ARAMARK

HOOVER'S COMPANY PROFILES

ARAMARK Corporation

OVERVIEW

"Take me out to the ball game, take me out to the crowd. Buy me some peanuts and sushi ..." Sushi? It's a big seller at some ballparks where ARAMARK has the refreshment concession. A major US concessionaire for sports and other recreational facilities and national parks, the Philadelphia-based company also provides food, building maintenance, and housekeeping services for schools, businesses, hospitals, and prisons.

ARAMARK is a leader in most of its other businesses as well. It has operations in uniform rental and maintenance (particularly to public safety and public employees and to the hospitality and health care industries), child care (Children's World Learning Centers, before- and after-school programs, employee on-site centers), and book and magazine distribution.

Food and support operations and uniform services account for about 85% of ARAMARK's sales and 75% of its profits, and the company has been building up its child care business with acquisitions. While ARAMARK still offers support services to health care providers, it has shed operations that supplied doctors and nurses to emergency rooms and prisons.

Chairman and CEO Joseph Neubauer owns about 13% of the privately held firm, and some 15,000 company managers own about 67%. Approximately 150 ARAMARK employees are "paper millionaires," thanks to the company's stock ownership program, which even lends to employees so they can buy shares.

History

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In 1959 Davidson Automatic Merchandising, owned by Davre Davidson of California, merged with a Chicago vending machine company owned by William Fishman. The two men had become friends through their individual roles as vending machine suppliers to local Douglas Aircraft factories during WWII. Davidson became chairman and CEO, and Fishman became president of the new enterprise, Automatic Retailers of America (ARA).

ARA serviced mainly candy, beverage, and cigarette machines and by 1961 was the US's leading vending machine company, with operations in 38 states. The firm moved into food vending in the early 1960s, with clients that included Southern Pacific Railway. Between 1959 and 1963 it acquired 150 food service businesses, including Slater Systems in 1961, making ARA a leader in the operation of cafeterias at colleges, hospitals, and work sites. ARA went into food service, despite slimmer profit margins, because it was less capital-intensive and more responsive to price changes than machines, which required increases of at least a nickel. The company (which officially became ARA in 1969) grew so rapidly that the FTC stepped in, and ARA agreed to restrict future food-vending-company acquisitions.

ARA began providing food services to the Olympics at the 1968 Mexico City games and served at most subsequent Olympics. (Atlanta in 1996 made 10.) It diversified into other service businesses, such as publication distribution, in 1968. In 1970 it expanded into janitorial and maintenance services by buying Ground Services (airline cleaning and loading services, sold 1990). A foray into residential care for the elderly -- National Living Centers, now Living Centers of America -- began in 1973 (and ended in fiscal 1993 with the sale of the last of its stock). This acquisition led to ARA's entry into emergency room staffing services (sold 1997). The company expanded into child care (National Child Care Centers) in 1980.

CFO Joseph Neubauer became CEO in 1983 and chairman a year later. Shortly after, to avoid a hostile takeover, he took ARA private in a $1.2 billion LBO. Since then the company has been repurchasing shares from other investors (investment banks and employee-benefit plans).

ARA has been refining its core operations since the buyout. It acquired Szabo (correctional food services) in 1986, Children's World Learning Centers in 1987, and Coordinated Health Services (medical billing services) in 1993, but sold its airport ground-handling service (1990).

ARA became ARAMARK in 1994 as part of its effort to raise its profile with its ultimate clients, the public. But all has not been rosy -- the company's concession operations suffered when baseball and hockey players struck in 1994 and 1995.

Acquisitions in 1996 included Gall's, North America's #1 supplier of public safety equipment. In 1997 ARAMARK cooked more than 3,000 pounds of barbecue for baseball fans during opening day of Atlanta's new Turner Field. That year it announced a plan, contingent on approval of stockholders, to become 100% employee owned.

OFFICERS AND EMPLOYEES
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Chairman and CEO: Joseph Neubauer, age 56, $900,000 pay
VC: James E. Ksansnak, age 57, $368,000 pay
President and COO: William Leonard, age 49, $437,500 pay
EVP and CFO: L. Frederick Sutherland, age 45, $347,000 pay
EVP, Secretary, and General Counsel: Martin W. Spector, age 59, $345,000 pay
EVP Human Resources: Brian G. Mulvaney, age 41
SVP and Treasurer: Barbara A. Austell, age 44
VP, Chief Accounting Officer, and Controller: Alan J. Griffith, age 43
VP: Dean E. Hill, age 46
VP: John P. Kallelis, age 59
Director Audit and Controls: Michael R. Murphy, age 40
Assistant Secretary and Associate General Counsel: Donald S. Morton, age 49
Assistant Treasurer: Richard M. Thon, age 42
Auditors: Arthur Andersen LLP
1997 Employees: 150,000 (Company Job Openings)
1-Yr. Employee Growth: 0.0%

Most of ARAMARK's operations are in the US. The company also operates in Belgium, Canada, the Czech Republic, Germany, Hungary, Japan, Mexico, South Korea, Spain, and the UK.

1997 Sales
% of total
US 85
Other countries 15

Total 100

PRODUCTS/SERVICES
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1997 1997
Sales Operating Income
$ mil. % of total $ mil. % of total
Food, leisure &
support services 4,131 66 170 43
Uniform services 1,252 20 124 31
Health & education 466 7 104 26
Distribution services 461 7 (50) -
Adjustments - - (16) -

Total 6,310 100 332 100

Major Operations:

Food and Support Services Group
Campus facility services (maintenance, grounds, custodial services)
Conference center management
Correctional services (food, commissary, facility maintenance)
Food and catering services to public schools, prep schools, colleges, and universities
Industrial services (cleaning, metal stamping, truck repair, nonhazardous solid waste disposal, emergency response situations)
One Card Systems (meal plan systems)
Project management
Refreshment services (snack and beverage vending machines, coffee services)
Sports and entertainment services (managed services for professional sports facilities, convention centers, and national parks and resorts)

Uniform and Career Apparel Group
Crest Uniform Co. (hospitality and health care uniforms)
E.T. Wright (direct marketer of hard-to-find shoe sizes)
Gall's, Inc. (direct marketer of police, medical, fire/rescue equipment, public employee uniforms)
WearGuard (direct marketer of work clothes and uniforms)

Health and Educational Resources Group
Children's World Learning Center
Health care support services (environmental services, food and nutrition, housekeeping, laundry and linen, patient transport, plant operations and management, security, uniform services, training)

Distribution Services
Magazine and book services

FINANCIALS
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Company Type: Private company
Fiscal year-end: September
1997 Sales ($ mil.): 6,310.4
1-Yr. Sales Growth: 3.1% 1997 Net Income ($ mil.): 146.1
1-Yr. Net Income Growth: 33.4%

Year end Currency Employee cost Number of employees Profit Profit per employee ROCE (percent) Revenue (in millions) Revenue in euros (millions) Revenue per employee
2010-10-01 USD 254000 31 5.83% 12572 9177 49
2009-10-02 USD 255000 -7 5.26% 12298 8429 48
Employees: 
254000

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