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Leases

12 Months Ended

Sep. 29, 2023

Leases [Abstract]

Leases

LEASES:

The Company has lease arrangements primarily related to real estate, vehicles and equipment, which generally have terms of one to 30 years. Finance leases primarily relate to vehicles and certain real estate. In addition, there can be leases identified in the Company's revenue contracts with customers, which generally include fixed or variable lease payments. The Company assesses whether an arrangement is a lease, or contains a lease, upon inception of the related contract. A right-of-use asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less ("short-term leases"). Certain of the Company's lease arrangements, primarily vehicle leases, with terms of one to 12 years, contain provisions related to residual value guarantees. The maximum potential liability to the Company under such arrangements was approximately $29.3 million at September 29, 2023 if the terminal fair value of vehicles coming off lease was zero. Consistent with past experience, management does not expect any significant payments will be required pursuant to these arrangements. No amounts have been accrued for guarantee arrangements at September 29, 2023.

The Company recognizes operating lease liabilities and operating lease right-of-use assets on its Consolidated Balance Sheets. Operating lease right-of-use assets represent the Company’s right to use the underlying assets for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities and operating lease right-of-use assets are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. Deferred rent, tenant improvement allowances and prepaid rent are included in the operating lease right-of-use asset balances. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has lease agreements with lease and non-lease components. Non-lease components are combined with the related lease components and accounted for as lease components for all classes of underlying assets.

Variable lease payments, which primarily consist of leases associated with the Company's revenue contracts with customers, real estate taxes, common area maintenance charges, insurance costs and other operating expenses, are not included in the

operating lease right-of-use asset or operating lease liability balances and are recognized in the period in which the expenses are incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain they will be exercised or not, respectively. Options to extend lease terms that are reasonably certain of exercise are recognized as part of the operating lease right-of-use asset and operating lease liability balances.

The Company is required to discount its future minimum lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. The Company primarily uses its incremental borrowing rate as the discount rate. The Company uses a portfolio approach to determine the incremental borrowing rate based on the geographic location of the lease and the remaining lease term. The incremental borrowing rate is calculated using a base line rate plus an applicable margin.

The following table summarizes the location of the operating and finance leases in the Company’s Consolidated Balance Sheets (in thousands), as well as the weighted average remaining lease term and weighted average discount rate:

Leases						Balance Sheet Location						September 29, 2023						September 30, 2022
Assets:
Operating(1)(2)						Operating Lease Right-of-use Assets						$	630,158					$	592,145
Finance						Property and Equipment, net						152,551						137,550
Total lease assets												$	782,709					$	729,695
Liabilities:
Current
Operating						Current operating lease liabilities						$	71,206					$	68,858
Finance						Current maturities of long-term borrowings						31,412						27,430
Noncurrent
Operating						Noncurrent Operating Lease Liabilities						291,955						305,623
Finance						Long-term borrowings						133,398						119,943
Total lease liabilities												$	527,971					$	521,854
Weighted average remaining lease term (in years)
Operating leases												7.1						7.7
Finance leases												7.4						7.7
Weighted average discount rate
Operating leases												4.3		%				3.7		%
Finance leases												4.4		%				4.0		%

(1)			Includes $320.1 million and $260.2 million of long-term prepaid rent as of September 29, 2023 and September 30, 2022, respectively.
(2)			During fiscal 2023, the Company recorded impairment charges to its Operating Lease Right-of-use Assets (see Note 1).

The following table summarizes the location of lease related costs on the Consolidated Statements of Income (Loss) (in thousands):

												Fiscal Year Ended
Lease Cost						Income Statement Location						September 29, 2023						September 30, 2022						October 1, 2021
Operating lease cost(1):
Fixed lease costs						Cost of services provided (exclusive of depreciation and amortization)						$	133,510					$	122,607					$	116,934
Variable lease costs(2)						Cost of services provided (exclusive of depreciation and amortization)						932,225						774,437						344,130
Short-term lease costs						Cost of services provided (exclusive of depreciation and amortization)						87,962						71,726						48,288
Finance lease cost(3):
Amortization of right-of-use-assets						Depreciation and amortization						34,745						32,702						31,243
Interest on lease liabilities						Interest and Other Financing Costs, net						5,666						4,499						4,794
Net lease cost												$	1,194,108					$	1,005,971					$	545,389

(1)			Excludes sublease income, which is immaterial.
(2)			Includes $903.4 million, $745.6 million and $325.3 million of costs related to leases associated with revenue contracts with customers for fiscal 2023, 2022 and 2021, respectively. These costs represent the rent the Company pays its clients to operate at their locations, typically based on a percentage of sales. Variable lease costs during fiscal 2021 was impacted by COVID-19.
(3)			Excludes variable lease costs, which are immaterial.

