Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of Aramark's (the "Company," "we," "our" and "us") financial condition and results of operations for the fiscal years ended October 3, 2025, September 27, 2024 and September 29, 2023 should be read in conjunction with our audited consolidated financial statements and the notes to those statements. Discussion and analysis of our financial condition for the fiscal year ended September 27, 2024 compared to the fiscal year ended September 29, 2023 is included under the heading Item 7 “Management’s Discussion and Analysis of Financial Condition - Liquidity and Capital Resources” in our Annual Report on Form 10-K filed for the fiscal year ended September 27, 2024 with the Securities and Exchange Commission ("SEC") on November 19, 2024.
Our discussion contains forward-looking statements, such as our plans, objectives, opinions, expectations, anticipations, intentions and beliefs, that are based upon our current expectations but that involve risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in those forward-looking statements as a result of a number of factors, including those set forth under "Risk Factors," "Special Note About Forward-looking Statements" and "Business" sections and elsewhere in this Annual Report on Form 10-K ("Annual Report"). In the following discussion and analysis of financial condition and results of operations, certain financial measures may be considered “non-GAAP financial measures” under the SEC rules. These rules require supplemental explanation and reconciliation, which is provided elsewhere in this Annual Report.
Overview
We are a leading global provider of food and facilities services to education, healthcare, business & industry and sports, leisure & corrections clients. Our largest market is the United States, which is supplemented by an additional 15-country footprint. We also provide our services on a more limited basis in several additional countries and in offshore locations. Through our established brand, broad geographic presence and employees, we anchor our business in our partnerships with thousands of clients. Through these partnerships we serve millions of consumers including students, patients, employees, sports fans and guests worldwide.
We operate our business in two reportable segments:
• Food and Support Services United States ("FSS United States") - Food, refreshment, specialized dietary and support services, including facility maintenance and housekeeping, provided to business, educational and healthcare institutions and in sports, leisure and other facilities within the United States.
• Food and Support Services International ("FSS International") - Food, refreshment, specialized dietary and support services, including facility maintenance and housekeeping, provided to business, educational and healthcare institutions and in sports, leisure and other facilities outside of the United States with the largest operations within Canada, Chile, China, Germany, Spain, Ireland and the United Kingdom.
Our operations focus on serving clients in five principal sectors: Business & Industry, Education, Healthcare, Sports, Leisure & Corrections and Facilities & Other. Our FSS International reportable segment provides a similar range of services as those provided to our FSS United States clients and operates in the same sectors. Administrative expenses not allocated to our reportable segments are presented separately as corporate expenses.
Current Business Environment
Recent developments regarding tariffs and global trade have resulted in increased volatility and uncertainty for macroeconomic conditions. Given the uncertainty of tariff policy and the resulting impact on current and future macroeconomic conditions, we may see continued volatility in foreign currencies as well as fluctuating trends in global inflationary costs and market interest rates in the near term. We regularly evaluate and believe we take appropriate actions when necessary to mitigate the risk in these areas. These actions include management of operating costs, including supply chain initiatives and pricing actions, and managing interest rate risk through the use of interest rate swaps and other risk mitigation strategies.
Sale of San Antonio Spurs NBA Franchise Equity Investment
During fiscal 2024 and fiscal 2023, we sold our ownership interest in the San Antonio Spurs NBA franchise for $101.2 million and $98.2 million, respectively, in cash in taxable transactions resulting in a pre-tax gain of $25.1 million ($19.6 million gain net of tax) in fiscal 2024 and a pre-tax loss of $1.1 million ($2.2 million loss net of tax) in fiscal 2023. See Note 1 to the audited consolidated financial statements.
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Separation and Distribution of Aramark Uniform and Career Apparel
On September 30, 2023, we completed the separation and distribution of our Aramark Uniform and Career Apparel ("Uniform") segment into an independent publicly traded company, Vestis Corporation ("Vestis"). The separation of our Uniform segment 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 NYSE. The historical results of the Uniform segment have been reflected as discontinued operations in our audited consolidated financial statements for all periods prior to the separation and distribution. Additional disclosures regarding the separation and distribution are provided in Note 2 to the audited consolidated financial statements.
Sale of AIM Services Co., Ltd Equity Investment
During fiscal 2023, we sold our 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 of $377.1 million ($278.7 million gain net of tax) (see Note 1 to the audited consolidated financial statements).
Sources of Revenue
Our clients engage us, generally through written contracts, to provide our services at their locations. Depending on the type of client and service, we are paid either by our client or directly by the customer to whom we have been provided access by our client. We typically use either profit and loss contracts or client interest contracts. These contracts differ in their provision for the amount of financial risk we bear and, accordingly, the potential compensation, profits or fees we may receive. Under profit and loss contracts, we receive all of the revenue from, and bear all of the expenses of, the provision of our services at a client location. For fiscal 2025, approximately two-thirds of our revenue was derived from profit and loss contracts. Client interest contracts include management fee contracts, under which our clients reimburse our operating costs and pay us a management fee, which may be calculated as a fixed dollar amount or a percentage of revenue or operating costs. Some management fee contracts entitle us to receive incentive fees based upon our performance under the contract, as measured by factors such as revenue, operating costs and customer satisfaction surveys. For fiscal 2025, approximately one-third of our revenue was derived from client interest contracts.
Costs and Expenses
Our costs and expenses are comprised of cost of services provided (exclusive of depreciation and amortization), depreciation and amortization and selling and general corporate expenses. Cost of services provided (exclusive of depreciation and amortization) consists of direct expenses associated with our operations, which includes food costs, wages, other labor-related expenses (including workers' compensation, severance, state unemployment insurance and federal or state mandated health benefits and other healthcare costs), insurance, fuel, utilities, clothing and equipment. Direct expense related to food costs within cost of services provided (exclusive of depreciation and amortization) are offset by rebates, vendor allowances and volume discounts. Depreciation and amortization expenses mainly relate to assets used in generating revenue. Selling and general corporate expenses include sales commissions, severance, share-based compensation and other unallocated costs related to administrative functions including finance, legal and human resources.
Interest Expense, net
Interest Expense, net, relates primarily to interest expense on long-term borrowings. Interest Expense, net also includes third-party costs associated with long-term borrowings that were capitalized and are being amortized over the term of the borrowing.
Provision for Income Taxes
The Provision for Income Taxes represents federal, foreign, state and local income taxes. Our effective tax rate differs from the statutory United States income tax rate due to the effect of state and local income taxes, tax rates in foreign jurisdictions, tax credits and certain nondeductible expenses. Our effective tax rate will change from quarter to quarter based on recurring and nonrecurring factors including, but not limited to, the geographical mix of earnings, state and local income taxes, tax audit settlements, share-based award exercise activity and enacted tax legislation, including certain business tax credits. Changes in judgment due to the evaluation of new information resulting in the recognition, derecognition or remeasurement of a tax position taken in a prior annual period are recognized separately in the quarter of the change.
