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Nature of Business, Basis of Presentation and Summary of Significant Accounting Policies
 12 Months Ended
Oct. 02, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Business, Basis of Presentation and Summary of Significant Accounting Policies
Aramark (the "Company") is a leading global provider of food, facilities and uniform services to education, healthcare, business & industry, and sports, leisure & corrections clients. The Company's core market is the United States, which is supplemented by an additional 18-country footprint. The Company operates its business in three reportable segments that share many of the same operating characteristics:
•Food and Support Services United States ("FSS United States") - Food, refreshment, specialized dietary and support services, including facility maintenance and housekeeping, provided to business, educational and healthcare institutions and in sports, leisure and other facilities.
•Food and Support Services International ("FSS International") - Food, refreshment, specialized dietary and support services, including facility maintenance and housekeeping, provided to business, educational and healthcare institutions and in sports, leisure and other facilities.
•Uniform and Career Apparel ("Uniform") - Provides a full service employee uniform solution, including design, sourcing and manufacturing, delivery, cleaning and maintenance on a contract basis. Directly markets personalized uniforms and accessories, including personal protective equipment ("PPE"), provides managed restroom services and rents uniforms, work clothing, outerwear, particulate-free garments and non-garment items and related services, including mats, shop towels and first aid supplies, to clients in a wide range of industries in the United States, Puerto Rico, Canada and through a joint venture in Japan, including the manufacturing, transportation, construction, restaurant and hotel, healthcare and pharmaceutical industries.
The consolidated financial statements include the accounts of the Company and all of its subsidiaries in which a controlling financial interest is maintained in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). All significant intercompany transactions and accounts have been eliminated.
Fiscal Year
The Company's fiscal year is the fifty-two or fifty-three week period which ends on the Friday nearest September 30th. The fiscal year ended October 2, 2020 was a fifty-three week period and the fiscal years ended September 27, 2019 and September 28, 2018 were each fifty-two week periods.
New Accounting Standards Updates
Adopted Standards
In March 2019, the Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") which provided clarification regarding three issues related to the lease recognition standard. The guidance was effective for the Company in the first quarter of fiscal 2020 when the lease accounting standard was adopted. See below for further discussion regarding the impact of this standard.
In July 2018, the FASB issued two ASUs regarding the lease recognition standard. The guidance provided clarification on issues identified regarding the adoption of the standard, provided an additional transition method to adopt the standard and provided an additional practical expedient to lessors. The guidance was effective for the Company in the first quarter of fiscal 2020 when the lease accounting standard was adopted. See below for further discussion regarding the impact of this standard.
In July 2018, the FASB issued an ASU which clarifies, corrects errors in or makes minor improvements to the Accounting Standards Codification. The guidance was effective for the Company either upon issuance or in the first quarter of fiscal 2020, depending on the amendment. There was no impact on the consolidated financial statements related to the amendments that were effective upon issuance of the guidance. The Company adopted the remaining amendments of the pronouncement in the first quarter of fiscal 2020, which did not have a material impact on the consolidated financial statements.
In February 2018, the FASB issued an ASU which allows for the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act (the "TCJA") from accumulated other comprehensive income to retained earnings. The guidance was effective for the Company in the first quarter of fiscal 2020. The Company adopted the guidance in the first quarter of fiscal 2020, which did not have an impact on the consolidated financial statements. The Company did not elect to reclassify the stranded income tax effects resulting from the TCJA from accumulated other comprehensive income to retained earnings.
In September 2017, the FASB issued an ASU to provide additional implementation guidance with respect to the lease accounting standard. The guidance was effective for the Company in the first quarter of fiscal 2020. The Company adopted the standard in the first quarter of fiscal 2020 in conjunction with the lease recognition standard. See below for further discussion regarding the impact of the lease accounting provisions related to this standard.
In February 2016, the FASB issued an ASU requiring lessees to recognize most leases on their balance sheets as operating lease liabilities with corresponding operating lease right-of-use assets and to disclose key information about lease arrangements. Recognition of expense on the Consolidated Statements of (Loss) Income continues in a manner similar to previous guidance. The Company adopted this guidance on September 28, 2019 (first day of fiscal 2020).
