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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 2024
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 001-36223
___________________________________________
Aramark_H_RedandBlack_R (002).jpg
Aramark
(Exact name of registrant as specified in its charter)
Delaware20-8236097
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
2400 Market Street
19103
Philadelphia,
Pennsylvania
(Address of principal executive offices)(Zip Code)
(215) 238-3000
(Registrant's telephone number, including area code)
___________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on which Registered
Common Stock,
par value $0.01 per share
ARMK
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerxAccelerated fileroNon-accelerated fileroSmaller reporting company☐Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐  No  x
As of July 26, 2024, the number of shares of the registrant's common stock outstanding is 263,448,528.


    
TABLE OF CONTENTS
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Special Note About Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current expectations as to future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our operations, our liquidity and capital resources, the conditions in our industry and our growth strategy. In some cases, forward-looking statements can be identified by words such as "outlook," "aim," "anticipate," "have confidence," "estimate," "expect," "will be," "will continue," "will likely result," "project," "intend," "plan," "believe," "see," "look to" and other words and terms of similar meaning or the negative versions of such words. These forward-looking statements are subject to risks and uncertainties that may change at any time, and actual results or outcomes may differ materially from those that we expected.
Some of the factors that we believe could affect or continue to affect our results include without limitation: unfavorable economic conditions; natural disasters, global calamities, climate change, pandemics, energy shortages, sports strikes and other adverse incidents; geopolitical events including, but not limited to, the ongoing conflict between Russia and Ukraine and the ongoing conflict in the Middle East, global supply chain disruptions, inflation, volatility and disruption of global financial markets; the failure to retain current clients, renew existing client contracts and obtain new client contracts; a determination by clients to reduce their outsourcing or use of preferred vendors; competition in our industries; increased operating costs and obstacles to cost recovery due to the pricing and cancellation terms of our food and support services contracts; currency risks and other risks associated with international operations, including compliance with a broad range of laws and regulations, including the United States Foreign Corrupt Practices Act; risks associated with suppliers from whom our products are sourced; disruptions to our relationship with our distribution partners; the contract intensive nature of our business, which may lead to client disputes; the inability to hire and retain key or sufficient qualified personnel or increases in labor costs; our expansion strategy and our ability to successfully integrate the businesses we acquire and costs and timing related thereto; risks associated with the completed spin-off of Aramark Uniform and Career Apparel ("Uniform") as an independent publicly traded company to our stockholders; continued or further unionization of our workforce; liability resulting from our participation in multiemployer defined benefit pension plans; laws and governmental regulations including those relating to food and beverages, the environment, wage and hour and government contracting; liability associated with noncompliance with applicable law or other governmental regulations; new interpretations of or changes in the enforcement of the government regulatory framework; increases or changes in income tax rates or tax-related laws; potential liabilities, increased costs, reputational harm, and other adverse effects based on our commitments and stakeholder expectations relating to environmental, social and governance considerations; the failure to maintain food safety throughout our supply chain, food-borne illness concerns and claims of illness or injury; a cybersecurity incident or other disruptions in the availability of our computer systems or privacy breaches; our leverage; variable rate indebtedness that subjects us to interest rate risk; the inability to generate sufficient cash to service all of our indebtedness; debt agreements that limit our flexibility in operating our business; and other factors set forth under the headings "Part I, Item 1A Risk Factors," "Part I, Item 3 Legal Proceedings" and "Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations" and other sections of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC") on November 21, 2023 as such factors may be updated from time to time in our other periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov and which may be obtained by contacting Aramark's investor relations department via its website at www.aramark.com. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and in our other filings with the SEC. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, us. Forward-looking statements speak only as of the date made. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, changes in our expectations, or otherwise, except as required by law.


PART I
Item 1.    Financial Statements
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts)
June 28, 2024September 29, 2023
ASSETS
Current Assets:
Cash and cash equivalents$436,075 $1,927,088 
Receivables (less allowances: $40,002 and $31,506)
2,199,876 1,970,782 
Inventories370,423 403,707 
Prepayments and other current assets323,992 297,519 
Current assets of discontinued operations— 620,931 
                   Total current assets3,330,366 5,220,027 
Property and Equipment, net1,493,778 1,425,973 
Goodwill4,641,245 4,615,986 
Other Intangible Assets1,802,176 1,804,473 
Operating Lease Right-of-use Assets628,561 572,268 
Other Assets652,585 728,678 
Noncurrent Assets of Discontinued Operations— 2,503,836 
$12,548,711 $16,871,241 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term borrowings$943,279 $1,543,032 
Current operating lease liabilities50,944 51,271 
Accounts payable1,041,756 1,271,859 
Accrued payroll and related expenses444,000 479,827 
Accrued expenses and other current liabilities972,987 1,288,454 
Current liabilities of discontinued operations— 395,524 
Total current liabilities3,452,966 5,029,967 
Long-Term Borrowings5,034,327 5,098,662 
Noncurrent Operating Lease Liabilities243,235 245,871 
Deferred Income Taxes376,352 410,935 
Other Noncurrent Liabilities490,170 503,129 
Noncurrent Liabilities of Discontinued Operations— 1,861,735 
Commitments and Contingencies (see Note 12)
Redeemable Noncontrolling Interests7,737 8,224 
Stockholders' Equity:
Common stock, par value $0.01 (authorized: 600,000,000 shares; issued: 303,742,547 shares and 301,069,012 shares; and outstanding: 263,445,025 shares and 261,450,373 shares)
3,037 3,011 
Capital surplus3,903,271 3,825,620 
Retained earnings144,013 964,158 
Accumulated other comprehensive loss(104,871)(98,237)
Treasury stock (held in treasury: 40,297,522 shares and 39,618,639 shares)
(1,001,526)(981,834)
Total stockholders' equity2,943,924 3,712,718 
$12,548,711 $16,871,241 

The accompanying notes are an integral part of these condensed consolidated financial statements.