Foreign Currency Fluctuations
The impact from foreign currency translation assumes constant foreign currency exchange rates based on the rates in effect for the prior year period being used in translation for the comparable current year period. We believe that providing the impact of fluctuations in foreign currency rates on certain financial results can facilitate analysis of period-to-period comparisons of business performance.
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Fiscal Year
Our fiscal year is the fifty-two or fifty-three week period which ends on the Friday nearest to September 30th. The fiscal year ended October 3, 2025 is a fifty-three week period, while the fiscal years ended September 27, 2024 and September 29, 2023 were each fifty-two week periods.
Results of Operations
Fiscal 2025 Compared to Fiscal 2024
The following table presents an overview of our results on a consolidated basis with the amount of and percentage change between periods for the fiscal years 2025 and 2024 (in millions):
Fiscal Year Ended
Change
Change
October 3, 2025
September 27, 2024
Revenue
Costs and Expenses:
Cost of services provided (exclusive of depreciation and amortization)
Depreciation and amortization
Selling and general corporate expenses
Total costs and expenses
Operating income
Loss (Gain) on Equity Investments, net
Interest Expense, net
Income from Continuing Operations Before Income Taxes
Provision for Income Taxes from Continuing Operations
Net income from Continuing Operations
*** Not meaningful
Consolidated Overview
Revenue
Revenue increased by 6.4% during fiscal 2025 compared to fiscal 2024, which was primarily attributable to base business growth, net new business and the estimated impact of the fifty-third week in fiscal 2025 (approximately 2%). The increase was partially offset by the exit of some lower margin accounts occurring later in fiscal 2024 in the FSS United States segment and the unfavorable impact of foreign currency translation during fiscal 2025 by 0.4%.
Cost of services provided (exclusive of depreciation and amortization)
The following table presents the components in cost of services provided (exclusive of depreciation and amortization) for fiscal 2025 as compared to fiscal 2024 (in millions):
Cost of services provided (exclusive of depreciation and amortization) components
Fiscal Year Ended
Change
As Percentage
of Revenue
October 3, 2025
September 27, 2024
October 3, 2025
September 27, 2024
Food and support service costs
Personnel costs
Other direct costs
Cost of services provided (exclusive of depreciation and amortization) increased by $984.7 million in fiscal 2025 compared to the prior year period, primarily driven by an increase in revenue as discussed above. Key drivers of the year-over-year increase include:
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• Food and support service costs increased by $329.2 million, primarily due to higher food and beverage costs associated with business growth. The increase was partially offset by supply chain efficiencies and prior year non-cash adjustments to inventory based on expected usage for certain products within the Corrections business ($18.2 million).
• Personnel costs rose by $619.2 million, reflecting overall business expansion as well as an increase in net severance charges ($23.5 million) and higher medical claims ($19.8 million), partially offset by a prior year charge related to a ruling on a foreign payroll tax matter ($6.8 million).
• Other direct costs grew by $36.3 million, driven by: business growth; higher contingent consideration expense compared to the prior year’s non-cash income from the reduction of contingent consideration liabilities related to acquisition earn-outs ($19.3 million) (see Note 16 to the audited consolidated financial statements); higher incentive expenses related to the annual bonus; and higher non-cash charges related to asset impairments ($5.6 million). The increase was largely offset by a decrease in subcontracting services resulting from the exit of certain lower margin accounts referenced above.
Depreciation and amortization
Depreciation and amortization expenses increased by $40.8 million in fiscal 2025 compared to the prior year period. The increase was driven by a higher depreciation expense on property and equipment ($25.8 million) and higher amortization expense, primarily from acquisition related intangible assets ($15.0 million).
Selling and general corporate expenses
Selling and general corporate expenses decreased by $5.2 million during fiscal 2025 compared to the prior year period. The decrease was primarily driven by prior year expenses related to the separation and distribution of the Uniform Segment ($29.0 million) (see Note 2 to the audited consolidated financial statements) and lower share-based compensation expenses ($4.0 million) compared to fiscal 2024 (see Note 12 to the audited consolidated financial statements), partially offset by higher incentive expenses related to the annual bonus and higher selling personnel costs and new business pursuit expenses.
Operating income
Operating income increased by $85.3 million during fiscal 2025 compared to the prior year period as a result of the aforementioned changes.
Loss (Gain) on Investments, net
During fiscal 2025, we recognized a non-cash charge for the impairment of an equity investment of $19.5 million (see Note 1 to the audited consolidated financial statements).
During fiscal 2024, we sold our remaining equity investment ownership interest in the San Antonio Spurs NBA franchise in a taxable transaction resulting in a pre-tax gain on sale of this equity investment of $25.1 million (see Note 1 to the audited consolidated financial statements.
Interest Expense, net
Interest Expense, net, decreased 6.8% during fiscal 2025 compared to the prior year period. The decrease was primarily due to the prior year payment of a call premium ($23.9 million) and prior year non-cash losses for the write-off of unamortized deferred financing costs and transaction costs related to multiple refinancing and repricing transactions ($10.8 million). The decrease was partially offset by new interest rate swap agreements entered into during fiscal 2025 at higher interest rates to replace maturing interest rate swap agreements; transaction costs related to the fiscal 2025 refinancing of the United States dollar denominated Term B-8 Loans ("U.S. Term B-8 Loans due 2030") ($5.8 million); and a non-cash loss for the current year write-off of unamortized deferred financing costs and discount on the United States dollar denominated Term B-4 Loans (" U.S. Term B-4 Loans due 2027") and 5.000% Senior Notes due April 2025 ("5.000% 2025 Notes") ($2.5 million) (see Note 5 to the audited consolidated financial statements).
Provision for Income Taxes from Continuing Operations
The Provision for Income Taxes for fiscal 2025 and the prior year period was recorded at an effective tax rate of 24.1% and 28.2%, respectively. The decrease in the effective tax rate compared to the prior year period was driven by favorable tax effects in fiscal 2025 from the release of valuation allowances in foreign subsidiaries resulting from sustained profitability and also based on future taxable income expected due to acquisitions of businesses in the FSS International segment.
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Segment Results
FSS United States Segment
The following table presents segment adjusted operating results for fiscal 2025 and fiscal 2024 (in millions) (1) :
Fiscal Year Ended
Change
Change
October 3, 2025
September 27, 2024
Revenue
Less
Food and support services costs
Personnel costs
Other direct costs
Depreciation and amortization
Selling expenses
Adjusted operating income
(1) Adjusted operating income represents operating income adjusted to eliminate the impact of amortization of acquisition-related intangible assets ($97.9 million and $91.4 million in fiscal 2025 and fiscal 2024, respectively), severance and other charges ($6.6 million and $12.9 million in fiscal 2025 and fiscal 2024, respectively), non-cash adjustments to inventory based on expected usage ($18.2 million in fiscal 2024) and other items impacting comparability ($18.0 million and $8.2 million in fiscal 2025 and fiscal 2024, respectively). The expenses in the table above may represent adjusted figures to arrive at adjusted operating income. Refer to Note 15 to the audited consolidated financial statements for a description of adjustments comprising adjusted operating income.
