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Aramark Announces Second Quarter 2014 Results

The Company Reported Strong Sales, Solid Adjusted Operating Income Growth and Significant New Business Wins

PHILADELPHIA, May 8, 2014-- Aramark Holdings Corporation (NYSE: ARMK), the $14 billion global provider of award winning services in food, facilities management, and uniforms, today reported second quarter 2014 results with strong sales, solid adjusted operating income growth and several key account wins.

KEY SECOND QUARTER HIGHLIGHTS  

  • Sales of $3.5 billion, with organic growth of 4%;
  • Adjusted operating income of $197.8 million up 6%, operating income of $120.8 million;
  • Adjusted net income of $75.2 million, net income of $13.1 million;
  • Adjusted earnings per share of $0.31, earnings per share of $0.05;
  • Quarterly dividend declared.

KEY YEAR-TO-DATE HIGHLIGHTS  

  • Sales of $7.3 billion, with organic growth of 5%;
  • Adjusted operating income of $457.4 million up 12%, operating income of $278.0 million.

"I am pleased to report strong business results for the second quarter and first half of 2014," said Eric J. Foss, President and Chief Executive Officer.  "We experienced growth across all segments and continued our journey to improve profitability.  We are investing for the future by building the Aramark brand and ensuring our front-line associates have the training, tools, and technology to build a strong connection with our customers and consumers.  We remain confident in our ability to drive continued growth and shareholder value."

SECOND QUARTER RESULTS Sales were $3.5 billion versus $3.4 billion in the second quarter of 2013, with organic growth of 4%.  Adjusted operating income was $197.8 million versus $187.3 million last year, an increase of 6%.  Unusually severe winter weather during the quarter affected results at a number of client locations. 

Adjusted net income for the quarter was $75.2 million or $0.31 per share, versus adjusted net income of$53.6 million or $0.26 per share in the second quarter of 2013.  The diluted share count in the second quarter was 243.4 million shares, up from 208.6 million shares in the same period last year, primarily as a result of the company's initial public offering this past December.          

On an as reported basis for the quarter, sales were $3.5 billion, operating income was $120.8 million, net income was $13.1 million and earnings per share were $0.05.  Changes in currency rates from the prior year reduced sales and operating income in the quarter.  A reconciliation of adjusted financial measures to as reported financial measures, including changes in currency translation rates is presented below.  See "Non-GAAP Measures."   

SECOND QUARTER SEGMENT RESULTS  

Food and Support Services – North America Sales in the Food and Support Services – North America segment were $2.4 billion, up 3% on an organic basis (up 2% on a reported basis) and adjusted operating income for the segment was up 1%.  Sales growth in the Education and Sports, Leisure and Corrections sectors were particularly notable as new business wins continue to come online.  Severe winter weather in North America affected many client locations, reducing sales and adjusted operating income by an estimated 1% and 5% to 6%, respectively.  Consistent with what the company previously communicated, reinvestment in growth, technology and people accelerated during the second quarter. 

Food and Support Services - International Sales in the Food and Support Services - International segment were $744.1 million, an 8% increase on an organic basis (up 6% on a reported basis) and adjusted operating income for the segment was up 26%.  Growth in Europe improved from the first quarter and emerging markets continued to grow in the double digits during the second quarter.  Results were aided by the timing of the Easter Holiday, which falls in the fiscal third quarter this year versus the second quarter in 2013.      

Uniform and Career Apparel Sales in the Uniform and Career Apparel segment were $361.0 million, up 4% on an organic basis (up 4% on a reported basis) and adjusted operating income for the segment was up 8%.  The combination of solid sales growth and continuing merchandise and plant productivity initiatives outweighed higher production and route costs from the severe weather. 

Declaration of Dividend On May 6, 2014, the company's Board of Directors declared a 7.5 cent dividend per share of common stock, payable on June 9, 2014, to shareholders of record at the close of business May 19, 2014.  

