ARAMARK Reports Third-Quarter Results.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 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 providing professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. , today reported sales of $2.93 billion for the third quarter of 2006, up 5 percent from the prior year quarter. Organic sales growth was 5 percent. Net income for the quarter was $35.0 million 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 were $0.19. These results reflect a previously announced $0.15 per share charge related to goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. and adjustments to asset and liability carrying values Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. in the company's Uniform and Career Apparel - Direct Marketing segment. Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Results Sales for the first nine months of the 2006 fiscal year increased 6 percent to $8.69 billion. Net income was $186.7 million and diluted earnings per share were $1.01. Chief Executive Officer's Comments "While we faced some challenges this quarter, we are taking aggressive steps to improve the performance of our uniform direct marketing business," said Joseph Neubauer Neubauer is a surname, and may refer to:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. vision for the company, and we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about future performance." Third-Quarter Results In the 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 - U.S. segment, sales increased 3 percent from the prior year quarter to $1.9 billion. Organic sales growth was 4 percent. 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. of $88.7 million was negatively affected by costs associated with two previously announced client contract terminations Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). . New business wins in the quarter included Cable News Network (CNN CNN or Cable News Network Subsidiary company of Turner Broadcasting Systems. It was created by Ted Turner in 1980 to present 24-hour live news broadcasts, using satellites to transmit reports from news bureaus around the world. ), St. Bonaventure University Students and alumni refer to the university with an affectionate nickname—"Bona's"—which originates from the school's original name, St. Bonaventure's College. Location The campus sits on 1,200 acres (4. , Johns Hopkins University Johns Hopkins University, mainly at Baltimore, Md. Johns Hopkins in 1867 had a group of his associates incorporated as the trustees of a university and a hospital, endowing each with $3.5 million. Daniel C. , and Saint Thomas Saint Thomas, island, Virgin Islands Saint Thomas, island (2000 pop. 51,181), 32 sq mi (83 sq km), one of the U.S. Virgin Islands, West Indies. Charlotte Amalie, the capital of the U.S. Virgin Islands, and the Univ. of the Virgin Islands are on Saint Thomas. Health System. Sales in the Food and Support Services - International segment grew 11 percent to $661 million. Organic sales growth was 7 percent. Segment operating income rose sharply from the prior year to $30.5 million. New business wins in the quarter included Bentley (Bentley Systems, Inc., Exton, PA, www.bentley.com) A leading CAD software company, founded in 1984 by Keith and Barry Bentley. Its MicroStation CAD software is used by major corporations for engineering large projects, including buildings, airports, hospitals, bridges and industrial Motors and Stratford-upon-Avon Stratford-upon-Avon Town (pop., 1995 est.: 28,000), Warwickshire, England. It is located on the River Avon. The town's first royal charter was granted in 1553. For centuries a country market town, it became a tourist centre because of its association with William College in the U.K. In the Uniform and Career Apparel - Rental segment, sales increased 7 percent to $301 million, with organic growth of 5 percent. Segment operating income increased 9 percent to $34.2 million. Sales in the Uniform and Career Apparel - Direct Marketing segment were $97 million. The segment reported an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $46 million which includes a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $35.0 million for the writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. of goodwill and approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $8.0 million for adjustments to asset and liability carrying values. Guidance While the company remains confident about its future prospects, in light of the announcement made on Tuesday Tuesday: see week. , August 8, 2006, regarding the signed definitive merger agreement, ARAMARK is no longer providing financial guidance and is withdrawing its previous guidance for 2006. 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 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 August 9, 2006 at 10:00 a.m. Eastern Time. 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 third quarter of fiscal 2006 are attached to this press release and can also 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. Certain previously undisclosed financial information, as well as reconciliations of non-GAAP financial measures 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 is a leader in professional services, providing award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" 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 , 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. , and uniform and career apparel to health care institutions, universities and school districts, stadiums and arenas, and businesses around the world. In FORTUNE magazine's 2006 list of "America's Most Admired Companies A yearly publication by Fortune Magazine, America's Most Admired Companies consists of corporations that are highly esteemed by the likes of Business Executives, Directors, and Analysts. A survey is taken of close to 3300 professionals who give their opinions on the companies. ," ARAMARK was ranked number one in its industry, consistently ranking since 1998 as one of the top three 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 its industry as evaluated by peers and industry analysts. The company was also ranked first in its industry in the 2006 FORTUNE 500 survey. Headquartered in Philadelphia, ARAMARK has approximately 240,000 employees serving clients in 20 countries. Learn more at the company's Web site, www.aramark.com 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. 