RMK Aramark

ARAMARK Corporation (NYSE:RMK), a world leader in providing professional services, today reported fiscal 2006 sales of $11.6 billion, up 6 percent from fiscal 2005. Organic sales growth was 5 percent. Net income was $261 million and diluted earnings per share were $1.41. Sales for the fourth quarter were $2.93 billion, up 5 percent from the prior year quarter, and organic sales growth was 5 percent. Net income was $74 million. Fourth quarter diluted earnings per share were $0.40 and include costs incurred in the shutdown of the healthcare apparel direct marketing business, professional fees related to the proposed merger, and the impact of the expensing of employee stock options. Full Year and Fourth-Quarter Results In the Food and Support Services � U.S. segment, sales for the fiscal year increased 5 percent from the prior year to $7.5 billion. Organic sales growth was 5 percent. Segment operating income was $398 million. Fourth quarter sales were $1.9 billion, up 4 percent from the prior year quarter. Organic sales growth was 4 percent. Segment operating income was $125 million, reflecting weaker results in the sports and entertainment group related to baseball and parks operations. Sales in the Food and Support Services � International segment for the full year were $2.5 billion, up 12 percent from fiscal year 2005. Organic sales growth was 8 percent. Segment operating income was $109 million. For the fourth quarter, sales were $620 million, up 10 percent from the prior year quarter. Organic sales growth was 6 percent. Segment operating income was $21 million. In the Uniform and Career Apparel � Rental segment, sales for the full year increased 7 percent over the prior year to $1.2 billion, with organic sales growth of 6 percent. Segment operating income was $134 million. Fourth quarter sales were up 7 percent from the prior year quarter to $306 million. Organic sales growth was 6 percent. Segment operating income was $35 million. Sales in the Uniform and Career Apparel � Direct Marketing segment for the full year were $418 million. The segment reported an operating loss of $44 million, which includes the $43 million third-quarter charge for the writedown of goodwill and adjustments to asset and liability carrying values. Fourth quarter sales were $94 million and the segment reported an operating loss of $5 million, due in large part to the shutdown of the healthcare apparel direct marketing business. Corporate expenses increased approximately $29 million for the full year and $12 million for the fourth quarter over the prior year, primarily due to stock option expense and professional expenses incurred in connection with the proposed merger. Cash flow remained strong for the year as the company funded $139 million of acquisitions, $113 million of share buybacks and $50 million of dividends while reducing year-over-year debt by about $40 million. Proposed Merger On August 8, 2006, the company announced that it has signed a definitive merger agreement under which Joseph Neubauer and investment funds managed by GS Capital Partners, CCMP Capital Advisors and J.P. Morgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC will acquire ARAMARK in a transaction valued at approximately $8.3 billion, including the assumption or repayment of approximately $2.0 billion of debt. Under the terms of the agreement, ARAMARK stockholders would receive upon completion of the merger $33.80 in cash for each share of ARAMARK common stock they hold. The transaction is subject to receipt of stockholder approval and customary regulatory approvals, as well as the satisfaction of other customary closing conditions. The transaction is expected to close in late 2006 or early 2007. Due to the proposed merger, the company will not hold a conference call or Webcast regarding its fourth quarter and full year results. About ARAMARK ARAMARK is a leader in professional services, providing award-winning food services, facilities management, 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," ARAMARK was ranked number one in its industry, consistently ranking since 1998 as one of the top three most admired 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 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, including the proposed merger, 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 or the proposed merger. 