In connection with the new lease guidance, the Company completed a comprehensive review of its lease arrangements in order to determine the impact of this ASU on its consolidated financial statements and related disclosures. The Company identified and implemented appropriate changes to business processes, controls and systems to support recognition and disclosure under the new standard.
The Company adopted Accounting Standards Codification 842 (“ASC 842” or the "new lease standard") using the modified retrospective transition approach with an adjustment that recognized "Operating Lease Right-of-use Assets," "Current operating lease liabilities" and "Noncurrent Operating Lease Liabilities" on the Consolidated Balance Sheets on September 28, 2019. Comparative period information and disclosures were not revised as a result of the recognition and measurement of leases. Adoption of the new lease standard resulted in the recognition of operating lease liabilities and associated operating lease right-of-use assets of approximately $416.1 million and $558.5 million, respectively, as of September 28, 2019 on the Consolidated Balance Sheets. Deferred rent, tenant improvement allowances and prepaid rent, including $166.9 million of long-term prepaid rent as of September 28, 2019 associated with certain leases at client locations, were reclassified into operating lease right-of-use assets. There was no material impact to the Consolidated Statements of (Loss) Income or Consolidated Statements of Cash Flows as a result of adoption. See Note 8 for further information on the impact of adopting the new lease standard.
Standards Not Yet Adopted (from most to least recent date of issuance)
In March 2020, the FASB issued an ASU which provides optional expedients that may be adopted and applied through December 2022 to assist with the discontinuance of LIBOR. The expedients allow companies to ease the potential accounting burden when modifying contracts and hedging relationships that use LIBOR as a reference rate, if certain criteria are met. During the second quarter of fiscal 2020, the Company adopted the optional expedient to assert probability of forecasted hedged transactions occurring on its interest rate swap derivative contracts regardless of any expected contract modifications related to reference reform. Other optional expedients related to hedging relationships may be contemplated in the future resulting from reference rate reform. The Company reviewed its portfolio of debt agreements, lease agreements and other contracts and determined that only its debt agreements will be impacted by this standard, as the lease agreements and other contracts do not use LIBOR as a reference rate. The Company is currently evaluating the impact of the remaining amendment of this standard.
In January 2020, the FASB issued an ASU which provides clarification and improvements to existing guidance related to accounting for certain equity securities upon the application or discontinuation of equity method accounting and the measurement of forward contracts and purchased options on certain securities. The guidance is effective for the Company in the first quarter of fiscal 2022 and early adoption is permitted. The Company is currently evaluating the impact of this standard.
In December 2019, the FASB issued an ASU which simplifies the accounting for income taxes and clarifies and amends existing income tax guidance. Impacted areas include intraperiod tax allocations, interim period taxes, deferred tax liabilities with outside basis differences, franchise taxes and transactions which result in the "step-up" of goodwill. The guidance is effective for the Company in the first quarter of fiscal 2022 and early adoption is permitted. The Company is currently evaluating the impact of this standard.
In November 2019, the FASB issued an ASU which provides clarification and improvements to existing guidance related to the credit losses on financial instruments standard. The Company will adopt this guidance in the first quarter of fiscal 2021 when the credit losses on financial instruments standard is adopted. The adoption of this guidance will not have a material impact on the Company’s financial statements or disclosures.
In May 2019, the FASB issued an ASU which provides the option to irrevocably elect to apply the fair value measurement option on an instrument-by-instrument basis for certain financial instruments within the scope of the credit losses on financial instruments standard. The Company will adopt this guidance in the first quarter of fiscal 2021 when the credit losses on financial instruments standard is adopted. The adoption of this guidance will not have a material impact on the Company’s financial statements or disclosures.
In April 2019, the FASB issued an ASU which provides clarification, error corrections and improvements to existing guidance related to the credit losses on financial instruments ASU issued in June 2016, the derivatives and hedging ASU issued in August 2017 and the financial instruments ASU issued in January 2016. The guidance related to the credit losses on financial instruments ASU will be adopted in the first quarter of fiscal 2021. The adoption of the amendment will not have a material impact on the Company’s financial statements or disclosures. The Company adopted the guidance related to financial
instruments ASU in the first quarter of 2019 and the derivatives and hedging in the first quarter of fiscal 2020, which did not have a material impact on the consolidated financial statements.