Revenue
The FSS United States reportable segment consists of five sectors which have similar economic characteristics and comprise a single operating segment. The five sectors of the FSS United States reportable segment are Business & Industry, Education, Healthcare, Sports, Leisure & Corrections and Facilities & Other.
Revenue for each of these sectors is summarized as follows (in millions):
Fiscal Year Ended
Change
Change
October 3, 2025
September 27, 2024
Business & Industry
Education
Healthcare
Sports, Leisure & Corrections
Facilities & Other
FSS United States segment revenue increased by approximately 5.1% during fiscal 2025 compared to the prior year period. The increase was attributable to both base and net new business growth, as well as the estimated impact of the fifty-third week (approximately 2%). This growth reflects higher volume within our Business & Industry, Sports and Leisure & Corrections, Education and Healthcare sectors. The Facilities & Other sector decrease resulted from the exit of some lower margin accounts late in the prior year period, partially offset by increased revenues from procurement services.
Adjusted Operating Income
The Facilities & Other sector had an adjusted operating income margin over ten percent, consistent in both fiscal 2025 and the prior year period. The Healthcare and Education sectors had high-single digit adjusted operating income margins, consistent in both fiscal 2025 and the prior year period. The Business & Industry sector had high-single digit adjusted operating income margins in fiscal 2025 compared to mid-single digit adjusted operating income margins in the prior year period. The Sports, Leisure & Corrections sector had mid-single digit adjusted operating income margins in fiscal 2025 compared to high-single digit adjusted operating income margins in the prior year period.
Adjusted operating income increased by $65.8 million during fiscal 2025 compared to the prior year period. The increase was attributable to base business growth, supply chain efficiencies and the estimated impact of the fifty-third week (approximately 2%). The increase in adjusted operating income more than offset higher costs related to medical claims ($19.8 million), incentive expenses related to the annual bonus, depreciation expense, expenses incurred related to new business, and selling personnel costs and new business pursuit expenses.
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FSS International Segment
The following table presents segment adjusted operating results for fiscal 2025 and fiscal 2024 (in millions) (1) :
Fiscal Year Ended
Change
Change
October 3, 2025
September 27, 2024
Revenue
Less
Food and support services costs
Personnel costs
Other direct costs
Depreciation and amortization
Selling expenses
Adjusted operating income
(1) Adjusted operating income represents operating income adjusted to eliminate the impact of amortization of acquisition-related intangible assets ($26.6 million and $15.7 million in fiscal 2025 and fiscal 2024, respectively), severance and other charges ($29.8 million in fiscal 2025), a charge related to a ruling on a foreign payroll tax matter ($6.8 million in fiscal 2024), and other items impacting comparability ($10.3 million and $8.8 million in fiscal 2025 and fiscal 2024, respectively). The expenses in the table above may represent adjusted figures to arrive at adjusted operating income. Refer to Note 15 to the audited consolidated financial statements for a description of adjustments comprising adjusted operating income.
Revenue
FSS International segment revenue increased by approximately 9.8% during fiscal 2025 compared to the prior year period. The increase was primarily attributable to both base business and net new business growth, as well as the estimated impact of the fifty-third week (approximately 1%). The growth in revenue was offset by the unfavorable impact of foreign currency translation by 1.4%.
Adjusted operating income
Adjusted operating income increased by $41.7 million during fiscal 2025 compared to the prior year period. The increase was mainly attributable to growth in base business and improved supply chain economics. The increase in adjusted operating income more than offset higher expenses incurred related to new business and higher depreciation expense.
Fiscal 2024 Compared to Fiscal 2023
The following table presents an overview of our results on a consolidated basis with the amount of and percentage change between periods for the fiscal years 2024 and 2023 (in millions):
Fiscal Year Ended
Change
Change
September 27, 2024
September 29, 2023
Revenue
Costs and Expenses:
Cost of services provided (exclusive of depreciation and amortization)
Depreciation and amortization
Selling and general corporate expenses
Total costs and expenses
Operating income
Gain on Equity Investments, net
Interest Expense, net
Income from Continuing Operations Before Income Taxes
Provision for Income Taxes from Continuing Operations
Net income from Continuing Operations
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Consolidated Overview
Revenue
Revenue increased by 8.2% during fiscal 2024 compared to fiscal 2023, which was primarily attributable to base business growth, including volume growth and contract price increases, and net new business. Foreign currency translation unfavorably impacted revenue during fiscal 2024 by 1.7%.
Cost of services provided (exclusive of depreciation and amortization)
The following table presents the components in cost of services provided (exclusive of depreciation and amortization) for fiscal 2024 as compared to fiscal 2023 (in millions):
Cost of services provided (exclusive of depreciation and amortization) components
Fiscal Year Ended
Change
As Percentage
of Revenue
September 27, 2024
September 29, 2023
September 27, 2024
September 29, 2023
Food and support service costs
Personnel costs
Other direct costs
Cost of services provided (exclusive of depreciation and amortization) increased by $1.2 billion in fiscal 2024 compared to fiscal 2023, primarily driven by an increase in revenue as discussed above. Key drivers of the year-over-year increase include:
• Food and support service costs increased by $332.9 million due to higher food and beverage costs associated with business growth and non-cash adjustments to inventory based on expected usage for certain products within the Corrections business ($18.2 million).
• Personnel costs increased by $449.5 million due to overall business expansion, the absence of prior year labor-related tax credits provided from governmental assistance programs ($12.5 million) and a charge related to a ruling on a foreign payroll tax matter in fiscal 2024 ($6.8 million), partially offset by lower net severance charges ($19.9 million).
• Other direct costs grew by $417.9 million, driven by: business growth; lower non-cash income from the reduction of the contingent consideration liabilities related to acquisition earn outs, net of expense ($77.5 million) (see Note 16 to the audited consolidated financial statements); prior year income from proceeds associated with possessory interest at one of the National Park sites ($36.3 million) (see Note 1 to the audited consolidated financial statements); higher incentive expenses related to the annual bonus; and lower income related to favorable loss experience under our general liability, automobile liability, and workers' compensation liability programs ($21.1 million). These increases were partially offset by prior year non-cash charges for the impairment of operating lease right-of-use assets and property and equipment related to certain real estate properties ($19.0 million) (see Note 1 to the audited consolidated financial statements).
Depreciation and amortization
Depreciation and amortization expenses increased by $25.8 million in fiscal 2024 compared to fiscal 2023. The increase was driven by higher amortization expense, primarily from acquisition related intangible assets ($17.4 million) and higher depreciation expense on property and equipment ($8.4 million).
