UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June ~~29, 2018~~28, 2019 Commission File Number: 001-36223



Aramark
(Exact name of registrant as specified in its charter)
Delaware		20-8236097
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
~~Aramark Tower~~ ~~1101~~2400 Market Street ~~Philadelphia, Pennsylvania~~		~~19107~~19103
Philadelphia,	Pennsylvania
(Address of principal executive offices)		(Zip Code)

~~(215)~~ (215) 238-3000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class		Trading 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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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 filer~~Accelerated Filer	x	Accelerated filer	o	Non-accelerated filer	o	Smaller reporting company	o☐	Emerging growth company	o☐

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 ~~27, 2018,~~26, 2019, the number of shares of the registrant's common stock outstanding is ~~246,476,311.~~246,908,555.

Special Note About Forward-Looking Statements

This report includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views as to future events and financial performance with respect to, without limitation, conditions in our industry, our operations, our economic performance and financial condition, including, in particular, with respect to, without limitation, anticipated effects of our adoption of new accounting standards, the expected impact of strategic portfolio actions, the benefits and costs of our acquisitions of each of Avendra, LLC ("Avendra") and AmeriPride Services, Inc. ("AmeriPride") ~~and related financings,~~, as well as statements regarding these companies' services and products and statements relating to our business and growth strategy. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "outlook," "aim," "anticipate," "are or remain or continue to be confident," "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.

Forward-looking statements speak only as of the date made. All statements we make relating to our estimated and projected earnings, costs, expenditures, cash flows, growth rates, financial results and our estimated benefits and costs of our acquisitions are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results or the costs and benefits of the acquisitions include without limitation: unfavorable economic conditions; natural disasters, global calamities, sports strikes and other adverse incidents; 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; the inability to achieve cost savings through our cost reduction efforts; our expansion strategy; the failure to maintain food safety throughout our supply chain, food-borne illness concerns and claims of illness or injury; 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; currency risks and other risks associated with international operations, including Foreign Corrupt Practices Act, U.K. Bribery Act and other anti-corruption law compliance; continued or further unionization of our workforce; liability resulting from our participation in multiemployer defined benefit pension plans; risks associated with suppliers from whom our products are sourced; disruptions to our relationship with, or to the business of, our primary distributor; the inability to hire and retain sufficient qualified personnel or increases in labor costs; healthcare reform legislation; the contract intensive nature of our business, which may lead to client disputes; seasonality; disruptions in the availability of our computer systems or privacy breaches; failure to achieve and maintain effective internal controls; our leverage; the inability to generate sufficient cash to service all of our indebtedness; debt agreements that limit our flexibility in operating our business; our ability to successfully integrate the businesses of Avendra and AmeriPride and costs and timing related thereto, the risk of unanticipated restructuring costs or assumption of undisclosed liabilities, the risk that we are unable to achieve the anticipated benefits (including tax benefits) and synergies of the acquisition of AmeriPride and Avendra including whether the ~~proposed~~ transactions will be accretive and within the expected timeframes, the availability of sufficient cash to repay certain indebtedness and our decision to utilize the cash for that purpose, the disruption of the transactions to each of Avendra and AmeriPride and their respective managements; the effect of the transactions on each of Avendra's and AmeriPride's ability to retain and hire key personnel and maintain relationships with customers, suppliers and other third parties, our ability to attract new or maintain existing customer and supplier relationships at reasonable cost, our ability to retain key personnel and other factors set forth under the headings Item 1A "Risk Factors," Item 3 "Legal Proceedings" and 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 SEC on November ~~22, 2017~~21, 2018 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 www.aramark.com. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report 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. 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 29, 2018			September 29, 2017			June 28, 2019			September 28, 2018
ASSETS
Current Assets:
Cash and cash equivalents	$	165,968		$	238,797		$	220,055		$	215,025
Receivables (less allowances: 2018 - $50,503; 2017 - $53,416)	1,851,928			1,615,993
Receivables (less allowances: 2019 - $48,666; 2018 - $52,682)							1,832,911			1,790,433
Inventories	705,364			610,732			393,115			724,802
Prepayments and other current assets	186,806			187,617			196,044			171,165
Total current assets	2,910,066			2,653,139			2,642,125			2,901,425
Property and Equipment, net	1,321,366			1,042,031			2,143,765			1,378,094
Goodwill	5,606,234			4,715,511			5,526,301			5,610,568
Other Intangible Assets	2,170,608			1,120,824			2,064,637			2,136,844
Other Assets	1,657,266			1,474,724			1,352,674			1,693,171
	$	13,665,540		$	11,006,229		$	13,729,502		$	13,720,102
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	81,970		$	78,157		$	53,749		$	30,907
Accounts payable	846,740			955,925			819,922			1,018,920
Accrued expenses and other current liabilities	1,213,904			1,334,013			1,285,725			1,440,332
Total current liabilities	2,142,614			2,368,095			2,159,396			2,490,159
Long-Term Borrowings	7,788,335			5,190,331			7,198,918			7,213,077
Deferred Income Taxes and Other Noncurrent Liabilities	878,771			978,944			1,075,198			977,215
Redeemable Noncontrolling Interest	10,045			9,798			10,068			10,093
Stockholders' Equity:
Common stock, par value $.01 (authorized: 600,000,000 shares; issued: 2018—279,024,864 shares and 2017—277,111,042 shares; and outstanding: 2018—246,460,602 shares and 2017—245,593,961 shares)	2,790			2,771
Common stock, par value $.01 (authorized: 600,000,000 shares; issued: 2019—281,900,468 shares and 2018—279,314,297 shares; and outstanding: 2019—246,891,550 shares and 2018—246,744,438 shares)							2,819			2,793
Capital surplus	3,104,910			3,014,546			3,208,399			3,132,421
Retained earnings	560,864			247,050			1,048,606			710,519
Accumulated other comprehensive loss	(98,066		)	(123,760		)	(170,838		)	(91,223		)
Treasury stock (shares held in treasury: 2018—32,564,262 shares and 2017—31,517,081 shares)	(724,723		)	(681,546		)
Treasury stock (shares held in treasury: 2019—35,008,918 shares and 2018—32,569,859 shares)							(803,064		)	(724,952		)
Total stockholders' equity	2,845,775			2,459,061			3,285,922			3,029,558
	$	13,665,540		$	11,006,229		$	13,729,502		$	13,720,102

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

ARAMARK AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in thousands, except per share data)



	Three Months Ended
	June 28, 2019		June 29, 2018
Revenue	$	4,010,761	$	3,971,606
Costs and Expenses:
Cost of services provided	3,594,978		3,526,293
Depreciation and amortization	148,779		156,934
Selling and general corporate expenses	78,185		101,715
	3,821,942		3,784,942
Operating income	188,819		186,664
Interest and Other Financing Costs, net	82,220		89,776
Income Before Income Taxes	106,599		96,888
Provision for Income Taxes	23,535		24,172
Net income	83,064		72,716
Less: Net income attributable to noncontrolling interest	109		139
Net income attributable to Aramark stockholders	$	82,955	$	72,577

Earnings per share attributable to Aramark stockholders:
Basic	$	0.34	$	0.29
Diluted	$	0.33	$	0.29
Weighted Average Shares Outstanding:
Basic	246,928		246,028
Diluted	251,147		251,857



	Nine Months Ended
	June 28, 2019			June 29, 2018
Revenue	$	12,276,097		$	11,876,035
Costs and Expenses:
Cost of services provided	11,029,382			10,611,532
Depreciation and amortization	447,408			443,646
Selling and general corporate expenses	270,600			282,327
Gain on sale of Healthcare Technologies	(156,309		)	—
	11,591,081			11,337,505
Operating income	685,016			538,530
Interest and Other Financing Costs, net	249,375			256,562
Income Before Income Taxes	435,641			281,968
(Benefit) Provision for Income Taxes	72,589			(110,904		)
Net income	363,052			392,872
Less: Net income attributable to noncontrolling interest	60			442
Net income attributable to Aramark stockholders	$	362,992		$	392,430

Earnings per share attributable to Aramark stockholders:
Basic	$	1.47		$	1.60
Diluted	$	1.44		$	1.56
Weighted Average Shares Outstanding:
Basic	246,665			245,588
Diluted	251,271			252,231

Three Months Ended
June 29, 2018 June 30, 2017
Sales $ 3,971,606
$ 3,593,277
Costs and Expenses:
Cost of services provided 3,524,804
3,232,366
Depreciation and amortization 156,934
126,440
Selling and general corporate expenses 101,715
79,792
3,783,453
3,438,598
Operating income 188,153
154,679
Interest and Other Financing Costs, net 91,265
61,483
Income Before Income Taxes 96,888
93,196
Provision for Income Taxes 24,172
27,832
Net income 72,716
65,364
Less: Net income attributable to noncontrolling interest 139
69
Net income attributable to Aramark stockholders $ 72,577
$ 65,295

Earnings per share attributable to Aramark stockholders:
Basic $ 0.29
$ 0.27
Diluted $ 0.29
$ 0.26
Weighted Average Shares Outstanding:
Basic 246,028
244,266
Diluted 251,857
251,156

Nine Months Ended
June 29, 2018 June 30, 2017
Sales $ 11,876,035
$ 10,950,288
Costs and Expenses:
Cost of services provided 10,606,377
9,757,892
Depreciation and amortization 443,646
378,258
Selling and general corporate expenses 282,327
223,984
11,332,350
10,360,134
Operating income 543,685
590,154
Interest and Other Financing Costs, net 261,717
224,791
Income Before Income Taxes 281,968
365,363
(Benefit) Provision for Income Taxes (110,904 ) 104,334
Net income 392,872
261,029
Less: Net income attributable to noncontrolling interest 442
244
Net income attributable to Aramark stockholders $ 392,430
$ 260,785

Earnings per share attributable to Aramark stockholders:
Basic $ 1.60
$ 1.07
Diluted $ 1.56
$ 1.04
Weighted Average Shares Outstanding:
Basic 245,588
244,399
Diluted 252,231
251,548

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

ARAMARK AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)


	Three Months Ended					Three Months Ended
	June 29, 2018			June 30, 2017		June 28, 2019			June 29, 2018
Net income	$	72,716		$	65,364	$	83,064		$	72,716
Other comprehensive income (loss), net of tax
Other comprehensive loss, net of tax
Pension plan adjustments	—			—		(179		)	—
Foreign currency translation adjustments	(44,955		)	16,994		(2,002		)	(44,955		)
Fair value of cash flow hedges	9,193			580		(26,749		)	9,193
Share of equity investee's comprehensive income (loss)	391			—		(257		)	391
Other comprehensive income (loss), net of tax	(35,371		)	17,574
Other comprehensive loss, net of tax						(29,187		)	(35,371		)
Comprehensive income	37,345			82,938		53,877			37,345
Less: Net income attributable to noncontrolling interest	139			69		109			139
Comprehensive income attributable to Aramark stockholders	$	37,206		$	82,869	$	53,768		$	37,206


	Nine Months Ended						Nine Months Ended
	June 29, 2018			June 30, 2017			June 28, 2019			June 29, 2018
Net income	$	392,872		$	261,029		$	363,052		$	392,872
Other comprehensive income (loss), net of tax
Pension plan adjustments	13,379			—			574			13,379
Foreign currency translation adjustments	(26,146		)	(4,258		)	(11,036		)	(26,146		)
Fair value of cash flow hedges	38,606			28,968			(68,666		)	38,606
Share of equity investee's comprehensive income (loss)	(145		)	—
Other comprehensive income, net of tax	25,694			24,710
Share of equity investee's comprehensive loss							(487		)	(145		)
Other comprehensive income (loss), net of tax							(79,615		)	25,694
Comprehensive income	418,566			285,739			283,437			418,566
Less: Net income attributable to noncontrolling interest	442			244			60			442
Comprehensive income attributable to Aramark stockholders	$	418,124		$	285,495		$	283,377		$	418,124

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

ARAMARK AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Nine Months Ended						Nine Months Ended
	June 29, 2018			June 30, 2017			June 28, 2019			June 29, 2018
Cash flows from operating activities:
Net income	$	392,872		$	261,029		$	363,052		$	392,872
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	443,646			378,258			447,408			443,646
Deferred income taxes	(155,050		)	(21,094		)	21,861			(155,050		)
Share-based compensation expense	68,318			50,318			48,414			68,318
Net gain on sale of Healthcare Technologies							(139,165		)	—
Changes in operating assets and liabilities:
Accounts Receivable	(101,538		)	(46,305		)	(88,173		)	(101,538		)
Inventories	(21,042		)	19,307			(37,133		)	(21,042		)
Prepayments and Other Current Assets	16,092			92,224			(33,586		)	16,092
Accounts Payable	(149,627		)	(125,842		)	(178,468		)	(149,627		)
Accrued Expenses	(341,067		)	(191,256		)	(164,584		)	(341,067		)
Payments made to clients on contracts (see Note 7)							(30,169		)	—
Other operating activities	(11,182		)	32,550			(1,270		)	(7,092		)
Net cash provided by operating activities	141,422			449,189			208,187			145,512
Cash flows from investing activities:
Purchases of property and equipment, client contract investments and other	(432,779		)	(340,294		)
Purchases of property and equipment and other							(340,449		)	(432,779		)
Disposals of property and equipment	7,686			14,917			11,020			7,686
Proceeds from divestiture							293,711			—
Acquisition of certain businesses, net of cash acquired	(2,239,601		)	(130,094		)	(35,515		)	(2,239,601		)
Other investing activities	(7,485		)	1,701			21,841			(7,485		)
Net cash used in investing activities	(2,672,179		)	(453,770		)	(49,392		)	(2,672,179		)
Cash flows from financing activities:
Proceeds from long-term borrowings	3,146,069			3,707,408			107,796			3,146,069
Payments of long-term borrowings	(701,062		)	(3,561,500		)	(372,168		)	(701,062		)
Net change in funding under the Receivables Facility	145,800			82,000			255,000			145,800
Payments of dividends	(77,317		)	(75,543		)	(81,305		)	(77,317		)
Proceeds from issuance of common stock	15,961			23,048			21,339			15,961
Repurchase of stock	(24,410		)	(100,000		)	(50,000		)	(24,410		)
Other financing activities	(47,113		)	(68,738		)	(31,322		)	(47,113		)
Net cash provided by financing activities	2,457,928			6,675
Net cash provided by (used in) financing activities							(150,660		)	2,457,928
Effect of foreign exchange rates on cash and cash equivalents							(3,105		)	(4,090		)
Increase (decrease) in cash and cash equivalents	(72,829		)	2,094			5,030			(72,829		)
Cash and cash equivalents, beginning of period	238,797			152,580			215,025			238,797
Cash and cash equivalents, end of period	$	165,968		$	154,674		$	220,055		$	165,968


