Goodwill And Other Intangible Assets

12 Months Ended

Oct. 02, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS: Goodwill represents the excess of the fair value of consideration paid for an acquired entity over the fair value of assets acquired and liabilities assumed in a business combination. Goodwill is not amortized and is subject to an impairment test that the Company conducts annually or more frequently if a change in circumstances or the occurrence of events indicates that

potential impairment exists, using discounted cash flows. The Company performs its assessment of goodwill at the reporting unit level. Within the FSS International segment, each country or region is evaluated separately since such operating units are relatively autonomous and separate goodwill balances have been recorded for each entity. The Company performs its annual impairment test as of the end of the fiscal month of August. If results of the qualitative assessment indicate a more likely than not determination or if a qualitative assessment is not performed, a quantitative test is performed by comparing the estimated fair value using discounted cash flow calculations of each reporting unit with its estimated net book value.

During the fourth quarter of fiscal 2020, the Company performed the annual impairment test for goodwill for each of the reporting units using a quantitative testing approach. The Company compared the estimated fair value using discounted cash flow calculations of each reporting unit with its estimated book value. Based on the evaluation performed, the Company determined that it was more likely than not that the fair value of each of the reporting units exceeded its respective carrying amount, and therefore, the Company determined that goodwill was not impaired.

During the second quarter of fiscal 2020, the Company identified a triggering event from the decline in its stock price resulting from COVID-19. As a result, the Company performed an interim quantitative impairment test as of March 27, 2020. The Company compared the estimated fair value using discounted cash flow calculations of each reporting unit with its estimated book value. Based on the evaluation performed, the Company determined that goodwill was not impaired for all but one reporting unit, as the fair value of each reporting unit substantially exceeded its respective carrying amount. The one reporting unit within the FSS International segment for which goodwill was determined to be impaired had also been tested for impairment using the quantitative approach during the Company's previous annual impairment test completed as of August 23, 2019. The reporting unit had a fair value that exceeded its carrying value by approximately 22% as of that date. As of March 27, 2020, the quantitative impairment test for this same reporting unit resulted in a fair value that was approximately 34% lower than its carrying value, which was driven most notably by the changes in underlying assumptions used for impairment calculation purposes, including the discount rate as well as the near term growth outlook of the reporting unit pre-COVID-19. As a result, the Company recognized a non-cash impairment charge of $198.6 million in the Consolidated Statements of (Loss) Income for the fiscal year ended October 2, 2020. For tax purposes, the impairment charge is not tax deductible. The impaired reporting unit has a remaining goodwill balance of $90.1 million as of October 2, 2020.

The determination of fair value for each reporting unit includes assumptions, which are considered Level 3 inputs, that are subject to risk and uncertainty. The discounted cash flow calculations are dependent on several subjective factors including the timing of future cash flows and the underlying margin projection assumptions, future growth rates and the discount rate. If assumptions or estimates in the fair value calculations change or if future cash flows or future growth rates vary from what was expected, including those assumptions relating to the duration and severity of COVID-19, this may impact the impairment analysis and could reduce the underlying cash flows used to estimate fair values and result in a decline in fair value that may trigger future impairment charges.

Changes in total goodwill during fiscal 2020 are as follows (in thousands):


Segment	September 27, 2019		Acquisitions and Divestitures		Impairments		Translation		October 2, 2020
FSS United States	$	3,949,218	$	4,118	$	—	$	(4)	$	3,953,332
FSS International	608,468		220		(198,600)		16,030		426,118
Uniform	961,114		3,307		—		(43)		964,378
	$	5,518,800	$	7,645	$	(198,600)	$	15,983	$	5,343,828

Other intangible assets consist of (in thousands):


	October 2, 2020						September 27, 2019
	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Customer relationship assets	$	2,195,700	$	(1,308,002)	$	887,698	$	2,183,492	$	(1,193,525)	$	989,967
Trade names	1,052,744		(7,805)		1,044,939		1,047,959		(4,360)		1,043,599
	$	3,248,444	$	(1,315,807)	$	1,932,637	$	3,231,451	$	(1,197,885)	$	2,033,566

During fiscal 2020, the Company acquired customer relationship assets with values of approximately $9.7 million. During fiscal 2019, the Company acquired customer relationship assets and trade names with values of approximately $28.5 million and $4.4 million, respectively. Customer relationship assets are being amortized principally on a straight-line basis over the expected period of benefit, between three and 24 years, with a weighted average life of approximately 14 years. The Aramark,

Avendra and a majority of the other trade names are indefinite lived intangible assets and are not amortized, but are evaluated for impairment at least annually or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. The Company utilized the "relief-from-royalty" method, which considers the discounted estimated royalty payments that are expected to be avoided as a result of the trade names being owned. During the fourth quarter of fiscal 2020, the Company completed its annual trade name impairment test for fiscal 2020, which did not result in an impairment charge. During the second quarter of fiscal 2020, the Company identified potential impairment indicators from the decline in its stock price resulting from COVID-19. As a result, the Company completed an interim trade name impairment test for the Avendra and certain other trade names as of March 27, 2020. Based on the evaluation performed, the Company determined that none of the trade names were impaired, as the estimated fair value for each of the Avendra and certain other trade names exceeded their respective carrying amounts. Amortization of other intangible assets for fiscal 2020, fiscal 2019 and fiscal 2018 was approximately $117.6 million, $117.0 million and $112.1 million, respectively.

Based on the recorded balances at October 2, 2020, total estimated amortization of all acquisition-related intangible assets for fiscal years 2021 through 2025 are as follows (in thousands):


2021	$	105,917
2022	85,813
2023	78,854
2024	78,453
2025	78,580