In August 2018, the FASB issued an ASU which adds, modifies and removes several disclosure requirements related to defined benefit pension plans. The guidance is effective for the Company in the first quarter of fiscal 2022 and early adoption is permitted. The Company is currently evaluating the impact of this standard.
In August 2018, the FASB issued an ASU which adds, modifies and removes several disclosure requirements related to fair value measurements. The Company will adopt this guidance in the first quarter of fiscal 2021 and the pronouncement will not have a material impact on the Company's consolidated financial statements.
In June 2016, the FASB issued an ASU to require entities to account for expected credit losses on financial instruments including trade receivables. The expected credit loss model will replace the existing incurred credit loss model, that generally requires a loss to be incurred before it is recognized. The forward-looking model will require the Company to consider historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount in estimating credit losses and is expected to result in earlier recognition of allowances for credit losses. The amended guidance requires financial assets that are measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of financial assets. The guidance will also require enhanced disclosures. The Company will adopt this guidance in the first quarter of fiscal 2021 and any impact will be applied through a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. The adoption of this guidance will not have a material impact on the Company’s financial statements or disclosures.
Revenue Recognition
The Company recognizes revenue when its performance obligation is satisfied upon the transfer of control of the promised product or service to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods and services. In each of the Company's operating segments, revenue is recognized over time in the period in which services are provided pursuant to the terms of the Company's contractual relationships with its clients. The Company generally records revenue on food and support services contracts (both profit and loss contracts and client interest contracts) on a gross basis as the Company is the primary obligor and service provider. See Note 7 for additional information on revenue recognition.
Certain profit and loss contracts include payments to the client, typically calculated as a fixed or variable percentage of various categories of revenue and income. In some cases these contracts require minimum guaranteed payments that are contingent on certain future events. These expenses are currently recorded in “Cost of services provided.”
Revenue from client interest contracts is generally comprised of amounts billed to clients for food, labor and other costs that the Company incurs, controls and pays for. Revenue from these contracts also includes any associated management fees, client subsidies or incentive fees based upon the Company's performance under the contract. Revenue from direct marketing activities is recognized at a point in time upon shipment. All revenue related taxes are presented on a net basis.
The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records an accounts receivable balance when revenue is recognized prior to or at the time of invoicing the customer. A majority of the Company’s receivables balances are based on contracts with customers.
The Company estimates and reserves for its bad debt exposure based on its experience with past due accounts and collectability, the aging of accounts receivable and its analysis of customer data. Bad debt expense is classified within “Cost of services provided.”
Vendor Consideration
Consideration received from vendors includes rebates, allowances and volume discounts and are accounted for as an adjustment to the cost of the vendors' products or services and are reported as a reduction of "Cost of services provided," "Inventory," or "Property and equipment, net." Income from rebates, allowances and volume discounts is recognized based on actual purchases in the fiscal period relative to total actual purchases to be made for the contractual rebate period agreed to with the vendor. Rebates, allowances and volume discounts related to “Inventory” held at the balance sheet date are deducted from the carrying value of these inventories. Rebates, allowances and volume discounts related to "Property and equipment, net" are deducted from the costs capitalized.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates.
Comprehensive Income (Loss)
Comprehensive income (loss) includes all changes to stockholders' equity during a period, except those resulting from investments by and distributions to stockholders. Components of comprehensive income (loss) include net income (loss), changes in foreign currency translation adjustments (net of tax), pension plan adjustments (net of tax), changes in the fair value of cash flow hedges (net of tax) and changes to the share of any equity investees' comprehensive income (loss) (net of tax).
