Managed services provider Aramark Corporation has posted consolidated sales of US$2.24bn for its Q3 ended 28 June, a 13% increase from a year ago.

Net income, including a US$6m one-time gain, was US$72.6m or US$0.35 per diluted share, compared with US$48.1m, or US$0.27 per diluted share year on year. If the FY 2001 results had been reported on the basis of the new accounting rules for goodwill, net income a year ago would have been US$53.5m, or US$0.30 per diluted share. After adjusting for goodwill and eliminating the one-time gain, net income for the Q3 2002 was up 24%, equal to US$0.32 per diluted share.

For the first nine months of FY 2002, the Philadelphia-based firm saw consolidated sales of US$6.50bn, up 12% year on year. Net income was US$188.4m, or US$0.94 per diluted share. Based on comparable accounting for goodwill, net income a year ago would have been $131.6 million, or $0.73 per diluted share, and the year-to-year increase in net income for the first nine months of fiscal 2002 would have been 20%, excluding the nonrecurring gains in 2002.

"We are very pleased to have again achieved record earnings per share," said Joseph Neubauer, chairman and CEO: "Despite the continuation of challenging economic conditions, our solid bottom-line results have been achieved through continued strong growth in our economically non-sensitive businesses, broadening our business relationships with existing clients, ongoing focus on operational cost controls and lower interest expense resulting from strong cash flow and the lower level of interest rates. In addition, our recent acquisitions continue to add to our leadership positions in key client sectors."

Food and support services

In this US segment, Q3 sales increased 19% from a year ago. Organic sales growth, which is adjusted to eliminate the effect of acquisitions and divestitures, and reflects the impact of 11 September, was slightly over 1% compared to the prior year. Lower attendance and spending levels within the convention and tourism businesses and weaker sales at stadiums and arenas reduced the organic growth rate by about two percentage points. The segment's operating income for the current quarter was up 22% after adjusting for the goodwill accounting change. Organic growth in operating income was about flat.

Q3 sales for the food and support services' international segment increased 8% from last year's Q3. Organic sales growth was about 1%, similar to that in the Q2. The impact of changes in currency translation between the Q3s of 2001 and 2002 increased reported sales growth by about 3 percentage points. Organic growth in operating income was about 24%. The profit improvement was significantly driven by the impact of BSE, which inflated food costs at several of our European operations in the prior year.

Looking forward

Neubauer concluded: "Looking forward, given our overall financial performance through the Q3, we believe it is reasonable to expect diluted EPS for the Q4 to be at the current consensus estimate of US$0.4, or perhaps slightly higher, resulting in FY 2002 earnings of US$1.19 per diluted share (excluding one-time gains) or slightly higher, somewhat ahead of the consensus.

"Notwithstanding the continuing weak economy and its adverse impact on the trend of organic sales growth and operating results in our economically sensitive businesses, we believe that the continued strength of our economically non-sensitive businesses, effective cost controls, strong cash generation and attractive interest rates should mitigate the impact on profit in the Q4."