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Aramark Reports Fourth Quarter and Full Year 2014 Results; Posts Strong Sales and Profitability Growth

Quarterly Dividend Increased 15%

PHILADELPHIA, PA (November 12, 2014) - Aramark (NYSE: ARMK), the $15 billion global provider of award-winning services in food, facilities management, and uniforms, today reported fourth quarter and full-year fiscal 2014 results with strong sales and profit growth and provided an initial outlook for fiscal 2015. Additionally, the Board of Directors has approved a 15% increase in the company's regular quarterly dividend.

53rd Week 

Aramark's 2014 Fiscal year and fourth quarter results contain an extra, or "53rd" week, when compared to prior period results and forward guidance. The company's organic sales growth calculations adjust for this week. The other metrics that the company reports such as adjusted operating income, adjusted net income, adjusted EPS and "as-reported" metrics, do not adjust for the extra week and unless otherwise noted, are presented on a 53-week basis.  

KEY HIGHLIGHTS 

  • 2014 sales of $14.8 billion with organic growth of 5%. Organic growth of 6% in Q4; 
  • 2014 adjusted operating income up 12% to $878 million including an estimated 2% benefit from the 53rd week, Q4 adjusted operating income up 15% including approximate 7% benefit from the extra week. 2014 and Q4 as reported operating income of $565 million and $145 million, respectively; 
  • 2014 and Q4 adjusted earnings per share of $1.51 and $0.39, respectively, both include an estimated $0.02 benefit from the 53rd week. 2014 and Q4 as reported earnings per share of $0.63 and $0.18, respectively; 
  • Board of Directors increases regular quarterly dividend to 8.625 cents per share; 
  • 2015 Adjusted Earnings per Share expected within a range of $1.60 - $1.70. 

"I am pleased to report a record year in 2014. We achieved strong organic growth along with double-digit increases in both operating profit and earnings per share. We continue to execute against a focused strategy to accelerate growth, activate productivity and attract the best people and our strong results this year are reflective of this strategy. Based on this performance, our Board of Directors has meaningfully increased our dividend," said Eric J. Foss, President and Chief Executive Officer. "As we look forward to 2015, we have continued confidence that the diversity and breadth of our portfolio positions us well for sustainable growth and creation of shareholder value."

FISCAL 2014 RESULTS 

Sales were $14.8 billion, up from $13.9 billion in 2013, with organic growth of 5%. The organic calculation of growth includes a reduction for 2014's 53rd week of $258 million, or approximately 2%, and adjusts for adverse currency translation of $106 million. Adjusted operating income was $878 million, an increase of 12% over 2013. It is estimated that the extra week boosted total company and segment adjusted operating income growth rates by approximately 2%. Adjusted net income was $359 million or $1.51 per share, versus adjusted net income of $261 million or $1.24 per share in 2013. The extra week increased adjusted net income by an estimated 2% and adjusted earnings per share by an estimated $0.02. The diluted share count average for fiscal 2014 was 237.5 million shares, up from 209.4 million shares in fiscal 2013, primarily as a result of the company's initial public offering in December of 2013.

On an as reported basis, sales were $14.8 billion, operating income was $565 million, net income attributable to Aramark stockholders was $149 million and earnings per share were $0.63. A reconciliation of as reported financial measures to adjusted financial measures, including changes in currency translation rates is presented below. See "Non-GAAP Measures."

FISCAL 2014 SEGMENT RESULTS 

Food and Support Services – North America 

Sales in the Food and Support Services – North America segment were up $10.2 billion with organic growth of 5%. Adjusted operating income for the segment was up 10%. Adjusted operating incomes includes the benefit of the 53rd week. As reported sales were up 7% and operating income was up 24%. Sales growth in the Education and Sports, Leisure and Corrections sectors were particularly notable as new business wins came onboard throughout the year.

Food and Support Services – International 

Sales in the Food and Support Services – International segment were $3.1 billion with organic growth of 7%. Adjusted operating income for the segment was up 25%. As reported sales were up 6% and operating income was up 56%. Organic growth in Europe increased in the low single digits from the prior year and emerging markets continued to grow in the double digits.

Uniform and Career Apparel 

Sales in the Uniform and Career Apparel segment were $1.5 billion with organic growth of 3%. Adjusted operating income for the segment was up 12%. As reported sales were up 5% and operating income was up 47%. Profitability improvement in the segment was driven by ongoing sales growth and continuing merchandise and plant productivity initiatives.

FOURTH QUARTER 2014 RESULTS 

Sales were $3.9 billion versus $3.5 billion in the fourth quarter of 2013, with organic growth of 6%. Sales in the quarter included non-recurring facility project work with a major North America client, which increased growth by about 2%. North America organic growth of 7% was led by Education, Healthcare Hospitality and Corrections and was boosted by the non-recurring facility project. International organic growth was 6% while organic growth in Uniform and Career Apparel was 3%.

Adjusted operating income was $228 million versus $198 million in last year's period, an increase of 15%, with North America up 12%, International up 27% and Uniform and Career Apparel up 15%. The extra week is estimated to comprise about 7% of the growth in the quarter. On an as reported basis, total company operating income increased 7% in the fourth quarter with North America, International and Uniform and Career Apparel increasing 13%, (5%) and 75%, respectively. North America adjusted operating income growth reflected both continued productivity initiatives and the impact of start-up costs of several large Education, Healthcare and Corrections clients. International benefited from continued strong performance in Emerging Markets while Uniform and Career Apparel continued to deliver on productivity initiatives.