The summary of the components of comprehensive (loss) income is as follows (in thousands):
Fiscal Year Ended
October 2, 2020September 27, 2019September 28, 2018
Pre-Tax AmountTax EffectAfter-Tax AmountPre-Tax AmountTax EffectAfter-Tax AmountPre-Tax AmountTax EffectAfter-Tax Amount
Net (loss) income$(461,435)$448,466 $568,440 
Pension plan adjustments(33,831)8,162 (25,669)(29,137)6,543 (22,594)29,650 (9,003)20,647 
Foreign currency translation adjustments(6,348)(1,470)(7,818)(34,099)(209)(34,308)(31,003)(250)(31,253)
Cash flow hedges:
Unrealized (losses) gains arising during the period(110,817)28,812 (82,005)(84,392)21,942 (62,450)55,445 (16,134)39,311 
Reclassification adjustments34,409 (8,946)25,463 (6,484)1,686 (4,798)5,185 (1,510)3,675 
Share of equity investee's comprehensive (loss) income(264)— (264)(1,592)— (1,592)157 — 157 
Other comprehensive (loss) income(116,851)26,558 (90,293)(155,704)29,962 (125,742)59,434 (26,897)32,537 
Comprehensive (loss) income(551,728)322,724 600,977 
Less: Net income (loss) attributable to noncontrolling interest94 (83)555 
Comprehensive (loss) income attributable to Aramark stockholders$(551,822)$322,807 $600,422 
Accumulated other comprehensive loss consists of the following (in thousands):
October 2, 2020September 27, 2019
Pension plan adjustments$(72,891)$(47,222)
Foreign currency translation adjustments(135,937)(128,119)
Cash flow hedges(87,598)(31,056)
Share of equity investee's accumulated other comprehensive loss(10,832)(10,568)
$(307,258)$(216,965)
Currency Translation
Gains and losses resulting from the translation of financial statements of non-U.S. subsidiaries are reflected as a component of accumulated other comprehensive income (loss) in stockholders' equity. Beginning in fiscal 2018, Argentina was determined to have a highly inflationary economy. As a result, the Company remeasures the financial statements of Argentina's operations in accordance with the accounting guidance for highly inflationary economies. The impact of the remeasurements was a foreign currency transaction loss of approximately $2.5 million, $4.9 million and $3.8 million during fiscal 2020, fiscal 2019 and fiscal 2018, respectively, to the Consolidated Statements of (Loss) Income. The impact of foreign currency transaction gains and losses exclusive of Argentina's operations included in the Company's operating results for fiscal 2020, fiscal 2019 and fiscal 2018 were immaterial to the consolidated financial statements.
Current Assets
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Beginning in fiscal 2019, the Company began insuring portions of its general liability, automobile liability and workers’ compensation risks through a wholly owned captive insurance subsidiary (the "Captive"), to enhance its risk financing strategies. The Captive is subject to regulations within its domicile of Bermuda, including regulations established by the Bermuda Monetary Authority (the "BMA") relating to levels of liquidity and solvency as such concepts are defined by the BMA. The Captive was in compliance with these regulations as of October 2, 2020. These regulations may have the effect of limiting the Company's ability to access certain cash and cash equivalents held by the Captive for uses other than for the payment of its general liability, automobile liability and workers’ compensation claims and related Captive costs. As of October 2, 2020, cash and cash equivalents at the Captive was $92.1 million.
Inventories are valued at the lower of cost (principally the first-in, first-out method) and net realizable value. As of October 2, 2020 and September 27, 2019, the Company's reserve for inventory obsolescence was approximately $36.7 million and $23.6 million, respectively. The inventory obsolescence reserve is determined based on history and specific identification.
The components of inventories are as follows: 
October 2, 2020September 27, 2019
Food(1)
42.7 %54.3 %
Career apparel and linens(2)
52.2 %40.5 %
Parts, supplies and novelties5.1 %5.2 %
100.0 %100.0 %
(1)Food inventory declined during fiscal 2020 as a result of reduced operations from the COVID-19 pandemic ("COVID-19").
(2)Career apparel and linens inventory increased during fiscal 2020 driven by increased production and distribution of PPE in the Uniform segment in response to COVID-19.
Prepayments and other current assets
The following table presents details of "Prepayments and other current assets" as presented in the Consolidated Balance Sheets (in thousands):
October 2, 2020September 27, 2019
Prepaid Insurance$13,396 $13,512 
Prepaid Taxes and Licenses11,130 12,399 
Current Income Tax Asset(1)
123,608 35,107 
Other Prepaid Expenses150,810 132,443 
$298,944 $193,461 
(1)Fiscal 2020 income tax receivable driven by the net loss position during the year.