1
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share data)
Three Months EndedNine Months Ended
June 28, 2024June 30, 2023June 28, 2024June 30, 2023
Revenue$4,376,076 $4,053,050 $12,983,754 $11,882,926 
Costs and Expenses:
Cost of services provided (exclusive of depreciation and amortization)4,040,866 3,754,548 11,955,096 10,967,755 
Depreciation and amortization108,132 101,317 322,794 307,083 
Selling and general corporate expenses65,399 64,673 218,149 198,534 
4,214,397 3,920,538 12,496,039 11,473,372 
Operating income161,679 132,512 487,715 409,554 
Gain on Sale of Equity Investments, net— (375,972)— (375,972)
Interest Expense, net81,478 112,235 282,417 326,790 
Income from Continuing Operations Before Income Taxes80,201 396,249 205,298 458,736 
Provision for Income Taxes from Continuing Operations22,080 109,572 65,658 119,971 
Net income from Continuing Operations58,121 286,677 139,640 338,765 
Less: Net (loss) income attributable to noncontrolling interests(5)71 (471)(588)
Net income from Continuing Operations attributable to Aramark stockholders58,126 286,606 140,111 339,353 
Income from Discontinued Operations, net of tax— 51,878 — 129,323 
Net income attributable to Aramark stockholders$58,126 $338,484 $140,111 $468,676 
Basic earnings per share attributable to Aramark stockholders:
Income from Continuing Operations$0.22 $1.10 $0.53 $1.30 
Income from Discontinued Operations— 0.20 — 0.50 
Basic earnings per share attributable to Aramark stockholders$0.22 $1.30 $0.53 $1.80 
Diluted earnings per share attributable to Aramark stockholders:
Income from Continuing Operations$0.22 $1.09 $0.53 $1.29 
Income from Discontinued Operations— 0.20 — 0.50 
Diluted earnings per share attributable to Aramark stockholders$0.22 $1.29 $0.53 $1.79 
Weighted Average Shares Outstanding:
Basic263,390 260,922 262,761 260,349 
 Diluted266,577 262,747 265,387 262,267 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)
Three Months EndedNine Months Ended
June 28, 2024June 30, 2023June 28, 2024June 30, 2023
Net income from Continuing Operations$58,121 $286,677 $139,640 $338,765 
Income from Discontinued Operations, net of tax— 51,878 — 129,323 
Net income58,121 338,555 139,640 468,088 
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments1,527 5,677 (3,719)50,670 
Fair value of cash flow hedges(6,145)17,630 (34,324)(10,905)
Share of equity investee's comprehensive income— 6,208 — 5,698 
Other comprehensive (loss) income, net of tax(4,618)29,515 (38,043)45,463 
Comprehensive income53,503 368,070 101,597 513,551 
Less: Net (loss) income attributable to noncontrolling interests(5)71 (471)(588)
Comprehensive income attributable to Aramark stockholders$53,508 $367,999 $102,068 $514,139 

The accompanying notes are an integral part of these condensed consolidated financial statements.
3
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
June 28, 2024June 30, 2023
Cash flows from operating activities of Continuing Operations:
Net income from Continuing Operations$139,640 $338,765 
Adjustments to reconcile Net income from Continuing Operations to Net cash used in operating activities of Continuing Operations
Depreciation and amortization
322,794 307,083 
Asset write-downs— 27,781 
Reduction of contingent consideration liability (see Note 14)— (73,891)
Gain on sale of equity investments, net— (375,972)
Deferred income taxes(11,948)89,760 
Share-based compensation expense 46,895 56,872 
Changes in operating assets and liabilities
Receivables(236,390)(178,606)
Inventories
27,632 (7,438)
Prepayments and Other Current Assets
(3,548)(16,449)
Accounts Payable
(224,211)(274,844)
Accrued Expenses
(353,730)(246,933)
Payments made to clients on contracts
(108,262)(103,798)
Other operating activities
106,027 42,663 
Net cash used in operating activities of Continuing Operations(295,101)(415,007)
Cash flows from investing activities of Continuing Operations:
Purchases of property and equipment and other
(288,140)(258,585)
Disposals of property and equipment
17,228 12,956 
Purchases of marketable securities(71,215)(69,998)
Proceeds from marketable securities71,215 40,000 
Acquisition of certain businesses, net of cash acquired
(106,334)(49,503)
Proceeds from sale of equity investments— 633,179 
Other investing activities
(2,158)15,455 
Net cash (used in) provided by investing activities of Continuing Operations(379,404)323,504 
Cash flows from financing activities of Continuing Operations:
Proceeds from long-term borrowings
298,329 1,550,886 
Payments of long-term borrowings
(1,591,906)(1,807,652)
Net change in funding under the Receivables Facility
599,000 395,065 
Payments of dividends
(74,853)(85,898)
Proceeds from issuance of common stock
24,872 42,343 
Other financing activities
(56,006)(18,578)
Net cash (used in) provided by financing activities of Continuing Operations(800,564)76,166 
Discontinued Operations:
Net cash provided by operating activities— 144,914 
Net cash used in investing activities— (41,598)
Net cash used in financing activities— (19,431)
Net cash provided by Discontinued Operations— 83,885 
Effect of foreign exchange rates on cash and cash equivalents and restricted cash(1,769)13,268 
(Decrease) Increase in cash and cash equivalents and restricted cash(1,476,838)81,816 
Cash and cash equivalents and restricted cash, beginning of period1,972,367 365,431 
Cash and cash equivalents and restricted cash, end of period$495,529 $447,247 
4
Supplemental disclosure of cash flow informationNine Months Ended
(in millions)June 28, 2024June 30, 2023
Interest paid$267.3 $322.2 
Income taxes paid90.3 37.3 
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated Balance Sheets:
Balance Sheet classification
(in thousands)June 28, 2024June 30, 2023
Cash and cash equivalents$436,075 $388,166 
Restricted cash in Prepayments and other current assets59,454 44,833 
Cash and cash equivalents in Current assets of discontinued operations— 14,248 
Total cash and cash equivalents and restricted cash$495,529 $447,247 
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
Total Stockholders' Equity
Common Stock
Capital Surplus
Retained Earnings
Accumulated Other
Comprehensive Loss		Treasury Stock
Balance, September 29, 2023$3,712,718 $3,011 $3,825,620 $964,158 $(98,237)$(981,834)
Net income attributable to Aramark stockholders28,536 28,536 
Other comprehensive loss(22,183)(22,183)
Capital contributions from issuance of common stock8,228 13 8,215 
Share-based compensation expense13,654 13,654 
Repurchases of common stock(12,333)(12,333)
Separation of Uniform Segment (see Note 2)(855,105)(886,514)31,409 
Payments of dividends ($0.095 per share)
(26,881)(26,881)
Balance, December 29, 2023$2,846,634 $3,024 $3,847,489 $79,299 $(89,011)$(994,167)
Net income attributable to Aramark stockholders53,449 53,449 
Other comprehensive loss(11,242)(11,242)
Capital contributions from issuance of common stock13,594 7 13,587 
Share-based compensation expense15,790 15,790 
Purchase of noncontrolling
interest		(1,771)(1,771)
Repurchase of common stock(3,445)(3,445)
Separation of Uniform Segment (see Note 2)3,078 3,078 
Payments of dividends ($0.095 per share)
(24,947)(24,947)
Balance, March 29, 2024$2,891,140 $3,031 $3,875,095 $110,879 $(100,253)$(997,612)
Net income attributable to Aramark stockholders58,126 58,126 
Other comprehensive loss(4,618)(4,618)
Capital contributions from issuance of common stock10,731 6 10,725 
Share-based compensation expense17,451 17,451 
Repurchase of common stock(3,914)(3,914)
Payments of dividends ($0.095 per share)
(24,992)(24,992)
Balance, June 28, 2024$2,943,924 $3,037 $3,903,271 $144,013 $(104,871)$(1,001,526)

The accompanying notes are an integral part of these condensed consolidated financial statements.