Adjusted net income for the quarter was $94 million or $0.39 per share, versus adjusted net income of $78 million or $0.37 per share in the fourth quarter of 2013. The 53rd week increased adjusted net income by about 6% and adjusted earnings per share by approximately $0.02. The diluted share count in the fourth quarter was 244.3 million shares, up from 209.6 million shares in the same period last year, primarily as a result of the company's initial public offering in December of 2013.

On an as reported basis for the quarter, sales were $3.9 billion, operating income was $145 million, net income attributable to Aramark stockholders was $44 million and earnings per share were $0.18. Changes in currency rates from the prior year reduced sales and operating income in the quarter. A reconciliation of as reported financial measures to adjusted financial measures, including changes in currency translation rates is presented below. See "Non-GAAP Measures."

TRANSFORMATION UPDATE 

In late 2012 the company launched a transformation initiative focused on Accelerating growth, Activating productivity, and Attracting the best people. This initiative is designed to drive annual organic sales growth of 3% - 5%, adjusted operating income growth of mid to high single digits and adjusted earnings per share growth in the low double digits. Included in the first phase of this transformation was a 2013 - 2015 target of $200 - $300 million of gross productivity savings leading to $100 million of savings, net of pass-through savings to clients under client interest contracts and reinvestment in growth, people and technology. The company has achieved this target early and delivered these savings by year-end fiscal 2014.

Looking forward, the company expects to continue programs related to food, labor and SG&A initiatives and has identified additional programs in these areas, including development of a more standardized in-unit organizational structure, supply chain and menu standardization and expansion of our shared services initiative globally. Efforts related to this next phase of transformation are already underway, and have resulted in a fourth quarter charge of $21 million. Over the next two years, the company expects to incur additional charges of approximately $100 million related to these initiatives. These incremental actions are expected to result in approximately $300 million in gross cost savings before client pass-through savings under client interest contracts over a three-year period and will support the company's existing multi-year framework, continued investment in growth, people and technology and help to partially offset external pressures that may arise such as food and wage inflation.

DIVIDEND INCREASE & DECLARATION 

In recognition of the company's improving growth and profitability, the company's Board of Directors is increasing the regular quarterly dividend by 15%, to 8.625 cents per share of common stock. On November 11, 2014 the Board of Directors declared the first quarter fiscal 2015 dividend, at the increased rate, which is payable on December 16, 2014, to stockholders of record at the close of business November 25, 2014.

LIQUIDITY & CAPITAL STRUCTURE 

As of October 3, 2014, total debt was $5.4 billion. The company's total debt to adjusted EBITDA ratio has been reduced to 4.3x, from 5.0x prior to the December 2013 public offering. Corporate liquidity remains strong, and as of year-end the company's $770 million revolving credit facility was undrawn.

MULTI-YEAR FRAMEWORK & OUTLOOK 

The company's multi-year framework remains unchanged – to deliver 3% - 5% organic sales growth, mid to high single digit adjusted operating income growth and low double digit growth in adjusted earnings per share. In 2015, adjusted EPS is expected within a range of $1.60 to $1.70, based upon an estimate of 245.0 million average diluted shares outstanding, up from 237.5 million in 2014.

53rd Week impact on 2015 Quarters 

The shift of the start of fiscal 2015 resulting from 2014's extra week creates a calendar shift that affects year-over-year quarterly comparisons. In general, this effect results from a change in timing between (1) the company's fiscal quarters and (2) holidays in the Business and Education sector, school semesters and breaks in the Education sector, and major league sports schedules in the Sports, Leisure and Corrections sector. This effect is expected to reduce both sales and adjusted operating income growth in the first and third quarters, while increasing growth in the second and fourth quarters, as shown in the table:

Estimated Calendar Shift Impact on Growth 

 

Q1 

Q2 

Q3 

Q4 

Sales 

(2%) – (3%) 

+1% - +2% 

(1%) – (2%) 

+1% - +2% 

Adjusted Operating Income 

(4%) – (5%) 

+3% - +4% 

(3%) – (4%) 

+3% - +4% 

The effect on the full year is expected to be negligible.

CONFERENCE CALL SCHEDULED 

The company has scheduled a conference call at 10 a.m. Eastern Standard Time today to discuss its earnings. This call can be heard, either live or on a delayed basis, on the company's web site,www.aramark.com on the investor relations page.

About Aramark 

Aramark (NYSE: ARMK) is in the customer service business across food, facilities and uniforms, wherever people work, learn, recover, and play. United by a passion to serve, our more than 270,000 employees deliver experiences that enrich and nourish the lives of millions of people in 22 countries around the world every day. Aramark is recognized among the Most Admired Companies by FORTUNE and the World's Most Ethical Companies by the Ethisphere Institute. Learn more at www.aramark.com or connect with us on Facebook and Twitter.

Selected Operational and Financial Metrics 

Adjusted Sales (Organic) 

Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions and divestitures, the impact of currency translation and the estimated impact of the 53rd week, 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.

Adjusted Operating Income 

Adjusted operating income represents operating income adjusted to eliminate the change in amortization of acquisition-related customer relationship intangible assets and depreciation of property and equipment resulting from the going-private transaction in 2007 (the "Transaction"); the impact of the change in fair value related to the gasoline and diesel agreements; severance and other charges; share-based compensation; the effects of acquisitions and divestitures and the impact of currency translation and other items impacting comparability.

Adjusted EBITDA 

Adjusted EBITDA represents Adjusted Operating Income further adjusted to exclude the impact of all other depreciation and amortization expense.