LIQUIDITY & CAPITAL STRUCTURE As of March 28, 2014, total debt was $5.6 billion, a reduction of approximately $600 million from the year prior.  The company's total debt to adjusted EBITDA ratio has been reduced to 4.6x, from 5.5x in March 2013.  Corporate liquidity remains strong, and as of quarter-end the company had $580.8 million of available borrowing capacity on its $770.0 million revolving credit facility.  During the second quarter, the company completed the refinancing of approximately $4.0 billion in outstanding debt obligations, extending the maturity of approximately $2.6 billion to 2021 and repricing $1.4 billion of debt obligations due 2019.  In connection with this refinancing, approximately $26 million of incremental interest and other financing charges, net was recorded during the quarter and is detailed in the company's non-GAAP reconciliations.            

OUTLOOK While the company's outlook for the remainder of fiscal 2014 remains unchanged, it is raising its expected 53-week adjusted earnings per share to $1.35 to $1.45 based upon first half performance. 

CONFERENCE CALL SCHEDULED The company has scheduled a conference call at 10 a.m. Eastern Daylight 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.

 

Selected Operational and Financial Metrics  

Adjusted Sales (Organic) Management believes that presentation of sales growth, adjusted to eliminate the effects of acquisitions & divestitures and the impact of currency translation, 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 increased 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 adjusted to eliminate the impact from discontinued operations; the increased 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, net income or operating 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  

Increased amortization of acquisition related customer relationship intangible assets and depreciation of property and equipment resulting from the Transaction – adjustments to eliminate the increased amortization and depreciation above historical levels resulting from the purchase accounting applied to the 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.

Shared-based compensation – adjustments to eliminate non-cash compensation expense related to the company's issuances of stock options, restricted stock units, performance stock units and other share-based units, excluding 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.  See Note 9 to the Condensed Consolidated Financial Statements contained in the company's Form 10-Q filing.

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 ($7.0 millionfor the second quarter of 2014 and $12.0 million for the year-to-date 2014), organizational streamlining initiatives ($1.8 million, net for the second quarter and year-to-date 2014 and $41.0 million for the second quarter of 2013 and $46.9 million for the year-to-date 2013), goodwill impairments and asset write-offs ($23.1 million for the second quarter and year-to-date  2013) and other transformational initiatives ($12.6 million for the second quarter and 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, etc.

Initial public offering and related expenses – adjustments to eliminate non-cash compensation expense ($14.0 million for the second quarter of 2014 and $50.9 million for the 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 the 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 ($3.9 million for year-to-date  2014 and $2.8 million for the second quarter of 2013 and $4.5 million for the year-to-date 2013), multiemployer pension withdrawal charges ($2.1 million for the second quarter and year-to-date 2013), wage and hour settlement ($2.8 million for the second quarter and year-to-date 2013), other income relating to the recovery of the Company's investment (possessory interest) at one of the National Park Service sites ($14.0 million for the second quarter and year-to-date 2013)  and other transactions.

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," "estimate," "expect," "will be," "will continue," "will likely result," "project," "intend," "plan," "believe," "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 website www.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 HOLDINGS CORPORATION AND SUBSIDIARIES  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  

(Unaudited)  

(In Thousands, Except Per Share Amounts)  

         
         
   

Three Months  

 

Three Months  

   

Ended  

 

Ended  

   

March 28, 2014  

 

March 29, 2013  

         

Sales  

 

$            3,502,007  

 

$            3,403,737 

Costs and Expenses:  

       

     Cost of services provided  

 

3,159,808  

 

3,132,226  

     Depreciation and amortization  

 

125,317  

 

135,304  

     Selling and general corporate expenses 

 

96,075  

 

55,992  

   

3,381,200  

 

3,323,522  

Operating income  

 

120,807  

 

80,215  

Interest and other financing costs, net  

 

102,074  

 

147,124  

     Income (loss) before income taxes   

 

18,733  

 

(66,909)  

Provision (benefit) for income taxes  

 

5,616  

 

(27,005)  

     Net income (loss)  

 

13,117  

 

(39,904)  

     Less: Net income attributable to noncontrolling interests  

 

201  

 

200  

     Net income (loss) attributable to ARAMARK Holdings       
     stockholders  

 

$                 12,916  

 

$                (40,104)  

         

Earnings per share attributable to ARAMARK Holdings stockholders:  

     

Basic  

 

$                     0.06  

 

$                    (0.20)  

Diluted  

 

$                     0.05  

 

$                    (0.20)  

Weighted Average Shares Outstanding:  

       