6
ARAMARK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(in thousands)
Total Stockholders' Equity
Common Stock
Capital Surplus
Retained Earnings
Accumulated Other
Comprehensive Loss		Treasury Stock
Balance, September 30, 2022$3,029,640 $2,976 $3,681,966 $406,784 $(111,571)$(950,515)
Net income attributable to Aramark stockholders74,151 74,151 
Other comprehensive income28,080 28,080 
Capital contributions from issuance of common stock33,594 20 33,574 
Share-based compensation expense24,043 24,043 
Repurchases of common stock(15,559)(15,559)
Payments of dividends ($0.11 per share)
(30,686)(30,686)
Balance, December 30, 2022$3,143,263 $2,996 $3,739,583 $450,249 $(83,491)$(966,074)
Net income attributable to Aramark stockholders56,041 56,041 
Other comprehensive loss(12,132)(12,132)
Capital contributions from issuance of common stock6,452 2 6,450 
Share-based compensation expense21,034 21,034 
Repurchase of common stock(2,727)(2,727)
Payments of dividends ($0.11 per share)
(28,658)(28,658)
Balance, March 31, 2023$3,183,273 $2,998 $3,767,067 $477,632 $(95,623)$(968,801)
Net income attributable to Aramark stockholders338,484 338,484 
Other comprehensive income29,515 29,515 
Capital contributions from issuance of common stock10,992 5 10,987 
Share-based compensation expense20,544 20,544 
Repurchase of common stock(2,865)(2,865)
Payments of dividends ($0.11 per share)
(28,674)(28,674)
Balance, June 30, 2023$3,551,269 $3,003 $3,798,598 $787,442 $(66,108)$(971,666)

The accompanying notes are an integral part of these condensed consolidated financial statements.
7
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Aramark (the "Company") is a leading global provider of food and facilities 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 14-country footprint. The Company also provides services on a more limited basis in several additional countries and in offshore locations. The Company operates its business in two reportable segments that share many of the same operating characteristics: Food and Support Services United States ("FSS United States") and Food and Support Services International ("FSS International").
On September 30, 2023, the Company completed the previously announced separation and distribution of its Aramark Uniform and Career Apparel ("Uniform") segment into an independent publicly traded company, Vestis Corporation ("Vestis"), and the historical results of the Uniform segment have been reflected as discontinued operations in the Company's condensed consolidated financial statements for all periods prior to the separation and distribution. Assets and liabilities associated with the Uniform segment are classified as assets and liabilities of discontinued operations in the Company's Condensed Consolidated Balance Sheet as of September 29, 2023. Additional disclosures regarding the separation and distribution are provided in Note 2.
The condensed consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and should be read in conjunction with the audited consolidated financial statements, and the notes to those statements, included in the Company's Form 10-K filed with the SEC on November 21, 2023. The Condensed Consolidated Balance Sheet as of September 29, 2023 was derived from audited financial statements which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of the Company, the statements include all adjustments, which are of a normal, recurring nature, required for a fair presentation for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for a full year, due to the seasonality of some of the Company's business activities and the possibility of changes in general economic conditions.
The condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries in which a controlling financial interest is maintained. All intercompany transactions and accounts have been eliminated.
New Accounting Standards Updates
Adopted Standards (from most to least recent date of issuance)
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2022-04 Liabilities - Supplier Finance Programs (Subtopic 405-50) to enhance the transparency of supplier finance programs, which may be referred to as reverse factoring, payables finance or structured payables arrangements. The guidance requires that a buyer in a supplier finance program disclose the program's nature, activity and potential magnitude. The guidance was effective for the Company in the first quarter of fiscal 2024. The Company reviewed existing supplier finance agreements and enhanced disclosures with qualitative and quantitative information about its supplier finance program, but the adoption of this guidance did not have a material impact on the condensed consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08 Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which required that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers ("ASC 606") as if it had originated the contracts. The guidance was effective for the Company in the first quarter of fiscal 2024. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements.
Standards Not Yet Adopted (from most to least recent date of issuance)
In March 2024, the SEC adopted final climate-related disclosure rules under SEC Release Nos. 33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rules require disclosure of governance, risk management and strategy related to material climate-related risks as well as disclosure of material greenhouse gas emissions in registration statements and annual reports. In addition, the rules require presentation of certain material climate-related disclosures in the annual consolidated financial statements. On April 4, 2024, the SEC voluntarily stayed the effective date of the final rules pending completion of judicial review following legal challenges. The disclosure requirements will apply to the Company's fiscal year reporting beginning October 4, 2025, pending resolution of the stay. The Company is currently evaluating the impact of the rules on the Company’s disclosures.
8
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. The guidance will require improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance is effective for the Company's annual disclosures for fiscal 2026 and early adoption is permitted. The Company is currently evaluating the impact of this standard.
In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to enhance the reportable segment disclosures. The guidance will require additional disclosures about significant segment expenses. The guidance is effective for the Company's annual disclosures for fiscal 2025 and early adoption is permitted. The Company is currently evaluating the impact of this standard.
Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements or are not expected to have a material impact on the condensed consolidated financial statements.
