's computer installation by an outside organization. All operations including systems, programming and the datacenter can be performed by the facilities management organization on the user's premises. services to healthcare institutions, universities and schools, stadiums and arenas, international and domestic corporations, as well as providing uniform and career apparel. In FORTUNE Magazine's 2003 survey of the "Most Admired ad·mire v. ad·mired, ad·mir·ing, ad·mires v.tr. 1. To regard with pleasure, wonder, and approval. 2. To have a high opinion of; esteem or respect. 3. Companies in America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. ," ARAMARK ranks No. 1 in the outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. services category and is No. 10 among all companies included in the survey by overall score as evaluated by peers within the industry. Headquartered in Philadelphia Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. , ARAMARK has approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 200,000 employees serving clients in 18 countries. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the forward-looking statements. Factors that might cause such a difference include: unfavorable economic conditions, including ramifications ramifications npl → Auswirkungen pl of any future terrorist attacks; increased operating costs operating costs npl → gastos mpl operacionales ; 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 de·rive v. 1. To obtain or receive from a source. 2. To produce or obtain a chemical compound from another substance by chemical reaction. 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the provision of food services food services Hospital services A 24/7 department in a hospital that provides for the nutritional needs of inpatients–eg, those needing special diets, preparing meals and transporting them to the floor and, through the cafeteria, the hospital staff and ; costs of compliance with governmental regulations; liability associated with non-compliance with governmental regulations, including regulations pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to food services and the environment; 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. For further information regarding risks and uncertainties associated with ARAMARK's business, please refer to the "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Results of Operations and Financial Condition" and "Risk Factors" sections of ARAMARK's SEC filings, including, but not limited to, our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and quarterly reports on Form 10-Q Form 10-Q See 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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.
ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
Three Months Ended
------------------------------------
January 2, 2004 December 27, 2002
----------------- -----------------
Sales $ 2,458,857 $ 2,275,940
----------------- ----------------
Costs and Expenses:
Cost of services provided 2,221,504 2,054,744
Depreciation and amortization 69,532 62,292
Selling and general corporate
expenses 30,400 30,398
----------------- ----------------
2,321,436 2,147,434
----------------- ----------------
Operating income 137,421 128,506
Interest and other financing
costs, net 29,259 35,151
----------------- ----------------
Income from continuing
operations before income
taxes 108,162 93,355
Provision for income taxes 40,810 34,939
----------------- ----------------
Income from continuing
operations 67,352 58,416
Income from discontinued
operations, net (1) - 4,283
----------------- ----------------
Net income $ 67,352 $ 62,699
================= ================
Earnings Per Share - Basic:
Income from continuing
operations $0.36 $0.31
Net income $0.36 $0.33
Earnings Per Share - Diluted:
Income from continuing
operations $0.35 $0.29
Net income $0.35 $0.31
Weighted Average Shares
Outstanding:
Basic 187,536 190,194
Diluted 193,860 199,177
(1) - The fiscal 2003 consolidated statement of income has been
presented to reflect ARAMARK Educational Resources as a
discontinued operation.
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
(In Thousands)
January 2, 2004 October 3, 2003
----------------- ----------------
Assets
----------------------------------
Current Assets $ 1,218,129 $ 1,226,592
Property and Equipment, net 1,168,809 1,184,320
Goodwill 1,458,633 1,422,639
Other Assets 643,873 634,026
----------------- ----------------
$ 4,489,444 $ 4,467,577
================= ================
Liabilities and Shareholders'
Equity
----------------------------------
Current Liabilities (1) $ 1,163,770 $ 1,415,789
Long-Term Borrowings 1,921,240 1,711,705
Other Liabilities 304,984 301,111
Total Shareholders' Equity 1,099,450 1,038,972
----------------- ----------------
$ 4,489,444 $ 4,467,577
================= ================
(1) - Includes $36.7 million and $18.2 million of current maturities
of long-term borrowings as of January 2, 2004 and October 3,
2003, respectively.
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW DATA
(Unaudited)
(In Thousands)
Three Months Ended
------------------------------------
January 2, 2004 December 27, 2002
----------------- -----------------
Cash flows from operating
activities from continuing
operations:
Income from continuing
operations $ 67,352 $ 58,416
Adjustments to reconcile
income from continuing
operations to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 69,532 62,292
Income taxes deferred 6,488 6,227
Changes in noncash working
capital (289,249) (168,704)
Net proceeds from sale of
receivables 16,300 47,500
Other operating activities (12,839) (3,244)
----------------- ----------------
Net cash provided by (used in)
operating activities from
continuing operations (142,416) 2,487
----------------- ----------------
Cash flows from investing
activities from continuing
operations:
Net purchases of property
and equipment and client
contract investments (63,625) (52,289)
Proceeds from sale of
investment 8,500 -
Acquisitions and other
investing activities (3,908) (172,703)
----------------- ----------------
Net cash used in investing
activities from continuing
operations (59,033) (224,992)
----------------- ----------------
Cash flows from financing
activities from continuing
operations:
Net proceeds from long-term
borrowings 227,355 252,829
Payment of dividend (9,212) -
Proceeds from issuance of
common stock 4,787 757
Repurchase of stock and other
financing activities (31,837) (39,551)
----------------- ----------------
Net cash provided by financing
activities from continuing
operations 191,093 214,035
----------------- ----------------
Net cash provided by discontinued
operations (1) - 4,691
----------------- ----------------
Decrease in cash and cash
equivalents $ (10,356) $ (3,779)
================= ================
(1) - The fiscal 2003 statement of cash flows has been presented to
reflect ARAMARK Educational Resources as a discontinued
operation.