Adjusted Net Income 

Adjusted Net Income represents net income attributable to Aramark stockholders adjusted to eliminate the impact of discontinued operations; the change in amortization of acquisition-related customer relationship intangible assets and depreciation of property and equipment resulting from the Transaction; the impact of changes in the fair value related to the gasoline and diesel agreements; severance and other charges; share-based compensation; the effects of acquisitions and divestitures and the impact of currency translation and other items impacting comparability, less the tax impact of these adjustments. Management believes that presentation of net income as adjusted is useful information to investors because we use such information when evaluating net income to better evaluate the underlying operating performance of the company.

We use Adjusted Sales, Adjusted Operating Income, Adjusted EBITDA and Adjusted Net Income as supplemental measures of our operating profitability and to operate and control our cash operating costs to evaluate our performance. These financial metrics are not measurements of financial performance under generally accepted accounting principles in the United States, or U.S. GAAP. We believe the presentation of these metrics is appropriate to provide additional information to investors about our operating performance. Our presentation of these metrics has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. You should not consider these measures as alternatives to sales, operating income or net income, determined in accordance with U.S. GAAP. Adjusted Sales, Adjusted Operating Income, Adjusted EBITDA and Adjusted Net Income, as presented by us, may not be comparable to other similarly titled measures of other companies because not all companies use identical calculations.

Explanatory Notes to the Non-GAAP Schedules 

Amortization of acquisition related customer relationship intangible assets and depreciation of property and equipment resulting from the Transaction - adjustments to eliminate the change in amortization and depreciation resulting from the purchase accounting applied to the January 26, 2007 going-private transaction executed with investment funds affiliated with GS Capital Partners, CCMP Capital Advisors, LLC and J.P. Morgan Partners, LLC, Thomas H. Lee Partners, L.P. and Warburg Pincus LLC as well as approximately 250 senior management personnel.

Share-based compensation - adjustments to eliminate compensation expense related to the company's issuances of share-based awards and the related employer payroll tax expense incurred by the company when employees exercise in the money stock options or vest in restricted stock awards. This adjustment excludes the expense related to the modification of missed year options in connection with the initial public offering which are included in the Initial public offering and related expenses adjustment noted below.

Effect of currency translation - adjustments to eliminate the impact that fluctuations in currency translation rates had on the comparative results by presenting the periods on a constant currency basis.

Severance and other charges - adjustments to eliminate severance expenses and other costs incurred in the applicable period such as costs incurred to start-up our Business Service Center in Nashville, TN ($6.4 million for the fourth quarter of 2014 and $24.5 million for the year-to-date 2014 and $2.1 million for the fourth quarter and year-to-date 2013), organizational streamlining initiatives ($20.9 million for the fourth quarter of 2014 and $21.3 million for the year-to-date 2014 and $16.5 million for the fourth quarter of 2013 and $71.2 million for the year-to-date 2013), goodwill impairments and asset write-offs ($0.4 million for the fourth quarter of 2013 and $23.6 million for the year-to-date 2013) and other transformational initiatives ($4.3 million for the fourth quarter of 2014 and $7.8 million for the year-to-date 2014 and $0.6 million for the fourth quarter of 2013 and $16.6 million for the year-to-date 2013).

Effects of acquisitions and divestitures - adjustments to eliminate the impact that acquisitions and divestitures had on the comparative periods by only presenting the acquired or divested businesses for the same periods of time in each period of the comparison.

Branding - adjustments to eliminate the expenses incurred in the period for the Aramark rebranding, such as costs related to the logo redesign, painting of trucks, changing signage, advertising, an internal new brand roll-out meeting, including travel and lodging expenses for company employees to attend this meeting.

Initial public offering and related expenses - adjustments to eliminate non-cash compensation expense ($50.9 million for year-to-date 2014) related to the modification of missed year options in connection with the initial public offering, bonuses paid ($4.3 million for year-to-date 2014) to select senior management individuals related to the successful completion of the initial public offering and other costs attributable to the completion of the initial public offering.

Gains, losses and settlements impacting comparability - adjustments to eliminate certain transactions that are not indicative of our ongoing operational performance such as the loss on the McKinley Chalet divestiture ($6.7 million for year-to-date 2014), insurance reserve adjustments due to favorable claims experience ($2.5 million for the fourth quarter of 2014 and $8.3 million for the year-to-date 2014 and $1.7 million for the fourth quarter of 2013 and $6.2 for the year-to-date 2013), multiemployer pension plan withdrawal charges ($3.2 million for the fourth quarter of 2013 and $5.3 million for the year-to-date 2013), wage and hour settlement ($2.8 million for the year-to-date 2013), other income relating to the recovery of the Company's investment (possessory interest) at our National Park Service sites ($2.0 million for fourth quarter and year-to-date 2014 and $14.2 million for the year-to-date 2013), loss on the sale of an aircraft ($1.4 million for the fourth quarter and year-to-date 2013), expenses related to a secondary offering of common stock by certain of our stockholders in May of 2014 ($0.9 million for the year-to-date 2014), the impact of the change in fair value related to the gasoline and diesel agreements ($2.4 million for the fourth quarter of 2014 and $1.8 million for the year-to-date 2014 and $0.1 million for the fourth quarter of 2013 and $0.7 million for the year-to-date 2013), other asset write-offs ($1.1 million for the fourth quarter and year-to-date 2014) and other miscellaneous expenses.

Effects of refinancing on interest and other financing costs, net - adjustments to eliminate expenses associated with refinancing activities undertaken by the Company in the applicable period such as third party costs and non-cash charges for the write-offs of deferring financing costs.