Comprehensive Income
Comprehensive income includes all changes to stockholders' equity during a period, except those resulting from investments by and distributions to stockholders. Components of comprehensive income include net income, changes in foreign currency translation 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 (net of tax).
The summary of the components of comprehensive income is as follows (in thousands):
Three Months Ended
June 28, 2024June 30, 2023
Pre-Tax AmountTax EffectAfter-Tax AmountPre-Tax AmountTax EffectAfter-Tax Amount
Net income$58,121 $338,555 
Foreign currency translation adjustments1,527 — 1,527 8,353 (2,676)5,677 
Fair value of cash flow hedges(8,304)2,159 (6,145)23,825 (6,195)17,630 
Share of equity investee's comprehensive income— — — 11,126 (4,918)6,208 
Other comprehensive (loss) income(6,777)2,159 (4,618)43,304 (13,789)29,515 
Comprehensive income 53,503 368,070 
Less: Net (loss) income attributable to noncontrolling interests(5)71 
Comprehensive income attributable to Aramark stockholders$53,508 $367,999 
Nine Months Ended
June 28, 2024June 30, 2023
Pre-Tax AmountTax EffectAfter-Tax AmountPre-Tax AmountTax EffectAfter-Tax Amount
Net income $139,640 $468,088 
Foreign currency translation adjustments(3,719)— (3,719)56,080 (5,410)50,670 
Fair value of cash flow hedges(46,384)12,060 (34,324)(14,736)3,831 (10,905)
Share of equity investee's comprehensive income— — — 10,616 (4,918)5,698 
Other comprehensive (loss) income (50,103)12,060 (38,043)51,960 (6,497)45,463 
Comprehensive income 101,597 513,551 
Less: Net loss attributable to noncontrolling interests(471)(588)
Comprehensive income attributable to Aramark stockholders$102,068 $514,139 
9
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The amounts in the table above exclude the impact of a $5.1 million pension plan adjustment and $26.3 million currency translation adjustment during the nine months ended June 28, 2024 related to the separation and distribution of the Uniform segment (see Note 2).
Accumulated other comprehensive loss consists of the following (in thousands):
June 28, 2024September 29, 2023
Pension plan adjustments$(9,165)$(14,241)
Foreign currency translation adjustments(170,501)(193,115)
Cash flow hedges74,795 109,119 
$(104,871)$(98,237)
Currency Translation
Gains and losses resulting from the translation of financial statements of non-United States subsidiaries are reflected as a component of accumulated other comprehensive loss in stockholder's 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 Argentina remeasurement was a foreign currency transaction loss of $0.4 million and $5.2 million during the three and nine month periods ended June 28, 2024. The impact of the Argentina remeasurement was a foreign currency transaction loss of $2.8 million and $6.7 million during the three and nine month periods ended June 30, 2023. The impact of foreign currency transaction gains and losses exclusive of Argentina's operations included in the Company's operating results during the three and nine month periods of both fiscal 2024 and 2023 were immaterial to the condensed consolidated financial statements. 
Current Assets
The Company insures portions of its risk in general liability, automobile liability, workers’ compensation liability claims as well as certain property damage risks through a wholly owned captive insurance subsidiary (the "Captive") as part of its approach to risk finance. 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 June 28, 2024. 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, workers' compensation liability, certain property damage and related Captive costs. As of June 28, 2024 and September 29, 2023, cash and cash equivalents at the Captive were $15.7 million and $32.8 million, respectively. The Captive also invests in United States Treasury securities where the amount as of June 28, 2024 and September 29, 2023 was $114.3 million and $110.7 million, respectively, and is recorded in "Prepayments and other current assets" on the Condensed Consolidated Balance Sheets.
Within the FSS International segment, the Company receives certain cash on behalf of the Company's clients, which is contractually restricted from withdrawal and usage. This restricted cash is recorded in "Prepayments and other current assets" on the Condensed Consolidated Balance Sheets.
Property and Equipment and Operating Lease Right-of-use Assets
During fiscal 2023, the Company completed a strategic review of certain administrative locations, taking into account facility capacity and current utilization, among other factors. Based on this review, the Company vacated or otherwise reduced its usage at certain of these locations, resulting in an analysis of the recoverability of the assets associated with the locations. As a result, for the nine months ended June 30, 2023, the Company recorded an impairment charge of $19.0 million within its FSS United States segment, which is included in "Cost of services provided (exclusive of depreciation and amortization)" on the Condensed Consolidated Statements of Income. For the nine months ended June 30, 2023, the non-cash impairment charges within the FSS United States segment consisted of operating lease right-of-use assets of $8.6 million and property and equipment of $10.4 million.
Other Assets
Other assets consist primarily of costs to obtain or fulfill contracts (including employee sales commissions), long-term receivables, investments in 50% or less owned entities and computer software costs.
For investments in 50% or less owned entities accounted for under the equity method of accounting, the carrying amount as of June 28, 2024 and September 29, 2023 was $75.4 million and $73.5 million, respectively. During the third quarter of fiscal 2023, the Company sold its 50% ownership interest in AIM Services Co., Ltd., a leading Japanese food services company, to Mitsui & Co., Ltd. for $535.0 million in cash in a taxable transaction resulting in a pre-tax gain on sale of this equity investment
10
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
of $377.1 million ($275.9 million net of tax) during the three and nine months ended June 30, 2023. The pre-tax gain is included in "Gain on Sale of Equity Investments, net" on the Condensed Consolidated Statements of Income.
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 both June 28, 2024 and September 29, 2023 was $83.6 million. During the third quarter of fiscal 2023, the Company sold a portion of its ownership interest in an equity investment for $98.2 million in cash in a taxable transaction resulting in a pre-tax loss on sale of this equity investment of $1.1 million ($2.2 million net of tax) during the three and nine months ended June 30, 2023. The pre-tax loss is included in "Gain on Sale of Equity Investments, net" on the Condensed Consolidated Statements of Income.
