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Income Taxes (Tables) | 12 Months Ended
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Sep. 29, 2023
Income Tax Disclosure [Abstract] |
Income from continuing operations before income taxes by source of income | The components of Income (Loss) Before Income Taxes by source of income (loss) are as follows (in thousands):
|  | Fiscal Year Ended
|  | September 29, 2023 |  | September 30, 2022 |  | October 1, 2021
United States |  | $ | 391,460 |  |  | $ | 142,507 |  |  | $ | (147,735) |
Non-United States(1) |  | 459,684 |  |  | 113,131 |  |  | 14,883 |
|  | $ | 851,144 |  |  | $ | 255,638 |  |  | $ | (132,852) |
(1) | Fiscal 2023 includes gains from sale of equity investments (see Note 1).
Provision (benefit) for income taxes | The Provision (Benefit) for Income Taxes consists of (in thousands):
|  | Fiscal Year Ended
|  | September 29, 2023 |  | September 30, 2022 |  | October 1, 2021
Current: |  |  |  |  |  |
Federal |  | $ | 28,118 |  |  | $ | 1,125 |  |  | $ | (18,245) |
State and local |  | 16,108 |  |  | 7,467 |  |  | (1,309) |
Non-United States |  | 18,843 |  |  | 17,447 |  |  | 22,155 |
|  | 63,069 |  |  | 26,039 |  |  | 2,601 |
Deferred: |  |  |  |  |  |
Federal(1) |  | 101,120 |  |  | 29,912 |  |  | (15,364) |
State and local |  | 10,058 |  |  | 1,525 |  |  | (11,652) |
Non-United States |  | 3,367 |  |  | 3,985 |  |  | (16,218) |
|  | 114,545 |  |  | 35,422 |  |  | (43,234) |
|  | $ | 177,614 |  |  | $ | 61,461 |  |  | $ | (40,633) |
(1) | Fiscal 2023 increase in deferred tax expense is a result of the utilization of tax credit carryforward assets.
Effective Income Tax Rate Reconciliation | The Provision (Benefit) for Income Taxes varies from the amount determined by applying the United States Federal statutory rate to Income (Loss) Before Income Taxes as a result of the following (all percentages are as a percentage of Income (Loss) Before Income Taxes):
|  | Fiscal Year Ended
|  | September 29, 2023 |  | September 30, 2022 |  | October 1, 2021
United States statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (decrease) in taxes, resulting from: |  |  |  |  |  |
State income taxes, net of Federal tax benefit |  | 2.4 |  |  | 4.7 |  |  | 7.7 |
Foreign taxes |  | 1.1 |  |  | 4.0 |  |  | 6.1 |
Reduction of foreign valuation allowances |  | (0.4) |  |  | (2.1) |  |  | (16.5) |
Permanent book/tax differences |  | (0.4) |  |  | 2.4 |  |  | (0.4) |
Uncertain tax positions |  | 0.7 |  |  | 1.0 |  |  | (2.2) |
Reduction of foreign tax credit valuation allowance |  | (0.6) |  |  | (0.3) |  |  | (27.5) |
Sale of investments(1) |  | (1.6) |  |  | — |  |  | — |
CARES Act - Carryback rate differential |  | — |  |  | — |  |  | 37.9 |
Canada Defined Benefit Pension Plan Termination |  | — |  |  | — |  |  | 3.0 |
Pennsylvania Rate Change Impact |  | — |  |  | (1.7) |  |  | — |
Tax credits & other |  | (1.3) |  |  | (5.0) |  |  | 1.5 |
Effective income tax rate |  | 20.9 | % |  | 24.0 | % |  | 30.6 | %
(1) | Includes mainly capital tax gains related to the sale of equity investments in AIM offset by capital tax losses in certain investments in foreign entities.
Components of deferred taxes | As of September 29, 2023 and September 30, 2022, the components of Deferred Income Taxes are as follows (in thousands):
|  | September 29, 2023 |  | September 30, 2022
Deferred tax liabilities: |  |  |  |
Derivatives |  | $ | 38,339 |  |  | $ | 40,325 |
Property and equipment |  | 60,622 |  |  | 98,331 |
Investments |  | 13,864 |  |  | 44,233 |
Other intangible assets, including goodwill |  | 635,154 |  |  | 606,211 |
Cost to fulfill - Rental merchandise in-service |  | 70,359 |  |  | 56,976 |
Operating Lease Right-of-use Assets |  | 61,049 |  |  | 83,270 |
Computer software costs and other |  | 33,014 |  |  | 25,401 |
Gross deferred tax liability |  | 912,401 |  |  | 954,747 |
Deferred tax assets: |  |  |  |
Insurance |  | 13,999 |  |  | 16,087 |
Employee compensation and benefits |  | 98,791 |  |  | 83,467 |
Accruals and allowances |  | 27,640 |  |  | 31,803 |
Operating lease liabilities |  | 74,024 |  |  | 91,492 |
NOL/credit carryforwards and other |  | 192,309 |  |  | 345,119 |
Gross deferred tax asset, before valuation allowances |  | 406,763 |  |  | 567,968 |
Valuation allowances |  | (78,194) |  |  | (83,827) |
Net deferred tax liability |  | $ | 583,832 |  |  | $ | 470,606 |
Schedule of Valuation and Qualifying Accounts Disclosure | Rollforward of the valuation allowance is as follows:
|  | September 29, 2023 |  | September 30, 2022
Balance, beginning of year |  | $ | (83,827) |  |  | $ | (97,472) |
Additions |  | — |  |  | — |
Subtractions(1) |  | 5,633 |  |  | 13,645 |
Balance, end of year |  | $ | (78,194) |  |  | $ | (83,827) |
(1) | The subtractions in fiscal 2023 and fiscal 2022 are mainly driven by the reversal of a valuation allowance based on future taxable income expected due to acquisitions of businesses in the FSS International segment. Fiscal 2022 also includes the reversal of valuation allowances related to pensions.
ARAMARK AND SUBSIDIARIES SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE FISCAL YEARS ENDED SEPTEMBER 29, 2023, SEPTEMBER 30, 2022 AND OCTOBER 1, 2021
|  |  |  | Additions |  | Reductions |  |
(in thousands) |  | Balance, Beginning of Period |  | Charged to Income |  | Deductions from Reserves(1) |  | Balance, End of Period
Description |  |  |  |  |  |  |  |
Fiscal Year 2023 |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 56,388 |  |  | $ | 38,074 |  |  | $ | 37,890 |  |  | $ | 56,572 |
Fiscal Year 2022 |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 79,644 |  |  | $ | 1,923 |  |  | $ | 25,179 |  |  | $ | 56,388 |
Fiscal Year 2021 |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 74,925 |  |  | $ | 13,544 |  |  | $ | 8,825 |  |  | $ | 79,644 |
(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 29, 2023 |  | September 30, 2022
Balance, beginning of year | $ | 80,220 |  |  | $ | 65,414 |
Additions based on tax positions taken in the current year | 4,433 |  |  | 863 |
Additions for tax positions taken in prior years(1) | — |  |  | 19,610 |
Reductions for remeasurements, settlements and payments(2) | (12,451) |  |  | (4,212) |
Reductions due to statute expiration | (1,889) |  |  | (1,455) |
Balance, end of year | $ | 70,313 |  |  | $ | 80,220 |
(1) | Fiscal 2022 includes a $16.2 million reclass from deferred income tax liabilities for a position taken in prior years primarily related to tangible property.
(2) | Fiscal 2023 includes a remeasurement of foreign tax credit assets that are available to reduce a position taken in prior years.

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