	Nine Months Ended				Nine Months Ended
(dollars in millions)	June 29, 2018		June 30, 2017		June 28, 2019		June 29, 2018
Interest paid	$	227.7	$	147.3	$	248.3	$	227.7
Income taxes paid	$	94.0	$	81.3	$	137.4	$	94.0

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

ARAMARK AND SUBSIDIARIES

4CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the nine months ended June 28, 2019

(Unaudited)

(in thousands)



	Total Stockholders' Equity¹			Common Stock		Capital Surplus		Retained Earnings¹			Accumulated Other Comprehensive Loss			Treasury Stock
Balance, September 28, 2018	$	3,029,558		$	2,793	$	3,132,421	$	710,519		$	(91,223	)	$	(724,952	)
Adoption of new accounting standard	58,395							58,395
Net income attributable to Aramark stockholders	250,682							250,682
Other comprehensive loss	(41,773		)								(41,773		)
Capital contributions from issuance of common stock	3,510			14		3,496
Share-based compensation expense	18,562					18,562
Repurchases of Common Stock	(71,884		)											(71,884		)
Payments of dividends	(29,157		)					(29,157		)
Balance, December 28, 2018	$	3,217,893		$	2,807	$	3,154,479	$	990,439		$	(132,996	)	$	(796,836	)
Net income attributable to Aramark stockholders	29,353							29,353
Other comprehensive loss	(8,655		)								(8,655		)
Capital contributions from issuance of common stock	11,790			5		11,785
Share-based compensation expense	14,679					14,679
Repurchases of Common Stock	(4,324		)											(4,324		)
Payments of dividends	(27,058		)					(27,058		)
Balance, March 29, 2019	$	3,233,680		$	2,812	$	3,180,943	$	992,736		$	(141,651	)	$	(801,160	)
Net income attributable to Aramark stockholders	82,955							82,955
Other comprehensive loss	(29,187		)								(29,187		)
Capital contributions from issuance of common stock	12,290			7		12,283
Share-based compensation expense	15,173					15,173
Repurchases of Common Stock	(1,904		)											(1,904		)
Payments of dividends	(27,085		)					(27,085		)
Balance, June 28, 2019	$	3,285,922		$	2,819	$	3,208,399	$	1,048,606		$	(170,838	)	$	(803,064	)

¹May not foot due to rounding.

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

ARAMARK AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the nine months ended June 29, 2018

(Unaudited)

(in thousands)



	Total Stockholders' Equity¹			Common Stock		Capital Surplus		Retained Earnings			Accumulated Other Comprehensive Loss¹			Treasury Stock
Balance, September 29, 2017	$	2,459,061		$	2,771	$	3,014,546	$	247,050		$	(123,760	)	$	(681,546	)
Net income attributable to Aramark stockholders	292,284							292,284
Other comprehensive income	11,604										11,604
Capital contributions from issuance of common stock	8,499			11		8,488
Share-based compensation expense	16,489					16,489
Repurchases of Common Stock	(38,463		)											(38,463		)
Payments of dividends	(27,080		)					(27,080		)
Balance, December 29, 2017	$	2,722,394		$	2,782	$	3,039,523	$	512,254		$	(112,156	)	$	(720,009	)
Net income attributable to Aramark stockholders	27,569							27,569
Other comprehensive income	49,460										49,460
Capital contributions from issuance of common stock	6,478			4		6,474
Share-based compensation expense	17,022					17,022
Repurchases of Common Stock	(1,533		)											(1,533		)
Payments of dividends	(25,768		)					(25,768		)
Balance, March 30, 2018	$	2,795,623		$	2,786	$	3,063,019	$	514,055		$	(62,695	)	$	(721,542	)
Net income attributable to Aramark stockholders	72,577							72,577
Other comprehensive loss	(35,371		)								(35,371		)
Capital contributions from issuance of common stock	7,088			4		7,084
Share-based compensation expense	34,807					34,807
Repurchases of Common Stock	(3,181		)											(3,181		)
Payments of dividends	(25,768		)					(25,768		)
Balance, June 29, 2018	$	2,845,775		$	2,790	$	3,104,910	$	560,864		$	(98,066	)	$	(724,723	)

¹May not foot due to rounding.

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

Table of Contents

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, facilities and uniform 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 18-country footprint. The Company operates its business in three reportable segments that share many of the same operating characteristics: Food and Support Services United States ("FSS United States"), Food and Support Services International ("FSS International") and Uniform and Career Apparel ("Uniform"). ~~See Note 12 for further discussion over the FSS United States reporting segment reclassification and name change.~~

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 ("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 ~~22, 2017.~~21, 2018. The Condensed Consolidated Balance Sheet as of September ~~29, 2017~~28, 2018 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 significant intercompany transactions and accounts have been eliminated.

New Accounting Standards Updates

Adopted Standards

In ~~August 2017,~~October 2018, the Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") ~~to improve~~which permits the ~~financial reporting~~use of ~~hedging relationships to better portray~~ the ~~economic results of an entity’s risk management activities in its financial statements and simplify~~Overnight Index Swap Rate based on the ~~application of~~Secured Overnight Financing Rate as a U.S. benchmark interest rate for hedge ~~accounting.~~accounting purposes. The guidance is effective for the Company in the first quarter of fiscal 2020 and early adoption is permitted. The Company early adopted the guidance in the third quarter of fiscal 2018, using the modified retrospective method as if the Company had adopted the standard as of the beginning of fiscal 2018. The guidance did not have a material impact on the condensed consolidated financial statements.

In May 2017, the FASB issued an ASU to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted.2020. The Company early adopted the guidance in the first quarter of fiscal ~~2018,~~2019, which did not have an impact on the condensed consolidated financial ~~statements.~~

~~In January 2017,~~statements, as the ~~FASB issued an ASU to simplify~~Company's existing interest rate hedges use LIBOR as the ~~subsequent measurement of goodwill as part~~benchmark interest rate. The use of the ~~impairment test. The guidance is effective for~~Secured Overnight Financing Rate Overnight Index Swap Rate as the ~~Company~~benchmark interest rate may be contemplated in the first quarter of fiscal 2021 and early adoption is permitted. The Company early adopted the guidance in the first quarter of fiscal 2018, which did not have an impact on the condensed consolidated financial statements. The Company will apply the guidance during its annual impairment test or earlier if a change in circumstances or the occurrence of events indicates potential impairment exists.

In August 2016, the FASB issued an ASU to address the classification of certain cash receipts and cash payments in the Statement of Cash Flows. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted. The Company early adopted the guidance in the first quarter of fiscal 2018, which did not have an impact on the condensed consolidated financial statements.

In July 2015, the FASB issued an ASU which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. The guidance is effective for the Company in the first quarter of fiscal 2018 and early adoption was permitted. The Company adopted the guidance in the first quarter of fiscal 2018, which did not have an impact on the condensed consolidated financial statements.

~~Standards Not Yet Adopted (from most to least recent date of issuance)~~future hedging arrangements.

In February 2018, the FASB issued an ASU which provides clarification regarding guidance related to the financial instrument standard. The guidance was effective for the Company in the first quarter of fiscal 2019. The Company adopted the guidance in the first quarter of fiscal 2019, which did not have an impact on the condensed consolidated financial statements.

In May 2017, the FASB issued an ASU to clarify the determination of the customer of the operation services in a service concession arrangement. The guidance was effective for the Company in the first quarter of fiscal 2019. The Company adopted this standard in the first quarter of fiscal 2019, which did not have a material impact on the condensed consolidated financial statements.

In March 2017, the FASB issued an ASU to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The guidance was effective for the Company in the first quarter of fiscal 2019. The Company adopted the guidance during the first quarter of fiscal 2019, which did not result in an impact to net income. However, certain balances, including $1.5 million and $5.2 million for the three and nine month period ended June 29, 2018, were reclassified from "Cost of services provided" to "Interest and Other Financing Costs, net" on the Condensed Consolidated Statements of Income. The Company applied the practical expedient allowing for the use of amounts disclosed in the pension footnote for prior comparative periods as an estimation basis for applying the retrospective presentation requirements.

In February 2017, the FASB issued an ASU to clarify the accounting guidance for partial sales of nonfinancial assets. The guidance was effective for the Company in the first quarter of fiscal 2019. The Company adopted the guidance in the first quarter of fiscal 2019, which did not have an impact on the condensed consolidated financial statements.

In January 2017, the FASB issued an ASU to clarify the definition of a business. The guidance was effective for the Company in the first quarter of fiscal 2019. The Company adopted the guidance in the first quarter of fiscal 2019, using the prospective method, which did not have a material impact on the condensed consolidated financial statements.

In January 2016, the FASB issued an ASU to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Under this guidance, equity investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee, are to be measured at fair value with the changes in fair value recognized in net income. The guidance was effective for the Company in the first quarter of fiscal 2019. The Company

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adopted the guidance in the first quarter of fiscal 2019. Due to the lack of readily available fair values for the Company's equity investments, other than those accounted for under the equity method of accounting, the Company elected to apply the practical expedient to measure these investments at cost minus impairment plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The guidance did not have an impact to the Company's condensed consolidated financial statements.

In connection with the new revenue recognition guidance, the Company completed a comprehensive contract review project and an evaluation of the standard's impact on the timing and presentation of various financial aspects of its contractual arrangements. The Company identified and implemented appropriate changes to business processes, controls and systems to support recognition and disclosure under the new standard. The adoption of the guidance did not have a material impact on the timing of revenue recognition or net income, but it did have an impact on the financial statement line item classification of certain items (see Note 7).

The Company adopted the new revenue recognition guidance using the modified retrospective transition method. This method allows the new standard to be applied retrospectively through a cumulative catch up adjustment recognized upon adoption. As such, comparative information in the Company’s financial statements has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative transition adjustment, net of tax, was an increase to retained earnings upon adoption (approximately $58.4 million) mainly to capitalize costs to obtain contracts related to employee commissions previously expensed. See Note 1 to the Company’s consolidated financial statements in its fiscal 2018 Form 10-K for further information on its significant accounting policies related to revenue recognition and see Note 7 for further information on the impact of adopting the new revenue recognition standard.

Standards Not Yet Adopted (from most to least recent date of issuance)

In May 2019, the FASB issued an ASU which provides the option to irrevocably elect to apply the fair value measurement option on an instrument-by-instrument basis for certain financial instruments within the scope of the credit losses on financial instruments standard. The guidance is effective for the Company in the first quarter of fiscal ~~2019~~2021 when the credit losses on financial instruments standard will be adopted and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In April 2019, the FASB issued an ASU which provides clarification, error corrections and improvements to existing guidance related to the credit losses on financial instruments ASU issued in June 2016, the derivatives and hedging ASU issued in August 2017 and the financial instruments ASU issued in January 2016. The guidance related to the credit losses on financial instruments ASU is effective for the Company in the first quarter of 2021 when the related ASU is adopted, while the guidance related to the derivatives and hedging and the financial instruments ASUs are effective for the Company in the first quarter of fiscal 2020 and the first quarter of 2021, respectively. Early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In March 2019, the FASB issued an ASU which provides clarification regarding three issues related to the lease recognition standard. The guidance is effective for the Company in the first quarter of fiscal 2020 when the lease recognition standard will be adopted and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In August 2018, the FASB issued an ASU which adds, modifies and removes several disclosure requirements related to defined benefit pension plans. The guidance is effective for the Company in the first quarter of fiscal 2022 and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In August 2018, the FASB issued an ASU which adds, modifies and removes several disclosure requirements related to fair value measurements. The guidance is effective for the Company in the first quarter of fiscal 2021 and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In July 2018, the FASB issued two ASUs regarding the lease recognition standard. The guidance provides clarification on issues identified regarding the adoption of the standard, provides an additional transition method to adopt the standard and provides an additional practical expedient to lessors. The guidance is effective for the Company in the first quarter of fiscal 2020 and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In July 2018, the FASB issued an ASU which clarifies, corrects errors in or makes minor improvements to the Accounting Standards Codification. The guidance is effective for the Company either upon issuance or in the first quarter of fiscal 2020, depending on the amendment. There was no impact on the condensed consolidated financial statements related to the

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amendments that were effective upon issuance of the guidance and the Company is currently evaluating the impact of the remaining amendments of the pronouncement.