Supply Chain Finance Program
The Company has agreements with third-party administrators that allow participating vendors to voluntarily elect to sell payment obligations from the Company to financial institutions as part of a Supply Chain Finance Program ("SCF Program"). The Company's payment terms to the financial institutions, including the timing and amount of payments, are based on the original supplier invoices. When participating vendors elect to sell one or more of the Company's payment obligations, the Company's rights and obligations to settle the payable on their contractual due date are not impacted. The Company has no economic or commercial interest in a vendor's decision to sell the Company's payment obligations. The Company agrees on commercial terms with vendors for the goods and services procured, which are consistent with payment terms observed at other peer companies in the industry, and the terms are not impacted by the SCF Program. For the SCF Program, the Company does not provide asset pledges, or other forms of guarantees, as security for the committed payment to the financial institutions. As of June 28, 2024 and September 29, 2023, the Company had $2.9 million and $2.8 million, respectively, of outstanding payment obligations to the financial institutions as part of the SCF Program recorded in "Accounts payable" on the Condensed Consolidated Balance Sheets.
Other Current and Noncurrent Liabilities
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, workers' compensation liability and certain property damage programs. Reserves for these programs are estimated through actuarial methods, with the assistance of third-party actuaries using loss development assumptions based on the Company's claims history.
Impact of COVID-19
The Coronavirus Aid, Relief and Economic Security Act ("CARES Act") provided 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% of the amount due December 31, 2022. Approximately $47.6 million of deferred social security taxes were paid during the nine months ended June 30, 2023.
NOTE 2. DISCONTINUED OPERATIONS:
On September 30, 2023, the Company completed the previously announced separation and distribution of its Uniform segment into an independent publicly traded company, Vestis. The separation was structured as a tax free spin-off, which occurred by way of a pro rata distribution to Aramark stockholders. Each of the Aramark stockholders received one share of Vestis common stock for every two shares of Aramark common stock held of record as of the close of business on September 20, 2023. Vestis is now an independent public company under the symbol “VSTS” on the New York Stock Exchange.
In connection with the separation and distribution, the Company entered into or adopted several agreements that provide a framework for the relationship between the Company and Vestis, including, but not limited to the following:
Separation and Distribution Agreement - governs the rights and obligations of the parties regarding the distribution following the completion of the separation, including the transfer of assets and assumption of liabilities, and establishes certain rights and obligations between the Company and Vestis following the distribution, including procedures with respect to claims subject to indemnification and related matters.
Transition Services Agreement - governs services between the Company and Vestis and their respective affiliates to provide each other on an interim, transitional basis, various services, including, but not limited to, administrative, information technology and cybersecurity support services and certain finance, treasury, tax and governmental function services. The services will terminate no later than 24 months following the distribution date.
11
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Tax Matters Agreement - governs the parties’ respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.
Employee Matters Agreement - governs the allocation of liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs and other related matters.
Under these agreements, the Company will continue to provide certain services to Vestis following the separation and distribution. The agreements do not provide the Company with the ability to influence the operating or financial policies of Vestis subsequent to the separation date. During the three and nine months ended June 28, 2024, the value of the services provided to Vestis were $2.3 million and $10.4 million, respectively. Current amounts due to Aramark from Vestis as of June 28, 2024 were not material.
The historical results of the Uniform segment have been reflected as discontinued operations in the Company's consolidated financial statements for all periods prior to the separation and distribution on September 30, 2023.
Details of "Income from Discontinued Operations, net of tax" are as follows (in thousands):
Three Months EndedNine Months Ended
June 30, 2023June 30, 2023
Revenue$696,159 $2,069,366 
Costs and Expenses:
Cost of services provided (exclusive of depreciation and amortization)560,162 1,688,450 
Depreciation and amortization34,205 101,712 
Selling and general corporate expenses30,922 103,747 
625,289 1,893,909 
Operating income70,870 175,457 
Interest Expense, net512 1,323 
Income from Discontinued Operations Before Income Taxes70,358 174,134 
Provision for Income Taxes from Discontinued Operations18,480 44,811 
Income from Discontinued Operations, net of tax$51,878 $129,323 
During the three and nine months ended June 30, 2023, the Company incurred charges of $9.5 million and $19.9 million, respectively, related to the Company's separation and distribution of its Uniform segment, including salaries and benefits, recruiting and relocation costs, accounting and legal related expenses, branding and other costs, of which $6.0 million and $13.0 million, respectively, were recorded within "Income from Discontinued Operations, net of tax" and $3.5 million and $6.9 million, respectively, were recorded within "Selling and general corporate expenses" on the Condensed Consolidated Statements of Income.
During the nine months ended June 28, 2024, the Company incurred $20.0 million of transaction fees related to the separation and distribution of its Uniform segment and $8.8 million of charitable contribution expense for the contribution of Vestis shares to a donor advised fund in order to fund charitable contributions, which were recorded within "Selling and general corporate expenses" on the Condensed Consolidated Statements of Income.
The following table summarizes the Uniform segment assets and liabilities classified as discontinued operations in the Company's Condensed Consolidated Balance Sheets (in thousands):
12
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 29, 2023
ASSETS
Cash and cash equivalents$36,051 
Receivables (less allowance: $25,066)
392,916 
Inventories174,720 
Prepayments and other current assets17,244 
Current assets of discontinued operations620,931 
Property and Equipment, net664,530 
Goodwill963,543 
Other Intangible Assets238,609 
Operating Lease Right-of-use Assets57,890 
Other Assets579,264 
Noncurrent Assets of Discontinued Operations$2,503,836 
LIABILITIES
Current maturities of long-term borrowings$53,910 
Current operating lease liabilities19,935 
Accounts payable134,497 
Accrued payroll and other related expenses113,770 
Accrued expenses and other current liabilities73,412 
Current liabilities of discontinued operations395,524 
Long-Term Borrowings1,567,910 
Noncurrent Operating Lease Liabilities46,084 
Deferred Income Taxes199,535 
Other Noncurrent Liabilities48,206 
Noncurrent Liabilities of Discontinued Operations$1,861,735 
In the fourth quarter of fiscal 2023, the Uniform legal entity entered into the Uniform credit agreement. The Uniform credit agreement included a revolving credit facility, a United States dollar denominated term loan in the amount of $800.0 million due September 2025 and a United States dollar denominated term loan in the amount of $700.0 million due September 2028, which are recorded in "Noncurrent Liabilities of Discontinued Operations" on the Condensed Consolidated Balance Sheets as of September 29, 2023. Also in the fourth quarter of fiscal 2023, the Uniform legal entity paid a cash dividend to the Company of $1,456.7 million. On October 2, 2023, the Company used the proceeds from the cash dividend, along with cash on hand, to repay the $1,500.0 million 6.375% Senior Notes due May 1, 2025 (the "6.375% 2025 Notes") (see Note 5).
