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Income Taxes (Tables)

12 Months Ended

Sep. 27, 2019

Income Tax Disclosure [Abstract]

Income from continuing operations before income taxes by source of income

The components of income before income taxes by source of income are as follows (in thousands):

		Fiscal Year Ended
		September 27, 2019				September 28, 2018				September 29, 2017
United States		$	418,902			$	326,277			$	362,783
Non-U.S.		137,270				145,599				157,859
		$	556,172			$	471,876			$	520,642

Provision (benefit) for income taxes

The provision (benefit) for income taxes consists of (in thousands):

		Fiscal Year Ended
		September 27, 2019				September 28, 2018				September 29, 2017
Current:
Federal		$	8,781			$	(48,249	)		$	111,175
State and local		19,966				11,356				15,455
Non-U.S.		38,456				44,618				57,681
		67,203				7,725				184,311
Deferred:
Federal		35,251				(113,475		)		(21,956		)
State and local		7,683				7,408				3,165
Non-U.S.		(2,431		)		1,778				(19,065		)
		40,503				(104,289		)		(37,856		)
		$	107,706			$	(96,564	)		$	146,455

Effective Income Tax Rate Reconciliation

The provision for income taxes varies from the amount determined by applying the United States Federal statutory rate to pretax income as a result of the following (all percentages are as a percentage of income before income taxes):

		Fiscal Year Ended
		September 27, 2019			September 28, 2018			September 29, 2017
United States statutory income tax rate		21.0	%		24.5	%		35.0	%
Increase (decrease) in taxes, resulting from:
State income taxes, net of Federal tax benefit		4.2			3.2			2.3
Foreign taxes(1)		2.2			3.3			(4.3	)
Permanent book/tax differences		0.4			(1.2	)		(3.8	)
Uncertain tax positions		—			(0.3	)		1.4
U.S. Tax Reform - Remeasurement of deferred taxes		—			(49.3	)		—
U.S. Tax Reform - Foreign tax credit valuation allowance		(2.3	)		2.8			—
Sale of Healthcare Technologies		(4.4	)		—			—
Tax credits & other		(1.7	)		(3.5	)		(2.5	)
Effective income tax rate		19.4	%		(20.5	)%		28.1	%

(1) Includes differences between the United States statutory tax rate and tax rates in foreign jurisdictions, foreign withholding taxes and taxation of foreign earnings, which includes the transition tax on deemed repatriated earnings of foreign subsidiaries and the tax on "Global Intangible Low-Taxed Income" ("GILTI").

Components of deferred taxes

As of September 27, 2019 and September 28, 2018, the components of deferred taxes are as follows (in thousands):

		September 27, 2019				September 28, 2018
Deferred tax liabilities:
Property and equipment		$	137,293			$	126,345
Investments		11,902				12,213
Other intangible assets, including goodwill		462,637				474,263
Cost to fulfill - Rental merchandise in-service		83,483				63,835
Derivatives		—				21,599
Other		37,309				17,450
Gross deferred tax liability		732,624				715,705
Deferred tax assets:
Derivatives		11,949				—
Insurance		34,112				40,240
Employee compensation and benefits		113,269				136,603
Accruals and allowances		31,844				19,338
Net operating loss/credit carryforwards and other		56,508				60,576
Gross deferred tax asset, before valuation allowances		247,682				256,757
Valuation allowances		(17,532		)		(29,023		)
Net deferred tax liability		$	502,474			$	487,971

Schedule of Valuation and Qualifying Accounts Disclosure

Rollforward of the valuation allowance is as follows:

		September 27, 2019				September 28, 2018
Balance, beginning of year		$	(29,023	)		$	(11,513	)
Additions(1)		(2,330		)		(21,101		)
Subtractions(2)		13,821				3,591
Balance, end of year		$	(17,532	)		$	(29,023	)

(1)	The additions in fiscal 2019 were mainly driven by losses in certain foreign subsidiaries. The additions in fiscal 2018 were mainly driven by the Tax Cuts and Jobs Act impacting the ability to utilize FTC carryforwards going forward, as well as the inability to use foreign NOL carryforwards.
(2)	Valuation allowances against FTC carryforwards were released during fiscal 2019 as a result of Treasury Regulations. During fiscal 2018, tax planning resulted in taxable income in separate Company states that had historical losses.

ARAMARK AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE FISCAL YEARS ENDED SEPTEMBER 27, 2019, SEPTEMBER 28, 2018 AND SEPTEMBER 29, 2017

						Additions				Reductions
		Balance, Beginning of Period				Charged to Income				Deductions from Reserves(1)				Balance, End of Period
Description
Fiscal Year 2019
Reserve for doubtful accounts, advances & current notes receivable		$	52,682			$	21,821			$	24,937			$	49,566
Fiscal Year 2018
Reserve for doubtful accounts, advances & current notes receivable		$	53,416			$	22,009			$	22,743			$	52,682
Fiscal Year 2017
Reserve for doubtful accounts, advances & current notes receivable		$	48,058			$	18,141			$	12,783			$	53,416

(1) Amounts determined not to be collectible and charged against the reserve and translation.

Reconciliation of the beginning and ending amount of gross unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits follows (in thousands):

	September 27, 2019				September 28, 2018
Balance, beginning of year	$	29,089			$	30,812
Additions based on tax positions taken in the current year	3,713				709
Additions for tax positions taken in prior years	6,531				1,505
Reductions for remeasurements, settlements and payments	(1,484		)		(2,368		)
Reductions due to statute expiration	(1,577		)		(1,569		)
Balance, end of year	$	36,272			$	29,089

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the change in unrecognized tax benefits.

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