Selling and general corporate expenses
Selling and general corporate expenses increased by $9.9 million during fiscal 2024 compared to fiscal 2023 primarily driven by higher selling personnel costs, higher expenses related to the separation and distribution of the Uniform Segment ($9.1 million) (see Note 2 to the audited consolidated financial statements) and higher incentive expenses related to the annual bonus, partially offset by lower share-based compensation expenses ($13.7 million) compared to fiscal 2023 (see Note 12 to the audited consolidated financial statements).
Operating income
Operating income increased by $81.5 million during fiscal 2024 compared to fiscal 2023 as a result of the aforementioned changes.
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Gain on Equity Investments, net
During fiscal 2024, we sold our remaining equity investment ownership interest in the San Antonio Spurs NBA franchise in a taxable transaction resulting in a pre-tax gain on sale of this equity investment of $25.1 million (see Note 1 to the audited consolidated financial statements).
During fiscal 2023, we recognized a $377.1 million pre-tax gain on the sale of our 50% ownership interest in AIM Services Co., Ltd., which was partially offset by a $1.1 million pre-tax loss from the sale of a portion of our equity investment in the San Antonio Spurs NBA franchise (see Note 1 to the audited consolidated financial statements).
Interest Expense, net
Interest Expense, net, decreased 16.2% during fiscal 2024 compared to fiscal 2023. The decrease was primarily due to lower interest expense related to the repayment of the 6.375% Senior Notes due May 1, 2025 ("6.375% 2025 Notes"). The decrease was partially offset by the payment of a $23.9 million call premium, $8.3 million of higher non-cash losses for the write-off of unamortized deferred financing costs and transaction costs related to the refinancing and repricing transactions in fiscal 2024 (see Note 5 to the audited consolidated financial statements) and higher borrowings on the Receivables Facility throughout fiscal 2024.
Provision for Income Taxes from Continuing Operations
The Provision for Income Taxes for fiscal 2024 and fiscal 2023 was recorded at an effective tax rate of 28.2% and 20.7%, respectively. The higher effective tax rate in fiscal 2024 compared to fiscal 2023 was driven by fiscal 2023 favorable tax effects from the sale of our equity investment in AIM Services Co., Ltd. (see Note 1 to the audited consolidated financial statements) and a higher fiscal 2023 reversal of a portion of the Union Supply contingent consideration liability (see Note 16 to the audited consolidated financial statements), as the majority of the gains from these transactions were not subject to tax.
Segment Results
FSS United States Segment
The following table presents segment adjusted operating results for fiscal 2024 and fiscal 2023 (in millions) (1) :
Fiscal Year Ended
Change
Change
September 27, 2024
September 29, 2023
Revenue
Less
Food and support services costs
Personnel costs
Other direct costs
Depreciation and amortization
Selling expenses
Adjusted operating income
(1) Adjusted operating income represents operating income adjusted to eliminate the impact of amortization of acquisition-related intangible assets ($91.4 million and $76.8 million in fiscal 2024 and fiscal 2023, respectively), severance and other charges ($12.9 million and $2.3 million in fiscal 2024 and fiscal 2023, respectively), non-cash adjustments to inventory based on expected usage ($18.2 million in fiscal 2024) and other items impacting comparability ($8.2 million and $46.9 million in fiscal 2024 and fiscal 2023, respectively). The expenses in the table above may represent adjusted figures to arrive at adjusted operating income. Refer to Note 15 to the audited consolidated financial statements for a description of adjustments comprising adjusted operating income.
Revenue
The FSS United States reportable segment consists of five sectors which have similar economic characteristics and comprise a single operating segment. The five sectors of the FSS United States reportable segment are Business & Industry, Education, Healthcare, Sports, Leisure & Corrections and Facilities & Other.
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Revenue for each of these sectors is summarized as follows (in millions):
Fiscal Year Ended
Change
Change
September 27, 2024
September 29, 2023
Business & Industry
Education
Healthcare (1)
Sports, Leisure & Corrections
Facilities & Other (1)
(1) 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 fiscal year ended September 29, 2023 were recast to reflect this change.
FSS United States segment revenue increased by approximately 7.3% during fiscal 2024 compared to fiscal 2023. The increase was primarily attributable to base business growth, including higher volume within our Business & Industry and Sports, Leisure & Corrections sectors. Additionally, contract price increases, especially within our Higher Education and Corrections businesses, contributed to year-over-year growth. The Facilities & Other sector increase was attributable to base business growth, which was partially offset by lost business occurring late in fiscal 2024. The Healthcare sector decrease was primarily attributable to portfolio optimization occurring late in fiscal 2023.
Adjusted Operating Income
The Facilities & Other sector had an adjusted operating income margin over ten percent, consistent in both fiscal 2024 and fiscal 2023. The Healthcare sector had high-single digit adjusted operating income margins, consistent in both fiscal 2024 and fiscal 2023. The Education and Sports, Leisure & Corrections sectors had high-single digit adjusted operating income margins in fiscal 2024 compared to mid-single digit adjusted operating income margins in fiscal 2023. The Business & Industry sector had mid-single digit adjusted operating income margins in fiscal 2024, compared to low-single digit adjusted operating income margins in fiscal 2023.
Adjusted operating income increased by $92.0 million during fiscal 2024 compared to fiscal 2023. The increase was attributable to base business volume growth, cost management and improved supply chain economics and favorable recovery of inflationary costs as compared to the prior year period. The increase in adjusted operating income more than offset the prior year income related to proceeds associated with possessory interest at one of the National Park sites ($36.3 million) (see Note 1 to the audited consolidated financial statements), lower income related to favorable loss experience under our general liability, automobile liability and workers' compensation liability programs ($21.1 million) and higher incentive expenses related to the annual bonus.
FSS International Segment
The following table presents segment adjusted operating results for fiscal 2024 and fiscal 2023 (in millions) (1) :
Fiscal Year Ended
Change
Change
September 27, 2024
September 29, 2023
Revenue
Less
Food and support services costs
Personnel costs
Other direct costs
Depreciation and amortization
Selling expenses
Adjusted operating income
(1) Adjusted operating income represents operating income adjusted to eliminate the impact of amortization of acquisition-related intangible assets ($15.7 million and $12.7 million in fiscal 2024 and fiscal 2023, respectively), severance and other charges ($30.0 million in fiscal 2023), a charge related to a ruling on a foreign payroll tax matter ($6.8 million in fiscal 2024) and other items impacting comparability ($8.8 million and $18.9 million in fiscal 2024 and fiscal 2023, respectively). The expenses in the table above may represent adjusted figures to arrive at adjusted operating income. Refer to Note 15 to the audited consolidated financial statements for a description of adjustments comprising adjusted operating income.
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Revenue
FSS International segment revenue increased by approximately 10.6% during fiscal 2024 compared to fiscal 2023. The increase was primarily attributable to base business growth, including volume growth and contract price increases, and net new business growth. The growth in revenue was offset by the unfavorable impact of foreign currency translation by 6.3%.