Basic  

 

230,693  

 

201,468  

Diluted  

 

243,376  

 

201,468  

 

ARAMARK HOLDINGS CORPORATION AND SUBSIDIARIES  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  

(Unaudited)  

(In Thousands, Except Per Share Amounts)  

         
         
   

Six Months  

 

Six Months 

   

Ended  

 

Ended  

   

March 28, 2014  

 

March 29, 2013  

         

Sales  

 

$            7,265,088  

 

$            6,939,652 

Costs and Expenses:  

       

     Cost of services provided  

 

6,514,627  

 

6,303,766  

     Depreciation and amortization  

 

262,141  

 

268,704  

     Selling and general corporate expenses 

 

210,291  

 

111,648  

   

6,987,059  

 

6,684,118  

Operating income  

 

278,029  

 

255,534  

Interest and other financing costs, net  

 

185,427  

 

260,475  

     Income (loss) before income taxes   

 

92,602  

 

(4,941)  

Provision (benefit) for income taxes  

 

34,569  

 

(8,229)  

     Net income  

 

58,033  

 

3,288  

     Less: Net income attributable to noncontrolling interests  

 

355  

 

578  

     Net income attributable to ARAMARK Holdings stockholders  

$                 57,678  

 

$                   2,710  

         

Earnings per share attributable to ARAMARK Holdings stockholders:  

     

Basic  

 

$                     0.26  

 

$                     0.01  

Diluted  

 

$                     0.25  

 

$                     0.01  

Weighted Average Shares Outstanding:  

       

Basic  

 

218,653  

 

201,728  

Diluted  

 

229,410  

 

208,841  

 

ARAMARK HOLDINGS CORPORATION AND SUBSIDIARIES  

CONDENSED CONSOLIDATED BALANCE SHEETS  

(Unaudited)  

(In Thousands)  

         
   

March 28, 2014  

 

September 27, 2013  

Assets  

       
         

Current Assets:  

       

Cash and cash equivalents  

 

$               139,184  

 

$               110,998  

Receivables   

 

1,523,027  

 

1,405,843  

Inventories  

 

549,942  

 

541,972  

Prepayments and other current assets  

 

203,563  

 

228,352  

Total current assets  

 

2,415,716  

 

2,287,165  

Property and Equipment, net  

 

960,903  

 

977,323  

Goodwill  

 

4,615,402  

 

4,619,987  

Other Intangible Assets  

 

1,327,349  

 

1,408,764  

Other Assets  

 

967,261  

 

973,867  

   

$          10,286,631  

 

$          10,267,106  

         

Liabilities and Stockholders' Equity  

       
         

Current Liabilities:  

       

Current maturities of long-term borrowings  

 

$                 89,613  

 

$                 65,841  

Accounts payable  

 

804,241  

 

888,969  

Accrued expenses and other current liabilities  

 

1,159,694  

 

1,434,443  

Total current liabilities  

 

2,053,548  

 

2,389,253  

Long-Term Borrowings  

 

5,547,928  

 

5,758,229  

Other Liabilities  

 

975,838  

 

1,047,002  

Common Stock Subject to Repurchase and Other  

 

10,177  

 

168,915  

Total Stockholders' Equity  

 

1,699,140  

 

903,707  

   

$          10,286,631  

 

$          10,267,106  

 

ARAMARK HOLDINGS CORPORATION AND SUBSIDIARIES  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  

(Unaudited)  

(In Thousands)  

         
         
   

Six Months  

 

Six Months 

   

Ended  

 

Ended  

   

March 28, 2014  

 

March 29, 2013  

         

Cash flows from operating activities:  

       

     Net income  

 

$                 58,033  

 

$                   3,288  

     Adjustments to reconcile net income to net cash   

       

       (used in) provided by operating activities:  

       

          Depreciation and amortization  

 

262,141  

 

268,704  

          Income taxes deferred  

 

(33,883)  

 

(28,957)  

          Share-based compensation expense 

 

72,998  

 

8,821  

     Changes in noncash working capital  

 

(507,238)  

 

(269,864)  

     Other operating activities  

 

20,529  

 

69,071  

Net cash (used in) provided by operating activities  

 

(127,420)  

 

51,063  

         

Cash flows from investing activities:  