In February 2018, the FASB issued an ASU which allows for the reclassification of stranded tax effects resulting from the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The guidance is effective for the

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Company in the first quarter of fiscal 2020 and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In September 2017, the FASB issued an ASU to provide additional implementation guidance with respect to the revenue recognition standard (see above) and the leases recognition ~~standard.~~standard (see below). The guidance is effective for the Company in the first quarter of fiscal 2019 ~~and early adoption is permitted. The Company is currently evaluating~~with respect to the ~~impact of the pronouncement.~~

~~In May 2017, the FASB issued an ASU to clarify the determination of the customer of the operation services in a service concession arrangement. The guidance is effective for the Company~~revenue recognition standard and in the first quarter of fiscal ~~2019 and early~~2020 with respect to the lease recognition standard. Early adoption is permitted. The Company ~~will adopt~~adopted the revenue related portions of this standard in conjunction with the revenue recognition standard during the first quarter of fiscal 2019, as described ~~below.~~above. The ~~Company is currently evaluating the impact~~lease related portions of ~~the pronouncement.~~

~~In March 2017, the FASB issued an ASU to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost. The guidance is effective for the Company~~this standard will be adopted in the first quarter of fiscal ~~2019 and early adoption is permitted. The Company is currently evaluating~~2020 in conjunction with the ~~impact of the pronouncement.~~

In February 2017, the FASB issued an ASU to clarify the accounting guidance for partial sales of nonfinancial assets. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In January 2017, the FASB issued an ASU to clarify the definition of a business. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In October 2016, the FASB issued an ASU to require entities to recognize the income tax consequences of certain intercompany assets transfers at the transaction date. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.lease recognition standard.

In June 2016, the FASB issued an ASU to require entities to account for expected credit losses on financial instruments including trade receivables. The guidance is effective for the Company in the first quarter of fiscal 2021 and early adoption is permitted. The Company is currently evaluating the impact of the pronouncement.

In February 2016, the FASB issued an ASU requiring lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and to disclose key information about lease arrangements. Recognition of expense on the Condensed Consolidated Statements of Income will continue in a manner similar to current guidance. The Company will adopt this guidance ~~is effective for~~using the ~~Company~~modified retrospective approach with an adjustment to recognize lease liabilities offset by a right-of-use asset. This adjustment will be recorded at the beginning of the period of adoption in the first quarter of fiscal ~~2020~~2020; therefore, the Company will recognize and ~~early adoption is permitted.~~measure leases without revising comparative period information or disclosure.

For existing leases as of the effective date, the Company will elect the package of practical expedients available at transition to not reassess historical lease determinations, lease classifications and initial direct costs. Additionally, the Company will not elect the use of hindsight for determining the reasonably certain lease term. The Company ~~is in~~will elect the ~~process of reviewing~~short-term lease recognition exemption whereby lease-related assets and liabilities will not be recognized for arrangements with terms less than one year.

The Company continues to review its lease arrangements in order to determine the impact the adoption of this ASU will have on its consolidated financial statements and related disclosures. The Company has also implemented a new lease system in connection with the adoption of this standard. The majority of the Company's lease spend relates to certain real estate, with the remaining lease spend primarily related to vehicles and equipment. Based on ~~the~~its assessment, ~~to date,~~ the Company expects adoption of this standard towill result in a material increase in lease-related assets and liabilities in its Condensed Consolidated Balance Sheets, but does not expect it to have a significant impact in its Condensed Consolidated Statements of Income or Cash Flows.

In January 2016, the FASB issued an ASU to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Under this guidance, equity investments, other than those accounted for under the equity method of accounting or those that result in consolidation of the investee, are to be measured at fair value with the changes in fair value recognized in net income. The guidance is effective for the Company in the first quarter of fiscal 2019 and early adoption is permitted. The Company ~~is currently evaluating~~continues to assess the ~~impact of the pronouncement.~~

In May 2014, the FASB issued an ASU on revenue from contracts with customers which supersedes most current revenue recognition guidance. The standard outlines a single comprehensive model which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Additionally, the standard requires disclosures regarding the nature, amount, timingdisclosure requirements and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB voted to defer the effective date of the new revenue standard by one year, but to permit entities to adopt one year earlier if they choose (i.e., the original effective date). The guidance is effective for the Company beginning in the first quarter of fiscal 2019.

In connection with the new revenue recognition guidance, the Company has completed its comprehensive contract review project, including contracts relating to its recent acquisitions, and its evaluation of the standard's impact on the timing and presentation of various financial aspects of its contractual arrangements. The Company is in the process of finalizing the documentation of the conclusions reached. Based on this assessment, the Company does not believe this standard will have a material impact on the timing of revenue recognition or net income. The largest impacts to the Company's consolidated financial statements will result from an increase in revenue within the Uniform segment for the reclassification of certain fees currently recognized as a reduction to “Cost of services provided” and employee commissions being capitalized and amortized over the expected customer relationship period. The Company has identified and is in the process of implementingimplement appropriate changes to business processes, controls and systems to support recognition and disclosure under the new standard. The Company plans to adopt the standard using the modified retrospective transition method, resulting in the recognition of a cumulative translation adjustment in retained earnings as of September 29, 2018.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

systems.

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 (loss), changes in foreign currency translation adjustments (net of tax), pension plan 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 or loss (net of tax).

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The summary of the components of comprehensive income is as follows (in thousands):



	Three Months Ended
	June 28, 2019						June 29, 2018
	Pre-Tax Amount		Tax Effect	After-Tax Amount			Pre-Tax Amount		Tax Effect		After-Tax Amount
Net income				$	83,064						$	72,716
Pension plan adjustments	(179	)	—	(179		)	—		—		—
Foreign currency translation adjustments	(2,002	)	—	(2,002		)	(45,185	)	230		(44,955		)
Fair value of cash flow hedges	(36,089	)	9,340	(26,749		)	12,966		(3,773	)	9,193
Share of equity investee's comprehensive income (loss)	(257	)	—	(257		)	391		—		391
Other comprehensive income (loss)	(38,527	)	9,340	(29,187		)	(31,828	)	(3,543	)	(35,371		)
Comprehensive income				53,877							37,345
Less: Net income attributable to noncontrolling interest				109							139
Comprehensive income attributable to Aramark stockholders				$	53,768						$	37,206

Three Months Ended
June 29, 2018 June 30, 2017
Pre-Tax Amount Tax Effect After-Tax Amount Pre-Tax Amount Tax Effect After-Tax Amount
Net income $ 72,716
$ 65,364
Foreign currency translation adjustments (45,185 ) 230
(44,955 ) 14,529
2,465
16,994
Fair value of cash flow hedges 12,966
(3,773 ) 9,193
951
(371 ) 580
Share of equity investee's comprehensive income (loss) 391
—
391
—
—
—
Other comprehensive income (loss) (31,828 ) (3,543 ) (35,371 ) 15,480
2,094
17,574
Comprehensive income 37,345
82,938
Less: Net income attributable to noncontrolling interest 139
69
Comprehensive income attributable to Aramark stockholders $ 37,206
$ 82,869



	Nine Months Ended
	June 28, 2019						June 29, 2018
	Pre-Tax Amount		Tax Effect	After-Tax Amount			Pre-Tax Amount		Tax Effect		After-Tax Amount
Net income				$	363,052						$	392,872
Pension plan adjustments	574		—	574			32,730		(19,351	)	13,379
Foreign currency translation adjustments	(11,036	)	—	(11,036		)	(25,447	)	(699	)	(26,146		)
Fair value of cash flow hedges	(92,642	)	23,976	(68,666		)	54,451		(15,845	)	38,606
Share of equity investee's comprehensive loss	(487	)	—	(487		)	(145	)	—		(145		)
Other comprehensive income (loss)	(103,591	)	23,976	(79,615		)	61,589		(35,895	)	25,694
Comprehensive income				283,437							418,566
Less: Net income attributable to noncontrolling interest				60							442
Comprehensive income attributable to Aramark stockholders				$	283,377						$	418,124

Nine Months Ended
June 29, 2018 June 30, 2017
Pre-Tax Amount Tax Effect After-Tax Amount Pre-Tax Amount Tax Effect After-Tax Amount
Net income $ 392,872
$ 261,029
Pension plan adjustments⁽¹⁾
32,730
(19,351 ) 13,379
—
—
—
Foreign currency translation adjustments (25,447 ) (699 ) (26,146 ) (11,429 ) 7,171
(4,258 )
Fair value of cash flow hedges 54,451
(15,845 ) 38,606
47,489
(18,521 ) 28,968
Share of equity investee's comprehensive income (loss) (145 ) —
(145 ) —
—
—
Other comprehensive income (loss) 61,589
(35,895 ) 25,694
36,060
(11,350 ) 24,710
Comprehensive income 418,566
285,739
Less: Net income attributable to noncontrolling interest 442
244
Comprehensive income attributable to Aramark stockholders $ 418,124
$ 285,495

~~(1) The Company amended certain Canadian pension plans to freeze benefit accruals. The plan will be closed to new participants and current participants will no longer earn additional benefits.~~

Accumulated other comprehensive loss consists of the following (in thousands):



	June 28, 2019			September 28, 2018
Pension plan adjustments	$	(24,054	)	$	(24,628	)
Foreign currency translation adjustments	(104,847		)	(93,811		)
Cash flow hedges	(32,474		)	36,192
Share of equity investee's accumulated other comprehensive loss	(9,463		)	(8,976		)
	$	(170,838	)	$	(91,223	)

June 29, 2018 September 29, 2017
Pension plan adjustments $ (31,896 ) $ (45,275 )
Foreign currency translation adjustments (88,704 ) (62,558 )
Cash flow hedges 31,812
(6,794 )
Share of equity investee's accumulated other comprehensive loss (9,278 ) (9,133 )
$ (98,066 ) $ (123,760 )
Currency Translation

During fiscal 2018, Argentina was determined to have a highly inflationary economy. As a result, the Company remeasured the financial statements of Argentina's operations in accordance with the accounting guidance for highly inflationary economies. During both the three and nine month periods of fiscal 2019, the impact of the foreign currency transactions were immaterial to the condensed consolidated financial statements.

Other Assets

Other assets consist primarily of ~~client contract investments,~~costs to obtain or fulfill contracts, long-term prepaid rent, investments in 50% or less owned entities, computer software costs, long-term receivables and long-term receivables. Client contract investments generally represent a cash payment provided by the Company to help finance improvement or renovation at the facility from which the Company operates. These amounts are amortized overpersonalized work apparel, linens and other rental items in service.

710

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the contract period. If a contract is terminated prior to its maturity date, the Company is reimbursed for the unamortized client contract investment amount. Client contract investments, net of accumulated amortization, were $1,017.2 million and $981.3 million as of June 29, 2018 and September 29, 2017, respectively.

NOTE 2.~~ACQUISITIONS:~~

~~AmeriPride Services, Inc. ("AmeriPride") Acquisition~~DIVESTITURES:

On ~~January 19,~~November 9, 2018, the Company completed the acquisition of AmeriPride, a uniform and linen rental and supply company in the U.S. and Canada, pursuant to the Agreement and Plan of Merger ("AmeriPride Merger Agreement") dated as of October 13, 2017, by and among the Company, AmeriPride, Timberwolf Acquisition Corporation, and Bruce M. Steiner, in his capacity as Stockholder Representative. Upon completion of the acquisition, AmeriPride became a wholly owned subsidiary of the Company and its results will be included in the Company's Uniform segment. The total consideration paid for AmeriPride was $995.4 million, partially offset by $84.9 million of cash acquired. In order to finance the AmeriPride acquisition, the Company entered into a long-term financing agreement (see Note 5). During the nine month period ended June 29, 2018, the Company incurred acquisition-related costs of $12.7 million, included in "Selling and general corporate expenses," and $5.2 million of commitment fees, included in "Interest and Other Financing Costs, net" in the Company’s Condensed Consolidated Statements of Income.

~~Consideration~~

The Company has accounted for the AmeriPride acquisition as a business combination under the acquisition method of accounting. The Company has preliminarily allocated the purchase price for the transaction based upon the estimated fair value of net assets acquired and liabilities assumed at the date of acquisition. Accordingly, the preliminary purchase price allocation is subject to change. The Company expects to finalize the allocation of the purchase price upon finalization of the valuation for property and equipment and intangible assets. Any adjustments to the preliminary fair values will be made as soon as practicable but no later than one year from the acquisition date. These adjustments may have a material impact on the Company's results of operations and financial position. For tax purposes, this acquisition is a taxable transaction.

~~Recognition and Measurement of Assets Acquired and Liabilities Assumed at Fair Value~~

~~The following tables summarize the preliminary fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date (in thousands):~~

Current assets $ 237,538
Noncurrent assets 960,035
Total assets $ 1,197,573

Current liabilities $ 135,427
Noncurrent liabilities 66,718
Total liabilities $ 202,145

~~Intangible Assets~~

~~The following table identifies the Company’s preliminary allocations of purchase price to the intangible assets acquired by category:~~

Estimated Fair
Value
(in millions) Weighted-
Average
Estimated
Useful Life
(in years)
Customer relationship assets $ 297.0
15
Trade names 24.0
3 to indefinite
Total intangible assets $ 321.0

The estimated fair value of the customer relationship assets was determined using the “multi-period excess earnings method” which considers the present value of net cash flows expected to be generated by the customer relationships, excluding any cash flows related to contributory assets. The estimated fair value of the two trade names acquired were determined using the “relief-

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~~from-royalty method” which considers the discounted estimated royalty payments that are expected to be avoided as a result of the trademarks being owned.~~

~~Goodwill~~

The Company recorded approximately $363.2 million of goodwill in connection with its preliminary purchase price allocation relating to the AmeriPride acquisition, all of which was recognized in the Uniform reporting segment. Factors that contributed to the Company’s preliminary recognition of goodwill include the Company’s intent to expand and complement its existing uniform business and to enhance its customer service experience, in addition to the anticipated synergies the Company expects to generate from the acquisition. Goodwill related to the AmeriPride acquisition may be revised upon final determination of the purchase price allocation.