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
Three Months Ended
------------------------------------
January 2, 2004 December 27, 2002
----------------- -----------------
Sales
----------------------------------
Food and Support Services -
United States $ 1,661,417 $ 1,556,317
Food and Support Services -
International 414,514 335,727
Uniform and Career Apparel -
Rental 255,815 254,664
Uniform and Career Apparel -
Direct Marketing 127,111 129,232
----------------- ----------------
$ 2,458,857 $ 2,275,940
================= ================
Operating Income
----------------------------------
Food and Support Services -
United States $ 89,653 $ 84,938
Food and Support Services -
International 16,221 13,958
Uniform and Career Apparel -
Rental 28,920 27,492
Uniform and Career Apparel -
Direct Marketing 11,451 9,928
Corporate (8,824) (7,810)
----------------- ----------------
$ 137,421 $ 128,506
================= ================
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
ORGANIC GROWTH
(Unaudited)
(In thousands)
---------------------------------------------------------------------
Management believes that presentation of organic sales growth in the
fiscal 2004 and 2003 first quarters, 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 two 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, with the 53rd week, which ended on October 3, 2003,
included in the fiscal 2003 fourth quarter. The comparable prior year
week was included in the first quarter of fiscal 2003 resulting in a
lack of comparability between the first quarters of fiscal 2003 and
fiscal 2004, particularly in the Education sector. Adjusting Education
sector sales for this difference in the fiscal calendar enhances
comparability between the two quarterly periods.
----------------------------------------------------------------------
Three Months Ended
--------------------------- %
January 2, December 27, Change
2004 2002
----------------------------------- ----------------------------------
Food and Support Services - United
States - Sales (as reported) $1,661,417 $1,556,317 7%
Less: Effect of Acquisitions,
Divestitures and the Calendar Shift (47,954) -
----------- -----------
Food and Support Services - United
States - Sales (as adjusted) $1,613,463 $1,556,317 4%
=========== ===========
Food and Support Services -
International - Sales (as reported) $414,514 $335,727 23%
Add: Effect of Currency Translation - 47,589
----------- -----------
Food and Support Services -
International - Sales, Excluding
Translation 414,514 383,316 9%
----------- -----------
Less: Effect of Acquisitions (8,894) -
----------- -----------
Food and Support Services -
International - Sales (as adjusted) $405,620 $383,316 6%
=========== ===========
ARAMARK CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
CASH FLOW BEFORE WORKING CAPITAL AND AFTER CAPITAL EXPENDITURES
(INTERNAL CASH FLOW)
(Unaudited)
(In Thousands)
----------------------------------------------------------------------
Internal cash flow, as defined by ARAMARK, is an internal operating
metric used by management to evaluate cash flows from normal
operations of our business, excluding the impact of working capital
changes. This metric eliminates the volatility of working capital
changes which long-term investors may find useful.
----------------------------------------------------------------------
Three Months Ended
------------------------- %
January 2, December 27, Change
2004 2002
----------- ----------- ------
Internal cash flow:
Income from continuing
operations $67,352 $58,416
Depreciation and
amortization 69,532 62,292
Income taxes deferred 6,488 6,227
Net purchases of property and
equipment and client contract
investments (63,625) (52,289)
----------- -----------
Internal cash flow $79,747 $74,646 7%
=========== ===========
Reconciliation of internal cash flow
to net cash provided by (used in)
operating activities from
continuing operations:
Internal cash flow $79,747 $74,646
Net purchases of property and
equipment and client contract
investments 63,625 52,289
Changes in noncash working
capital (289,249) (168,704)
Net proceeds from sale of
receivables 16,300 47,500
Other operating activities (12,839) (3,244)
----------- -----------
Net cash provided by (used in)
operating activities from continuing
operations $(142,416) $2,487
=========== ===========
Reconciliation of net purchases of
property and equipment:
Purchases of property and
equipment and client contract
investments $(69,389) $(63,924)
Disposals of property and
equipment 5,764 11,635
----------- -----------
Net purchases of property and
equipment and client contract
investments $(63,625) $(52,289)
=========== ===========
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