       

     Net purchases of property and equipment,  

       

       client contract investments and other  

 

(159,587)  

 

(160,738)  

     Acquisitions, divestitures and other investing activities  

 

18,309  

 

1,416  

Net cash used in investing activities  

 

(141,278)  

 

(159,322)  

         

Cash flows from financing activities:  

       

     Net proceeds/payments of long-term borrowings  

 

(182,725)  

 

187,079  

     Net change in funding under the Receivables Facility  

 

-  

 

36,200  

     Payment of dividends  

 

(17,306)  

 

-  

     Proceeds from initial public offering, net 

 

524,081  

 

-  

     Proceeds from issuance of common stock  

 

3,419  

 

4,372  

     Distribution in connection with spin-off of Seamless Holdings  

 

-  

 

(47,352)  

     Repurchase of common stock  

 

(1,549)  

 

(33,155)  

     Other financing activities   

 

(29,036)  

 

(55,918)  

Net cash provided by financing activities  

 

296,884  

 

91,226  

Increase (decrease) in cash and cash equivalents  

 

28,186  

 

(17,033)  

Cash and cash equivalents, beginning of period  

 

110,998  

 

136,748  

Cash and cash equivalents, end of period  

 

$               139,184  

 

$               119,715  

 

ARAMARK HOLDINGS CORPORATION AND SUBSIDIARIES  

RECONCILIATION OF NON-GAAP MEASURES  

ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN  

(Unaudited)  

(In thousands)  

                     
                     
                     
   

Three Months Ended  

   

 March 28, 2014   

   

FSS North America  

 

FSS International 

 

Uniform  

 

Corporate 

 

ARAMARK  

Holdings  

Corporation 

Sales (as reported)  

 

$     2,396,880 

 

$        744,163  

 

$        360,964 

     

$     3,502,007  

                     

Operating Income (as reported)  

 

$        125,416  

 

$          13,163  

 

$          36,564  

 

$        (54,336) 

 

$        120,807  

                     

Operating Income Margin (as reported)  

 

5.2%  

 

1.8%  

 

10.1%  

     

3.4%  

                     
                     

Sales (as reported)  

 

$     2,396,880 

 

$        744,163  

 

$        360,964 

     

$     3,502,007  

                     

Effect of Acquisitions and Divestitures  

 

(1,435)  

 

(709)  

 

-  

     

(2,144)  

                     

Adjusted Sales (Organic)  

 

$     2,395,445 

 

$        743,454  

 

$        360,964 

     

$     3,499,863  

                     

Operating Income (as reported)  

 

$        125,416  

 

$          13,163  

 

$          36,564  

 

$        (54,336) 

 

$        120,807  

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

 

28,605  

 

1,424  

 

793  

 

-  

 

30,822  

Share-Based Compensation  

 

-  

 

-  

 

-  

 

13,620  

 

13,620  

Severance and Other Charges  

 

(11,327)  

 

13,108  

 

-  

 

7,008  

 

8,789  

Effect of Acquisitions and Divestitures  

 

(407)  

 

(53)  

 

-  

 

-  

 

(460)  

Branding  

 

1,189  

 

225  

 

210  

 

8,052  

 

9,676  

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

 

-  

 

-  

 

-  

 

14,276  

 

14,276  

Gains, Losses and Settlements impacting comparability  

 

-  

 

-  

 

-  

 

248  

 

248  

Adjusted Operating Income  

 

$        143,476  

 

$          27,867  

 

$          37,567  

 

$        (11,132) 

 

$        197,778  

                     

Adjusted Operating Income Margin  

 

6.0%  

 

3.7%  

 

10.4%  

     

5.7%  

                     
                     
                     
   

Three Months Ended  

   

 March 29, 2013   

   

FSS North America  

 

FSS International 

 

Uniform  

 

Corporate 

 

ARAMARK  

Holdings  

Corporation 

Sales (as reported)  

 

$     2,354,315 

 

$        702,154  

 

$        347,268 

     

$     3,403,737  

                     

Operating Income (as reported)  

 

$          84,238  

 

$        (10,027)  

 

$          23,277  

 

$        (17,273) 

 

$          80,215  

                     

Operating Income Margin (as reported)  

 