~~Avendra, LLC ("Avendra") Acquisition~~

On December 11, 2017, the Company completed the acquisition of Avendra, a hospitality procurement services provider in North America, which included the merger of Capital Merger Sub, LLC, a wholly owned subsidiary of the Company, with Avendra, pursuant to the Agreement and Plan of Merger ("Avendra Merger Agreement") dated as of October 13, 2017, by and among Aramark Services, Inc. (“ASI”), a wholly owned subsidiary of the Company, Avendra, Capital Merger Sub, LLC, and Marriott International, Inc., in its capacity as Holder Representative. Avendra continued as the surviving entity of the merger and is a wholly owned subsidiary of the Company whose financial results are included within the FSS United States reporting segment from December 11, 2017. The total consideration paid for Avendra was $1,386.4 million, partially offset by $87.3 million of cash and restricted investments acquired. In order to finance the Avendra acquisition, the Company entered into a long-term financing agreement (see Note 5). During the nine month period ended June 29, 2018, the Company incurred acquisition-related costs of $11.5 million, included in "Selling and general corporate expenses," and $6.7 million of commitment fees, included in "Interest and Other Financing Costs, net" in the Company’s Condensed Consolidated Statements of Income.

~~Consideration~~

The Company has accounted for the Avendra acquisition as a business combination under the acquisition method of accounting. The Company has preliminarily allocated the purchase price for the transaction based upon the estimated fair value of net assets acquired and liabilities assumed at the date of acquisition. Accordingly, the preliminary purchase price allocation is subject to change. The Company expects to finalize the allocation of the purchase price upon finalization of management's review of the final purchase price allocations. These adjustments may have a material impact on the Company's results of operations and financial position. For tax purposes, this acquisition is a taxable transaction.

~~Recognition and Measurement of Assets Acquired and Liabilities Assumed at Fair Value~~

~~The following tables summarize the preliminary fair values of the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date (in thousands):~~

Current assets $ 157,675
Noncurrent assets 1,343,035
Total assets $ 1,500,710

Current liabilities $ 108,384
Noncurrent liabilities 5,949
Total liabilities $ 114,333

~~Intangible Assets~~

~~The following table identifies the Company’s preliminary allocations of purchase price to the intangible assets acquired by category:~~

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Estimated Fair
Value
(in millions) Weighted-
Average
Estimated
Useful Life
(in years)
Customer relationship assets $ 567.0
15
Trade name 222.0
indefinite
Total intangible assets $ 789.0

The estimated fair value of the customer relationship assets was determined using the “multi-period excess earnings method” which considers the present value of net cash flows expected to be generated by the customer relationships, excluding any cash flows related to contributory assets. The estimated fair value of the trade name was determined using the “relief-from-royalty method” which considers the discounted estimated royalty payments that are expected to be avoided as a result of the trademarks being owned.

~~Goodwill~~

The Company recorded approximately $528.0 million of goodwill in connection with its preliminary purchase price allocation relating to the Avendra acquisition, all of which was recognized in the FSS United States reporting segment. Factors that contributed to the Company’s preliminary recognition of goodwill include the Company’s intent to expand its buying scale through Avendra’s procurement capabilities and to expand its customer base outsidesale of its ~~traditional industries,~~wholly-owned Healthcare Technologies ("HCT") business for $293.7 million in ~~addition to the anticipated synergies the Company expects to generate from the acquisition. Goodwill related to the Avendra acquisition may be revised upon final determination~~cash. The transaction resulted in a pretax gain of ~~the purchase price allocation.~~

~~Combined Sales and Earnings for AmeriPride and Avendra~~

~~Included~~$156.3 million (tax effected gain of $139.2 million) in the ~~Company’s~~ Condensed Consolidated Statements of Income for the ~~three and~~ nine months ended June ~~29, 2018 were combined sales from AmeriPride~~28, 2019. The Company evaluated the sale under the rules for discontinued operations and Avendra of approximately $184.7 million and $338.0 million, respectively, related to these entities. Combined net income for the results of AmeriPride and Avendra was $12.6 million for the three months ended June 29, 2018, which excludes the impactconcluded it did not meet all of the ~~increased interest expense incurred from the financing of the acquisitions.~~criteria required.

~~Unaudited Pro Forma Results of Operations for AmeriPride and Avendra~~

The following table reflects the unaudited pro forma combined results of operations for the three and nine months ended June 29, 2018 for the Company, assuming the closing of both acquisitions occurred on October 1, 2016:

Three Months Ended Nine Months Ended
Unaudited (in thousands) June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017
Total sales $ 3,971,606
$ 3,789,191
$ 12,100,865
$ 11,526,351
Net income 79,817
55,107
435,707
226,264

The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the closing of the acquisitions taken place on October 1, 2016. Furthermore, the pro forma results do not purport to project the future results of operations of the Company.

~~The unaudited pro forma information primarily reflects the following adjustments:~~

~~adjustments to amortization expense related to identifiable intangible assets acquired;~~

~~adjustments to depreciation expense related to the fair value of property and equipment acquired;~~

~~adjustments to interest expense to reflect the long-term financing agreements used to finance the acquisitions (see Note 5); and~~

~~adjustments for the tax effect of the aforementioned adjustments.~~

~~Other Acquisitions~~

During the nine month period of fiscal 2018, the Company paid cash consideration of approximately $35.8 million for various acquisitions, excluding the purchases of AmeriPride and Avendra. The sales, net income, assets and liabilities of these acquisitions did not have a material impact on the Company's condensed consolidated financial statements.

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~~ARAMARK AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

NOTE 3. SEVERANCE:

During ~~the second quarter of~~ fiscal 2018, the Company commenced a new phase of strategic reinvestment and reorganization actions to streamline and improve efficiencies and effectiveness of its selling, general and administrative functions which resulted in a net severance charge of approximately $19.8 million and $39.5 million for the nine months ended June 28, 2019 and June 29, ~~2018.~~2018, respectively. As of June ~~29, 2018~~28, 2019 and September ~~29, 2017,~~28, 2018, the Company had an accrual of approximately ~~$27.9~~$17.3 million and ~~$17.8~~$16.6 million, respectively, related to unpaid severance obligations. These obligations are expected to be paid through ~~the first six months of~~ fiscal ~~2019.~~2020.

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 ~~29, 2018 follow~~28, 2019 is as follows (in thousands):



Segment	September 28, 2018		Acquisitions and Divestitures			Translation			June 28, 2019
FSS United States¹	$	4,028,454	$	(86,280	)	$	—		$	3,942,174
FSS International	626,379		8,082			(9,830		)	624,631
Uniform	955,735		3,895			(134		)	959,496
	$	5,610,568	$	(74,303	)	$	(9,964	)	$	5,526,301

Segment September 29, 2017 Acquisitions Translation June 29, 2018
FSS United States $ 3,493,756
$ 532,201
$ —
$ 4,025,957
FSS International 637,816
2,656
(14,433 ) 626,039
Uniform 583,939
370,856
(557 ) 954,238
$ 4,715,511
$ 905,713
$ (14,990 ) $ 5,606,234

During the first quarter of fiscal 2018, $173.3 million of goodwill related to certain Canadian businesses was reclassified out of the FSS United States segment and into the FSS International segment (see Note 12), which is reflected in the opening balance as of September 29, 2017. Goodwill related to the acquisitions made during the nine months ended June 29, 2018 may be revised upon final determination of the purchase price allocation



(1)	Includes the removal of approximately $87.0 million of goodwill related to the divestiture of HCT during the first quarter of fiscal 2019 (see Note 2).

Other intangible assets consist of the following (in thousands):



	June 28, 2019							September 28, 2018
	Gross Amount		Accumulated Amortization			Net Amount		Gross Amount		Accumulated Amortization			Net Amount
Customer relationship assets	$	2,231,136	$	(1,211,039	)	$	1,020,097	$	2,244,215	$	(1,156,811	)	$	1,087,404
Trade names	1,047,425		(2,885		)	1,044,540		1,050,825		(1,385		)	1,049,440
	$	3,278,561	$	(1,213,924	)	$	2,064,637	$	3,295,040	$	(1,158,196	)	$	2,136,844

June 29, 2018 September 29, 2017
Gross
Amount Accumulated
Amortization Net
Amount Gross
Amount Accumulated
Amortization Net
Amount
Customer relationship assets $ 2,253,545
$ (1,133,361 ) $ 1,120,184
$ 1,376,812
$ (1,063,350 ) $ 313,462
Trade names 1,051,309
(885 ) 1,050,424
807,362
—
807,362
$ 3,304,854
$ (1,134,246 ) $ 2,170,608
$ 2,184,174
$ (1,063,350 ) $ 1,120,824

During the nine months ended June 29, 2018, the Company acquired customer relationship assets and trade names with preliminary values of approximately $887.0 million and $246.0 million, respectively. Customer relationship assets are being amortized principally on a straight-line basis over the expected period of benefit, 5 to 24 years, with a weighted average life of approximately 15 years. The Aramark and a majority of the other trade names are indefinite lived intangible assets and are not amortizable but are evaluated for impairment at least annually. Other intangible asset values related to the acquisitions made during the nine months ended June 29, 2018 may be revised upon final determination of the purchase price allocation (see Note 2).

Amortization of ~~acquired~~ intangible assets for the nine months ended June 28, 2019 and June 29, 2018 ~~and June 30, 2017~~ was approximately ~~$82.3~~$87.7 million and ~~$66.3~~$82.3 million, respectively.

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ARAMARK AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5. BORROWINGS:

Long-term borrowings, net, are summarized in the following table (in thousands):



	June 28, 2019			September 28, 2018
Senior secured revolving credit facility, due October 2023	$	57,689		$	77,000
Senior secured term loan facility, due October 2023	516,473			538,674
Senior secured term loan facility, due March 2024	1,126,820			1,325,923
Senior secured term loan facility, due March 2025	1,657,745			1,656,919
5.125% senior notes, due January 2024	902,490			902,908
5.000% senior notes, due April 2025	591,780			590,884
3.125% senior notes, due April 2025⁽¹⁾	366,180			373,240
4.750% senior notes, due June 2026	494,566			494,082
5.000% senior notes, due February 2028	1,137,331			1,136,472
Receivables Facility, due May 2021	255,000			—
Capital leases	141,297			143,388
Other	5,296			4,494
	7,252,667			7,243,984
Less—current portion	(53,749		)	(30,907		)
	$	7,198,918		$	7,213,077

June 29, 2018 September 29, 2017
Senior secured revolving credit facility, due March 2022 $ 47,208
$ —
Senior secured term loan facility, due March 2022 454,273
1,125,858
Senior secured term loan facility, due February 2023 146,208
—
Senior secured term loan facility, due March 2024 1,403,203
1,403,429
Senior secured term loan facility, due March 2025 1,772,373
—
5.125% senior notes, due January 2024 903,048
903,654
5.000% senior notes, due April 2025 590,593
589,733
3.125% senior notes, due April 2025 375,646
379,429
4.750% senior notes, due June 2026 493,925
493,464
5.000% senior notes, due February 2028 1,136,192
—
Receivables Facility, due May 2021 400,000
254,200
Capital leases 137,068
114,400
Other 10,568
4,321
7,870,305
5,268,488
Less—current portion (81,970 ) (78,157 )
$ 7,788,335
$ 5,190,331



(1)	This is a Euro denominated borrowing.

As of June ~~29, 2018,~~28, 2019, there was approximately ~~$997.6~~$942.9 million of outstanding foreign currency borrowings.

Fiscal ~~2018~~2019 Refinancing Transactions

~~Receivables Facility~~

During the ~~third~~first quarter of fiscal ~~2018,~~2019, the Company extended the ~~terms~~maturity dates of the ~~Receivables~~Revolving Credit Facility, from May 2019 to May 2021. The purchase limit increased from $350.0 million to $400.0 million and the additional seasonal capacity of the Receivables Facility increased from $50.0 million to $100.0 million from October through March. All other terms and conditions remain largely unchanged.

~~Term Loan B due 2024 and Yen Term Loan due 2022~~

On May 24, 2018, ASI, an indirect wholly owned subsidiary of the Company, entered into Amendment No. 5 ("Amendment No. 5") to the Credit Agreement dated March 28, 2017 (as supplemented or otherwise modified from time to time, the “Credit Agreement”) and last amended by Incremental Amendment No. 4 on May 11, 2018, Incremental Amendment No. 3 on February 28, 2018, Incremental Amendment No. 2 on December 11, 2017 and Incremental Amendment No. 1 on September 20, 2017, which replaced the existing Amended and Restated Credit Agreement, originally dated January 26, 2007 and last amended and restated on February 24, 2014 (the "Previous Credit Agreement"). Amendment No. 5 changed the applicable interest rate on the outstanding borrowings related to the U.S. dollar denominated Term Loan B due 2024 ("U.S. Term Loan B due 2024"). As a result of the amendment, the applicable margin on the U.S. Term Loan due 2024 was changed from 2.00% for borrowings based on the LIBOR rate to 1.75% and from 1.00% for borrowings based on the base rate to 0.75%. There were no other material changes to the terms of the U.S. Term Loan B due 2024.

On May 11, 2018, ASI entered into Incremental Amendment No. 4 ("Incremental Amendment No. 4") to the Credit Agreement. Incremental Amendment No. 4 changed the applicable interest rate on the outstanding borrowings related to the Yen denominated Term Loan due 2022 ("Yen Term Loan due 2022"). As a result of the amendment, the applicable margin on the Yen Term Loan due 2022, ~~was changed from 1.75% to 1.50%. All other terms related to the Yen~~Canadian Term Loan due 2022, ~~remained unchanged.~~

Canadian Term Loan ~~A-1~~ due 2023

On February 28, 2018, ASI entered into Incremental Amendment No. 3 (“Incremental Amendment No. 3”) to the Credit Agreement. Incremental Amendment No. 3 provides for an incremental, senior secured credit facility under the Credit Agreement comprised of a Canadian dollar denominated term loan made to Aramark Canada Limited ("ACL"), a company

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~~ARAMARK AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~organized under the laws of Canada~~ and ~~an indirect subsidiary of ASI in an amount equal to CAD200 million (approximately $146.6 million as of June 29, 2018) due on February 28, 2023 (the "Canadian~~Euro Term Loan ~~A-1~~ due ~~2023").~~2022 to October 1, 2023.