The Company recorded its distribution of Vestis' net assets as a change in "Retained Earnings". The amount recorded reflected the carrying amounts, as of September 29, 2023, of the net assets distributed offset by the holdback of Vestis shares upon distribution of $8.8 million, net cash received from Vestis post-separation of $6.1 million and other adjustments of $0.6 million. The Company also recorded a net decrease to "Accumulated other comprehensive loss" of $31.4 million to derecognize foreign currency translation adjustments and pension plan adjustments which were attributable to Vestis.
NOTE 3. SEVERANCE:
During the second quarter of fiscal 2023, the Company approved headcount reductions to streamline and improve the efficiency and effectiveness of operational and administrative functions. As a result of these actions, severance charges of $29.7 million were recorded within “Cost of services provided (exclusive of depreciation and amortization)” and "Selling and general corporate expenses" on the Condensed Consolidated Statements of Income for the nine months ended June 30, 2023.
The following table summarizes the severance charges by segment recognized in the Condensed Consolidated Statements of Income for the nine months ended June 30, 2023 (in millions):
13
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FSS United States$3.3 
FSS International25.8 
Corporate0.6 
$29.7 
As of June 28, 2024, the Company had an accrual of approximately $6.0 million related to these unpaid severance obligations.
NOTE 4. GOODWILL AND OTHER INTANGIBLE ASSETS:
Goodwill represents the excess of the fair value of consideration paid for an acquired entity over the fair value of assets acquired and liabilities assumed in a business combination. Goodwill is not amortized and is subject to an impairment test that the Company conducts annually or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists, using discounted cash flows.
Changes in total goodwill during the nine months ended June 28, 2024 are as follows (in thousands):
Segment
September 29, 2023AcquisitionsTranslationJune 28, 2024
FSS United States$4,164,392 $12,817 $(21)$4,177,188 
FSS International451,594 8,880 3,583 464,057 
$4,615,986 $21,697 $3,562 $4,641,245 
Other intangible assets consist of the following (in thousands):
June 28, 2024September 29, 2023
Gross AmountAccumulated AmortizationNet AmountGross AmountAccumulated AmortizationNet Amount
Customer relationship assets$1,155,997 $(496,944)$659,053 $1,116,771 $(433,741)$683,030 
Trade names1,175,771 (32,648)1,143,123 1,137,535 (16,092)1,121,443 
$2,331,768 $(529,592)$1,802,176 $2,254,306 $(449,833)$1,804,473 
Amortization of intangible assets for the nine months ended June 28, 2024 and June 30, 2023 was $78.8 million and $66.7 million, respectively.
NOTE 5. BORROWINGS:
Long-term borrowings, net, are summarized in the following table (in thousands):
June 28, 2024September 29, 2023
Senior secured revolving credit facility, due April 2026$422,785 $170,759 
Senior secured term loan facility, due April 2026223,833 258,060 
Senior secured term loan facility, due January 2027836,415 835,631 
Senior secured term loan facility, due April 2028725,174 724,393 
Senior secured term loan facility, due June 20301,072,495 1,078,588 
5.000% senior notes, due April 2025
550,421 549,348 
3.125% senior notes, due April 2025(1)
347,729 342,718 
6.375% senior notes, due May 2025
— 1,492,153 
5.000% senior notes, due February 2028
1,144,023 1,142,910 
Receivables Facility, due July 2026599,000 — 
Finance leases37,632 31,933 
Other18,099 15,201 
5,977,606 6,641,694 
Less—current portion(943,279)(1,543,032)
$5,034,327 $5,098,662 
(1)
This is a Euro denominated borrowing.
As of June 28, 2024, the Company had approximately $739.4 million of outstanding foreign currency borrowings.
14
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As of June 28, 2024, the Company had approximately $702.2 million of availability under the senior secured revolving credit facility.
As of June 28, 2024, the 5.000% Senior Notes due April 1, 2025 and 3.125% Senior Notes due April 1, 2025 mature within one year. The Company intends to repay, redeem or otherwise refinance the outstanding obligations related to these securities.
Senior Secured Credit Agreement
On March 27, 2024, the Company amended its existing Credit Agreement (“Amendment No. 14”), to provide for, among other things, the repricing of all the United States dollar denominated Term B-5 Loans previously outstanding under the Credit Agreement (“U.S. Term B-5 Loans due 2028”) and the repricing of all the United States dollar denominated Term B-6 Loans previously outstanding under the Credit Agreement (“U.S. Term B-6 Loans due 2030”).
As a result of the Amendment No. 14, (i) U.S. Term B-5 Loans due 2028 previously outstanding under the Credit Agreement were replaced with new United States dollar denominated Term B-7 Loans (“U.S. Term B-7 Loans due 2028”) in an amount equal to $730.5 million due in April 2028 and (ii) U.S. Term B-6 Loans due 2030 previously outstanding under the Credit Agreement were replaced with the new United States dollar denominated Term B-8 Loans (“U.S. Term B-8 Loans due 2030”) in an amount equal to $1,094.5 million due in June 2030, each with an interest rate equal to the sum of (a) the Term SOFR Rate (as defined in the Credit Agreement) plus (b) an applicable margin of 2.00% plus (c) a credit spread adjustment of 0.0% (as compared to the interest rate for the U.S. Term B-5 Loans due 2028 and the U.S. Term B-6 Loans due 2030 equal to the sum of (a) the Term SOFR Rate plus (b) an applicable margin of 2.50% plus (c) a credit spread adjustment between 0.11448% and 0.42826% (depending on the selected interest period)).
The U.S. Term B-7 Loans due 2028 do not require any quarterly repayments of the principal amount and require the payment of $730.5 million at maturity. The U.S. Term B-8 Loans due 2030 require repayment of principal in quarterly installments of $2.8 million from March 31, 2024 through March 31, 2030 and $1,025.8 million at maturity.
The Company capitalized $0.9 million of transaction costs directly attributable to the repricings in Amendment No. 14, which are included in “Long-Term Borrowings” on the Condensed Consolidated Balance Sheet as of June 28, 2024. Amounts paid for capitalized transaction costs are included within “Other financing activities” on the Condensed Consolidated Statement of Cash Flows for the nine months ended June 28, 2024. Additionally, the Company recorded $1.6 million of charges to "Interest Expense, net" on the Condensed Consolidated Statements of Income for the nine months ended June 28, 2024, consisting of a $1.2 million non-cash loss for the write-off of unamortized deferred financing costs and discount on the U.S. Term B-5 Loans due 2028 and U.S. Term B-6 Loans due 2030 and the payment of $0.4 million of transaction costs related to the repricings.