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 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 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 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," "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 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; ramifications ramifications npl → Auswirkungen pl of any future terrorist attacks or increased security alert levels; increased operating costs operating costs npl → gastos mpl operacionales , including labor-related and energy costs; shortages of qualified personnel or increases in labor costs; costs and possible effects of further unionization of our workforce; currency risks and other risks associated with international markets; risks associated with acquisitions, including acquisition integration issues and 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 our recent acquisitions; competition; decline in attendance at client facilities; unpredictability of sales and expenses due to contract terms and terminations; the impact of natural disasters on our sales and operating results; the risk that clients may become insolvent INSOLVENT. This word has several meanings. It signifies a person whose estate is not sufficient to pay his debts. Civ. Code of Louisiana, art. 1980.. A person is also said to be insolvent, who is under a present inability to answer, in the ordinary course of business, the responsibility ; 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; costs of compliance with governmental regulations and government investigations; liability associated with noncompliance noncompliance failure of the owner to follow instructions, particularly in administering medication as prescribed; a cause of a less than expected response to treatment. noncompliance 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, the environment, the Federal school lunch program, Federal and state employment and wage and hour laws and import and export controls and customs laws; dram shop Dram shop or dramshop is a legal term in the United States referring to a bar, tavern or the like where alcoholic beverages are sold. Traditionally, it referred to a shop where spirits were sold by the dram, a small unit of liquid. compliance and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; contract compliance and administration issues, inability to retain current clients and renew existing client contracts; determination by customers to reduce their 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. and use of preferred vendors; seasonality; and other risks that are set forth in the "Risk Factors," "Legal Proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. " 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 website www.aramark.com. Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : ARAMARK defines organic growth as sales growth adjusted to exclude the effects of acquisitions, divestitures and the impact of currency translation.
ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
Three Months Ended
----------------------------
June 30, 2006 July 1, 2005
------------- -------------
Sales $ 2,933,638 $ 2,792,366
------------- -------------
Costs and Expenses:
Cost of services provided 2,676,846 2,532,145
Depreciation and amortization 85,542 79,410
Selling and general corporate expenses 44,152 36,879
Goodwill impairment 35,000 -
------------- -------------
2,841,540 2,648,434
------------- -------------
Operating income 92,098 143,932
Interest and other financing costs, net 36,382 32,222
------------- -------------
Income before income taxes 55,716 111,710
Provision for income taxes 20,733 40,327
------------- -------------
Net income $ 34,983 $ 71,383
============= =============
Earnings Per Share:
Basic $ 0.19 $ 0.38
Diluted $ 0.19 $ 0.38
Weighted Average Shares Outstanding:
Basic 182,756 186,264
Diluted 185,023 188,078
Note: The three month period of fiscal 2006 includes a pre-tax charge
of $42.9 million ($0.15 per share) to reflect a goodwill impairment
charge, inventory write-downs and severance accruals in the Direct
Marketing segment.
ARAMARK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, Except Per Share Amounts)
Nine Months Ended
----------------------------
June 30, 2006 July 1, 2005
------------- -------------
Sales $ 8,689,061 $ 8,181,741
------------- -------------
Costs and Expenses:
Cost of services provided 7,898,818 7,434,734
Depreciation and amortization 251,053 235,962
Selling and general corporate expenses 129,884 107,267
Goodwill impairment 35,000 -
------------- -------------
8,314,755 7,777,963
------------- -------------
Operating income 374,306 403,778
Interest and other financing costs, net 105,543 96,857
------------- -------------
Income before income taxes 268,763 306,921
Provision for income taxes 82,028 109,998
------------- -------------
Net income $ 186,735 $ 196,923
============= =============
Earnings Per Share:
Basic $ 1.02 $ 1.06
Diluted $ 1.01 $ 1.04
Weighted Average Shares Outstanding:
Basic 183,306 186,425
Diluted 185,292 188,837
Note: The nine month period of fiscal 2006 includes a pre-tax charge
of $42.9 million ($0.15 per share) to reflect a goodwill impairment
charge, inventory write-downs and severance accruals in the Direct
Marketing segment. The nine month period of fiscal 2006 also includes
a $14.9 million ($0.08 per share) favorable income tax adjustment
recorded in the first quarter based on the settlement of certain open
tax years.
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
(In Thousands)
June 30, September 30,
2006 2005
------------ -------------
Assets
-------------------------------------------
Current Assets $1,495,068 $1,443,227
Property and Equipment, net 1,187,991 1,211,454
Goodwill 1,734,971 1,682,749
Other Assets 797,554 819,670
------------ -------------
$5,215,584 $5,157,100
============ =============
Liabilities and Shareholders' Equity
-------------------------------------------
Current Liabilities (1) $1,415,775 $1,518,680
Long-Term Borrowings 1,949,677 1,794,522
Other Liabilities 387,551 518,434
Total Shareholders' Equity 1,462,581 1,325,464
------------ -------------
$5,215,584 $5,157,100
============ =============
(1) - Includes $31.9 million and $46.4 million of current maturities
of long-term borrowings as of June 30, 2006 and September 30, 2005,
respectively.