Forward-Looking Statements

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, without limitation, conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business and growth strategy. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "outlook," "aim," "anticipate," "are confident," "have confidence," "estimate," "expect," "will be," "will continue," "will likely result," "project," "intend," "plan," "believe," "see," "look to" and other words and terms of similar meaning or the negative versions of such words.

Forward-looking statements speak only as of the date made. All statements we make relating to our estimated and projected earnings, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include without limitation: unfavorable economic conditions; natural disasters, global calamities, sports strikes and other adverse incidents; the failure to retain current clients, renew existing client contracts and obtain new client contracts; a determination by clients to reduce their outsourcing or use of preferred vendors; competition in our industries; increased operating costs and obstacles to cost recovery due to the pricing and cancellation terms of our food and support services contracts; the inability to achieve cost savings through our cost reduction efforts; our expansion strategy; the failure to maintain food safety throughout our supply chain, food-borne illness concerns and claims of illness or injury; governmental regulations including those relating to food and beverages, the environment, wage and hour and government contracting; liability associated with noncompliance with applicable law or other governmental regulations; changes in, new interpretations of or changes in the enforcement of the government regulatory framework; currency risks and other risks associated with international operations, including Foreign Corrupt Practices Act, U.K. Bribery Act and other anti-corruption law compliance; continued or further unionization of our workforce; liability resulting from our participation in multiemployer defined benefit pension plans; risks associated with suppliers from whom our products are sourced; disruptions to our relationship with, or to the business of, our primary distributor; the inability to hire and retain sufficient qualified personnel or increases in labor costs; healthcare reform legislation; the contract intensive nature of our business, which may lead to client disputes; seasonality; our leverage; the inability to generate sufficient cash to service all of our indebtedness; debt agreements that limit our flexibility in operating our business; potential conflicts of interest between certain of our controlling shareholders and us; and other factors set forth under the headings "Risk Factors," "Business - Legal Proceedings" and "Management Discussion and Analysis of Financial Condition and Results of Operations" sections in our prospectus dated December 11, 2013, filed with the SEC pursuant to Rule 424(b) of the Securities Act on December 12, 2013, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov and which may be obtained by contacting Aramark's investor relations department via its websitewww.aramark.com. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. 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. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, changes in our expectations, or otherwise, except as required by law.

 

 

ARAMARK AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(Unaudited) 

(In Thousands, Except Per Share Amounts) 

 

 

 

 

 

 

 

Three Months 

 

Three Months 

 

 

Ended 

 

Ended 

 

 

October 3, 2014 

 

September 27, 2013 

 

 

 

 

 

Sales 

 

$ 3,947,768 

 

$ 3,515,975 

Costs and Expenses: 

 

 

 

 

    Cost of services provided 

 

3,573,882 

 

3,179,286 

    Depreciation and amortization 

 

134,523 

 

137,624 

    Selling and general corporate expenses 

 

94,112 

 

63,721 

 

 

3,802,517 

 

3,380,631 

Operating income 

 

145,251 

 

135,344 

Interest and other financing costs, net 

 

78,273 

 

82,453 

    Income from continuing operations before income taxes  

 

66,978 

 

52,891 

Provision for income taxes 

 

22,468 

 

12,757 

    Income from continuing operations 

 

44,510 

 

40,134 

    Loss from discontinued operations, net of tax 

 

 

(1,030) 

    Net income 

 

44,510 

 

39,104 

    Less: Net income attributable to noncontrolling interests 

 

105 

 

206 

    Net income attributable to Aramark stockholders 

 

$ 44,405 

 

$ 38,898 

 

 

 

 

 

Earnings per share attributable to Aramark stockholders: 

 

 

 

 

Basic: 

 

 

 

 

    Income from continuing operations 

 

$ 0.19 

 

$ 0.20 

    Loss from discontinued operations 

 

 

(0.01) 

 

 

$ 0.19 

 

$ 0.19 

 

 

 

 

 

Diluted: 

 

 

 

 

    Income from continuing operations 

 

$ 0.18 

 

$ 0.20 

    Loss from discontinued operations 

 

 

(0.01) 

 

 

$ 0.18 

 

$ 0.19 

Weighted Average Shares Outstanding: 

 

 

 

 

Basic 

 

233,392 

 

201,753 

Diluted 

 

244,266 

 

209,568 

 

 

 

ARAMARK AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME 

(Unaudited) 

(In Thousands, Except Per Share Amounts) 

 

 

 

 

 

 

 

Twelve Months 

 

Twelve Months 

 

 

Ended 

 

Ended 

 

 

October 3, 2014 

 

September 27, 2013 

 

 

 

 

 

Sales 

 

$ 14,832,913 

 

$ 13,945,657 

Costs and Expenses: 

 

 

 

 

    Cost of services provided 

 

13,363,918 

 

12,661,145 

    Depreciation and amortization 

 

521,581 

 

542,136 

    Selling and general corporate expenses 

 

382,851 

 

227,902 

 

 

14,268,350 

 

13,431,183 

Operating income 

 

564,563 

 

514,474 

Interest and other financing costs, net 

 

334,886 

 

423,845 

    Income from continuing operations before income taxes  

 

229,677 

 

90,629 

Provision for income taxes 

 

80,218 

 

19,233 

    Income from continuing operations 

 

149,459 

 

71,396 

    Loss from discontinued operations, net of tax 

 

 

(1,030) 

    Net income 

 

149,459 

 