Property and Equipment
Property and equipment are stated at cost and are depreciated over their estimated useful lives on a straight-line basis. Gains and losses on dispositions are included in operating results. Maintenance and repairs are charged to current operations and replacements and significant improvements that extend the useful life of the asset are capitalized. The estimated useful lives for the major categories of property and equipment are 10 to 40 years for buildings and improvements and three to 20 years for service equipment and fixtures. Depreciation expense during fiscal 2020, fiscal 2019 and fiscal 2018 was $418.3 million, $421.4 million, and $270.0 million, respectively. The increase from fiscal 2018 to fiscal 2019 is due to the Company's adoption of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers (see Note 7).
During the fourth quarter of fiscal 2020, the Company recognized impairment charges of $30.6 million within its FSS United States and FSS International segments, consisting of right-of-use assets ($11.6 million), property and equipment ($17.8 million) and other assets ($1.2 million), which are included in "Cost of services provided" on the Consolidated Statements of (Loss) Income for the fiscal year ended October 2, 2020. These impairment charges primarily relate to client contracts that were reassessed due to the impact of COVID-19. In order to determine the impairment charges, the Company compared the estimated fair value of each asset group, calculated using discount cash flows, to its book value.
During the third quarter of fiscal 2020, the Company permanently vacated certain rental properties and assets at various locations throughout the United States related to non-core operations and no longer intends to operate or sublease at these locations. Accordingly, the Company recorded a loss on disposal by abandonment of $28.5 million within its FSS United States
segment, consisting of right-of-use assets ($10.3 million), leasehold improvements ($17.4 million) and other assets ($0.8 million), which is included in "Cost of services provided" on the Consolidated Statements of (Loss) Income for the fiscal year ended October 2, 2020. The Company has a remaining lease liability of $11.3 million related to the abandoned leases, which represents the fixed minimum rental payments contractually required under the leases through February 2025.
During the third quarter of fiscal 2020, the Company received $25.0 million of insurance proceeds from one of its insurance carriers related to property damage and business interruption from a tornado at one of its Uniform market centers in Nashville, Tennessee. These proceeds serve to cover the cost of rebuilding the property and for any incremental expenses the Company incurs to continue servicing its customers at nearby market centers. The Company’s insurance policy provides coverage for the property damage and reimbursement for other expenses and incremental costs that have been incurred related to the damages and losses. The Company recorded a gain during fiscal 2020 of approximately $16.3 million from these proceeds, which represents the excess of previously incurred losses, including the write-down of the damaged property and equipment and business interruption expenses. The gain is included in “Cost of services provided” on the Consolidated Statements of (Loss) Income. Of the $25.0 million of insurance proceeds received, $21.5 million related to the recovery of the damaged building and equipment and is included within “Net cash used in investing activities” on the Consolidated Statement of Cash Flows for the fiscal year ended October 2, 2020. The remaining $3.5 million of insurance proceeds is included within “Net cash provided by operating activities” to offset the business interruption expenses incurred during the fiscal year ended October 2, 2020. The claims are ongoing and will be finalized upon completion of the new property. The Company believes the remaining claim amounts in future periods will be recoverable.
Other Assets
The following table presents details of "Other Assets" as presented in the Consolidated Balance Sheets (in thousands):
October 2, 2020September 27, 2019
Long-term prepaid rent(1)
$— $166,931 
Cost to fulfill - Client(1)
113,940 109,401 
Cost to fulfill - Rental merchandise in-service(2)
311,238 356,853 
Long-term receivables28,460 27,574 
Miscellaneous investments(3)
262,609 264,452 
Computer software costs, net(4)
177,136 170,510 
Employee sales commissions(5)
122,011 111,001 
Other(6)
142,712 137,084 
$1,158,106 $1,343,806 

(1)
Prior to the Company's adoption of ASC 606, Revenue from Contracts with Customers, in fiscal 2019, client contract investments generally represented a cash payment provided by the Company for improvement or renovation at the facility from which the Company operated. These amounts were amortized over the contract period. If the contract was terminated prior to its maturity date, the Company was reimbursed for the unamortized client contract investment amounts. Amortization expense was $183.6 million during fiscal 2018.