Supplemental cash flow information related to leases for the periods reported is as follows (in thousands):

						Fiscal Year Ended
						September 29, 2023						September 30, 2022						October 1, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases(1)						$	194,663					$	135,936					$	189,061
Operating cash flows from finance leases						5,666						4,499						4,794
Financing cash flows from finance leases						31,808						31,289						32,496
Lease assets obtained in exchange for lease obligations:
Operating leases						$	64,857					$	82,635					$	61,345
Finance leases						47,488						35,839						36,046

(1) For fiscal 2023, excludes cash paid for variable and short-term lease costs of $919.0 million and $88.0 million, respectively, that are not included within the measurement of lease liabilities. For fiscal 2022, excludes cash paid for variable and short-term lease costs of $734.2 million and $71.7 million, respectively, that are not included within the measurement of lease liabilities. For fiscal 2021, excludes cash paid for variable and short-term lease costs of $304.5 million and $48.3 million, respectively, that are not included within the measurement of lease liabilities.

Future minimum lease payments under non-cancelable leases as of September 29, 2023 are as follows (in thousands):

			Operating leases						Finance leases						Total
2024			$	85,073					$	37,366					$	122,439
2025			71,165						33,906						105,071
2026			58,165						29,310						87,475
2027			45,612						24,039						69,651
2028			37,319						19,300						56,619
Thereafter			125,028						49,400						174,428
Total future minimum lease payments			$	422,362					$	193,321					$	615,683
Less: Interest			(59,201)						(28,511)						(87,712)
Present value of lease liabilities			$	363,161					$	164,810					$	527,971

Leases

LEASES:

The Company has lease arrangements primarily related to real estate, vehicles and equipment, which generally have terms of one to 30 years. Finance leases primarily relate to vehicles and certain real estate. In addition, there can be leases identified in the Company's revenue contracts with customers, which generally include fixed or variable lease payments. The Company assesses whether an arrangement is a lease, or contains a lease, upon inception of the related contract. A right-of-use asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less ("short-term leases"). Certain of the Company's lease arrangements, primarily vehicle leases, with terms of one to 12 years, contain provisions related to residual value guarantees. The maximum potential liability to the Company under such arrangements was approximately $29.3 million at September 29, 2023 if the terminal fair value of vehicles coming off lease was zero. Consistent with past experience, management does not expect any significant payments will be required pursuant to these arrangements. No amounts have been accrued for guarantee arrangements at September 29, 2023.

The Company recognizes operating lease liabilities and operating lease right-of-use assets on its Consolidated Balance Sheets. Operating lease right-of-use assets represent the Company’s right to use the underlying assets for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities and operating lease right-of-use assets are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. Deferred rent, tenant improvement allowances and prepaid rent are included in the operating lease right-of-use asset balances. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has lease agreements with lease and non-lease components. Non-lease components are combined with the related lease components and accounted for as lease components for all classes of underlying assets.

Variable lease payments, which primarily consist of leases associated with the Company's revenue contracts with customers, real estate taxes, common area maintenance charges, insurance costs and other operating expenses, are not included in the

operating lease right-of-use asset or operating lease liability balances and are recognized in the period in which the expenses are incurred. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain they will be exercised or not, respectively. Options to extend lease terms that are reasonably certain of exercise are recognized as part of the operating lease right-of-use asset and operating lease liability balances.

The Company is required to discount its future minimum lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. The Company primarily uses its incremental borrowing rate as the discount rate. The Company uses a portfolio approach to determine the incremental borrowing rate based on the geographic location of the lease and the remaining lease term. The incremental borrowing rate is calculated using a base line rate plus an applicable margin.