70,366 

    Less: Net income attributable to noncontrolling interests 

 

503 

 

1,010 

    Net income attributable to Aramark stockholders 

 

$ 148,956 

 

$ 69,356 

 

 

 

 

 

Earnings per share attributable to Aramark stockholders: 

 

 

 

 

Basic: 

 

 

 

 

    Income from continuing operations 

 

$ 0.66 

 

$ 0.35 

    Loss from discontinued operations 

 

 

(0.01) 

 

 

$ 0.66 

 

$ 0.34 

 

 

 

 

 

Diluted: 

 

 

 

 

    Income from continuing operations 

 

$ 0.63 

 

$ 0.34 

    Loss from discontinued operations 

 

 

(0.01) 

 

 

$ 0.63 

 

$ 0.33 

Weighted Average Shares Outstanding: 

 

 

 

 

Basic 

 

225,866 

 

201,916 

Diluted 

 

237,451 

 

209,370 

 

 

 

ARAMARK AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS 

(Unaudited) 

(In Thousands) 

 

 

 

 

 

 

 

October 3, 2014 

 

September 27, 2013 

Assets 

 

 

 

 

 

 

 

 

 

Current Assets: 

 

 

 

 

Cash and cash equivalents 

 

$ 111,690 

 

$ 110,998 

Receivables  

 

1,582,431 

 

1,405,843 

Inventories 

 

553,815 

 

541,972 

Prepayments and other current assets 

 

217,040 

 

228,352 

Total current assets 

 

2,464,976 

 

2,287,165 

Property and Equipment, net 

 

997,331 

 

977,323 

Goodwill 

 

4,589,680 

 

4,619,987 

Other Intangible Assets 

 

1,252,741 

 

1,408,764 

Other Assets 

 

1,150,965 

 

973,867 

 

 

$ 10,455,693 

 

$ 10,267,106 

 

 

 

 

 

Liabilities and Stockholders' Equity 

 

 

 

 

 

 

 

 

 

Current Liabilities: 

 

 

 

 

Current maturities of long-term borrowings 

 

$ 89,805 

 

$ 65,841 

Accounts payable 

 

986,240 

 

888,969 

Accrued expenses and other current liabilities 

 

1,302,828 

 

1,434,443 

Total current liabilities 

 

2,378,873 

 

2,389,253 

Long-Term Borrowings 

 

5,355,789 

 

5,758,229 

Other Liabilities 

 

993,118 

 

1,047,002 

Common Stock Subject to Repurchase and Other 

 

9,877 

 

168,915 

Total Stockholders' Equity 

 

1,718,036 

 

903,707 

 

 

$ 10,455,693 

 

$ 10,267,106 

 

 

 

ARAMARK AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Unaudited) 

(In Thousands) 

 

 

 

 

 

 

 

Twelve Months 

 

Twelve Months 

 

 

Ended 

 

Ended 

 

 

October 3, 2014 

 

September 27, 2013 

 

 

 

 

 

Cash flows from operating activities: 

 

 

 

 

    Net income 

 

$ 149,459 

 

$ 70,366 

    Adjustments to reconcile net income to net cash  

 

 

 

 

     provided by operating activities: 

 

 

 

 

       Depreciation and amortization 

 

521,581 

 

542,136 

       Income taxes deferred 

 

37,372 

 

(17,791) 

       Share-based compensation expense 

 

96,332 

 

19,417 

    Changes in noncash working capital 

 

(427,711) 

 

43,146 

    Other operating activities 

 

21,126 

 

38,633 

Net cash provided by operating activities 

 

398,159 

 

695,907 

 

 

 

 

 

Cash flows from investing activities: 

 

 

 

 

    Net purchases of property and equipment, 

 

 

 

 

     client contract investments and other 

 

(516,700) 

 

(381,634) 

    Acquisitions, divestitures and other investing activities 

 

11,478 

 

(3,754) 

Net cash used in investing activities 

 

(505,222) 

 

(385,388) 

 

 

 

 

 

Cash flows from financing activities: 

 

 

 

 

    Net proceeds/payments of long-term borrowings 

 

(407,788) 

 

(234,389) 

    Net change in funding under the Receivables Facility 

 

50,000 

 

36,200 

    Payments of dividends 

 

(52,186) 

 

    Proceeds from initial public offering, net 

 

524,081 

 

    Proceeds from issuance of common stock 

 

4,408 

 

5,597 

    Distribution in connection with spin-off of Seamless 

 

 

(47,352) 

    Repurchase of common stock 

 

(4,730) 

 

(42,399) 

    Other financing activities  

 

(6,030) 

 

(53,926) 

Net cash provided by (used in) financing activities 

 

107,755 

 

(336,269) 

Increase (decrease) in cash and cash equivalents 

 

692 

 

(25,750) 

Cash and cash equivalents, beginning of period 

 

110,998 

 

136,748 

Cash and cash equivalents, end of period 

 

$ 111,690 

 

$ 110,998 

 

 

 

ARAMARK AND SUBSIDIARIES 

RECONCILIATION OF NON-GAAP MEASURES 

ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN 

(Unaudited) 

(In thousands) 

 

 

 

Three Months Ended 

 

 

October 3, 2014  

 

 

FSS North America 

 

FSS International 

 

Uniform 

 

Corporate 

 

Aramark and
Subsidiaries 

Sales (as reported) 

 

$ 2,783,048 

 

$ 771,097 

 

$ 393,623 

 

 

 

$ 3,947,768 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported) 

 

$ 118,782 

 

$ 27,659 

 

