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Income Taxes (Tables)

12 Months Ended

Oct. 02, 2020

Income Tax Disclosure [Abstract]

Income from continuing operations before income taxes by source of income

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

						Fiscal Year Ended
						October 2, 2020						September 27, 2019						September 28, 2018
United States						$	(291,436)					$	418,902					$	326,277
Non-U.S.						(356,283)						137,270						145,599
						$	(647,719)					$	556,172					$	471,876

Provision (benefit) for income taxes

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

						Fiscal Year Ended
						October 2, 2020						September 27, 2019						September 28, 2018
Current:
Federal						$	(69,399)					$	8,781					$	(48,249)
State and local						(4,616)						19,966						11,356
Non-U.S.						21,779						38,456						44,618
						(52,236)						67,203						7,725
Deferred:
Federal						(79,054)						35,251						(113,475)
State and local						(19,627)						7,683						7,408
Non-U.S.						(35,367)						(2,431)						1,778
						(134,048)						40,503						(104,289)
						$	(186,284)					$	107,706					$	(96,564)

Effective Income Tax Rate Reconciliation

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

						Fiscal Year Ended
						October 2, 2020						September 27, 2019						September 28, 2018
United States statutory income tax rate						21.0		%				21.0		%				24.5		%
Increase (decrease) in taxes, resulting from:
State income taxes, net of Federal tax benefit						3.0						4.2						3.2
Foreign taxes(1)						(3.9)						2.2						3.3
Foreign goodwill impairment						(5.0)						—						—
Permanent book/tax differences						(0.7)						0.6						(1.2)
Uncertain tax positions						0.1						—						(0.3)
U.S. Tax Reform - Remeasurement of deferred taxes						—						—						(49.3)
U.S. Tax Reform - Foreign tax credit valuation allowance						—						(2.3)						2.8
Stock compensation						3.6						(0.2)						—
CARES Act - Carryback rate differential						9.8						—						—
Sale of HCT						—						(4.4)						—
Tax credits & other						0.9						(1.7)						(3.5)
Effective income tax rate						28.8		%				19.4		%				(20.5)		%

(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"), as well as valuation allowances in foreign countries in fiscal 2020 (3.4%).

Components of deferred taxes

As of October 2, 2020 and September 27, 2019, the components of deferred taxes are as follows (in thousands):

						October 2, 2020						September 27, 2019
Deferred tax liabilities:
Property and equipment						$	183,789					$	137,293
Investments						13,300						11,902
Other intangible assets, including goodwill						500,447						462,637
Cost to fulfill - Rental merchandise in-service						52,334						83,483
Operating Lease Right-of-use Assets						89,464						—
Other						45,589						37,309
Gross deferred tax liability						884,923						732,624
Deferred tax assets:
Derivatives						30,625						11,949
Insurance						23,784						34,112
Employee compensation and benefits						128,771						113,269
Accruals and allowances						31,218						31,844
Operating lease liabilities						102,259						—
NOL/credit carryforwards and other						261,763						56,508
Gross deferred tax asset, before valuation allowances						578,420						247,682
Valuation allowances						(38,977)						(17,532)
Net deferred tax liability						$	345,480					$	502,474

Schedule of Valuation and Qualifying Accounts Disclosure

Rollforward of the valuation allowance is as follows:

						October 2, 2020						September 27, 2019
Balance, beginning of year						$	(17,532)					$	(29,023)
Additions(1)						(21,445)						(2,330)
Subtractions(2)						—						13,821
Balance, end of year						$	(38,977)					$	(17,532)

(1)			The additions in both fiscal 2020 and fiscal 2019 were mainly driven by losses in certain foreign subsidiaries.
(2)			Valuation allowances against FTC carryforwards were released during fiscal 2019 as a result of Treasury Regulations.

ARAMARK AND SUBSIDIARIES

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE FISCAL YEARS ENDED OCTOBER 2, 2020, SEPTEMBER 27, 2019 AND SEPTEMBER 28, 2018

												Additions						Reductions
						Balance, Beginning of Period						Charged to Income						Deductions from Reserves(1)						Balance, End of Period
Description
Fiscal Year 2020
Reserve for doubtful accounts, advances & current notes receivable						$	49,566					$	64,655					$	39,296					$	74,925
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

(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):

			October 2, 2020						September 27, 2019
Balance, beginning of year			$	36,272					$	29,089
Additions based on tax positions taken in the current year			1,257						3,713
Additions for tax positions taken in prior years			—						6,531
Reductions for remeasurements, settlements and payments			(392)						(1,484)
Reductions due to statute expiration			(2,559)						(1,577)
Balance, end of year			$	34,578					$	36,272

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