~~The net proceeds from~~Also during the ~~Canadian Term Loan A-1 due 2023 were used to pay down certain borrowings on the revolving credit facility and to pay fees and expenses related to the consummation of Incremental Amendment No. 3.~~

The Canadian Term Loan A-1 due 2023 bears interest at a rate equal to, at the Company’s option, either (a) a Bank Act of Canada rate determined by reference to offered rates for bankers' acceptances, increased by 0.10% depending on the lender party or (b) a base rate or Canadian base rate determined by reference to the higher of (1) the prime rate of the administrative agent and (2) the Bank Act of Canada rate plus 1.00% plus an applicable margin set initially at 1.75% for borrowings based on the Bank Act of Canada rate and 0.75% for borrowings based on the Canadian base rate, in each case, subject to a reduction of 0.125% per each decline of 0.50 to 1.00 in the Company's consolidated leverage ratio from 4.75 to 1.00. Accordingly, the applicable margin spread for the Canadian Term Loan A-1 due 2023 is 1.25% to 1.75% (as of June 29, 2018 - 1.75%) with respect to Bank Act of Canada borrowings, subject to a floor of 0.00%, and 0.25% to 0.75% (as of June 29, 2018 - 0.75%) with respect to Canadian base rate borrowings, subject to a floor of 0.00%.

The Canadian Term Loan A-1 requires the payment of installments in quarterly principal amounts of CAD2.5 million from March 31, 2018 through December 31, 2019, CAD3.75 million from March 31, 2020 through December 31, 2020, CAD5.0 million from March 31, 2021 through December 31, 2021, CAD7.5 million from March 31, 2022 through December 31, 2022, and CAD115.0 million at maturity. The Canadian Term Loan A-1 is subject to substantially similar terms currently relating to guarantees, collateral, mandatory prepayments and covenants that are applicable to the Company’s existing term loans outstanding under the Credit Agreement.

~~5.000% Senior Notes due 2028~~

On January 18, 2018, ASI issued $1,150.0 million aggregate principal amount of 5.000% Senior Notes due February 1, 2028 (the "2028 Notes"). The net proceeds from the 2028 Notes were used to finance the AmeriPride acquisition, to pay down certain borrowings under the revolving credit facility and to pay fees related to the transaction. During the secondfirst quarter of fiscal ~~2018,~~2019, the Company ~~capitalized third-party costs~~made an optional prepayment of approximately ~~$14.2~~$200.0 million ~~directly attributable to the 2028 Notes, which are included in "Long-Term Borrowings" in the Condensed Consolidated Balance Sheets.~~

The 2028 Notes were issued pursuant to an indenture, dated as of January 18, 2018 (the "2028 Notes Indenture"), entered into by and among ASI, the Company and certain other Aramark entities, as guarantors, and the U.S. Bank National Association, as trustee. The 2028 Notes were issued at par.

The 2028 Notes are senior unsecured obligations of ASI. The 2028 Notes rank equal in right of payment to all of the Issuer's existing and future senior indebtedness and will rank senior in right of payment to the Issuer's future subordinated indebtedness. The 2028 Notes are guaranteed on a senior, unsecured basis by the Company and substantially all of the domestic subsidiaries of ASI. The guarantees of the 2028 Notes rank equal in right of payment to all of the senior obligations of such guarantor. The 2028 Notes are effectively subordinated to all of ASI's existing and future secured indebtedness, to the extent of the value of the assets securing that indebtedness, and structurally subordinated to all of the liabilities of any of ASI's subsidiaries that do not guarantee the 2028 Notes. Interest on the ~~2028 Notes is payable on February 1 and August 1 of each year, commencing on August 1, 2018.~~

At any time prior to February 1, 2023, ASI has the option to redeem all or a part of the 2028 Notes at a purchase price equal to 100% of the principal amount of such 2028 Notes plus an applicable premium and accrued and unpaid interest, if any, to but not including the date of redemption. Prior to February 1, 2021, ASI has the option to redeem up to 40% of the aggregate principal amount of all 2028 Notes at a purchase price equal to 105% of the principal amount of such 2028 Notes plus accrued and unpaid interest, if any, to but not including the date of redemption, with the net cash proceeds of one or more equity offerings, provided that at least 50% of the sum of the aggregate principal amount of the 2028 Notes originally issued remain outstanding immediately after the purchase.

The 2028 Notes Indenture contains covenants limiting ASI's ability and the ability of its restricted subsidiaries to: incur additional indebtedness or issue certain preferred shares; pay dividends and make certain distributions, investments and other restricted payments; create certain liens; sell assets; enter into transactions with affiliates; limit the ability of restricted subsidiaries to make payments to ASI; enter into sale and leaseback transactions; merge, consolidate, sell or otherwise dispose of all or substantially all of ASI's and its restricted subsidiaries assets; and designate ASI's subsidiaries as unrestricted subsidiaries. The 2028 Notes Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the applicable series of 2028 Notes to become or to be declared due and payable. Further, a failure to pay any obligations under the 2028 Notes Indenture as they become due or any event causing amounts to become due prior to their stated maturity could result in a cross-default and potential acceleration of the Company’s other outstanding debt obligations.

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~~ARAMARK AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~U.S. Term Loan B due 2025~~

On December 11, 2017, ASI entered into Incremental Amendment No. 2 (“Incremental Amendment No. 2”) to the Credit Agreement. Incremental Amendment No. 2 provides for an incremental senior secured credit facility under the Credit Agreement comprised of a U.S. dollar denominated term loan ~~made to ASI in an amount equal to $1,785.0 million,~~ due on March 11, 2025. On June 12, 2018, the Company entered into Amendment No. 6 ("Amendment No. 6") to the Credit Agreement, which changed the applicable interest rate on the outstanding U.S. Term Loan B due 2025 borrowings (see below for further discussion). There were no other material changes to the terms of the U.S. Term Loan B due 2025 as a result of Amendment No. 6.

The net proceeds from the U.S. Term Loan B due 2025 were used to finance the Avendra acquisition and, together with approximately $200.0 million of proceeds from a borrowing made under the Credit Agreement’s revolving credit facility, to repay the $633.8 million of principal outstanding on the U.S. Term Loan A under the Credit Agreement, along with accrued interest and certain fees and related expenses. The Company recorded $5.7 million of charges to "Interest and Other Financing Costs, net" in the Condensed Consolidated Statements of Income for the nine months ended June 29, 2018 for the write-off of debt issuance costs.

The Company capitalized third-party costs of approximately $8.9 million directly attributable to the U.S. Term Loan B due 2025 under the Credit Agreement, which are included in "Long-Term Borrowings" in the Condensed Consolidated Balance Sheets as of March 30, 2018.

The U.S. Term Loan B due 2025 bears interest at a rate equal to, at the Company’s option, either (a) a LIBOR rate determined by reference to the costs of funds for deposits in U.S. dollars for the interest period relevant to such borrowing adjusted for certain additional costs or (b) a base rate determined by reference to the highest of (1) the prime rate of the administrative agent, (2) the federal funds rate plus 0.50% and (3) the LIBOR rate plus 1.00% plus an applicable margin set initially at 2.00% for borrowings based on the LIBOR rate and 1.00% for borrowings based on the base rate, in each case, subject to a reduction of 0.25% upon compliance by the Company with a consolidated leverage ratio of 3.00 to 1.00. As a result of Amendment No. 6, the applicable margin was changed from 2.00% for borrowings based on the eurocurrency (LIBOR) rate to 1.75%, subject to a LIBOR floor of 0.00%, and from 1.00% for borrowings based on the base rate to 0.75%, subject to a minimum base rate of 0.00%.

The Company is required to make quarterly principal repayments on the U.S. Term Loan B due 2025 in quarterly amounts of 1.00% per annum of the funded total principal amount and is subject to substantially similar terms relating to guarantees, collateral, mandatory prepayments and covenants that are applicable to the Company’s existing U.S. Term Loan B due 2024 outstanding under the Credit Agreement.

~~Future Maturities~~

At June 29, 2018, annual maturities on long-term borrowings maturing between fiscal years 2018 and 2022 and thereafter (excluding the $60.5 million reduction to long-term borrowings from debt issuance costs and the increase of $13.0 million from the premium on the 5.125% Senior Notes due 2024 (the "2024 Notes")) are as follows (in thousands):

2018 $ 26,067
2019 63,980
2020 120,216
2021 515,768
2022 468,881
Thereafter 6,722,925
2024.

NOTE 6. DERIVATIVE INSTRUMENTS:

The Company enters into contractual derivative arrangements to manage changes in market conditions related to interest on debt obligations, foreign currency exposures and exposure to fluctuating gasoline and diesel fuel prices. Derivative instruments utilized during the period include interest rate swap agreements, foreign currency forward exchange contracts and gasoline and diesel fuel agreements. All derivative instruments 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. For designated hedging relationships, 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

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~~ARAMARK AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

and retrospectively. 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 approximately ~~$2.7~~$2.5 billion notional amount of outstanding interest rate swap agreements as of June ~~29, 2018,~~28, 2019, which fixes the rate on a like amount of variable rate borrowings through the first quarter of fiscal 2023. During the ~~first quarter of fiscal 2018,~~nine months ended June 28, 2019, the Company entered into approximately ~~$1.6 billion~~$500.0 million notional amount of forward starting interest rate swap agreements to hedge the cash flow risk of variability in interest payments on variable rate borrowings. In addition, interest rate swaps with a notional ~~amounts~~amount of ~~$450.0~~$575.0 million matured during the nine months ~~of fiscal 2018, respectively.~~ended June 28, 2019.

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 income (loss) and reclassified into earnings as the underlying hedged item affects earnings. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to

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ARAMARK AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

interest expense as interest payments are made on the Company’s variable-rate debt. As of June ~~29, 2018~~28, 2019 and September ~~29, 2017,~~28, 2018, approximately ~~$31.8~~($32.5) million and ~~($6.8)~~$36.2 million of unrealized net of tax gains (losses) related to the interest rate swaps were included in "Accumulated other comprehensive loss," respectively.

The following table summarizes the effect of our derivatives designated as cash flow hedging instruments on Other comprehensive income (loss) (in thousands):

Three Months Ended
June 29, 2018 June 30, 2017
Interest rate swap agreements $ 12,257
$ (2,721 )



	Three Months Ended
	June 28, 2019			June 29, 2018
Interest rate swap agreements	$	(33,975	)	$	12,257



	Nine Months Ended
	June 28, 2019			June 29, 2018
Interest rate swap agreements	$	(86,500	)	$	48,825

Nine Months Ended
June 29, 2018 June 30, 2017
Interest rate swap agreements $ 48,825
$ 33,261

Derivatives not Designated in Hedging Relationships

The Company entered into a series of pay fixed/receive floating gasoline and diesel fuel agreements based on the Department of Energy weekly retail on-highway index in order to limit its exposure to price fluctuations for gasoline and diesel fuel. As of June ~~29, 2018,~~28, 2019, the Company has contracts for approximately ~~10.5~~16.3 million gallons outstanding through the third quarter of fiscal ~~2019.~~2020. The Company does not record its gasoline and diesel fuel agreements as hedges for accounting purposes. The impact on earnings related to the change in fair value of these unsettled contracts was a gain of approximately $1.1 million and a loss of approximately $3.2 million for the three and nine months ended June 28, 2019, respectively. The impact on earnings related to the change in fair value of these unsettled contracts was a gain of approximately $0.1 million and a gain of approximately $0.3 million for the three and nine months ended June 29, 2018, respectively. The impact on earnings related to the change in fair value of these unsettled contracts was a loss of approximately $2.6 million and $3.6 million for the three and nine months ended June 30, 2017, respectively. The change in fair value for unsettled contracts is included in "Selling and general corporate expenses" in the Condensed Consolidated Statements of Income. When the contracts settle, the gain or loss is recorded to"Costs of services provided" in the Condensed Consolidated Statements of Income.

As of June ~~29, 2018,~~28, 2019, the Company had foreign currency forward exchange contracts outstanding with notional amounts of ~~€40.0~~€41.0 million and ~~£6.0~~£9.0 million to mitigate the risk of changes in foreign currency exchange rates on short-term intercompany loans to certain international subsidiaries. Gains and losses on these foreign currency exchange contracts are recognized in ~~income~~earnings as the contracts were not designated as hedging instruments, substantially offsetting currency transaction gains and losses on the short-term intercompany loans.