Adjusted operating income
Adjusted operating income increased by $42.6 million during fiscal 2024 compared to fiscal 2023. The increase was mainly attributable to the volume growth in base business, net new business and improved supply chain economics. The increase in adjusted operating income more than offset the prior year labor related tax credits provided from governmental assistance programs ($12.5 million), an unfavorable impact of foreign currency translation ($11.6 million), a decline in profit related to the sale of our 50% ownership interest in AIM Services Co., Ltd. and higher incentive expenses related to the annual bonus.
Liquidity and Capital Resources
Overview
Our principal sources of liquidity are cash generated from operating activities, funds from borrowings and existing cash on hand. As of October 3, 2025, we had approximately $2.4 billion of liquidity comprised of $639.1 million of cash and cash equivalents, $1,161.7 million of availability under our senior secured revolving credit facility and $625.0 million of availability under the Receivables Facility. A significant portion of our cash and cash equivalents are held in mature, liquid geographies where we have operations. As of October 3, 2025, there were $952.0 million of outstanding foreign currency borrowings.
We entered into a credit agreement on March 28, 2017 (as subsequently amended the "Credit Agreement"). On August 15, 2025, we entered into Amendment No. 18 (the “Amendment No. 18”) to provide for, among other things, the repricing of all of the United States dollar denominated Term B-7 Loans ("U.S. Term B-7 Loans due 2028") previously outstanding under the Credit Agreement by refinancing all of the U.S. Term B-7 Loans due 2028 previously outstanding under the Credit Agreement with new United States dollar denominated Term B-9 Loans ("U.S. Term B-9 Loans due 2028") in an amount equal to $730.5 million due in April 2028. The U.S. Term B-9 Loans due 2028 were funded in full on the Closing Date and were applied by us to refinance the entire principal amount of the U.S. Term B-7 Loans due 2028 previously outstanding under the Credit Agreement.
On March 19, 2025, we issued €400.0 million of euro denominated 4.375% Senior Notes due April 2033 (the "4.375% 2033 Notes"). We used a portion of the net proceeds from the issuance and sale of the 4.375% 2033 Notes to repay at maturity, April 1, 2025, all of the €325.0 million outstanding aggregate principal amount of Euro denominated 3.125% Senior Notes due April 2025 (the "3.125% 2025 Notes") and the remainder for general corporate purposes, including reduction of debt (see Note 5 to the audited consolidated financial statements).
On February 18, 2025, we entered into an incremental amendment to the Credit Agreement (“Incremental Amendment No. 17”) to provide for, among other things, the establishment of new term loans comprised of new United States dollar denominated Term B-8 Loans ("New U.S. Term B-8 Loans due 2030") in an amount equal to $1,395.0 million, in the form of a fungible upsize to the existing U.S. Term B-8 Loans due 2030. The New U.S. Term B-8 Loans due 2030 were funded in full on the closing date of Incremental Amendment No. 17 and were applied to: (a) repay in full $839.3 million of the U.S. Term B-4 Loans due 2027 previously outstanding under the Credit Agreement; (b) to redeem the entire $551.5 million aggregate principal amount outstanding of the 5.000% 2025 Notes; and (c) to pay fees, premiums, expenses and other transaction costs in connection with the foregoing (see Note 5 to the audited consolidated financial statements).
On November 5, 2024, the Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $500.0 million of Aramark's outstanding common stock. The share repurchase program does not have a fixed expiration date.
We believe that our cash and cash equivalents and availability under our revolving credit facility and Receivables Facility will be adequate to meet anticipated cash requirements for the foreseeable future to fund working capital, capital spending, debt service obligations, refinancings, dividends and other cash needs. We also have flexibility to optimize working capital and defer certain capital expenditures as appropriate without a material impact to the business. We believe that our assumptions used to estimate our liquidity and working capital requirements are reasonable. For additional information regarding the risks associated with our liquidity and capital resources, see Part I, Item 1A, "Risk Factors."
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The table below summarizes our cash activity (in millions):
Fiscal Year Ended
October 3, 2025
September 27, 2024
Net cash provided by operating activities of Continuing Operations
Net cash used in investing activities of Continuing Operations
Net cash used in financing activities of Continuing Operations
Reference to the audited Consolidated Statements of Cash Flows will facilitate understanding of the discussion that follows.
Cash Flows Provided by Operating Activities
Cash provided by operating activities increased by $194.5 million during fiscal 2025 compared to the prior year period. The change was driven by higher net income, inclusive of the add-back of non-cash gains and losses and adjustments to non-operating cash transactions, in fiscal 2025 compared to the prior year period, as discussed in "Results of Operations" above. Additionally, cash provided by operating activities was favorably impacted by the change in operating assets and liabilities compared to the prior year period by $37.4 million, which was primarily due to:
• Accrued expenses by $66.1 million, resulting in a greater source of cash primarily due to the timing of interest, insurance and lower commission payments, partially offset by higher employee incentive payments.
• Receivables by $25.3 million, resulting in a lower use of cash due to the timing of collections; and
• Accounts payable by $9.7 million, resulting in a greater source of cash due to the timing of disbursements
These changes in operating assets and liabilities more than offset:
• Prepayments by $43.4 million, resulting in a higher use of cash due to the timing of insurance and other annual contractual payments compared to the prior year period; and
• Inventories by $20.3 million, resulting in a higher use of cash due to increased purchases from new business.
During the prior year period, we received proceeds of $6.5 million related to favorable loss experience in older insurance years under our general liability, automobile liability and workers' compensation programs. "Payments made to clients on contracts" resulted in a lower use of cash during fiscal 2025 due to timing of client contract commitments. The "Other operating activities" caption in both periods reflects adjustments to net income in the current year and prior year periods related to non-cash gains and losses and adjustments to non-operating cash transactions.
Cash Flows Used in Investing Activities
The net cash flows used in investing activities during fiscal 2025 was primarily impacted by purchases of property and equipment and other ($489.2 million), acquisitions of certain businesses ($263.6 million) and acquisition of certain equity investments ($25.9 million), partially offset by proceeds from the maturity of United States Treasury securities related to our captive insurance subsidiary ($43.9 million) and proceeds from disposal of property and equipment ($22.7 million).
The net cash flows used in investing activities during the prior year period was primarily impacted by purchases of property and equipment and other ($427.4 million), acquisitions of certain businesses ($148.7 million), purchases of United States Treasury securities related to our captive insurance subsidiary ($113.3 million) and acquisition of certain equity investments ($34.2 million), partially offset by proceeds from the maturity of United States Treasury securities related to our captive insurance subsidiary ($186.4 million), proceeds from sale of equity investments ($101.2 million) (see Note 1 to the audited consolidated financial statements) and proceeds from disposal of property and equipment ($23.9 million).