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 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 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; the risk that our insurers may become insolvent or may liquidate; 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 noncompliance with governmental regulations, including regulations pertaining 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 compliance and litigation; contract compliance and administration issues, inability to retain current clients and renew existing client contracts; determination by customers to reduce their 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 website www.aramark.com. These factors also include the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the outcome of any legal proceedings that have been or may be instituted against ARAMARK and others following announcement of the proposal or the merger agreement; the inability to complete the merger due to the failure to obtain stockholder approval or the failure to satisfy other conditions to the completion of the merger; the failure to obtain the necessary debt financing arrangements set forth in commitment letters received in connection with the merger; risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; the ability to recognize the benefits of the merger; the amount of the costs, fees, expenses and charges related to the merger and the actual terms of certain financings that will be obtained for the merger; and the impact of the substantial indebtedness incurred to finance the consummation of the merger. Editor�s Note: 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 September 29, 2006 September 30, 2005 � Sales $ 2,932,112� $ 2,781,619� � Costs and Expenses: Cost of services provided 2,638,565� 2,487,008� Depreciation and amortization 88,284� 84,156� Selling and general corporate expenses � 49,038� � 34,061� � 2,775,887� � 2,605,225� Operating income 156,225� 176,394� Interest and other financing costs, net � 34,402� � 30,142� Income from continuing operations before income taxes and cumulative effect of change in accounting principle 121,823� 146,252� Provision for income taxes � 47,202� � 54,700� Income from continuing operations before cumulative effect of change in accounting principle 74,621� 91,552� Income from discontinued operations, net 3,093� -� Cumulative effect of change in accounting principle, net � (3,351) � -� Net income $ 74,363� $ 91,552� � Earnings Per Share - Basic: Income from continuing operations before cumulative effect of change in accounting principle $ 0.41� $ 0.50� Net income $ 0.41� $ 0.50� � Earnings Per Share - Diluted: Income from continuing operations before cumulative effect of change in accounting principle $ 0.40� $ 0.49� Net income $ 0.40� $ 0.49� � Weighted Average Shares Outstanding: Basic 183,121� 184,689� Diluted 185,442� 186,750� � Note: The three month period of fiscal 2006 includes $5.7 million of merger-related expenses. ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands, Except Per Share Amounts) � Twelve Months Ended September 29, 2006 September 30, 2005 � Sales $ 11,621,173� $ 10,963,360� � Costs and Expenses: Cost of services provided 10,537,383� 9,921,742� Depreciation and amortization 339,337� 320,118� Selling and general corporate expenses 178,922� 141,328� Goodwill impairment � 35,000� � -� � 11,090,642� � 10,383,188� Operating income 530,531� 580,172� Interest and other financing costs, net � 139,945� � 126,999� Income from continuing operations before income taxes and cumulative effect of change in accounting principle 390,586� 453,173� Provision for income taxes � 129,230� � 164,698� Income from continuing operations before cumulative effect of change in accounting principle 261,356� 288,475� Income from discontinued operations, net 3,093� -� Cumulative effect of change in accounting principle, net � (3,351) � -� Net income $ 261,098� $ 288,475� � Earnings Per Share - Basic: Income from continuing operations before cumulative effect of change in accounting principle $ 1.43� $ 1.55� Net income $ 1.42� $ 1.55� � Earnings Per Share - Diluted: Income from continuing operations before cumulative effect of change in accounting principle $ 1.41� $ 1.53� Net income $ 1.41� $ 1.53� � Weighted Average Shares Outstanding: Basic 183,259� 185,991� Diluted 185,362� 188,309� � Note: The twelve month period of fiscal 2006 includes a pre-tax charge of $42.9 million to reflect a goodwill impairment