3.6%  

 

-1.4%  

 

6.7%  

     

2.4%  

                     
                     

Sales (as reported)  

 

$     2,354,315 

 

$        702,154  

 

$        347,268 

     

$     3,403,737  

                     

Effect of Currency Translation  

 

(22,562)  

 

(12,970)  

 

-  

     

(35,532)  

Effect of Acquisitions and Divestitures  

 

(179)  

 

-  

 

-  

     

(179)  

                     

Adjusted Sales (Organic)  

 

$     2,331,574 

 

$        689,184  

 

$        347,268 

     

$     3,368,026  

                     

Operating Income (as reported)  

 

$          84,238  

 

$        (10,027)  

 

$          23,277  

 

$        (17,273) 

 

$          80,215  

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

 

30,187  

 

1,906  

 

6,797  

 

-  

 

38,890  

Share-Based Compensation  

 

-  

 

-  

 

-  

 

4,794  

 

4,794  

Effect of Currency Translation  

 

(1,584)  

 

(348)  

 

-  

 

-  

 

(1,932)  

Severance and Other Charges  

 

44,968  

 

30,551  

 

150  

 

1,021  

 

76,690  

Effect of Acquisitions and Divestitures  

 

651  

 

-  

 

-  

 

-  

 

651  

Gains, Losses and Settlements impacting comparability  

 

(16,541)  

 

-  

 

4,606  

 

(53)  

 

(11,988)  

Adjusted Operating Income  

 

$        141,919  

 

$          22,082  

 

$          34,830  

 

$        (11,511) 

 

$        187,320  

                     

Adjusted Operating Income Margin  

 

6.1%  

 

3.2%  

 

10.0%  

     

5.6%  

 

ARAMARK HOLDINGS CORPORATION AND SUBSIDIARIES  

RECONCILIATION OF NON-GAAP MEASURES  

ADJUSTED CONSOLIDATED OPERATING INCOME MARGIN  

(Unaudited)  

(In thousands)  

                     
                     
                     
   

Six Months Ended  

   

 March 28, 2014   

   

FSS North America  

 

FSS International 

 

Uniform  

 

Corporate  

 

ARAMARK  

Holdings  

Corporation 

Sales (as reported)  

 

$     5,017,231 

 

$     1,519,738  

 

$        728,119 

     

$     7,265,088  

                     

Operating Income (as reported)  

 

$        288,550  

 

$          40,235  

 

$          76,859  

 

$      (127,615) 

 

$        278,029  

                     

Operating Income Margin (as reported)  

 

5.8%  

 

2.6%  

 

10.6%  

     

3.8%  

                     
                     

Sales (as reported)  

 

$     5,017,231 

 

$     1,519,738  

 

$        728,119 

     

$     7,265,088  

                     

Effect of Acquisitions and Divestitures  

 

(6,467)  

 

(709)  

 

-  

     

(7,176)  

                     

Adjusted Sales (Organic)  

 

$     5,010,764 

 

$     1,519,029  

 

$        728,119 

     

$     7,257,912  

                     

Operating Income (as reported)  

 

$        288,550  

 

$          40,235  

 

$          76,859  

 

$      (127,615) 

 

$        278,029  

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

 

59,373  

 

3,196  

 

7,769  

 

-  

 

70,338  

Share-Based Compensation  

 

-  

 

-  

 

-  

 

22,133  

 

22,133  

Severance and Other Charges  

 

(11,327)  

 

13,108  

 

-  

 

12,046  

 

13,827  

Effect of Acquisitions and Divestitures  

 

(550)  

 

(53)  

 

-  

 

-  

 

(603)  

Branding  

 

1,189  

 

225  

 

210  

 

13,228  

 

14,852  

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

 

-  

 

-  

 

-  

 

56,133  

 

56,133  

Gains, Losses and Settlements impacting comparability  

 

3,667  

 

-  

 

(923)  

 

(81)  

 

2,663  

Adjusted Operating Income  

 

$        340,902  

 

$          56,711  

 

$          83,915  

 

$        (24,156)  

 

$        457,372  

                     

Adjusted Operating Income Margin  

 

6.8%  

 

3.7%  

 

11.5%  

     

6.3%  

                     
                     
                     
   

Six Months Ended  

   