Subsequent to adoption of ASC 606 in fiscal 2019, these balances were reclassified to either leasehold improvements in "Property and Equipment, net" or to long-term prepaid rent or costs to fulfill - client in "Other Assets" and continue to be expensed over the contract life (see Note 7). Due to the Company's adoption of ASC 842, Leases, in fiscal 2020, all long-term prepaid rent balances were reclassified to "Operating Lease Right-of-use Assets" (see Note 8).
(2)
Costs to fulfill - Rental merchandise in-service represent personalized work apparel, linens and other rental items in service at customer locations (see Note 7).
(3)
Miscellaneous investments represent investments in 50% or less owned entities, including the Company's 50% ownership in AIM Services Co., Ltd., a Japanese food and support services company (approximately $182.9 million and $180.5 million at October 2, 2020 and September 27, 2019, respectively). For investments in 50% or less owned entities, other than those accounted for under the equity method of accounting, the Company measures these investments at cost, less any impairment and adjusted for changes in fair value resulting from observable price changes for an identical or a similar investment of the same issuer due to the lack of readily available fair values related to those investments. The carrying amount of equity investments without readily determinable fair values as of October 2, 2020 and September 27, 2019 was $42.5 million and $42.6 million, respectively. During fiscal 2019, the Company recognized an impairment of $7.0 million in "Cost of services provided" related to an equity investment.
(4)
Computer software costs represent capitalized costs incurred to purchase or develop software for internal use, and are amortized over the estimated useful life of the software, generally a period of three to 10 years. The Company recorded non-cash asset write-downs within its FSS United States segment of approximately $26.1 million related to certain information technology assets during the fiscal year ended October 2, 2020, as a result of management decisions to discontinue use of these solutions and from non-renewal or expirations of contracts with specific vendors. These non-cash charges were recorded to “Cost of services provided” in the Consolidated Statements of (Loss) Income for the fiscal year ended October 2, 2020.
(5)
Employee sales commissions represent commission payments made to employees related to new or retained business contracts (see Note 7).
(6)
Other consists primarily of noncurrent deferred tax assets, pension assets, deferred financing costs on certain revolving credit facilities and other noncurrent assets.
Other Accrued Expenses and Liabilities
The following table presents details of "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets (in thousands):
October 2, 2020September 27, 2019
Deferred income(1)(2)
$291,680 $345,840 
Accrued client expenses(2)
44,419 105,636 
Accrued taxes53,146 61,816 
Accrued insurance(3) and interest
174,048 192,695 
Other376,909 420,249 
$940,202 $1,126,236 
(1)
Includes consideration received in advance from customers prior to the service being performed ($263.8 million and $319.0 million) or from vendors prior to the goods being consumed ($27.9 million and $26.8 million) in fiscal 2020 and fiscal 2019, respectively.
(2)Decreases in fiscal 2020 driven by the impact of COVID-19, as clients ceased or reduced operations. See below and Note 7.
(3)
The Company is self-insured for certain obligations related to its employee health care benefit programs as well as for certain risks retained under its general liability, automobile liability and workers’ compensation liability programs. Reserves are estimated through actuarial methods, with the assistance of third-party actuaries using loss development assumptions based on our claims history.
Deferred Income Taxes and Other Noncurrent Liabilities
The following table presents details of "Deferred Income Taxes and Other Noncurrent Liabilities" as presented in the Consolidated Balance Sheets (in thousands):
October 2, 2020September 27, 2019
Deferred income taxes (see Note 10)$398,777 $519,904 
Deferred compensation210,884 212,090 
Pension-related liabilities18,044 21,367 
Interest rate swap agreements116,882 43,112 
Insurance reserves(1)
143,923 125,293 
Other noncurrent liabilities(2)
210,565 167,056 
$1,099,075 $1,088,822 
(1)
The Company is self-insured for certain obligations related to its employee health care benefit programs as well as for certain risks retained under its general liability, automobile liability and workers’ compensation liability programs. Reserves are estimated through actuarial methods, with the assistance of third-party actuaries using loss development assumptions based on our claims history.