charge, inventory write-downs and severance accruals in the Direct Marketing segment. The twelve month period of fiscal 2006 also includes a $14.9 million favorable income tax adjustment based on the settlement of certain open tax years. ARAMARK CORPORATION AND SUBSIDIARIES SELECTED CONSOLIDATED BALANCE SHEET DATA (Unaudited) (In Thousands) � September 29, 2006 September 30, 2005 Assets � Current Assets $ 1,526,844� $ 1,443,227� Property and Equipment, net 1,196,830� 1,211,454� Goodwill 1,747,094� 1,682,749� Other Assets � 792,549� � 819,670� $ 5,263,317� $ 5,157,100� � Liabilities and Shareholders' Equity � Current Liabilities (1) $ 1,586,696� $ 1,518,680� Long-Term Borrowings 1,763,088� 1,794,522� Other Liabilities 391,941� 518,434� Total Shareholders' Equity � 1,521,592� � 1,325,464� $ 5,263,317� $ 5,157,100� � (1) - Includes $40.2 million and $46.4 million of current maturities of long-term borrowings as of September 29, 2006 and September 30, 2005, respectively. ARAMARK CORPORATION AND SUBSIDIARIES SELECTED CONSOLIDATED CASH FLOW DATA (Unaudited) (In Thousands) � Twelve Months Ended September 29, 2006 September 30, 2005 � Cash flows from operating activities: Net income $ 261,098� $ 288,475� Less: Income from discontinued operations, net (3,093) -� Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 339,337� 320,118� Cumulative effect of change in accounting principle, net 3,351� -� Income taxes deferred (53,722) (4,073) Goodwill impairment 35,000� -� Changes in noncash working capital 7,989� 7,386� Net proceeds from sale of receivables -� 32,800� Other operating activities � (4,163) � (32,926) Net cash provided by operating activities � 585,797� � 611,780� � Cash flows from investing activities: Net purchases of property and equipment and client contract investments (270,734) (293,979) Acquisitions and other investing activities � (125,783) � (71,916) Net cash used in investing activities � (396,517) � (365,895) � Cash flows from financing activities: Net payments of long-term borrowings (80,787) (32,247) Dividend payments (50,512) (40,321) Proceeds from issuance of common stock 45,251� 35,748� Repurchase of stock and other financing activities � (111,619) � (198,318) Net cash used in financing activities � (197,667) � (235,138) � Increase (decrease) in cash and cash equivalents $ (8,387) $ 10,747� ARAMARK CORPORATION AND SUBSIDIARIES SALES AND OPERATING INCOME BY SEGMENT SUPPLEMENTAL DATA (Unaudited) (In Thousands) � Three Months Ended September 29, 2006 September 30, 2005 Sales Food and Support Services - United States $ 1,912,241� $ 1,831,592� Food and Support Services - International 620,254� 564,837� Uniform and Career Apparel - Rental 305,547� 285,949� Uniform and Career Apparel - Direct Marketing � 94,070� � 99,241� $ 2,932,112� $ 2,781,619� � Operating Income Food and Support Services - United States $ 125,094� $ 133,104� Food and Support Services - International 20,613� 17,897� Uniform and Career Apparel - Rental 35,219� 34,472� Uniform and Career Apparel - Direct Marketing (4,962) (978) Corporate (1) � (19,739) � (8,101) $ 156,225� $ 176,394� � (1) The three month period of fiscal 2006 includes $5.7 million of merger-related expenses. ARAMARK CORPORATION AND SUBSIDIARIES SALES AND OPERATING INCOME BY SEGMENT SUPPLEMENTAL DATA (Unaudited) (In Thousands) � Twelve Months Ended September 29, 2006 September 30, 2005 Sales Food and Support Services - United States $ 7,454,355� $ 7,129,100� Food and Support Services - International 2,546,581� 2,280,165� Uniform and Career Apparel - Rental 1,202,006� 1,125,802� Uniform and Career Apparel - Direct Marketing � 418,231� � 428,293� $ 11,621,173� $ 10,963,360� � Operating Income Food and Support Services - United States (1) $ 397,896� $ 403,056� Food and Support Services - International (2) 109,399� 77,981� Uniform and Career Apparel - Rental 133,901� 125,827� Uniform and Career Apparel - Direct Marketing (3) (44,200) 11,157� Corporate (4) � (66,465) � (37,849) $ 530,531� $ 580,172� � (1) Includes $9.7 million gain on real estate sale by equity affiliate in fiscal 2005. � (2) Includes $7.4 million charge for exiting West Africa business and severance in fiscal 2005. � (3) Includes a charge of $42.9 million to reflect a goodwill impairment charge, inventory write-downs and severance accruals in fiscal 2006. � (4) Includes $6.4 million of merger-related expenses in 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 