 March 29, 2013   

   

FSS North America  

 

FSS International 

 

Uniform  

 

Corporate  

 

ARAMARK  

Holdings  

Corporation 

Sales (as reported)  

 

$     4,811,899 

 

$     1,427,051  

 

$        700,702 

     

$     6,939,652  

                     

Operating Income (as reported)  

 

$        225,789  

 

$            9,183  

 

$          54,373  

 

$        (33,811)  

 

$        255,534  

                     

Operating Income Margin (as reported)  

 

4.7%  

 

0.6%  

 

7.8%  

     

3.7%  

                     
                     

Sales (as reported)  

 

$     4,811,899 

 

$     1,427,051  

 

$        700,702 

     

$     6,939,652  

                     

Effect of Currency Translation  

 

(37,083)  

 

(14,323)  

 

-  

     

(51,406)  

Effect of Acquisitions and Divestitures  

 

(8,630)  

 

-  

 

-  

     

(8,630)  

                     

Adjusted Sales (Organic)  

 

$     4,766,186 

 

$     1,412,728  

 

$        700,702 

     

$     6,879,616  

                     

Operating Income (as reported)  

 

$        225,789  

 

$            9,183  

 

$          54,373  

 

$        (33,811)  

 

$        255,534  

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

 

59,780  

 

4,403  

 

13,518  

 

-  

 

77,701  

Share-Based Compensation  

 

-  

 

-  

 

-  

 

8,821  

 

8,821  

Effect of Currency Translation  

 

(2,935)  

 

(1,085)  

 

-  

 

-  

 

(4,020)  

Severance and Other Charges  

 

44,968  

 

32,951  

 

3,730  

 

1,021  

 

82,670  

Effect of Acquisitions and Divestitures  

 

615  

 

-  

 

-  

 

-  

 

615  

Gains, Losses and Settlements impacting comparability  

 

(16,541)  

 

-  

 

2,913  

 

178  

 

(13,450)  

Adjusted Operating Income  

 

$        311,676  

 

$          45,452  

 

$          74,534  

 

$        (23,791)  

 

$        407,871  

                     

Adjusted Operating Income Margin  

 

6.5%  

 

3.2%  

 

10.6%  

     

5.9%  

 

 

ARAMARK HOLDINGS CORPORATION AND SUBSIDIARIES  

RECONCILIATION OF NON-GAAP MEASURES  

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

(Unaudited)  

(In thousands)  

                   
                   
     

Three Months Ended  

 

Three Months Ended  

 

Six Months Ended  

 

Six Months Ended  

     

 March 28, 2014   

 

 March 29, 2013   

 

 March 28, 2014   

 

 March 29, 2013   

                   

Net Income (Loss) (as reported)  

 

$                      13,117  

 

$                    (39,904) 

 

$                      58,033  

 

$                        3,288  

 

Adjustment:  

               
 

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

 

30,822  

 

38,890  

 

70,338  

 

77,701  

 

Share-Based Compensation  

 

13,620  

 

4,794  

 

22,133  

 

8,821  

 

Effect of Currency Translation  

 

-  

 

(1,932)  

 

-  

 

(4,020)  

 

Severance and Other Charges  

 

8,789  

 

76,690  

 

13,827  

 

82,670  

 

Effect of Acquisitions and Divestitures  

 

(460)  

 

651  

 

(603)  

 

615  

 

Branding  

 

9,676  

 

-  

 

14,852  

 

-  

 

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

 

14,276  

 

-  

 

56,133  

 

-  

 

Gains, Losses and Settlements impacting
   comparability  

 

248  

 

(11,988)  

 

2,663  

 

(13,450)  

 

Effects of Refinancing on Interest
   and Other Financing Costs, net  

 

25,705  

 

39,830  

 

25,705  

 

39,830  

 

Tax Impact of Adjustments to Adjusted Net
   Income  

 

(40,557)  

 

(53,419)  

 

(75,989)  

 

(71,285)  

Adjusted Net Income 

 

$                      75,236  

 

$                      53,612  

 

$                    187,092 

 

$                    124,170 

 

Adjustment:  

               
 

Tax Impact of Adjustments to Adjusted Net
   Income and Interest Adjustments  

 

14,852  

 