1513

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ARAMARK AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the location and fair value, using Level 2 inputs (see Note ~~13)~~14 for a description of the fair value levels), of the Company's derivatives designated and not designated as hedging instruments in the Condensed Consolidated Balance Sheets (in thousands):



	Balance Sheet Location	June 28, 2019		September 28, 2018
ASSETS
Designated as hedging instruments:
Interest rate swap agreements	Prepayments and other current assets	$	—	$	1,459
Interest rate swap agreements	Noncurrent Assets	—		54,708

Not designated as hedging instruments:
Foreign currency forward exchange contracts	Prepayments and other current assets	$	—	$	209
Gasoline and diesel fuel agreements	Prepayments and other current assets	450		3,623
		$	450	$	59,999
LIABILITIES
Designated as hedging instruments:
Interest rate swap agreements	Other Noncurrent Liabilities	$	34,824	$	—

Not designated as hedging instruments:
Foreign currency forward exchange contracts	Accounts payable	$	29	$	—
		$	34,853	$	—

Balance Sheet Location June 29, 2018 September 29, 2017
ASSETS
Designated as hedging instruments:
Interest rate swap agreements Prepayments and other current assets $ 1,795
$ —
Interest rate swap agreements Noncurrent Assets $ 46,497
$ —

Not designated as hedging instruments:
Foreign currency forward exchange contracts Prepayments and other current assets $ 293
$ 80
Gasoline and diesel fuel agreements Prepayments and other current assets $ 3,941
$ 3,626
$ 52,526
$ 3,706
LIABILITIES
Designated as hedging instruments:
Interest rate swap agreements Accrued expenses and other current liabilities $ —
$ 1,196
Interest rate swap agreements Other Noncurrent Liabilities —
9,313
$ —
$ 10,509

The following table summarizes the location of (gain) loss reclassified from "Accumulated other comprehensive loss" into earnings for derivatives designated as hedging instruments and the location of (gain) loss for ~~the Company's~~our derivatives not designated as hedging instruments in the Condensed Consolidated Statements of Income (in thousands):



		Three Months Ended
	Income Statement Location	June 28, 2019			June 29, 2018
Designated as hedging instruments:
Interest rate swap agreements	Interest expense	$	(2,114	)	$	709
Not designated as hedging instruments:
Gasoline and diesel fuel agreements	Costs of services provided / Selling and general corporate expenses	$	(792	)	$	(2,070	)
Foreign currency forward exchange contracts	Interest expense	(6		)	(603		)
		(798		)	(2,673		)
		$	(2,912	)	$	(1,964	)

Three Months Ended
Income Statement Location June 29, 2018 June 30, 2017
Designated as hedging instruments:
Interest rate swap agreements Interest expense $ 709
$ 3,732
Not designated as hedging instruments:
Gasoline and diesel fuel agreements Costs of services provided / Selling and general corporate expenses $ (2,070 ) $ 2,404
Foreign currency forward exchange contracts Interest expense (603 ) 1,673
(2,673 ) 4,077
$ (1,964 ) $ 7,809



		Nine Months Ended
	Income Statement Location	June 28, 2019			June 29, 2018
Designated as hedging instruments:
Interest rate swap agreements	Interest expense	$	(6,143	)	$	5,626
Not designated as hedging instruments:
Gasoline and diesel fuel agreements	Costs of services provided / Selling and general corporate expenses	$	4,677		$	(5,547	)
Foreign currency forward exchange contracts	Interest expense	238			(152		)
		4,915			(5,699		)
		$	(1,228	)	$	(73	)

Nine Months Ended
Income Statement Location June 29, 2018 June 30, 2017
Designated as hedging instruments:
Interest rate swap agreements Interest Expense $ 5,626
$ 14,288
Not designated as hedging instruments:
Gasoline and diesel fuel agreements Costs of services provided / Selling and general corporate expenses $ (5,547 ) $ 2,787
Foreign currency forward exchange contracts Interest Expense (152 ) (3,134 )
$ (5,699 ) $ (347 )
$ (73 ) $ 13,941

The Company has a Japanese yen denominated term loan in the amount of ¥10,884.9 million. The term loan was designated as a hedge of the Company's net Japanese currency exposure represented by the equity investment in its Japanese affiliate, AIM

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Services Co., Ltd. Additionally, the Company has a Euro denominated term loan in the amount of €159.4 million. The term loan was designated as a hedge of the Company's net Euro currency exposure represented by certain holdings in its European affiliates.

At June ~~29, 2018,~~28, 2019, the net of tax ~~gain~~loss expected to be reclassified from "Accumulated other comprehensive loss" into earnings over the next twelve months based on current market rates is approximately ~~$5.6~~$6.3 million.

NOTE 7. REVENUE RECOGNITION:

The Company generates revenue through sales of food, facility and uniform services to customers based on written contracts at the locations it serves. Within our FSS United States and FSS International segments, the Company provides food and beverage services, including catering and retail services, or facilities services, including plant operations and maintenance, custodial, housekeeping, landscaping and other services. Within the Uniform segment, the Company provides a full service uniform solution, including delivery, cleaning and maintenance. In accordance with Accounting Standards Codification 606 ("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.

Impact of New Revenue Recognition Standard

As a result of the adoption of ASC 606, the following changes occurred with respect to financial statement line item classification in the Company's condensed consolidated financial statements:

Transition Adjustment:

costs to obtain contracts related to employee sales commissions, previously expensed to “Cost of services provided” at contract inception, are now capitalized in “Other Assets” ($97.2 million and $105.4 million as of September 29, 2018 and June 28, 2019, respectively);

Other Reclassifications and Changes in Presentation:

certain fees within the Uniform segment, $91.7 million and $282.8 million for the three and nine month periods of fiscal 2019, previously recognized as a reduction to “Cost of services provided,” are now recognized in “Revenue;”

client contract investments, previously capitalized within “Other Assets” and amortized to “Depreciation and amortization” will continue to be expensed over the contract life as either a leasehold improvement in “Property and equipment, net” ($792.0 million as of June 28, 2019) or as long-term prepaid rent or costs to fulfill in “Other Assets” ($183.4 million and $110.1 million as of June 28, 2019, respectively) and primarily classified in “Depreciation and amortization” or “Cost of services provided;”

costs to fulfill contracts related to personalized work apparel, linens and other rental items in service, previously capitalized within "Inventories" are now capitalized within "Other Assets" ($355.2 million as of June 28, 2019); and

certain client contract investments, previously included within "Purchases of property and equipment and other" in Net cash provided by (used in) investing activities on the Condensed Consolidated Statements of Cash Flows, are now included within "Payments made to clients on contracts" in Net cash provided by operating activities.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table compares the reported Condensed Consolidated Balance Sheet as of June 28, 2019, to the balances had the previous revenue accounting guidance remained in effect (in thousands):



	June 28, 2019
	As Reported			Adoption adjustments of ASC 606			Balances without adoption of ASC 606
ASSETS
Current Assets:
Cash and cash equivalents	$	220,055		$	—		$	220,055
Receivables, net	1,832,911			—			1,832,911
Inventories	393,115			355,154			748,269
Prepayments and other current assets	196,044			—			196,044
Total current assets	2,642,125			355,154			2,997,279
Property and Equipment, net	2,143,765			(792,022		)	1,351,743
Goodwill	5,526,301			—			5,526,301
Other Intangible Assets	2,064,637			—			2,064,637
Other Assets	1,352,674			324,848			1,677,522
	$	13,729,502		$	(112,020	)	$	13,617,482
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	53,749		$	—		$	53,749
Accounts payable	819,922			—			819,922
Accrued expenses and other current liabilities	1,285,725			(23,526		)	1,262,199
Total current liabilities	2,159,396			(23,526		)	2,135,870
Long-Term Borrowings	7,198,918			—			7,198,918
Deferred Income Taxes and Other Noncurrent Liabilities	1,075,198			(23,973		)	1,051,225
Redeemable Noncontrolling Interest	10,068			—			10,068
Stockholders' Equity:
Common stock	2,819			—			2,819
Capital surplus	3,208,399			—			3,208,399
Retained earnings	1,048,606			(64,521		)	984,085
Accumulated other comprehensive loss	(170,838		)	—			(170,838		)
Treasury stock	(803,064		)	—			(803,064		)
Total stockholders' equity	3,285,922			(64,521		)	3,221,401
	$	13,729,502		$	(112,020	)	$	13,617,482

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ARAMARK AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table compares the reported Condensed Consolidated Statements of Income for the three and nine month period ended June 28, 2019, to the balances had the previous revenue accounting guidance remained in effect (in thousands):



	Three Months Ended June 28, 2019
	As Reported		Adoption adjustments of ASC 606			Balances without adoption of ASC 606

Revenue	$	4,010,761	$	(80,343	)	$	3,930,418
Costs and Expenses:
Cost of services provided	3,594,978		(82,624		)	3,512,354
Depreciation and amortization	148,779		5,173			153,952
Selling and general corporate expenses	78,185		—			78,185
	3,821,942		(77,451		)	3,744,491
Operating income	188,819		(2,892		)	185,927
Interest and Other Financing Costs, net	82,220		—			82,220
Income Before Income Taxes	106,599		(2,892		)	103,707
Provision for Income Taxes	23,535		(749		)	22,786
Net income	83,064		(2,143		)	80,921
Less: Net income attributable to noncontrolling interest	109		—			109
Net income attributable to Aramark stockholders	$	82,955	$	(2,143	)	$	80,812



	Nine Months Ended June 28, 2019
	As Reported			Adoption adjustments of ASC 606			Balances without adoption of ASC 606

Revenue	$	12,276,097		$	(260,433	)	$	12,015,664
Costs and Expenses:
Cost of services provided	11,029,382			(265,821		)	10,763,561
Depreciation and amortization	447,408			13,072			460,480
Selling and general corporate expenses	270,600			—			270,600
Gain on sale of Healthcare Technologies	(156,309		)	—			(156,309		)
	11,591,081			(252,749		)	11,338,332
Operating income	685,016			(7,684		)	677,332
Interest and Other Financing Costs, net	249,375			—			249,375
Income Before Income Taxes	435,641			(7,684		)	427,957
Provision for Income Taxes	72,589			(1,990		)	70,599
Net income	363,052			(5,694		)	357,358
Less: Net income attributable to noncontrolling interest	60			—			60
Net income attributable to Aramark stockholders	$	362,992		$	(5,694	)	$	357,298

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Disaggregation of Revenue

The following table presents revenue disaggregated by revenue source (in millions):



	Three Months Ended		Nine Months Ended
	June 28, 2019		June 28, 2019
FSS United States:
Business & Industry	$	404.4	$	1,199.1
Education	707.6		2,625.5
Healthcare	224.0		708.7
Sports, Leisure & Corrections	681.4		1,780.4
Facilities & Other	396.1		1,177.1
Total FSS United States	$	2,413.5	$	7,490.8

FSS International:
Europe	527.0		1,559.2
Rest of World	422.9		1,285.9
Total FSS International	$	949.9	$	2,845.1

Uniform	$	647.4	$	1,940.2

Total Revenue	$	4,010.8	$	12,276.1

Contract Balances

The Company defers sales commissions earned by its sales force that are considered to be incremental and recoverable costs of obtaining a contract tied to its food, facilities and uniform services. The deferred costs are amortized using the portfolio approach on a straight line basis over the average period of benefit and are assessed for impairment on a periodic basis. Determination of the amortization period and the subsequent assessment for impairment of the contract cost asset requires judgment. During the three and nine months ended June 28, 2019, the Company expensed approximately $3.8 million and $11.0 million of these costs to “Cost of services provided” in the Condensed Consolidated Statements of Income.

Costs to fulfill contracts includes payments made by the Company to enhance the service resources used by the Company to satisfy its performance obligation. These amounts are amortized over the contract period. If a contract is terminated prior to its maturity date, the Company is typically reimbursed for the unamortized amount. During the three and nine months ended June 28, 2019, the Company expensed approximately $5.2 million and $15.1 million of these costs to "Depreciation and amortization" in the Condensed Consolidated Statements of Income.

Other costs to fulfill contracts represent personalized work apparel, linens and other rental items in service in the Uniform segment. The amounts are recorded at cost and are amortized over their estimated useful lives, which primarily range from one to four years. The amortization rates used are based on the Company's specific experience. The Company recorded expense of approximately $79.5 million and $237.0 million during the three and nine months ended June 28, 2019 related to these costs, which was recorded in "Costs of services provided" in the Condensed Consolidated Statements of Income.

Deferred income is recognized in "Accrued expenses and other current liabilities" in 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 arrangement is short term in nature.

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ARAMARK AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the nine months ended June 28, 2019, deferred income increased related to customer prepayments and decreased related to income recognized during the period as a result of satisfying the performance obligation. Below is a summary of the changes (in millions):



	Balance, September 28, 2018		Add: Net increase in current period deferred income	Less: Recognition of deferred income		Balance, June 28, 2019
Deferred income	$	281.5	828.6	(976.8	)	$	133.3

NOTE 8. INCOME TAXES:

On December 22, 2017, “H.R.1,” commonly referred to as the “Tax Cuts and Jobs Act” (the “Tax Legislation”) was signed into U.S. law. The Tax Legislation, which was effective on January 1, 2018, significantly ~~revises~~revised the U.S. tax code by, among other things, lowering the corporate income tax rate from 35.0% to 21.0% and implementing ~~a territorial~~new international tax ~~system~~provisions that ~~includes~~included a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. Though certain key aspects of the new law ~~are~~were effective January 1, 2018 and ~~have~~had an immediate accounting impact, other significant provisions ~~are~~were not effective or ~~may~~did not result in accounting implications for the Company until after the fiscal year-end September 28, ~~2018 or after.~~

~~The impact of the corporate income tax rate change is reflected in the estimated annual effective tax rate for the fiscal year ending September 28,~~ 2018. The ~~legislation requires~~provisions effective for fiscal 2019 are the tax on "Global Intangible Low-Taxed Income" ("GILTI"), the deduction for "Foreign-Derived Intangible Income" ("FDII"), the 163(j) limitation on interest expense and the 162(m) limitation on certain executive compensation.

During fiscal 2018, the Company made reasonable estimates related to use a blended rate for its fiscal 2018 tax year by applying a prorated percentage of days before and after the January 1, 2018 effective date. As a result, the Company's 2018 annual statutory rate has been reduced to 24.5%.

~~As a result of the enactment~~certain impacts of the Tax Legislation and, in accordance with the ~~Company was required to recognize the effect~~Securities and Exchange Commission (“SEC”) Staff Accountant Bulletin No. 118, Income Tax Accounting Implications of the ~~corporate income~~Tax Cut and Jobs Act (“SAB 118”), recorded provisional estimates during a measurement period when it did not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in tax rate change on its deferred tax assets and liabilities in the first quarter of fiscal 2018, the period in which the legislation was enacted. The Company recorded a provisional tax benefit from corporate income tax rate change and certain other adjustments, which resulted in a noncash benefit to the provision for income taxes of approximately $207.5 million, which was recorded to the Condensed Consolidated Statements of Income during the first quarter of fiscal 2018. A corresponding reduction to the Company's deferred income tax liability was also recorded to the Condensed Consolidated Balance Sheets during the first quarter of fiscal 2018. This was the Company’s provisional estimate and will be subject to adjustment as the computations are finalized.law.