and year-to-date 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� Twelve Months Ended % Change� September 29, 2006 September 30, 2005 September 29, 2006 September 30, 2005 � ARAMARK Corporation Consolidated Sales (as reported) $ 2,932,112� $ 2,781,619� 5% $ 11,621,173� $ 10,963,360� 6% Effect of Currency Translation -� 29,037� -� 19,049� Effect of Acquisitions and Divestitures � (17,090) � (25,391) � (137,344) � (95,558) ARAMARK Corporation Consolidated Sales (as adjusted) $ 2,915,022� $ 2,785,265� 5% $ 11,483,829� $ 10,886,851� 5% � � � Food and Support Services - International Sales (as reported) $ 620,254� $ 564,837� 10% $ 2,546,581� $ 2,280,165� 12% Effect of Currency Translation � -� � 29,037� � -� � 19,049� Food and Support Services - International Sales (excluding currency translation) 620,254� 593,874� 4% 2,546,581� 2,299,214� 11% Effect of Acquisitions and Divestitures � (6,132) � (16,763) � (108,132) � (30,905) Food and Support Services - International Sales (as adjusted) $ 614,122� $ 577,111� 6% $ 2,438,449� $ 2,268,309� 8% ARAMARK Corporation (NYSE:RMK), a world leader in providing professional services, today reported fiscal 2006 sales of $11.6 billion, up 6 percent from fiscal 2005. Organic sales growth was 5 percent. Net income was $261 million and diluted earnings per share were $1.41. Sales for the fourth quarter were $2.93 billion, up 5 percent from the prior year quarter, and organic sales growth was 5 percent. Net income was $74 million. Fourth quarter diluted earnings per share were $0.40 and include costs incurred in the shutdown of the healthcare apparel direct marketing business, professional fees related to the proposed merger, and the impact of the expensing of employee stock options. Full Year and Fourth-Quarter Results In the Food and Support Services - U.S. segment, sales for the fiscal year increased 5 percent from the prior year to $7.5 billion. Organic sales growth was 5 percent. Segment operating income was $398 million. Fourth quarter sales were $1.9 billion, up 4 percent from the prior year quarter. Organic sales growth was 4 percent. Segment operating income was $125 million, reflecting weaker results in the sports and entertainment group related to baseball and parks operations. Sales in the Food and Support Services - International segment for the full year were $2.5 billion, up 12 percent from fiscal year 2005. Organic sales growth was 8 percent. Segment operating income was $109 million. For the fourth quarter, sales were $620 million, up 10 percent from the prior year quarter. Organic sales growth was 6 percent. Segment operating income was $21 million. In the Uniform and Career Apparel - Rental segment, sales for the full year increased 7 percent over the prior year to $1.2 billion, with organic sales growth of 6 percent. Segment operating income was $134 million. Fourth quarter sales were up 7 percent from the prior year quarter to $306 million. Organic sales growth was 6 percent. Segment operating income was $35 million. Sales in the Uniform and Career Apparel - Direct Marketing segment for the full year were $418 million. The segment reported an operating loss of $44 million, which includes the $43 million third-quarter charge for the writedown of goodwill and adjustments to asset and liability carrying values. Fourth quarter sales were $94 million and the segment reported an operating loss of $5 million, due in large part to the shutdown of the healthcare apparel direct marketing business. Corporate expenses increased approximately $29 million for the full year and $12 million for the fourth quarter over the prior year, primarily due to stock option expense and professional expenses incurred in connection with the proposed merger. Cash flow remained strong for the year as the company funded $139 million of acquisitions, $113 million of share buybacks and $50 million of dividends while reducing year-over-year debt by about $40 million. Proposed Merger On August 8, 2006, the company announced that it has signed a definitive merger agreement under which Joseph Neubauer and investment funds managed by GS Capital Partners, CCMP Capital Advisors and J.P. Morgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC will acquire ARAMARK in a transaction valued at approximately $8.3 billion, including the assumption or repayment of approximately $2.0 billion of debt. Under the terms of the agreement, ARAMARK stockholders