ARAMARK CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW DATA
(Unaudited)
(In Thousands)
Nine Months Ended
----------------------------
June 30, 2006 July 1, 2005
------------- -------------
Cash flows from operating activities:
Net income $ 186,735 $ 196,923
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 251,053 235,962
Income taxes deferred (38,313) (3,055)
Goodwill impairment 35,000 -
Changes in noncash working capital (127,783) (124,043)
Net proceeds from sale of receivables - 30,500
Other operating activities (9,639) (26,067)
------------- -------------
Net cash provided by operating activities 297,053 310,220
------------- -------------
Cash flows from investing activities:
Net purchases of property and
equipment and client contract
investments (181,513) (213,518)
Acquisitions and other investing
activities (113,972) (89,760)
------------- -------------
Net cash used in investing activities (295,485) (303,278)
------------- -------------
Cash flows from financing activities:
Net proceeds from long-term borrowings 103,076 145,867
Dividend payments (37,808) (30,313)
Proceeds from issuance of common stock 41,501 30,997
Repurchase of stock and other
financing activities (111,300) (156,492)
------------- -------------
Net cash used in financing activities (4,531) (9,941)
------------- -------------
Decrease in cash and cash equivalents $ (2,963) $ (2,999)
============= =============
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
Three Months Ended
----------------------------
June 30, 2006 July 1, 2005
------------- -------------
Sales
-----------------------------------------
Food and Support Services - United States $ 1,874,045 $ 1,815,272
Food and Support Services - International 661,214 594,035
Uniform and Career Apparel - Rental 301,462 282,879
Uniform and Career Apparel - Direct
Marketing 96,917 100,180
------------- -------------
$ 2,933,638 $ 2,792,366
============= =============
Operating Income
-----------------------------------------
Food and Support Services - United States $ 88,657 $ 97,670
Food and Support Services - International 30,540 21,250
Uniform and Career Apparel - Rental 34,231 31,329
Uniform and Career Apparel - Direct
Marketing (1) (45,888) 2,576
Corporate (15,442) (8,893)
------------- -------------
$ 92,098 $ 143,932
============= =============
(1) Includes a charge of $42.9 million to reflect a goodwill
impairment charge, inventory write-downs and severance accruals
recorded in fiscal 2006.
ARAMARK CORPORATION AND SUBSIDIARIES
SALES AND OPERATING INCOME BY SEGMENT
SUPPLEMENTAL DATA
(Unaudited)
(In Thousands)
Nine Months Ended
----------------------------
June 30, 2006 July 1, 2005
------------- -------------
Sales
-----------------------------------------
Food and Support Services - United States $ 5,542,114 $ 5,297,508
Food and Support Services - International 1,926,327 1,715,328
Uniform and Career Apparel - Rental 896,459 839,853
Uniform and Career Apparel - Direct
Marketing 324,161 329,052
------------- -------------
$ 8,689,061 $ 8,181,741
============= =============
Operating Income
-----------------------------------------
Food and Support Services - United States
(1) $ 272,802 $ 269,952
Food and Support Services - International
(2) 88,786 60,084
Uniform and Career Apparel - Rental 98,682 91,355
Uniform and Career Apparel - Direct
Marketing (3) (39,238) 12,135
Corporate (46,726) (29,748)
------------- -------------
$ 374,306 $ 403,778
============= =============
(1) Includes $9.7 million gain on real estate sale by equity affiliate
in second quarter of fiscal 2005.
(2) Includes $7.4 million charge for exiting West Africa business and
severance in second quarter of fiscal 2005.
(3) Includes a charge of $42.9 million to reflect a goodwill
impairment charge, inventory write-downs and severance accruals
recorded in the third quarter of fiscal 2006.
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
---------------------------- %
June 30, 2006 July 1, 2005 Change
------------- ------------- ------
ARAMARK Corporation Consolidated
Sales (as reported) $ 2,933,638 $ 2,792,366 5%
Effect of Currency Translation - 16,922
Effect of Acquisitions and
Divestitures (14,742) (19,555)
------------- -------------
ARAMARK Corporation Consolidated
Sales (as adjusted) $ 2,918,896 $ 2,789,733 5%
============= =============
Food and Support Services -
International Sales (as
reported) $ 661,214 $ 594,035 11%
Effect of Currency Translation - 16,922
------------- -------------
Food and Support Services -
International Sales (excluding
currency translation) 661,214 610,957 8%
Effect of Acquisitions and
Divestitures (5,289) -
------------- -------------
Food and Support Services -
International Sales (as
adjusted) $ 655,925 $ 610,957 7%
============= =============
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