(2)Fiscal 2020 includes the payment deferral related to the employer portion of social security taxes as permitted under the Coronavirus Aid, Relief and Economic Security Act.
Impact of COVID-19
COVID-19 has adversely affected global economies, financial markets and the overall environment for the Company and the extent to which it may impact future results of operations and overall financial performance remains uncertain. The Company began experiencing a significant decline in operations due to COVID-19 towards the end of its second quarter of fiscal 2020, which has continued through the fourth quarter of fiscal 2020. The decline in operations from COVID-19 caused a material deterioration in the Company's revenue, operating income (loss) and net income (loss) for the fiscal year ended October 2, 2020. The allowance for doubtful accounts increased to $74.9 million as of October 2, 2020 compared to $49.6 million as of September 27, 2019, which includes the Company's current estimates that reflect the continued economic uncertainty resulting from COVID-19. Certain businesses, mainly those related the Company's Sports, Leisure & Correction, Education and Business & Industry sectors, have been more significantly impacted than others. In response, the Company took significant actions in order to mitigate the negative impacts of COVID-19, including:
•implementing several cost reduction initiatives, including renegotiations of client contracts, salary and other compensation adjustments, reductions to general corporate expenses and headcount reductions (see Note 3);
•strengthening cash position by increasing borrowings (see Note 5); and
•leveraging relief provisions provided under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") and other foreign governmental programs (see below and Note 10).
The ongoing impact of COVID-19 on the Company's longer-term operational and financial performance will depend on future developments, which are highly uncertain and cannot be predicted.
The CARES Act provides an employee retention credit (“CARES Employee Retention credit”), which is a refundable tax credit against certain employment taxes of up to $5,000 per employee for eligible employers. The tax credit is equal to 50% of qualified wages paid to employees during a quarter, capped at $10,000 of qualified wages per employee through year end. The Company qualifies for the tax credit and expects to continue to receive additional tax credits for qualified wages through December 31, 2020. During the fiscal year ended October 2, 2020, the Company recorded $18.7 million related to the CARES Employee Retention credit in “Cost of services provided” on the Company’s Consolidated Statements of (Loss) Income.
The CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of calendar 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. This payment deferral has provided the Company with additional liquidity during the current year. The deferred amounts of approximately $80.8 million are recorded as a liability within “Deferred Income Taxes and Other Noncurrent Liabilities” on the Company’s Consolidated Balance Sheets as of October 2, 2020.
Within the FSS International and Uniform segments, many foreign jurisdictions in which the Company operates are also providing companies various forms of relief from the COVID-19 pandemic, including labor related tax credits. These labor related tax credits generally allow companies to receive credits if they retain employees on their payroll, rather than furloughing or terminating employees as a result of the business disruption caused by COVID-19. The Company qualifies for these tax credits and expects to continue to receive additional tax credits for qualified wages in foreign jurisdictions into fiscal 2021. The Company recorded approximately $128.1 million of labor related tax credits during the fiscal year ended October 2, 2020 within "Cost of services provided" on the Consolidated Statements of (Loss) Income.
The Company accounts for these labor related tax credits as a reduction to the expense that it is intended to compensate in the period in which the corresponding expense is incurred and there is reasonable assurance the Company will both receive the tax credits and comply with all conditions attached to the tax credit.
Supplemental Cash Flow Information
Fiscal Year Ended
(dollars in millions)October 2, 2020September 27, 2019September 28, 2018
Interest paid$353.6 $306.2 $307.1 
Income taxes paid (refunded)(1)
40.2 139.3 (1.1)
(1)During fiscal 2018, the Company was in a net refund position, primarily due to the impact of the TCJA (see Note 10).
Significant non-cash activities follow:
•During fiscal 2020, fiscal 2019 and fiscal 2018, the Company executed finance lease transactions. The present value of the future rental obligations was approximately $29.3 million, $41.6 million and $34.0 million for the respective periods, which is included in property and equipment and long-term borrowings.
•During fiscal 2020, fiscal 2019 and fiscal 2018, cashless settlements of the exercise price and related employee minimum tax withholding liabilities of share-based payment awards were approximately $92.3 million, $34.3 million and $19.0 million, respectively.