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Income Taxes (Tables)

12 Months Ended

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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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure of the change in unrecognized tax benefits.

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