Noncash items sink Aramark's earnings

Posted: August 10, 2006

A day after agreeing to a $6.3 billion buyout offer from private investors, Aramark Corp. reported a steep decline in quarterly net income because of noncash charges in its uniform-rental business.

The previously announced pretax charges of $42.9 million reduced the Philadelphia company's net income 51 percent, to $35 million, or 19 cents a share, on revenue of $2.9 billion.

For the same period a year ago, Aramark reported sales of $2.8 billion and earnings of $71.4 million, or 38 cents a share.

Operating profit in Aramark's largest segment - U.S. food and support services - fell 9 percent to $88.6 million. The company said last month that it would incur costs related to the termination of two unprofitable contracts.

The contracts were signed in the quarter with Cable News Network, St. Bonaventure University and Johns Hopkins University, among others, the company said.

Aramark shares closed down 21 cents, or 0.64 percent, at $32.37 on the New York Stock Exchange, as risk arbitragers calculated suitable gains on the company's proposed sale at $33.80 a share near the end of this year or early next year.

Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.

Company (Symbol) Exchange

Aramark Corp. (RMK) NYSE

3 qtr. '06 3 qtr. '05 Pct.

end 6/30 end 7/1 chg.

Revenue (millions) $2,933.64 $2,792.37 +5

Net income (millions) $34.98 $71.38 -51

Per share $0.19 $0.38 -50

9 mo '06 9 mo '05 Pct.

Revenue (millions) $8,689.06 $8,181.74 +6

Net income (millions) $186.74 $196.92 -5

Per share $1.01 $1.04 -3

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