6.375% Senior Notes due 2025 Repayment
On October 2, 2023, the Company repaid the $1,500.0 million 6.375% 2025 Notes in conjunction with the separation and distribution of the Uniform segment (see Note 2). The Company recorded $31.8 million of charges to "Interest Expense, net" in the Condensed Consolidated Statements of Income for the nine months ended June 28, 2024, consisting of the payment of a $23.9 million call premium and a $7.9 million non-cash loss for the write-off of unamortized deferred financing costs on the 6.375% 2025 Notes. The amount paid for the call premium is included within "Other financing activities" on the Condensed Consolidated Statements of Cash Flows for the nine months ended June 28, 2024.
NOTE 6. DERIVATIVE INSTRUMENTS:
The Company enters into contractual derivative arrangements to manage changes in market conditions related to interest on debt obligations, including interest rate swap agreements, that are recognized as either assets or liabilities on the balance sheet at fair value at the end of each quarter. The counterparties to the Company's contractual derivative agreements are all major international financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company continually monitors its positions and the credit ratings of its counterparties and does not anticipate nonperformance by the counterparties. The Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged and how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively for designated hedges. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items.
Cash Flow Hedges
The Company has $2.3 billion notional amount of outstanding interest rate swap agreements as of June 28, 2024, which fix the rate on a like amount of variable rate borrowings with varying maturities through December of fiscal 2028. During the second quarter of fiscal 2024, $100.0 million notional amount of previously forward starting interest rate swap agreements to hedge the cash flow risk of variability in interest payments on variable rate borrowings became effective.
15
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Changes in the fair value of a derivative that is designated as and meets all the required criteria for a cash flow hedge are recorded in accumulated other comprehensive loss and reclassified into earnings as the underlying hedged item affects earnings. Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of June 28, 2024 and September 29, 2023, $74.8 million and $109.1 million, respectively, of unrealized net of tax gains related to the interest rate swaps were included in "Accumulated other comprehensive loss" on the Condensed Consolidated Balance Sheets.
The following table summarizes the effect of the Company's derivatives designated as cash flow hedging instruments on Other comprehensive income (loss) (in thousands):
Three Months EndedNine Months Ended
June 28, 2024June 30, 2023June 28, 2024June 30, 2023
Interest rate swap agreements$10,820 $40,370 $10,705 $26,039 
The following table summarizes the location and fair value, using Level 2 inputs (see Note 14 for a description of the fair value levels), of the Company's derivatives designated as hedging instruments on the Condensed Consolidated Balance Sheets (in thousands):
Balance Sheet LocationJune 28, 2024September 29, 2023
ASSETS
Interest rate swap agreementsPrepayments and other current assets$16,985 $— 
Interest rate swap agreementsOther Assets84,090 147,458 
The following table summarizes the location of the gain reclassified from "Accumulated other comprehensive loss" into earnings for derivatives designated as hedging instruments on the Condensed Consolidated Statements of Income (in thousands):
Three Months EndedNine Months Ended
Income Statement Location
June 28, 2024June 30, 2023June 28, 2024June 30, 2023
Interest rate swap agreementsInterest Expense, net$(19,124)$(16,545)$(57,089)$(40,775)
As of June 28, 2024, the Company has a Euro denominated term loan in the amount of €63.1 million. The term loan was designated as a hedge of the Company's net Euro currency exposure represented by certain holdings in the Company's European affiliates.
At June 28, 2024, the net of tax gain expected to be reclassified from "Accumulated other comprehensive loss" into earnings over the next twelve months based on current market rates is approximately $41.3 million.
NOTE 7. REVENUE RECOGNITION:
The Company generates revenue through sales of food and facility services to customers based on written contracts at the locations it serves. The Company provides food and beverage services, including catering and retail services, and facilities services, including plant operations and maintenance, custodial, housekeeping, landscaping and other services. In accordance with ASC 606, the Company accounts for a customer contract when both parties have approved the arrangement and are committed to perform their respective obligations, each party's rights can be identified, payment terms can be identified, the contract has commercial substance and it is probable the Company will collect substantially all of the consideration to which it is entitled. Revenue is recognized 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.
Performance Obligations
The Company recognizes revenue when its performance obligation is satisfied. Each contract generally has one performance obligation, which is satisfied over time. The Company primarily accounts for its performance obligations under the series guidance, using the as-invoiced practical expedient when applicable. The Company applies the right to invoice practical expedient to record revenue as the services are provided, given the nature of the services provided and the frequency of billing under the customer contracts. Under this practical expedient, the Company recognizes revenue in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date and for which the Company has the right to invoice the customer. Certain arrangements include performance obligations which include variable consideration (primarily per transaction fees). For these arrangements, the Company does not need to estimate the variable consideration for the contract and allocate to the entire performance obligation; therefore, the variable fees are recognized in the period they are earned.
16
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Disaggregation of Revenue
The following table presents revenue disaggregated by revenue source (in millions):
Three Months EndedNine Months Ended
June 28, 2024June 30, 2023June 28, 2024June 30, 2023
FSS United States:
    Business & Industry$427.5 $369.0 $1,207.3 $1,043.7 
    Education779.6 725.5 2,931.4 2,712.8 
    Healthcare(1)
411.8 416.5 1,216.4 1,251.3 
    Sports, Leisure & Corrections1,083.9 956.2 2,751.1 2,416.8 
    Facilities & Other(1)
441.7 423.4 1,294.5 1,230.2 
         Total FSS United States3,144.5 2,890.6 9,400.7 8,654.8 
FSS International:
    Europe700.9 638.7 1,963.1 1,694.9 
    Rest of World530.7 523.7 1,620.0 1,533.2 
          Total FSS International1,231.6 1,162.4 3,583.1 3,228.1 
Total Revenue$4,376.1 $4,053.0 $12,983.8 $11,882.9 
(1)
Beginning in fiscal 2024, management began reporting results for healthcare facility services within "Healthcare", whereas the results were previously reported within "Facilities & Other". As such, the "Healthcare" and "Facilities & Other" results for the three and nine months ended June 30, 2023 were recast to reflect this change.