Cash Flows Used in Financing Activities
During fiscal 2025, cash used in financing activities was primarily driven by the repayment of debt instruments, including the term loans due 2027 ($839.3 million), the 5.00% 2025 Notes ($551.5 million), the 3.125% 2025 Notes ($363.4 million) and the term loans due 2030 ($99.9 million), the repurchase of common stock through the share repurchase program and taxes paid by us when we withhold shares upon an employee's exercise or vesting of equity awards to cover income taxes ($169.8 million) and the payments of dividends ($110.8 million). Cash used in financing activities more than offset proceeds from the issuance of new domestic and foreign term loans due 2030 ($1,395.0 million) and proceeds from the issuance of the 4.375% 2033 Notes (€400.0 million). See Note 5 to the audited consolidated financial statements for additional information on borrowing activities during fiscal 2025.
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During the prior year period, cash used in financing activities was primarily driven by the repayment of debt instruments, including the 6.375% 2025 Notes ($1,500.0 million), the foreign denominated term loans due 2026 ($259.4 million) and the revolving credit facility ($166.1 million), the payments of dividends ($99.9 million) and the repurchase of common stock through taxes paid by us when we withhold shares upon an employee's exercise or vesting of equity awards to cover income taxes ($14.4 million). Cash used in financing activities more than offset proceeds from the issuance of new domestic and foreign term loans due 2029 ($499.1 million).
The "Other financing activities" caption reflects a use of cash during fiscal 2025, primarily related to debt issuance costs related to the refinancing of the U.S. Term B-8 Loans due 2030 and the issuance of the 4.375% 2033 Notes ($16.3 million) in fiscal 2025. The prior year period includes the payment of a call premium on the 6.375% 2025 Notes ($23.9 million) and debt issuance costs mainly related to the refinancing of the revolving credit facility and Term A Loans ($8.5 million).
We intend to continue to pay cash dividends on our common stock, subject to our compliance with applicable law, and depending on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements, business prospects and other factors that our Board of Directors may deem relevant. However, the payment of any future dividends will be at the discretion of our Board of Directors and our Board of Directors may, at any time, determine not to continue to declare quarterly dividends.
Covenant Compliance
The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability and the ability of our subsidiaries to: incur additional indebtedness; issue preferred stock or provide guarantees; create liens on assets; engage in mergers or consolidations; sell assets; pay dividends, make distributions or repurchase our capital stock; make investments, loans or advances; repay or repurchase any subordinated debt, except as scheduled or at maturity; create restrictions on the payment of dividends or other amounts to us from our restricted subsidiaries; make certain acquisitions; engage in certain transactions with affiliates; amend material agreements governing our subordinated debt (or any indebtedness that refinances our subordinated debt); and fundamentally change our business. The indentures governing our senior notes contain similar provisions. As of October 3, 2025, we were in compliance with these covenants.
As stated above, the Credit Agreement and the indentures governing our senior notes contain provisions that restrict our ability to pay dividends and repurchase stock (collectively, "Restricted Payments"). In addition to customary exceptions, the Credit Agreement and indentures permit Restricted Payments in the aggregate up to an amount that increases quarterly by 50% of our Consolidated Net Income, as such term is defined in these debt agreements, subject to being in compliance with the interest coverage ratio described below.
Under the Credit Agreement, we are required to satisfy and maintain specified financial ratios and other financial condition tests and covenants. The indentures governing our senior notes also require us to comply with certain financial ratios in order to take certain actions. Our continued ability to meet those financial ratios, tests and covenants can be affected by events beyond our control, and there can be no assurance that we will meet those ratios, tests and covenants.
These financial ratios, tests and covenants involve the calculation of certain measures that we refer to in this discussion as "Covenant Adjusted EBITDA." Covenant Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States ("U.S. GAAP"). Covenant Adjusted EBITDA is defined as net income of Aramark Services, Inc. ("ASI") and its restricted subsidiaries plus interest expense, net, provision for income taxes, and depreciation and amortization, further adjusted to give effect to adjustments required in calculating covenant ratios and compliance under our Credit Agreement and the indentures governing our senior notes.
Our presentation of these measures has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. You should not consider these measures as alternatives to net income or operating income determined in accordance with U.S. GAAP. Covenant Adjusted EBITDA, as presented by us, may not be comparable to other similarly titled measures of other companies because not all companies use identical calculations.
The following is a reconciliation of Net income attributable to ASI stockholders, which is a U.S. GAAP measure of ASI's operating results, to Covenant Adjusted EBITDA as defined in our debt agreements. The terms and related calculations are defined in the Credit Agreement and the indentures governing our senior notes. Covenant Adjusted EBITDA is a measure of ASI and its restricted subsidiaries only and does not include the results of Aramark.
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Twelve Months Ended
(in millions)
October 3, 2025
September 27, 2024
Net income attributable to ASI stockholders
Interest expense, net
Provision for income taxes
Depreciation and amortization
Share-based compensation expense (1)
Unusual or non-recurring losses and (gains) (2)
Pro forma EBITDA for certain transactions (3)
Other (4)(5)
Covenant Adjusted EBITDA
(1) Represents share-based compensation expense of equity awards resulting from the application of accounting for stock options, restricted stock units, performance stock units and deferred stock units awards (see Note 12 to the audited consolidated financial statements).
(2) The twelve months ended October 3, 2025 represents the fiscal 2025 non-cash charge for the impairment of an equity investment ($19.5 million). The twelve months ended September 27, 2024 represents the fiscal 2024 gain from the sale of our remaining equity investment in the San Antonio Spurs NBA franchise ($25.1 million) and the fiscal 2024 non-cash charge for the impairment of certain assets related to a business that was sold ($2.3 million).
(3) Represents the annualizing of net EBITDA from certain acquisitions and divestitures made during the period.
(4) "Other" for the twelve months ended October 3, 2025 includes adjustments to remove the impact attributable to the adoption of certain accounting standards that are made to the calculation in accordance with the Credit Agreement and indentures ($54.2 million), severance charges ($36.4 million), contingent consideration expense related to acquisition earn outs ($11.1 million), non-cash charges for the impairments of assets ($8.9 million), the impact of hyperinflation in Argentina ($5.7 million), merger and integration charges ($4.1 million), legal charges related to an anti-trust review ($2.5 million) and other miscellaneous expenses.
(5) "Other" for the twelve months ended September 27, 2024 includes adjustments to remove the impact attributable to the adoption of certain accounting standards that are made to the calculation in accordance with the Credit Agreement and indentures ($52.2 million), charges related to our spin-off of the Uniform segment ($29.0 million), non-cash adjustments to inventory based on expected usage ($21.7 million), severance charges ($13.0 million), the reversal of contingent consideration liabilities related to acquisition earn outs, net of expense ($8.1 million), a charge related to a ruling on a foreign payroll tax matter ($6.8 million), the impact of hyperinflation in Argentina ($5.4 million), non-cash charges related to the impairment of a trade name ($3.3 million), income related to non-United States governmental wage subsidies ($1.1 million) and other miscellaneous expenses.