13,589  

 

50,284  

 

31,455  

 

Provision (Benefit) for Income Taxes  

 

5,616  

 

(27,005)  

 

34,569  

 

(8,229)  

 

Interest and Other Financing Costs, net  

 

102,074 

 

147,124 

 

185,427 

 

260,475 

Adjusted Operating Income  

 

$                    197,778 

 

$                    187,320 

 

$                    457,372 

 

$                    407,871 

 

Adjustment:  

               
 

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

 

(30,822)  

 

(38,890)  

 

(70,338)  

 

(77,701)  

 

Depreciation and Amortization  

 

125,317 

 

135,304 

 

262,141 

 

268,704 

Adjusted EBITDA  

 

$                    292,273 

 

$                    283,734 

 

$                    649,175 

 

$                    598,874 

                   
                   

Adjusted Earnings Per Share  

               
 

Adjusted Net Income  

 

$                      75,236  

 

$                      53,612  

 

$                    187,092 

 

$                    124,170 

 

Net Income Attributable to Noncontrolling Interests  

 

(201)  

 

(200)  

 

(355)  

 

(578)  

 

Adjusted Net Income Attributable to Aramark
   Stockholders  

 

$                      75,035  

 

$                      53,412  

 

$                    186,737 

 

$                    123,592 

 

Diluted Weighted Average Shares Outstanding  

 

243,376 

 

208,574 

(a) 

229,410 

 

208,841 

     

$                          0.31  

 

$                          0.26  

 

$                          0.81  

 

$                          0.59  

 

(a) The diluted weighted average shares outstanding for the three months ended March 29, 2013 represent the fully diluted weighted average shares outstanding as Adjusted Net Income reflects a net income. The reported diluted weighted average shares outstanding does not reflect any diluted shares as the company is reporting a net loss for the three months ended March 29, 2013.  

 

 

 

ARAMARK HOLDINGS CORPORATION AND SUBSIDIARIES  

RECONCILIATION OF NON-GAAP MEASURES  

DEBT TO ADJUSTED EBITDA  

         
 

Twelve months ended  

 

Twelve months ended  

 
 

 March 28, 2014   

 

 March 29, 2013   

 

Net Income  

$                125,111  

 

$                  77,253  

 

Adjustment:  

       

Loss from Discontinued Operations, net of tax  

1,030  

 

-  

 

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

148,080  

 

154,256  

 

Share-Based Compensation  

32,729  

 

12,934  

 

Effect of Currency Translation  

859  

 

(6,691)  

 

Severance and Other Charges  

45,589  

 

84,470  

 

Effect of Acquisitions and Divestitures  

(7,568)  

 

(3,508)  

 

Branding  

14,852  

 

-  

 

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

56,133  

 

-  

 

Gains, Losses and Settlements impacting
   comparability  

5,862  

 

(19,574)  

 

Effects of Refinancing on Interest
   and Other Financing Costs, net  

25,705  

 

39,830  

 

Tax Impact of Adjustments to Adjusted Net
   Income  

(106,548)  

 

(98,757)  

 

Adjusted Net Income  

$                341,834  

 

$                240,213  

 

Adjustment:  

       

Tax Impact of Adjustments to Adjusted Net
   Income and Interest Adjustments  

80,843  

 

58,927  

 

Provision (Benefit) for Income Taxes  

62,031  

 

(3,024)  

 

Interest and Other Financing Costs, net  

348,797  

 

462,490  

 

Adjusted Operating Income  

$                833,505  

 

$                758,606  

 

Adjustment:  

       

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

(148,080)  

 

(154,256)  

 

Depreciation and Amortization  

535,573  

 

534,337  

 

Adjusted EBITDA  

$             1,220,998  

 

$             1,138,687  

 
         

Debt to Adjusted EBITDA  

       

Total Long-Term Borrowings  

$             5,637,541  

 

$             6,224,416  

 

Adjusted EBITDA  

$             1,220,998  

 

$             1,138,687  

 

Debt/Adjusted EBITDA  

4.6  

 

5.5  

 

 

 

 

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 byFORTUNE and the World’s Most Ethical Companies by the Ethisphere Institute. Learn more at www.aramark.com or connect with us onFacebook and Twitter.

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