$ 48,372 

 

$ (49,562) 

 

$ 145,251 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin (as reported) 

 

4.3% 

 

3.6% 

 

12.3% 

 

 

 

3.7% 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales (as reported) 

 

$ 2,783,048 

 

$ 771,097 

 

$ 393,623 

 

 

 

$ 3,947,768 

 

 

 

 

 

 

 

 

 

 

 

Effects of Acquisitions and Divestitures 

 

(3,906) 

 

(991) 

 

(708) 

 

 

 

(5,605) 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Sales 

 

$ 2,779,142 

 

$ 770,106 

 

$ 392,915 

 

 

 

$ 3,942,163 

 

 

 

 

 

 

 

 

 

 

 

Estimated Impact of 53rd Week 

 

(214,413) 

 

(15,125) 

 

(28,425) 

 

 

 

(257,963) 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Sales (Organic) 

 

$ 2,564,729 

 

$ 754,981 

 

$ 364,490 

 

 

 

$ 3,684,200 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported) 

 

$ 118,782 

 

$ 27,659 

 

$ 48,372 

 

$ (49,562) 

 

$ 145,251 

Amortization of Acquisition-Related Customer
  Relationship Intangible Assets and Depreciation of
  Property and Equipment Resulting from the Transaction 

 

29,954 

 

1,796 

 

(1,109) 

 

 

30,641 

Share-Based Compensation 

 

329 

 

131 

 

92 

 

13,526 

 

14,078 

Severance and Other Charges 

 

8,717 

 

9,706 

 

2,153 

 

11,025 

 

31,601 

Effects of Acquisitions and Divestitures 

 

(1,574) 

 

(158) 

 

16 

 

 

(1,716) 

Branding 

 

 

 

1,283 

 

6,141 

 

7,424 

Gains, Losses and Settlements impacting comparability 

 

(1,443) 

 

1,566 

 

(2,062) 

 

2,593 

 

654 

Adjusted Operating Income 

 

$ 154,765 

 

$ 40,700 

 

$ 48,745 

 

$ (16,277) 

 

$ 227,933 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin 

 

5.6% 

 

5.3% 

 

12.4% 

 

 

 

5.8% 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

 

September 27, 2013  

 

 

FSS North America 

 

FSS International 

 

Uniform 

 

Corporate 

 

Aramark and
Subsidiaries 

Sales (as reported) 

 

$ 2,429,256 

 

$ 732,738 

 

$ 353,981 

 

 

 

$ 3,515,975 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported) 

 

$ 105,341 

 

$ 29,172 

 

$ 27,583 

 

$ (26,752) 

 

$ 135,344 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin (as reported) 

 

4.3% 

 

4.0% 

 

7.8% 

 

 

 

3.8% 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales (as reported) 

 

$ 2,429,256 

 

$ 732,738 

 

$ 353,981 

 

 

 

$ 3,515,975 

 

 

 

 

 

 

 

 

 

 

 

Effects of Currency Translation 

 

(10,410) 

 

(21,617) 

 

 

 

 

(32,027) 

Effects of Acquisitions and Divestitures 

 

(11,747) 

 

 

 

 

 

(11,747) 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Sales (Organic) 

 

$ 2,407,099 

 

$ 711,121 

 

$ 353,981 

 

 

 

$ 3,472,201 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported) 

 

$ 105,341 

 

$ 29,172 

 

$ 27,583 

 

$ (26,752) 

 

$ 135,344 

Amortization of Acquisition-Related Customer
  Relationship Intangible Assets and Depreciation of
  Property and Equipment Resulting from the Transaction 

 

30,304 

 

1,774 

 

6,966 

 

 

39,044 

Share-Based Compensation 

 

 

 

 

7,089 

 

7,089 

Effects of Currency Translation 

 

(652) 

 

(848) 

 

 

 

(1,500) 

Severance and Other Charges 

 

10,594 

 

2,055 

 

4,790 

 

2,279 

 

19,718 

Effects of Acquisitions and Divestitures 

 

(5,545) 

 

 

 

 

(5,545) 

Branding 

 

 

 

 

968 

 

968 

Gains, Losses and Settlements impacting comparability 

 

(1,560) 

 

 

3,039 

 

1,527 

 

3,006 

Adjusted Operating Income 

 

$ 138,482 

 

$ 32,153 

 

$ 42,378 

 

$ (14,889) 

 

$ 198,124 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin 

 

5.8% 

 

4.5% 

 

12.0% 

 

 

 

5.7% 

 

 

 

ARAMARK AND SUBSIDIARIES 

RECONCILIATION OF NON-GAAP MEASURES 

ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN 

(Unaudited) 

(In thousands) 

 

 

 

Fiscal Year Ended 

 

 

October 3, 2014  

 

 

FSS North America 

 

FSS International 

 

Uniform 

 

Corporate 

 

Aramark and
Subsidiaries 

Sales (as reported) 

 

$ 10,232,809 

 

$ 3,111,250 

 

$ 1,488,854 

 

 

 

$ 14,832,913 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported) 

 

$ 501,301 

 

$ 106,193 

 

$ 172,088 

 

$ (215,019) 

 

$ 564,563 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin (as reported) 

 

4.9% 

 

3.4% 

 

11.6% 

 

 

 

3.8% 

 

 

 

 

 

 

 

 

 

 

 

Sales (as reported) 

 

$ 10,232,809 

 

$ 3,111,250 

 

$ 1,488,854 

 

 

 

$ 14,832,913 

 

 

 

 