Our covenant requirements and actual ratios for the twelve months ended October 3, 2025 are as follows:
Covenant
Requirements
Actual
Ratios
Consolidated Secured Debt Ratio (1)
Interest Coverage Ratio (Fixed Charge Coverage Ratio) (2)
(1) The Credit Agreement requires ASI to maintain a maximum Consolidated Secured Debt Ratio, defined as consolidated total indebtedness secured by a lien to Covenant Adjusted EBITDA, not to exceed 5.125x. Consolidated total indebtedness secured by a lien is defined in the Credit Agreement as total indebtedness consisting of debt for borrowed money, finance leases, debt in respect of sales-leaseback transactions, disqualified and preferred stock and advances under the Receivables Facility secured by a lien reduced by the amount of cash and cash equivalents on the consolidated balance sheets that is free and clear of any lien. Non-compliance with the maximum Consolidated Secured Debt Ratio could result in the requirement to immediately repay all amounts outstanding under the Credit Agreement, which, if ASI's lenders under our Credit Agreement (other than the lenders in respect of ASI's United States Term B Loans, which lenders do not benefit from the maximum Consolidated Debt Ratio covenant) failed to waive any such default, would also constitute a default under the indentures governing our senior notes.
(2) Our Credit Agreement establishes an incurrence-based minimum Interest Coverage Ratio, defined as Covenant Adjusted EBITDA to consolidated interest expense, the achievement of which is a condition for us to incur additional
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indebtedness and to make certain restricted payments and does not result in a default under the Credit Agreement or the indentures governing the senior notes. If we do not maintain this minimum Interest Coverage Ratio calculated on a pro forma basis for any such additional indebtedness or restricted payments, we could be prohibited from being able to (1) incur additional indebtedness, other than the incremental capacity provided for under the Credit Agreement and pursuant to specified exceptions, and (2) make certain restricted payments, other than pursuant to certain exceptions. However, any failure to maintain the minimum Interest Coverage Ratio would not result in a default or an event of default under either the Credit Agreement or the indentures governing the senior notes. The minimum Interest Coverage Ratio is at least 2.000x for the term of the Credit Agreement. Consolidated interest expense is defined in the Credit Agreement as consolidated interest expense excluding interest income, adjusted for acquisitions and dispositions and for certain non-cash or nonrecurring interest expense. The indentures governing our senior notes include a similar requirement which is referred to as a Fixed Charge Coverage Ratio.
We and our subsidiaries and affiliates may from time to time, in our sole discretion, purchase, repay, redeem or retire any of our outstanding debt securities (including any publicly issued debt securities), in privately negotiated or open market transactions, by tender offer or otherwise, or extend or refinance any of our outstanding indebtedness.
The following table summarizes our future obligations for debt repayments, finance leases, estimated interest payments, future minimum rental and similar commitments under noncancelable operating leases as well as contingent obligations related to outstanding letters of credit and guarantees as of October 3, 2025 (in thousands):
Payments Due by Period
Contractual Obligations as of October 3, 2025
Total
Less than
1 year
1-3 years
3-5 years
More than
5 years
Long-term borrowings (1)
Finance lease obligations
Estimated interest payments (2)
Operating leases and other noncancelable commitments
Purchase obligations (3)
Other liabilities (4)
Amount of Commitment Expiration by Period
Other Commercial Commitments as of October 3, 2025
Total
Amounts
Committed
Less than
1 year
1-3 years
3-5 years
More than
5 years
Letters of credit
(1) Excludes the $23.7 million reduction to long-term borrowings from debt issuance costs and $7.2 million reduction from the discount on the United States Term B-8 Loans due 2030.
(2) These amounts represent future interest payments related to our existing debt obligations based on fixed and variable interest rates specified in the associated debt agreements and reflect any current hedging arrangements. Payments related to variable debt are based on applicable rates at October 3, 2025 plus the specified margin in the associated debt agreements for each period presented. The amounts provided relate only to existing debt obligations and do not assume the refinancing or replacement of such debt. The weighted average debt balance for each fiscal year from 2026 through 2031 is $5,421.9 million, $5,391.8 million, $4,243.7 million, $3,102.8 million, $1,678.6 million and $495.6 million, respectively. The weighted average interest rate of our existing debt obligations for each fiscal year from 2026 through 2031 is 4.03%, 4.32%, 5.03%, 5.73%, 5.56% and 4.15%, respectively (see Note 5 to the audited consolidated financial statements for the terms and maturities of existing debt obligations).
(3) Represents mainly the commitments for capital projects to help finance improvements or renovations at the facilities in which we operate.
(4) Includes certain unfunded employee retirement obligations, contingent consideration obligations related to acquisitions, self-insurance obligations, and other obligations.
We have excluded from the table above uncertain tax liabilities due to the uncertainty of the amount and period of payment. As of October 3, 2025, we have gross uncertain tax liabilities of $88.6 million (see Note 10 to the audited consolidated financial statements).
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We have a Receivables Facility agreement with four financial institutions where we sell on a continuous basis an undivided interest in all eligible accounts receivable, as defined in the Receivables Facility. The maximum amount available under the Receivables Facility as of October 3, 2025 is $625.0 million. As of October 3, 2025, there are no outstanding borrowings under the Receivables Facility. Amounts borrowed under the Receivables Facility may fluctuate monthly based on our funding requirements and the level of qualified receivables available to collateralize the Receivables Facility.
Pursuant to the Receivables Facility, we formed ARAMARK Receivables, LLC, a wholly-owned, consolidated, bankruptcy-remote subsidiary. ARAMARK Receivables, LLC was formed for the sole purpose of buying and selling receivables generated by certain of our subsidiaries. Under the Receivables Facility, we and certain of our subsidiaries transfer without recourse all of our accounts receivable to ARAMARK Receivables, LLC. As collections reduce previously transferred interests, interests in new, eligible receivables are transferred to ARAMARK Receivables, LLC, subject to meeting certain conditions.
Supplemental Consolidating Information
Pursuant to Regulation S-X Rule 13-01, which simplified certain disclosure requirements for guarantors and issuers of guaranteed securities, we are no longer required to provide consolidating financial statements for Aramark and its subsidiaries, including the guarantors and non-guarantors under our Credit Agreement and the indentures governing our senior notes. ASI, the borrower under our Credit Agreement and the indentures governing our senior notes, and its restricted subsidiaries together comprise substantially all of our assets, liabilities and operations, and there are no material differences between the consolidating information related to Aramark and Aramark Intermediate Holdco Corporation, the direct parent of ASI and a guarantor under our Credit Agreement, on the one hand, and ASI and its restricted subsidiaries on a standalone basis, on the other hand.
Other
Our business activities do not include the use of unconsolidated special purpose entities and there are no significant business transactions that have not been reflected in the accompanying audited consolidated financial statements. We insure portions of our risk related to 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 our approach to risk finance. The Captive is subject to the 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 October 3, 2025. These regulations may have the effect of limiting our ability to access certain cash and cash equivalents held by the Captive for uses other than for the payment of our general liability, automobile liability, workers’ compensation liability, certain property damage and related Captive costs. As of October 3, 2025 and September 27, 2024, cash and cash equivalents at the Captive were $133.5 million and $94.7 million, respectively. The Captive previously invested in United States Treasury securities where the amount of these investments as of October 3, 2025 and September 27, 2024 was zero and $42.3 million, respectively, and recorded in "Prepayments and other current assets" on the Consolidated Balance Sheets.