would receive upon completion of the merger $33.80 in cash for each share of ARAMARK common stock they hold. The transaction is subject to receipt of stockholder approval and customary regulatory approvals, as well as the satisfaction of other customary closing conditions. The transaction is expected to close in late 2006 or early 2007. Due to the proposed merger, the company will not hold a conference call or Webcast regarding its fourth quarter and full year results. About ARAMARK ARAMARK is a leader in professional services, providing award-winning food services, facilities management, 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," ARAMARK was ranked number one in its industry, consistently ranking since 1998 as one of the top three most admired 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 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, including the proposed merger, 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 or the proposed merger. 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 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 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; the risk that our insurers may become insolvent or may liquidate; 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 noncompliance with governmental regulations, including regulations pertaining 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 compliance and litigation; contract compliance and administration issues, inability to retain current clients and renew existing client contracts; determination by customers to reduce their 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 website www.aramark.com. These factors also include the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the outcome of any legal proceedings that have been or may be instituted against ARAMARK and others following announcement of the proposal or the merger agreement; the inability to complete the merger due to the failure to obtain stockholder approval or the failure to satisfy other conditions to the completion of the merger; the failure to obtain the necessary debt financing arrangements set forth in commitment letters received in connection with the merger; risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; the ability to recognize the benefits of the merger; the amount of the costs, fees, expenses and charges related to the merger and the actual terms of certain financings that will be obtained for the merger; and the impact of the substantial indebtedness incurred to finance the consummation of the merger. Editor's Note: ARAMARK defines organic growth as sales growth adjusted to exclude the effects of acquisitions, divestitures and the impact of currency translation. -0- *T ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands, Except Per Share Amounts) Three Months Ended --------------------------- September 29, September 30, 2006 2005 ------------- ------------- Sales $ 2,932,112 $ 2,781,619 ------------- ------------- Costs and Expenses: Cost of services provided 2,638,565 2,487,008 Depreciation and amortization 88,284 84,156 Selling and general corporate expenses 49,038 34,061 ------------- ------------- 2,775,887 2,605,225 ------------- ------------- Operating income 156,225 176,394 Interest and other financing costs, net 34,402 30,142 ------------- ------------- Income from continuing operations before income taxes and cumulative effect of change in accounting principle 121,823 146,252 Provision for income taxes 47,202 54,700 ------------- ------------- Income from continuing operations before cumulative effect of change in accounting principle 74,621 91,552 Income from discontinued operations, net 3,093 - Cumulative effect of change in accounting principle, net (3,351) - ------------- ------------- Net income $ 74,363 $ 91,552 ============= ============= Earnings Per Share - Basic: Income from continuing operations before cumulative effect of change in accounting principle $ 0.41 $ 0.50 Net income $ 0.41 $ 0.50 Earnings Per Share - Diluted: Income from continuing operations before cumulative effect of change in accounting principle $ 0.40 $ 0.49 Net income $ 0.40 $ 0.49 Weighted Average Shares Outstanding: Basic 183,121 184,689 Diluted 185,442 186,750 Note: The three month period of fiscal 2006 includes $5.7 million of merger-related expenses. *T -0- *T ARAMARK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands, Except