Contract Balances
Deferred income is recognized in "Accrued expenses and other current liabilities" on the Condensed Consolidated Balance Sheets when the Company has received consideration, or has the right to receive consideration, in advance of the transfer of the performance obligation of the contract to the customer, primarily prepaid meal plans. The consideration received remains a liability until the goods or services have been provided to the customer. The Company classifies deferred income as current as the deferred income is expected to be recognized in the next 12 months. If the Company cannot render its performance obligation according to contract terms after receiving the consideration in advance, amounts may be contractually required to be refunded to the customer.
During the nine months ended June 28, 2024, deferred income increased related to customer prepayments and decreased related to income recognized during the period as a result of satisfying the performance obligation or return of funds related to non-performance. For the nine months ended June 28, 2024, the Company recognized $290.0 million of revenue that was included in deferred income at the beginning of the period. Deferred income balances are summarized in the following table (in millions):
June 28, 2024September 29, 2023
Deferred income$124.2 $329.9 
NOTE 8. INCOME TAXES:
During the nine months ended June 28, 2024, the Company recorded a valuation allowance to the "Provision for Income Taxes from Continuing Operations" on the Condensed Consolidated Statements of Income of $7.1 million against certain foreign tax credits, as it is more likely than not a tax benefit will not be realized due to the reduction of future forecasted foreign income as a result of the separation and distribution of the Uniform segment.
During the nine months ended June 30, 2023, the Company recorded a benefit to the "Provision for Income Taxes from Continuing Operations" on the Condensed Consolidated Statements of Income of $3.8 million for the reversal of a valuation allowance at a foreign subsidiary driven by the Company's ability to utilize the deferred tax assets based on future taxable income expected due to the acquisition of a business.
NOTE 9. STOCKHOLDERS' EQUITY:
On August 2, 2024, the Company's Board of Directors approved a $0.095 dividend per share of common stock, payable on September 3, 2024, to stockholders of record on the close of business on August 19, 2024.
17
ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The Company has 100.0 million shares of preferred stock authorized, with a par value of $0.01 per share. At June 28, 2024 and September 29, 2023, zero shares of preferred stock were issued or outstanding.
NOTE 10. SHARE-BASED COMPENSATION:
On October 13, 2023, the Company's Compensation and Human Resources Committee of the Board of Directors (the "Committee"), pursuant to the terms of the Third Amended and Restated 2013 Stock Incentive Plan and to reflect the separation and distribution of the Company’s Uniform segment that occurred on September 30, 2023, approved amendments to the performance goals and performance periods for the Company’s outstanding Performance Stock Units ("PSUs"). For the PSUs granted in fiscal 2022, which were subject to performance targets for the three-year period ending September 27, 2024, two-thirds of these PSUs became subject to new adjusted performance targets and an adjusted performance period for the two-year period ending September 29, 2023 and the remaining one-third of these PSUs will be subject to new adjusted performance targets for the one-year period ending September 27, 2024. The PSUs granted in fiscal 2023, which were subject to performance targets for the three-year period ending October 3, 2025, were amended to be subject to adjusted performance targets primarily to reflect the Company on a post-spin off basis. The Committee also approved adjustments increasing the maximum aggregate number of shares authorized for awards under the 2023 Stock Plan by an additional 3.5 million shares.
The following table summarizes the share-based compensation expense and related information for Time-Based Options ("TBOs"), Retention Time-Based Options ("TBO-Rs"), Time-Based Restricted Stock Units ("RSUs"), PSUs, Deferred Stock Units and Employee Stock Purchase Plan ("ESPP") recorded within "Selling and general corporate expenses" on the Condensed Consolidated Statements of Income (in millions).
Three Months EndedNine Months Ended
June 28, 2024June 30, 2023June 28, 2024June 30, 2023
TBOs$2.6 $3.6 $7.3 $10.6 
TBO-Rs1.5 0.7 2.5 3.8 
RSUs8.4 10.8 24.6 33.2 
PSUs4.5 2.2 11.1 6.1 
Deferred Stock Units0.5 0.5 1.4 1.3 
ESPP(1)
— — — 1.9 
$17.5 $17.8 $46.9 $56.9 
Taxes related to share-based compensation$2.8 $3.0 $8.1 $9.7 
Cash Received from Option Exercises/ESPP Purchases9.3 9.6 24.9 42.3 
Tax Benefit on Share Deliveries0.5 0.2 0.5 1.0 
(1)
The Company suspended its ESPP beginning in the second quarter of fiscal 2023.
The below table summarizes the number of shares granted and the weighted-average grant-date fair value per unit during the nine months ended June 28, 2024:
Shares Granted
(in millions)		Weighted Average Grant-Date Fair Value
(dollars per share)
TBOs1.2 $12.04 
RSUs1.6 $28.13 
PSUs0.7 $32.16 
3.5 
NOTE 11. EARNINGS PER SHARE:
Basic earnings per share is computed using the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares outstanding adjusted to include the potentially dilutive effect of stock awards.
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ARAMARK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following table sets forth the computation of basic and diluted earnings per share attributable to the Company's stockholders (in thousands, except per share data):
Three Months EndedNine Months Ended
June 28, 2024June 30, 2023June 28, 2024June 30, 2023
Earnings:
Net income from Continuing Operations attributable
to Aramark stockholders
$58,126 $286,606 $140,111 $339,353 
Income from Discontinued Operations, net of tax— 51,878 — 129,323 
Net income attributable to Aramark stockholders$58,126 $338,484 $140,111 $468,676 
Shares:
Basic weighted-average shares outstanding
263,390 260,922 262,761 260,349 
Effect of dilutive securities3,187 1,825 2,626 1,918 
Diluted weighted-average shares outstanding
266,577 262,747 265,387 262,267 
Basic earnings per share attributable to Aramark stockholders:
Income from Continuing Operations$0.22 $1.10 $0.53 $1.30 
Income from Discontinued Operations— 0.20 — 0.50 
Basic earnings per share attributable to Aramark
stockholders
$0.22 $1.30 $0.53 $1.80 
Diluted earnings per share attributable to Aramark stockholders:
Income from Continuing Operations$0.22 $1.09 $0.53 $1.29 
Income from Discontinued Operations— 0.20 —