The Tax Legislation also requires the Company to pay a one-time transition tax on unremitted earnings of certain non-U.S. subsidiaries. The Company recorded a provisional estimate of the tax expense of approximately $2.5 million during the first quarter of fiscal 2018 related to the one time transition tax, net of foreign tax credits. As a result of the Tax Legislation, the Company ~~re-assessed~~reassessed during fiscal 2018 the ability to recover its ~~$21.2~~$27.2 million of foreign tax credit ("FTC") carryforwards. Based on currently available information, the Company ~~believes~~believed it ~~will~~would not generate sufficient foreign source income in the carryforward period to utilize a portion of these credits. As a result, the Company recorded a valuation allowance of ~~$21.2~~$13.1 million against its foreign tax credit carryforward during ~~the first quarter of~~ fiscal 2018 as a provisional estimate. On the basis of proposed Treasury Regulations issued subsequent to the filing of the Company's Annual Report on Form 10-K on November 21, 2018, the Company recorded an adjustment to reduce the $13.1 million valuation allowance by $9.5 million, which was recorded as a tax benefit to the provision for income taxes during the first quarter of fiscal 2019. During the second quarter of fiscal 2019, the Company reduced the remaining $3.6 million valuation allowance and recorded a related uncertain tax position of $2.7 million, resulting in a net benefit to the provision for income taxes of $0.9 million.

The Tax Legislation contains additional international provisions which ~~may~~ impact the Company ~~prospectively,~~beginning in the period ended December 28, 2018, including the tax on “Global Intangible Low-Taxed Income” (“GILTI”). The Company is currently unable to provide a reasonable provisional estimate as to whether additional deferred tax assets and liabilities should be recognized for basis differences expected to reverse as GILTI in future years, pending clarification of interpretive issues and the availabilityimpact of the ~~necessary information to develop a reasonable estimate. Accordingly, the Company has yet to determine whether~~ GILTI ~~tax should be recorded as a period expense or measured as a deferred tax asset or liability. However, the Company does not believe the impact will be material.~~

As the result of the one-time transition tax on unremitted foreign earnings of non-U.S. subsidiaries, as well as the shift from a worldwide system of taxation to a participation exemption system, the Company generally will not incur additional U.S. tax liability on the distribution of unremitted foreign earnings. However, other items continue to trigger additional tax expense for which no deferred tax liability has been recorded, including Section 986(c) currency gain/loss, foreign withholding taxes and state taxes. As a result, the Company has performed a preliminary assessment of its indefinite reinvestment position, pending further analysis and expected guidance around newly enacted legislation of U.S. taxation of foreign multinational companies, including the transition tax, GILTI and the potential tax liabilities attributable to repatriation under the Tax Legislation. Accordingly, the provisional estimate of undistributed earnings of certain foreign subsidiaries for which no deferred tax liability was recorded amounted to approximately $71.6 million as of June 29, 2018. The provisional estimate of foreign withholding tax cost associated with remitting these earnings is ~~approximately $3.9 million. Such amount has not been accrued by the Company as it believes those foreign earnings are permanently reinvested.~~

~~The Tax Legislation also contains limitations on the deductibility of interest expense and certain executive compensation, that are~~ not expected to have a significant impact on the ~~Company until~~financial statements for the fiscal ~~years~~year ending ~~after~~ September ~~28, 2018.~~27, 2019. The Company ~~continues~~is electing to ~~evaluate their impact~~treat taxes due on ~~its consolidated financial statements.~~

~~Table of Contents~~

~~ARAMARK AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”).

The ~~provisional amounts are based on information available at this time and subject to change due to several factors, including, finalization of~~accounting for the ~~Company’s annual financial closing and reporting processes, management’s further assessment~~impact of the Tax Legislation is complete and ~~related regulatory guidance, guidance that may be issued and actions~~ the Company ~~may take as a result of~~closed the ~~Tax Legislation.~~

~~The Company is in the process of finalizing these provisional calculations, and will continue~~measurement period related to ~~evaluate the effect of tax reform on its financial results. Additional details will be included in the Company's Form 10-K for the fiscal year ended September 28, 2018.~~

~~The Company~~filed the fiscal 2017 federal income tax return in the fourth quarter of 2018, which included several accounting method changes that impact the income tax payable and deferred income tax assets and liabilities. Management is analyzing the results and will record the tax impact in the fourth quarter of fiscal 2018. SAB 118.

NOTE 8.9. STOCKHOLDERS' EQUITY:

During the nine months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017,~~29, 2018, the Company paid dividends of approximately ~~$77.3~~$81.3 million and ~~$75.5~~$77.3 million to its stockholders, respectively. On ~~August 1, 2018,~~July 31, 2019, the Company's Board declared a ~~$0.105~~$0.110 dividend per share of common stock, payable on August ~~30, 2018,~~29, 2019, to shareholders of record on the close of business on August ~~16, 2018.~~15, 2019. During the first quarter of fiscal 2019, the Company completed a repurchase of 1.6 million shares of its common stock for $50.0 million. During the first quarter of fiscal 2018, the Company completed a repurchase of 0.6 million shares of its common stock for $24.4 million. ~~During the second quarter of fiscal 2017, the Company completed a repurchase of approximately 2.8 million shares of its common stock for $100.0 million.~~

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ARAMARK AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 9.10. SHARE-BASED COMPENSATION:

The following table summarizes the share-based compensation expense and related information for Time-Based Options ("TBOs"), Time-Based Restricted Stock Units ("RSUs"), Performance Stock Units and Performance Restricted Stock ("PSUs"), and Deferred Stock and Other Units classified as "Selling and general corporate expenses" in the Condensed Consolidated Statements of Income (in millions).



	Three Months Ended				Nine Months Ended
	June 28, 2019		June 29, 2018		June 28, 2019		June 29, 2018
TBOs	$	2.8	$	4.2	$	11.2	$	14.0
RSUs	7.2		6.0		23.3		17.9
PSUs⁽¹⁾	4.8		24.0		12.5		34.9
Deferred Stock and Other Units	0.4		0.6		1.4		1.5
	$	15.2	$	34.8	$	48.4	$	68.3

Taxes related to share-based compensation	$	3.8	$	9.8	$	12.0	$	19.2

Three Months Ended Nine Months Ended
June 29, 2018 June 30, 2017 June 29, 2018 June 30, 2017
TBOs $ 4.2
$ 5.2
$ 14.0
$ 15.7
RSUs 6.0
5.0
17.9
16.4
PSUs ⁽¹⁾
24.0
5.0
34.9
16.4
Deferred Stock and Other Units 0.6
0.4
1.5
1.8
$ 34.8
$ 15.6
$ 68.3
$ 50.3

Taxes related to share-based compensation $ 9.8
$ 5.7
$ 19.2
$ 18.6

⁽¹⁾ During the third quarter of fiscal 2018, the Company increased the expected adjusted earnings per share target attainment percentage for both the fiscal 2016 and fiscal 2017 PSU grants, and recognized an additional $18.9 million of share-based compensation expense.



(1)	During the third quarter of fiscal 2018, the Company increased the adjusted earnings per share target attainment percentage for both the fiscal 2016 and fiscal 2017 PSU grants, and recognized an additional $18.9 million of share-based compensation expense.

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 ~~29, 2018:~~28, 2019:



	Shares Granted (in millions)	Weighted-Average Grant-Date Fair Value (dollars per share)
TBOs	1.9	$	8.24
RSUs	1.1	$	36.52
PSUs⁽²⁾	1.3	$	36.43
Deferred Stock Units	0.1	$	32.71
	4.4

Shares Granted (in millions) Weighted-Average Grant-Date Fair Value (dollars per share)
TBOs 1.9
$ 8.56
RSUs 1.2
$ 40.46
PSUs 0.7
$ 38.95
Deferred Stock Units 0.1
$ 44.62
3.9



(2)	Includes approximately 0.5 million shares resulting from the payout of the 2016 PSU grants due to exceeding the adjusted earnings per share target.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE ~~10.~~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.

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 Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	June 29, 2018		June 30, 2017		June 29, 2018		June 30, 2017		June 28, 2019		June 29, 2018		June 28, 2019		June 29, 2018
Earnings:
Net income attributable to Aramark stockholders	$	72,577	$	65,295	$	392,430	$	260,785	$	82,955	$	72,577	$	362,992	$	392,430
Shares:
Basic weighted-average shares outstanding	246,028		244,266		245,588		244,399		246,928		246,028		246,665		245,588
Effect of dilutive securities	5,829		6,890		6,643		7,149		4,219		5,829		4,606		6,643
Diluted weighted-average shares outstanding	251,857		251,156		252,231		251,548		251,147		251,857		251,271		252,231

Basic Earnings Per Share:
Net income attributable to Aramark stockholders	$	0.29	$	0.27	$	1.60	$	1.07	$	0.34	$	0.29	$	1.47	$	1.60
Diluted Earnings Per Share:
Net income attributable to Aramark stockholders	$	0.29	$	0.26	$	1.56	$	1.04	$	0.33	$	0.29	$	1.44	$	1.56

Share-based awards to purchase 7.3 million and 3.7 million shares were outstanding for ~~both~~ the three months ended June 28, 2019 and June 29, 2018, ~~and June 30, 2017,~~respectively, but were not included in the computation of diluted earnings per common share, as their effect would have been antidilutive. In addition, PSUs related to ~~1.8~~1.6 million shares and ~~1.2~~1.8 million shares were outstanding for the three month periods of June ~~29, 2018~~28, 2019 and June ~~30, 2017,~~29, 2018, respectively, but were not included in the computation of diluted earnings per common share, as the performance targets were not yet met.

Share-based awards to purchase ~~1.6~~7.8 million and ~~3.9~~1.6 million shares were outstanding for the nine months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017,~~29, 2018, respectively, but were not included in the computation of diluted earnings per common share, as their effect would have been antidilutive. In addition, PSUs related to ~~1.8~~1.6 million shares and ~~1.2~~1.8 million shares were outstanding for the nine month periods of June ~~29, 2018~~28, 2019 and June ~~30, 2017,~~29, 2018, respectively, but were not included in the computation of diluted earnings per common share, as the performance targets were not yet met.

NOTE ~~11.~~12. COMMITMENTS AND CONTINGENCIES:

Certain of the Company's lease arrangements, primarily vehicle leases, with terms of one to eight years, contain provisions related to residual value guarantees. The maximum potential liability to the Company under such arrangements was approximately ~~$119.5~~$36.2 million at June ~~29, 2018~~28, 2019 if the terminal fair value of vehicles coming off lease was zero. Consistent with past experience, management does not expect any significant payments will be required pursuant to these arrangements. No amounts have been accrued for guarantee arrangements at June ~~29, 2018.~~28, 2019.

From time to time, the Company and its subsidiaries are a party to various legal actions, proceedings and investigations involving claims incidental to the conduct of their business, including actions by clients, consumers, 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, 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 negligence and/or breaches of contractual and other obligations. Based on information currently available, advice of counsel, available insurance coverage, established reserves and other resources, the Company does not believe that any such actions are likely to be, individually or in the aggregate, material to its business, financial condition, results of operations or cash flows. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company's business, financial condition, results of operations or cash flows.

1921

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE ~~12.~~13. BUSINESS SEGMENTS:

~~Prior to fiscal 2018, the~~The Company reported its operating results in three reportable segments: FSS ~~North America,~~United States, FSS International and Uniform. Beginning in fiscal 2018, the segment reporting structure was modified to align more closely with the Company’s management and internal reporting structure, which was changed on September 30, 2017. Specifically, a majority of the Canadian operations, previously in the FSS North America segment, were combined with the FSS International reportable segment. The FSS North America reportable segment was then renamed the FSS United States reportable segment. All prior period segment information has been restated to reflect the new reportable segment structure. Management believes this new presentation enhances the utility of the segment information, as it reflects the Company’s current management structure and operating organization. The financial statement effect of this segment realignment was not material. Corporate includes general expenses not specifically allocated to an individual segment and share-based compensation expense (see Note 9)10). In the Company's food and support services segments, approximately ~~80%~~77% of the global ~~sales~~revenue is related to food services and ~~20%~~23% is related to facilities services. Financial information by segment follows (in millions):


	Sales				Revenue¹
	Three Months Ended				Three Months Ended
	June 29, 2018		June 30, 2017		June 28, 2019		June 29, 2018
FSS United States	$	2,501.0	$	2,383.7	$	2,413.5	$	2,501.0
FSS International	929.9		821.8		949.9		929.9
Uniform	540.7		387.8		647.4		540.7
	$	3,971.6	$	3,593.3	$	4,010.8	$	3,971.6



	Operating Income¹
	Three Months Ended
	June 28, 2019			June 29, 2018
FSS United States	$	127.8		$	135.7
FSS International	40.2			43.7
Uniform	53.6			56.7
	221.6			236.1
Corporate	(32.8		)	(49.4		)
Operating Income	188.8			186.7
Interest and Other Financing Costs, net	82.2			89.8
Income Before Income Taxes	$	106.6		$	96.9

Operating Income
Three Months Ended
June 29, 2018 June 30, 2017
FSS United States $ 134.6
$ 119.9
FSS International 45.9
26.0
Uniform 57.1
45.0
237.6
190.9
Corporate (49.4 ) (36.2 )
Operating Income 188.2
154.7
Interest and Other Financing Costs, net (91.3 ) (61.5 )
Income Before Income Taxes $ 96.9
$ 93.2



	Revenue¹
	Nine Months Ended
	June 28, 2019		June 29, 2018
FSS United States	$	7,490.8	$	7,657.0
FSS International	2,845.1		2,768.1
Uniform	1,940.2		1,450.9
	$	12,276.1	$	11,876.0

Sales
Nine Months Ended
June 29, 2018 June 30, 2017
FSS United States $ 7,657.0
$ 7,341.6
FSS International $ 2,768.1
2,437.8
Uniform 1,450.9
1,170.9
$ 11,876.0
$ 10,950.3



	Operating Income¹
	Nine Months Ended
	June 28, 2019			June 29, 2018
FSS United States	$	560.4		$	453.6
FSS International	93.5			101.5
Uniform	144.5			131.2
	798.4			686.3
Corporate	(113.4		)	(147.8		)
Operating Income	685.0			538.5
Interest and Other Financing Costs, net	249.4			256.5
Income Before Income Taxes	$	435.6		$	282.0



(1)	The adoption of ASC 606 impacted revenue and operating income for all segments in the three and nine month periods of fiscal 2019 (see Note 7). Revenue and operating income in the three and nine month periods of fiscal 2019 for the FSS United States segment were impacted by the sale of Healthcare Technologies in the first quarter of fiscal 2019 (see Note 2).