Per Share Amounts) Twelve Months Ended --------------------------- September 29, September 30, 2006 2005 ------------- ------------- Sales $ 11,621,173 $ 10,963,360 ------------- ------------- Costs and Expenses: Cost of services provided 10,537,383 9,921,742 Depreciation and amortization 339,337 320,118 Selling and general corporate expenses 178,922 141,328 Goodwill impairment 35,000 - ------------- ------------- 11,090,642 10,383,188 ------------- ------------- Operating income 530,531 580,172 Interest and other financing costs, net 139,945 126,999 ------------- ------------- Income from continuing operations before income taxes and cumulative effect of change in accounting principle 390,586 453,173 Provision for income taxes 129,230 164,698 ------------- ------------- Income from continuing operations before cumulative effect of change in accounting principle 261,356 288,475 Income from discontinued operations, net 3,093 - Cumulative effect of change in accounting principle, net (3,351) - ------------- ------------- Net income $ 261,098 $ 288,475 ============= ============= Earnings Per Share - Basic: Income from continuing operations before cumulative effect of change in accounting principle $ 1.43 $ 1.55 Net income $ 1.42 $ 1.55 Earnings Per Share - Diluted: Income from continuing operations before cumulative effect of change in accounting principle $ 1.41 $ 1.53 Net income $ 1.41 $ 1.53 Weighted Average Shares Outstanding: Basic 183,259 185,991 Diluted 185,362 188,309 Note: The twelve month period of fiscal 2006 includes a pre-tax charge of $42.9 million to reflect a goodwill impairment charge, inventory write-downs and severance accruals in the Direct Marketing segment. The twelve month period of fiscal 2006 also includes a $14.9 million favorable income tax adjustment based on the settlement of certain open tax years. *T -0- *T ARAMARK CORPORATION AND SUBSIDIARIES SELECTED CONSOLIDATED BALANCE SHEET DATA (Unaudited) (In Thousands) September 29, September 30, 2006 2005 ------------- ------------- Assets ------------------------------------------ Current Assets $ 1,526,844 $ 1,443,227 Property and Equipment, net 1,196,830 1,211,454 Goodwill 1,747,094 1,682,749 Other Assets 792,549 819,670 ------------- ------------- $ 5,263,317 $ 5,157,100 ============= ============= Liabilities and Shareholders' Equity ------------------------------------------ Current Liabilities (1) $ 1,586,696 $ 1,518,680 Long-Term Borrowings 1,763,088 1,794,522 Other Liabilities 391,941 518,434 Total Shareholders' Equity 1,521,592 1,325,464 ------------- ------------- $ 5,263,317 $ 5,157,100 ============= ============= (1) - Includes $40.2 million and $46.4 million of current maturities of long-term borrowings as of September 29, 2006 and September 30, 2005, respectively. *T -0- *T ARAMARK CORPORATION AND SUBSIDIARIES SELECTED CONSOLIDATED CASH FLOW DATA (Unaudited) (In Thousands) Twelve Months Ended --------------------------- September 29, September 30, 2006 2005 ------------- ------------- Cash flows from operating activities: Net income $ 261,098 $ 288,475 Less: Income from discontinued operations, net (3,093) - Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 339,337 320,118 Cumulative effect of change in accounting principle, net 3,351 - Income taxes deferred (53,722) (4,073) Goodwill impairment 35,000 - Changes in noncash working capital 7,989 7,386 Net proceeds from sale of receivables - 32,800 Other operating activities (4,163) (32,926) ------------- ------------- Net cash provided by operating activities 585,797 611,780 ------------- ------------- Cash flows from investing activities: Net purchases of property and equipment and client contract investments (270,734) (293,979) Acquisitions and other investing activities (125,783) (71,916) ------------- ------------- Net cash used in investing activities (396,517) (365,895) ------------- ------------- Cash flows from financing activities: Net payments of long-term borrowings (80,787) (32,247) Dividend payments (50,512) (40,321) Proceeds from issuance of common stock 45,251 35,748 Repurchase of stock and other financing activities (111,619) (198,318) ------------- ------------- Net cash used in financing activities (197,667) (235,138) ------------- ------------- Increase (decrease) in cash and cash equivalents $ (8,387) $ 10,747 ============= ============= *T -0- *T ARAMARK CORPORATION AND SUBSIDIARIES SALES AND OPERATING