 

 

 

 

 

 

 

Effects of Acquisitions and Divestitures 

 

(11,753) 

 

(2,628) 

 

(1,256) 

 

 

 

(15,637) 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Sales 

 

$ 10,221,056 

 

$ 3,108,622 

 

$ 1,487,598 

 

 

 

$ 14,817,276 

 

 

 

 

 

 

 

 

 

 

 

Estimated Impact of 53rd Week 

 

(214,413) 

 

(15,125) 

 

(28,425) 

 

 

 

(257,963) 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Sales (Organic) 

 

$ 10,006,643 

 

$ 3,093,497 

 

$ 1,459,173 

 

 

 

$ 14,559,313 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported) 

 

$ 501,301 

 

$ 106,193 

 

$ 172,088 

 

$ (215,019) 

 

$ 564,563 

Amortization of Acquisition-Related Customer
  Relationship Intangible Assets and Depreciation of
  Property and Equipment Resulting from the Transaction 

 

117,174 

 

6,719 

 

5,612 

 

 

129,505 

Share-Based Compensation 

 

1,003 

 

298 

 

440 

 

45,781 

 

47,522 

Severance and Other Charges 

 

(3,219) 

 

23,568 

 

2,153 

 

31,052 

 

53,554 

Effects of Acquisitions and Divestitures 

 

(2,125) 

 

(350) 

 

34 

 

 

(2,441) 

Branding 

 

1,189 

 

225 

 

1,493 

 

24,003 

 

26,910 

Initial Public Offering-Related Expenses, including share- 

 based compensation 

 

 

 

 

56,133 

 

56,133 

Gains, Losses and Settlements impacting comparability 

 

966 

 

1,566 

 

(3,608) 

 

2,987 

 

1,911 

Adjusted Operating Income 

 

$ 616,289 

 

$ 138,219 

 

$ 178,212 

 

$ (55,063) 

 

$ 877,657 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin 

 

6.0% 

 

4.4% 

 

12.0% 

 

 

 

5.9% 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended 

 

 

September 27, 2013  

 

 

FSS North America 

 

FSS International 

 

Uniform 

 

Corporate 

 

Aramark and
Subsidiaries 

Sales (as reported) 

 

$ 9,594,122 

 

$ 2,940,198 

 

$ 1,411,337 

 

 

 

$ 13,945,657 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported) 

 

$ 403,235 

 

$ 68,090 

 

$ 117,344 

 

$ (74,195) 

 

$ 514,474 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin (as reported) 

 

4.2% 

 

2.3% 

 

8.3% 

 

 

 

3.7% 

 

 

 

 

 

 

 

 

 

 

 

Sales (as reported) 

 

$ 9,594,122 

 

$ 2,940,198 

 

$ 1,411,337 

 

 

 

$ 13,945,657 

 

 

 

 

 

 

 

 

 

 

 

Effects of Currency Translation 

 

(61,422) 

 

(44,766) 

 

 

 

 

(106,188) 

Effects of Acquisitions and Divestitures 

 

(25,477) 

 

 

 

 

 

(25,477) 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Sales (Organic) 

 

$ 9,507,223 

 

$ 2,895,432 

 

$ 1,411,337 

 

 

 

$ 13,813,992 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported) 

 

$ 403,235 

 

$ 68,090 

 

$ 117,344 

 

$ (74,195) 

 

$ 514,474 

Amortization of Acquisition-Related Customer
  Relationship Intangible Assets and Depreciation of
  Property and Equipment Resulting from the Transaction 

 

120,118 

 

7,934 

 

27,391 

 

 

155,443 

Share-Based Compensation 

 

 

 

 

19,417 

 

19,417 

Effects of Currency Translation 

 

(4,524) 

 

(1,539) 

 

 

 

(6,063) 

Severance and Other Charges 

 

65,437 

 

36,207 

 

8,520 

 

3,300 

 

113,464 

Effects of Acquisitions and Divestitures 

 

(5,992) 

 

 

 

 

(5,992) 

Branding 

 

 

 

 

968 

 

968 

Gains, Losses and Settlements impacting comparability 

 

(18,281) 

 

 

5,952 

 

2,078 

 

(10,251) 

Adjusted Operating Income 

 

$ 559,993 

 

$ 110,692 

 

$ 159,207 

 

$ (48,432) 

 

$ 781,460 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income Margin 

 

5.9% 

 

3.8% 

 

11.3% 

 

 

 

5.7% 

 

 

 

ARAMARK AND SUBSIDIARIES 

RECONCILIATION OF NON-GAAP MEASURES 

ADJUSTED NET INCOME, ADJUSTED OPERATING INCOME, ADJUSTED EBITDA & ADJUSTED EPS 

(Unaudited) 

(In thousands, except per share amounts) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Three Months Ended 

 

Twelve Months Ended 

 

Twelve Months Ended 

 

 

 

 

October 3, 2014  

 

September 27, 2013  

 

October 3, 2014  

 

September 27, 2013  

 

 

 

 

 

 

 

 

 

 

 

Net Income (as reported) 

$ 44,510 

 

$ 39,104 

 

$ 149,459 

 

$ 70,366 

 

Adjustment: 

 

 

 

 

 

 

 

 

Loss from Discontinued Operations, net of tax 

 

1,030 

 

 

1,030 

 

Amortization of Acquisition-Related Customer Relationship Intangible Assets and Depreciation of Property and Equipment Resulting from the Transaction 

30,641 

 

39,044 

 

129,505 

 

155,443 

 

