Angelica Reports Fourth Quarter and Fiscal Year 2004 Results Annual Revenues Increase 8.4% to $316

FOR IMMEDIATE RELEASE
ST. LOUIS , MISSOURI
March 17, 2005

Angelica Reports Fourth Quarter and Fiscal Year 2004 Results
Annual Revenues Increase 8.4% to $316 Million

St. Louis , Missouri (March 17, 2005) - Angelica Corporation (NYSE: AGL), a leading provider of healthcare linen management services, reported today unaudited financial results for the fourth quarter and twelve months ended January 29, 2005. For the year, revenues rose 8.4% from fiscal year 2003 to $316.1 million. Diluted earnings per share from continuing operations were $1.14, which was one cent, or approximately $0.1 million of net income, below the prior guidance range, as fourth quarter workers' compensation claims and worker fringe benefit costs rose $1.3 million versus the prior year. Continuing operating results exclude the Company's Life Uniform retail division, which was sold during the second quarter of fiscal year 2004 and is shown as a discontinued operation.

Revenues from continuing operations for the fourth quarter of fiscal year 2004 were $81.7 million, up 4.0% from $78.6 million in fourth quarter of fiscal year 2003, despite one less week in the fourth quarter of fiscal year 2004 versus fiscal year 2003. Acquisitions net of divestitures added $6.2 million to fourth quarter revenues, offset by the loss of $5.5 million of revenues from the extra week in fiscal year 2003.

Net income from continuing operations for the fourth quarter was $2.4 million, down 19.9% from fourth quarter fiscal year 2003 of $3.0 million. Diluted earnings per share for fourth quarter fiscal year 2004 were $0.26, compared to fourth quarter fiscal year 2003 earnings per share of $0.33. The decrease versus prior year was primarily due to the increase in workers' compensation and fringe benefit costs, a $1.5 million increase in utilities and delivery fuel expense versus the prior year, and the loss of gross margin from the one less week in the quarter.

For the twelve months ended January 29, 2005, revenues from continuing operations were $316.1 million, up 8.4% from $291.5 million in the prior year. Acquisitions net of divestitures added $18.2 million to fiscal year 2004 revenues, offset by the loss of $5.5 million of revenues from the extra week in fiscal year 2003. Healthcare revenues in fiscal year 2004 were $283.7 million, up 11.9% from $253.6 million in fiscal year 2003. Non-healthcare revenues declined 14.7% in fiscal year 2004, primarily reflecting our sale of the Daytona Beach , Florida hospitality business.

Net income from continuing operations for fiscal year 2004 was $10.4 million, down 6.0% from fiscal year 2003 net income from continuing operations of $11.0 million. Increased revenue and gross margin contribution from

organic growth and acquisitions were insufficient to offset a $4.0 million increase in utilities and delivery fuel expense from the prior year. Diluted earnings per share for fiscal year 2004 were $1.14, compared to fiscal year 2003 earnings per share from continuing operations of $1.23.

For fiscal year 2004, net loss from the discontinued Life Uniform operations was $4.0 million, including a $3.0 million loss on disposal of the segment, versus a net loss of $1.8 million in fiscal year 2003. The Company does not expect any additional charges from this operation going forward.

During the fourth quarter of fiscal year 2004, Angelica completed three strategic acquisitions. Facilities were purchased in Sacramento and Turlock , CA from Golden States Services; in Hempstead , NY from Tartan Textiles; and in Dallas and Wichita Falls , TX from National Linen Services. Each acquisition strengthened the company's market presence in their respective areas—Northern California, New York and the Southwest.

Angelica continues to have significant borrowing capacity with its revolving line of credit. The Company enhanced that borrowing capacity in the fourth quarter by increasing its credit facility to $150 million with an accordion feature that could increase the amount to $175 million. Year-end debt was $66.5 million, net of cash, and shareholders' equity was $151.4 million.

Steve O'Hara, President and CEO, said, “We are pleased to have been able to focus our business on healthcare linen services this past year by selling Life Uniform, streamlining our overhead, and accelerating our acquisition efforts. However, we are disappointed that our organic growth fell short of our target 5.0% organic revenue growth rate for fiscal year 2004 and that we were unable to offset the significant cost increases in energy and workers' compensation and benefits at the gross margin level.”

Mr. O'Hara continued, “Competitive pressure held average price increases below the rate of inflation which, along with the sharp increase in natural gas and delivery fuel contributed to our gross margin decline. Nevertheless, we continue to target a 20.0% gross margin for Angelica within the next three years as competitive pricing reflective of underlying costs is restored to the market and our cost initiatives in linen procurement, distribution efficiency, natural gas purchasing and capital investment lower our base costs.”

Angelica Corporation will host a conference call on March 18, 2005 at 10:00 AM CST (11:00 EST) to discuss its fourth quarter and fiscal year 2004 results. The conference call will be broadcast live over the internet hosted at http://www.angelica.com and will be archived online within one hour of the completion of the conference call. Participating in the call will be Steve O'Hara, President and Chief Executive Officer, and Jim Shaffer, Chief Financial Officer. A telephonic replay of the call will be available through April 1, 2005 by calling 800-475-6701 and using the passcode 774246.

Angelica Corporation, traded on the New York Stock Exchange under the symbol AGL, is a leading provider of textile rental and linen management services to the U.S. healthcare market. More information about Angelica is available on its website, www.angelica.com.