INCOME BY SEGMENT SUPPLEMENTAL DATA (Unaudited) (In Thousands) Three Months Ended --------------------------- September 29, September 30, 2006 2005 ------------- ------------- Sales ------------------------------------------ Food and Support Services - United States $ 1,912,241 $ 1,831,592 Food and Support Services - International 620,254 564,837 Uniform and Career Apparel - Rental 305,547 285,949 Uniform and Career Apparel - Direct Marketing 94,070 99,241 ------------- ------------- $ 2,932,112 $ 2,781,619 ============= ============= Operating Income ------------------------------------------ Food and Support Services - United States $ 125,094 $ 133,104 Food and Support Services - International 20,613 17,897 Uniform and Career Apparel - Rental 35,219 34,472 Uniform and Career Apparel - Direct Marketing (4,962) (978) Corporate (1) (19,739) (8,101) ------------- ------------- $ 156,225 $ 176,394 ============= ============= (1) The three month period of fiscal 2006 includes $5.7 million of merger-related expenses. *T -0- *T ARAMARK CORPORATION AND SUBSIDIARIES SALES AND OPERATING INCOME BY SEGMENT SUPPLEMENTAL DATA (Unaudited) (In Thousands) Twelve Months Ended --------------------------- September 29, September 30, 2006 2005 ------------- ------------- Sales ------------------------------------------ Food and Support Services - United States $ 7,454,355 $ 7,129,100 Food and Support Services - International 2,546,581 2,280,165 Uniform and Career Apparel - Rental 1,202,006 1,125,802 Uniform and Career Apparel - Direct Marketing 418,231 428,293 ------------- ------------- $ 11,621,173 $ 10,963,360 ============= ============= Operating Income ------------------------------------------ Food and Support Services - United States (1) $ 397,896 $ 403,056 Food and Support Services - International (2) 109,399 77,981 Uniform and Career Apparel - Rental 133,901 125,827 Uniform and Career Apparel - Direct Marketing (3) (44,200) 11,157 Corporate (4) (66,465) (37,849) ------------- ------------- $ 530,531 $ 580,172 ============= ============= (1) Includes $9.7 million gain on real estate sale by equity affiliate in fiscal 2005. (2) Includes $7.4 million charge for exiting West Africa business and severance in fiscal 2005. (3) Includes a charge of $42.9 million to reflect a goodwill impairment charge, inventory write-downs and severance accruals in fiscal 2006. (4) Includes $6.4 million of merger-related expenses in fiscal 2006. *T -0- *T 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 and year-to-date 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 ------------------------------- September 29, September 30, % 2006 2005 Change --------------- --------------- -------- ARAMARK Corporation Consolidated Sales (as reported) $ 2,932,112 $ 2,781,619 5% Effect of Currency Translation - 29,037 Effect of Acquisitions and Divestitures (17,090) (25,391) --------------- --------------- ARAMARK Corporation Consolidated Sales (as adjusted) $ 2,915,022 $ 2,785,265 5% =============== =============== Food and Support Services - International Sales (as reported) $ 620,254 $ 564,837 10% Effect of Currency Translation - 29,037 --------------- --------------- Food and Support Services - International Sales (excluding currency translation) 620,254 593,874 4% Effect of Acquisitions and Divestitures (6,132) (16,763) --------------- --------------- Food and Support Services - International Sales (as adjusted) $ 614,122 $ 577,111 6% =============== =============== Twelve Months Ended ------------------------------- September 29, September 30, % 2006 2005 Change --------------- --------------- -------- ARAMARK Corporation Consolidated Sales (as reported) $ 11,621,173 $ 10,963,360 6% Effect of Currency Translation - 19,049 Effect of Acquisitions and Divestitures (137,344) (95,558) --------------- --------------- ARAMARK Corporation Consolidated Sales (as adjusted) $ 11,483,829 $ 10,886,851 5% =============== =============== Food and Support Services - International Sales (as reported) $ 2,546,581 $ 2,280,165 12% Effect of Currency Translation - 19,049 --------------- --------------- Food and Support Services - International Sales (excluding currency translation) 2,546,581 2,299,214 11% Effect of Acquisitions and Divestitures (108,132) (30,905) --------------- --------------- Food and Support Services - International Sales (as adjusted) $ 2,438,449 $ 2,268,309 8% =============== =============== *T