Critical Accounting Estimates
Our significant accounting policies are described in the notes to the audited consolidated financial statements included in this Annual Report.
In preparing our financial statements, management is required to make estimates and assumptions that, among other things, affect the reported amounts of assets, liabilities, revenue and expenses. These estimates and assumptions are most significant where they involve levels of subjectivity and judgment necessary to account for highly uncertain matters or matters susceptible to change, and where they can have a material impact on our financial condition and operating performance. If actual results were to differ materially from the estimates made, the reported results could be materially affected.
Critical accounting estimates and the related assumptions are evaluated periodically as conditions warrant, and changes to such estimates are recorded as new information or changed conditions require.
Asset Impairment Determinations
Indefinite lived intangible assets that are not amortized are subject to an impairment test that we conduct annually or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists. For goodwill, we perform the assessment of goodwill at the reporting unit level, which is an operating segment or one level below the operating segment. The impairment test may first consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Examples of qualitative factors include, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, entity-specific events, events affecting reporting units and sustained changes in our stock price. If results of the qualitative assessment indicate a more likely than not
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determination or if a qualitative assessment is not performed, a quantitative test is performed by comparing the estimated fair value using a discounted cash flow method or market method for each reporting unit with its estimated net book value.
During the fourth quarter of fiscal 2025, we performed the annual impairment test for goodwill for each of our reporting units using a quantitative testing approach. Based on the evaluation performed, we determined that the fair value of each of the reporting units substantially exceeded its respective carrying amount, and therefore, we determined that goodwill was not impaired.
The determination of fair value for each reporting unit includes assumptions, which are considered Level 3 inputs, that are subject to risk and uncertainty. The discounted cash flow calculations are dependent on several subjective factors including the timing of future cash flows, the underlying margin projection assumptions, future growth rates and the discount rate. The market based method is dependent on several subjective factors including the determination of market multiples and future cash flows. If our assumptions or estimates in our fair value calculations change or if future cash flows, margin projections or future growth rates vary from what was expected, this may impact our impairment analysis and could reduce the underlying cash flows used to estimate fair values and result in a decline in fair value that may trigger future impairment charges.
With respect to our other long-lived assets, we are required to test for asset impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are present, we compare the sum of the future expected cash flows from the asset, undiscounted and without interest charges, to the asset’s carrying value. If the sum of the future expected cash flows from the asset is less than the carrying value, an impairment would be recognized for the difference between the estimated fair value and the carrying value of the asset.
In making future cash flow analyses of various assets, we make assumptions relating to the following:
• the intended use of assets and the expected future cash flows resulting directly from such use;
• comparable market valuations of businesses similar to Aramark's business segments;
• industry specific economic conditions;
• competitor activities and regulatory initiatives; and
• client and customer preferences and behavior patterns.
We believe that an accounting estimate relating to asset impairment is a critical accounting estimate because the assumptions underlying future cash flow estimates are subject to change from time to time and the recognition of an impairment could have a significant impact on our Consolidated Statements of Income.
Litigation and Claims
From time to time, we and our subsidiaries are party to various legal actions, proceedings and investigations involving claims incidental to the conduct of our business, including actions by clients, customers, employees, government entities and third parties, including under federal, state, international, national, provincial and local employment laws, wage and hour laws, discrimination laws, immigration laws, human health and safety laws, import and export controls and customs laws, environmental laws, environmental, social and governance related non-financial disclosure laws, false claims or whistleblower statutes, minority, women and disadvantaged business enterprise statutes, tax codes, antitrust and competition laws, consumer protection statutes, procurement regulations, intellectual property laws, food safety and sanitation laws, cost and accounting principles, the Foreign Corrupt Practices Act, the U.K. Bribery Act, other anti-corruption laws, lobbying laws, motor carrier safety laws, data privacy and security laws and alcohol licensing and service laws, or alleging and/or of contractual and other obligations. We consider the measurement of reserves as a accounting estimate because of the significant uncertainty in some cases relating to the outcome of potential or and the of predicting the likelihood and range of potential liability involved, coupled with the material impact on our results of operations that could result from or other . In determining legal reserves, we consider, among other issues:
• interpretation of contractual rights and obligations;
• the status of government regulatory initiatives, interpretations and investigations;
• the status of settlement negotiations;
• prior experience with similar types of claims;
• whether there is available insurance; and
• advice of counsel.
See Note 14 to the audited consolidated financial statements.
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Self-Insurance Reserves
We self-insure for obligations related to certain risks that we retain under our casualty program, which includes general liability, automobile liability and workers’ compensation liability, as well as for certain property damage risks and employee healthcare benefit programs. The accounting estimates related to our self-insurance reserves are critical accounting estimates because changes in our claim experience, our ability to settle claims or other estimates and judgments we use could potentially have a material impact on our results of operations. Our reserves for retained costs associated with our casualty program are estimated through actuarial methods, with the assistance of third-party actuaries, using loss development assumptions based on our claims history. Our casualty program reserves take into account reported claims as well as incurred-but-not-reported losses using loss development factors based upon past experience. In order to determine the loss development factors, we make judgments relating to the nature, frequency, , and age of , and industry, regulatory and company-specific trends impacting the development of . The actual cost to settle our self-insured casualty claim liabilities can differ from our reserve estimates because of a number of uncertainties, including the inherent in estimating the of a claim and the potential amount to and settle a claim.
As of October 3, 2025 and September 27, 2024, our self-insurance reserves were $267.7 million and $248.6 million, respectively.
Income Taxes
We are subject to income taxes in the United States and in many foreign jurisdictions. Significant judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowances recorded against our net deferred tax assets. We record valuation allowances for our net deferred tax assets when it is more likely than not that they will not be realized. We monitor the realizability of our deferred tax assets taking into account all relevant factors at each reporting period. In completing our assessment of realizability of our deferred tax assets, we consider our history of income measured at pre-tax income adjusted for permanent book-tax differences on a jurisdictional basis, volatility in actual earnings, and impacts of the timing of reversal of existing temporary differences. We also rely on our assessment of projected future results of business operations, including uncertainty in future operating results relative to historical results, volatility in the market price of our common stock and its performance over time, variable macroeconomic conditions impacting our ability to forecast future taxable income, and changes in business that may affect the existence and magnitude of future taxable income. Our valuation allowance assessment is based on our best estimate of future results considering all available information.
As of October 3, 2025 and September 27, 2024, our valuation allowance reserves recorded against deferred tax assets were $62.3 million and $80.6 million, respectively (see Note 10 to the audited consolidated financial statements).
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New Accounting Standards Updates
See Note 1 to the audited consolidated financial statements for a full description of recent accounting standards updates, including the expected dates of adoption.