The following table summarizes the location of the operating and finance leases in the Company’s Consolidated Balance Sheets (in thousands), as well as the weighted average remaining lease term and weighted average discount rate:

Leases						Balance Sheet Location						September 29, 2023						September 30, 2022
Assets:
Operating(1)(2)						Operating Lease Right-of-use Assets						$	630,158					$	592,145
Finance						Property and Equipment, net						152,551						137,550
Total lease assets												$	782,709					$	729,695
Liabilities:
Current
Operating						Current operating lease liabilities						$	71,206					$	68,858
Finance						Current maturities of long-term borrowings						31,412						27,430
Noncurrent
Operating						Noncurrent Operating Lease Liabilities						291,955						305,623
Finance						Long-term borrowings						133,398						119,943
Total lease liabilities												$	527,971					$	521,854
Weighted average remaining lease term (in years)
Operating leases												7.1						7.7
Finance leases												7.4						7.7
Weighted average discount rate
Operating leases												4.3		%				3.7		%
Finance leases												4.4		%				4.0		%

(1)			Includes $320.1 million and $260.2 million of long-term prepaid rent as of September 29, 2023 and September 30, 2022, respectively.
(2)			During fiscal 2023, the Company recorded impairment charges to its Operating Lease Right-of-use Assets (see Note 1).

The following table summarizes the location of lease related costs on the Consolidated Statements of Income (Loss) (in thousands):

												Fiscal Year Ended
Lease Cost						Income Statement Location						September 29, 2023						September 30, 2022						October 1, 2021
Operating lease cost(1):
Fixed lease costs						Cost of services provided (exclusive of depreciation and amortization)						$	133,510					$	122,607					$	116,934
Variable lease costs(2)						Cost of services provided (exclusive of depreciation and amortization)						932,225						774,437						344,130
Short-term lease costs						Cost of services provided (exclusive of depreciation and amortization)						87,962						71,726						48,288
Finance lease cost(3):
Amortization of right-of-use-assets						Depreciation and amortization						34,745						32,702						31,243
Interest on lease liabilities						Interest and Other Financing Costs, net						5,666						4,499						4,794
Net lease cost												$	1,194,108					$	1,005,971					$	545,389

(1)			Excludes sublease income, which is immaterial.
(2)			Includes $903.4 million, $745.6 million and $325.3 million of costs related to leases associated with revenue contracts with customers for fiscal 2023, 2022 and 2021, respectively. These costs represent the rent the Company pays its clients to operate at their locations, typically based on a percentage of sales. Variable lease costs during fiscal 2021 was impacted by COVID-19.
(3)			Excludes variable lease costs, which are immaterial.

Supplemental cash flow information related to leases for the periods reported is as follows (in thousands):

						Fiscal Year Ended
						September 29, 2023						September 30, 2022						October 1, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases(1)						$	194,663					$	135,936					$	189,061
Operating cash flows from finance leases						5,666						4,499						4,794
Financing cash flows from finance leases						31,808						31,289						32,496
Lease assets obtained in exchange for lease obligations:
Operating leases						$	64,857					$	82,635					$	61,345
Finance leases						47,488						35,839						36,046

(1) For fiscal 2023, excludes cash paid for variable and short-term lease costs of $919.0 million and $88.0 million, respectively, that are not included within the measurement of lease liabilities. For fiscal 2022, excludes cash paid for variable and short-term lease costs of $734.2 million and $71.7 million, respectively, that are not included within the measurement of lease liabilities. For fiscal 2021, excludes cash paid for variable and short-term lease costs of $304.5 million and $48.3 million, respectively, that are not included within the measurement of lease liabilities.

Future minimum lease payments under non-cancelable leases as of September 29, 2023 are as follows (in thousands):

			Operating leases						Finance leases						Total
2024			$	85,073					$	37,366					$	122,439
2025			71,165						33,906						105,071
2026			58,165						29,310						87,475
2027			45,612						24,039						69,651
2028			37,319						19,300						56,619
Thereafter			125,028						49,400						174,428
Total future minimum lease payments			$	422,362					$	193,321					$	615,683
Less: Interest			(59,201)						(28,511)						(87,712)
Present value of lease liabilities			$	363,161					$	164,810					$	527,971

X

- References

No definition available.

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X

- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

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X

- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 842
-SubTopic 20
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//842-20/tableOfContent

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Namespace Prefix:	us-gaap_
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