Share-Based Compensation 

14,078 

 

7,089 

 

47,522 

 

19,417 

 

Effects of Currency Translation 

 

(1,500) 

 

 

(6,063) 

 

Severance and Other Charges 

31,601 

 

19,718 

 

53,554 

 

113,464 

 

Effects of Acquisitions and Divestitures 

(1,716) 

 

(5,545) 

 

(2,441) 

 

(5,992) 

 

Branding 

7,424 

 

968 

 

26,910 

 

968 

 

Initial Public Offering-Related Expenses,
  including share-based compensation 

 

 

56,133 

 

 

Gains, Losses and Settlements impacting
  comparability 

654 

 

3,006 

 

1,911 

 

(10,251) 

 

Effects of Refinancings on Interest and Other Financing Costs, net 

 

 

25,705 

 

39,830 

 

Tax Impact of Adjustments to Adjusted Net
Income 

(32,659) 

 

(24,798) 

 

(128,821) 

 

(116,572) 

Adjusted Net Income 

$ 94,533 

 

$ 78,116 

 

$ 359,437 

 

$ 261,640 

 

Adjustment: 

 

 

 

 

 

 

 

 

Tax Impact of Adjustments to Adjusted Net
  Income and Interest Adjustments 

32,659 

 

24,798 

 

103,116 

 

76,742 

 

Provision for Income Taxes 

22,468 

 

12,757 

 

80,218 

 

19,233 

 

Interest and Other Financing Costs, net 

78,273 

 

82,453 

 

334,886 

 

423,845 

Adjusted Operating Income 

$ 227,933 

 

$ 198,124 

 

$ 877,657 

 

$ 781,460 

 

Adjustment: 

 

 

 

 

 

 

 

 

Amortization of Acquisition-Related Customer Relationship Intangible Assets and Depreciation of Property and Equipment Resulting from the Transaction 

(30,641) 

 

(39,044) 

 

(129,505) 

 

(155,443) 

 

Depreciation and Amortization 

134,523 

 

137,624 

 

521,581 

 

542,136 

Adjusted EBITDA 

$ 331,815 

 

$ 296,704 

 

$ 1,269,733 

 

$ 1,168,153 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Share 

 

 

 

 

 

 

 

 

Adjusted Net Income 

$ 94,533 

 

$ 78,116 

 

$ 359,437 

 

$ 261,640 

 

Net Income Attributable to Noncontrolling Interests 

(105) 

 

(206) 

 

(503) 

 

(1,010) 

 

Adjusted Net Income Attributable to Aramark
  Stockholders 

$ 94,428 

 

$ 77,910 

 

$ 358,934 

 

$ 260,630 

 

Diluted Weighted Average Shares Outstanding 

244,266 

 

209,568 

 

237,451 

 

209,370 

 

 

 

 

$ 0.39 

 

$ 0.37 

 

$ 1.51 

 

$ 1.24 

 

 

 

ARAMARK AND SUBSIDIARIES 

RECONCILIATION OF NON-GAAP MEASURES 

DEBT TO ADJUSTED EBITDA 

(Unaudited) 

(In thousands) 

 

 

 

 

 

 

 

Fiscal Year Ended 

 

Fiscal Year Ended 

 

 

October 3, 2014  

 

September 27, 2013  

 

Net Income (as reported) 

$ 149,459 

 

$ 70,366 

 

Adjustment: 

 

 

 

 

Loss from Discontinued Operations, net of tax 

 

1,030 

 

  Amortization of Acquisition-Related Customer
    Relationship Intangible Assets and Depreciation of
    Property and Equipment Resulting from the Transaction 

129,505 

 

155,443 

 

Share-Based Compensation 

47,522 

 

19,417 

 

Effects of Currency Translation 

 

(6,063) 

 

Severance and Other Charges 

53,554 

 

113,464 

 

Effects of Acquisitions and Divestitures 

(2,441) 

 

(5,992) 

 

Branding 

26,910 

 

968 

 

Initial Public Offering-Related Expenses,
 including share-based compensation 

56,133 

 

 

Gains, Losses and Settlements impacting
 comparability 

1,911 

 

(10,251) 

 

Effect of refinancings on Interest and Other  

 Financing Costs, net 

25,705 

 

39,830 

 

Tax Impact of Adjustments to Adjusted Net
    Income 

(128,821) 

 

(116,572) 

 

Adjusted Net Income 

$ 359,437 

 

$ 261,640 

 

Adjustment: 

 

 

 

 

Tax Impact of Adjustments to Adjusted Net
    Income and Interest Adjustments 

103,116 

 

76,742 

 

Provision for Income Taxes 

80,218 

 

19,233 

 

Interest and Other Financing Costs, net 

334,886 

 

423,845 

 

Adjusted Operating Income 

$ 877,657 

 

$ 781,460 

 

Adjustment: 

 

 

 

 

Amortization of Acquisition-Related Customer
    Relationship Intangible Assets and Depreciation of
    Property and Equipment Resulting from the Transaction 

(129,505) 

 

(155,443) 

 

Depreciation and Amortization 

521,581 

 

542,136 

 

Adjusted EBITDA 

$ 1,269,733 

 

$ 1,168,153 

 

 

 

 

 

 

Debt to Adjusted EBITDA 

 

 

 

 

Total Long-Term Borrowings 

$ 5,445,595 

 

$ 5,824,070 

 

Adjusted EBITDA 

$ 1,269,733 

 

$ 1,168,153 

 

Debt/Adjusted EBITDA 

4.3 

 

5.0 

 

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