Table of Contents

ARAMARK AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Operating Income
Nine Months Ended
June 29, 2018 June 30, 2017
FSS United States $ 451.5
$ 437.7
FSS International 108.0
108.2
Uniform 132.0
144.2
691.5
690.1
Corporate (147.8 ) (99.9 )
Operating Income 543.7
590.2
Interest and Other Financing Costs, net (261.7 ) (224.8 )
Income Before Income Taxes $ 282.0
$ 365.4

NOTE ~~13.~~14. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES:

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are classified based upon the level of judgment associated with the inputs used to measure their fair value. The hierarchical levels related to the subjectivity of the valuation inputs are defined as follows:

Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets

Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument

Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement

Recurring Fair Value Measurements

The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, borrowings and derivatives. Management believes that the carrying value of cash and cash equivalents, accounts receivable and accounts payable are representative of their respective fair values. In conjunction with the fair value measurement of the derivative instruments, the Company made an accounting policy election to measure the credit risk of its derivative instruments that are subject to master netting agreements on a net basis by counterparty portfolio, the gross values would not be materially different. The fair value of the Company's debt at June ~~29, 2018~~28, 2019 and September ~~29, 2017~~28, 2018 was ~~$7,865.2~~$7,379.8 million and ~~$5,450.1~~$7,303.1 million, respectively. The carrying value of the Company's debt at June ~~29, 2018~~28, 2019 and September ~~29, 2017~~28, 2018 was ~~$7,870.3~~$7,252.7 million and ~~$5,268.5~~$7,244.0 million, respectively. The fair values were computed using market quotes, if available, or based on discounted cash flows using market interest rates as of the end of the respective periods. The inputs utilized in estimating the fair value of the Company's debt have been classified as level 2 in the fair value hierarchy levels.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE ~~14.~~15. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS OF ARAMARK AND SUBSIDIARIES:

The following condensed consolidating financial statements of the Company have been prepared pursuant to Rule 3-10 of Regulation S-X.

The condensed consolidating financial statements are presented for: (i) Aramark (the "Parent"); (ii) Aramark Services, Inc. and Aramark International Finance S.à r.l. (the "Issuers"); (iii) the guarantors; (iv) the non guarantors; (v) elimination entries necessary to consolidate the Parent with the Issuers, the guarantors and non guarantors; and (vi) the Company on a consolidated basis. Each of the guarantors is wholly-owned, directly or indirectly, by the Company. The 5.125% Senior Notes due 2024 (the "2024 Notes"), 5.000% Senior Notes due April 1, 2025 (the "5.000% 2025 Notes"), 3.125% Senior Notes due April 1, 2025 (the "3.125% 2025 Notes" and, together with the 5.000% 2025 Notes, the "2025 Notes"), 4.75% Senior Notes due June 1, 2026 ("2026 Notes") and 5.000% Senior Notes due February 1, 2028 ~~Notes~~(the "2028 Notes") are obligations of the Company's wholly-owned subsidiary, Aramark Services, Inc., (other than the 3.125% 2025 Notes, which are obligations of the Company's wholly owned subsidiary, Aramark International Finance S.a.r.l) and are each jointly and severally guaranteed on a senior unsecured basis by the Company and substantially all of the Company's existing and future domestic subsidiaries (excluding the Receivables Facility subsidiary) ("Guarantors"). All other subsidiaries of the Company, either direct or indirect, do not guarantee the 2024 Notes, 2025 Notes, 2026 Notes or 2028 Notes ("Non Guarantors"). The Guarantors also guarantee certain other debt. These condensed consolidating financial statements have been prepared from the Company's financial information on the same basis of accounting as the condensed consolidated financial statements. Interest expense and certain other costs are partially allocated to all of the subsidiaries of the Company. Goodwill and other intangible assets have been allocated to the subsidiaries based on management's estimates.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATING BALANCE SHEETS

June ~~29, 2018~~28, 2019

(in thousands)


	Aramark (Parent)		Issuers		Guarantors		Non Guarantors		Eliminations			Consolidated		Aramark (Parent)		Issuers		Guarantors		Non Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	5	$	27,472	$	26,034	$	112,457	$	—		$	165,968	$	5	$	46,698	$	23,405	$	149,947	$	—		$	220,055
Receivables	—		1,307		549,047		1,301,574		—			1,851,928		—		2,111		588,382		1,242,418		—			1,832,911
Inventories	—		15,142		575,835		114,387		—			705,364		—		15,984		281,530		95,601		—			393,115
Prepayments and other current assets	—		9,330		83,863		93,613		—			186,806		—		40,392		74,367		81,285		—			196,044
Total current assets	5		53,251		1,234,779		1,622,031		—			2,910,066		5		105,185		967,684		1,569,251		—			2,642,125
Property and Equipment, net	—		27,653		963,811		329,902		—			1,321,366		—		43,599		1,739,272		360,894		—			2,143,765
Goodwill	—		181,756		4,769,053		655,425		—			5,606,234		—		173,104		4,702,583		650,614		—			5,526,301
Investment in and Advances to Subsidiaries	2,845,770		7,507,640		90,049		634,463		(11,077,922		)	—		3,285,917		6,865,245		—		762,770		(10,913,932		)	—
Other Intangible Assets	—		29,684		1,950,400		190,524		—			2,170,608		—		29,684		1,834,974		199,979		—			2,064,637
Other Assets	—		94,609		1,211,119		353,540		(2,002		)	1,657,266		—		20,885		973,747		360,044		(2,002		)	1,352,674
	$	2,845,775	$	7,894,593	$	10,219,211	$	3,785,885	$	(11,079,924	)	$	13,665,540	$	3,285,922	$	7,237,702	$	10,218,260	$	3,903,552	$	(10,915,934	)	$	13,729,502
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	—	$	32,162	$	27,022	$	22,786	$	—		$	81,970	$	—	$	3,756	$	27,845	$	22,148	$	—		$	53,749
Accounts payable	—		141,797		376,492		328,451		—			846,740		—		119,826		383,399		316,697		—			819,922
Accrued expenses and other current liabilities	—		197,794		681,087		334,935		88			1,213,904		—		177,816		737,534		370,287		88			1,285,725
Total current liabilities	—		371,753		1,084,601		686,172		88			2,142,614		—		301,398		1,148,778		709,132		88			2,159,396
Long-term Borrowings	—		6,773,741		74,602		939,992		—			7,788,335		—		6,368,352		77,240		753,326		—			7,198,918
Deferred Income Taxes and Other Noncurrent Liabilities	—		389,980		407,460		81,331		—			878,771		—		421,092		529,391		124,715		—			1,075,198
Intercompany Payable	—		—		5,328,743		519,783		(5,848,526		)	—		—		—		4,710,831		419,352		(5,130,183		)	—
Redeemable Noncontrolling Interest	—		—		10,045		—		—			10,045		—		—		10,068		—		—			10,068
Total Stockholders' Equity	2,845,775		359,119		3,313,760		1,558,607		(5,231,486		)	2,845,775		3,285,922		146,860		3,741,952		1,897,027		(5,785,839		)	3,285,922
	$	2,845,775	$	7,894,593	$	10,219,211	$	3,785,885	$	(11,079,924	)	$	13,665,540	$	3,285,922	$	7,237,702	$	10,218,260	$	3,903,552	$	(10,915,934	)	$	13,729,502

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ARAMARK AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATING BALANCE SHEETS

September ~~29, 2017~~28, 2018

(in thousands)



	Aramark (Parent)		Issuers		Guarantors		Non Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	5	$	50,716	$	29,844	$	134,460	$	—		$	215,025
Receivables	—		1,038		443,599		1,345,796		—			1,790,433
Inventories	—		15,857		592,259		116,686		—			724,802
Prepayments and other current assets	—		21,411		86,100		63,654		—			171,165
Total current assets	5		89,022		1,151,802		1,660,596		—			2,901,425
Property and Equipment, net	—		28,341		1,013,523		336,230		—			1,378,094
Goodwill	—		173,104		4,783,547		653,917		—			5,610,568
Investment in and Advances to Subsidiaries	3,029,553		7,441,605		90,049		844,245		(11,405,452		)	—
Other Intangible Assets	—		29,684		1,919,795		187,365		—			2,136,844
Other Assets	—		100,754		1,264,976		329,443		(2,002		)	1,693,171
	$	3,029,558	$	7,862,510	$	10,223,692	$	4,011,796	$	(11,407,454	)	$	13,720,102
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	—	$	—	$	26,564	$	4,343	$	—		$	30,907
Accounts payable	—		128,460		483,606		406,854		—			1,018,920
Accrued expenses and other current liabilities	—		205,807		926,794		307,643		88			1,440,332
Total current liabilities	—		334,267		1,436,964		718,840		88			2,490,159
Long-term Borrowings	—		6,651,110		82,097		479,870		—			7,213,077
Deferred Income Taxes and Other Noncurrent Liabilities	—		432,583		466,331		78,301		—			977,215
Intercompany Payable	—		—		4,827,084		955,407		(5,782,491		)	—
Redeemable Noncontrolling Interest	—		—		10,093		—		—			10,093
Total Stockholders' Equity	3,029,558		444,550		3,401,123		1,779,378		(5,625,051		)	3,029,558
	$	3,029,558	$	7,862,510	$	10,223,692	$	4,011,796	$	(11,407,454	)	$	13,720,102

Aramark (Parent) Issuers
Guarantors
Non
Guarantors Eliminations Consolidated
ASSETS
Current Assets:
Cash and cash equivalents $ 5
$ 111,512
$ 37,513
$ 89,767
$ —
$ 238,797
Receivables —
3,721
303,664
1,308,608
—
1,615,993
Inventories —
15,737
514,267
80,728
—
610,732
Prepayments and other current assets —
14,123
83,404
90,090
—
187,617
Total current assets 5
145,093
938,848
1,569,193
—
2,653,139
Property and Equipment, net —
29,869
775,362
236,800
—
1,042,031
Goodwill —
173,104
3,874,647
667,760
—
4,715,511
Investment in and Advances to Subsidiaries 2,459,056
5,248,858
90,049
567,277
(8,365,240 ) —
Other Intangible Assets —
29,683
914,000
177,141
—
1,120,824
Other Assets —
53,538
1,112,076
311,112
(2,002 ) 1,474,724
$ 2,459,061
$ 5,680,145
$ 7,704,982
$ 3,529,283
$ (8,367,242 ) $ 11,006,229
LIABILITIES AND
STOCKHOLDERS' EQUITY

Current Liabilities:
Current maturities of long-term borrowings $ —
$ 33,487
$ 20,330
$ 24,340
$ —
$ 78,157
Accounts payable —
167,926
461,192
326,807
—
955,925
Accrued expenses and other current liabilities —
200,130
814,542
319,253
88
1,334,013
Total current liabilities —
401,543
1,296,064
670,400
88
2,368,095
Long-term Borrowings —
4,460,730
63,604
665,997
—
5,190,331
Deferred Income Taxes and Other Noncurrent Liabilities —
425,297
513,797
39,850
—
978,944
Intercompany Payable —
—
5,224,196
747,347
(5,971,543 ) —
Redeemable Noncontrolling Interest —
—
9,798
—
—
9,798
Total Stockholders' Equity 2,459,061
392,575
597,523
1,405,689
(2,395,787 ) 2,459,061
$ 2,459,061
$ 5,680,145
$ 7,704,982
$ 3,529,283
$ (8,367,242 ) $ 11,006,229

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the three months ended June ~~29, 2018~~28, 2019

(in thousands)



	Aramark (Parent)			Issuers			Guarantors		Non Guarantors		Eliminations			Consolidated
Revenue	$	—		$	271,186		$	2,589,449	$	1,150,126	$	—		$	4,010,761
Costs and Expenses:
Cost of services provided	—			257,515			2,285,548		1,051,915		—			3,594,978
Depreciation and amortization	—			4,090			119,529		25,160		—			148,779
Selling and general corporate expenses	—			26,038			44,838		7,309		—			78,185
Interest and other financing costs, net	—			77,896			532		3,792		—			82,220
Expense allocations	—			(70,854		)	67,384		3,470		—			—
	—			294,685			2,517,831		1,091,646		—			3,904,162
Income (Loss) before Income Tax	—			(23,499		)	71,618		58,480		—			106,599
Provision (Benefit) for Income Taxes	—			(6,381		)	15,406		14,510		—			23,535
Equity in Net Income of Subsidiaries	82,955			—			—		—		(82,955		)	—
Net income (loss)	82,955			(17,118		)	56,212		43,970		(82,955		)	83,064
Less: Net income attributable to noncontrolling interest	—			—			109		—		—			109
Net income (loss) attributable to Aramark stockholders	82,955			(17,118		)	56,103		43,970		(82,955		)	82,955
Other comprehensive (loss), net of tax	(29,187		)	(30,062		)	—		20,060		10,002			(29,187		)
Comprehensive income (loss) attributable to Aramark stockholders	$	53,768		$	(47,180	)	$	56,103	$	64,030	$	(72,953	)	$	53,768

Aramark (Parent) Issuers
Guarantors
Non
Guarantors Eliminations Consolidated
Sales $ —
$ 261,383
$ 2,580,276
$ 1,129,947
$ —
$ 3,971,606
Costs and Expenses:
Cost of services provided —
235,789
2,263,239
1,025,776
—
3,524,804
Depreciation and amortization —
4,771
127,321
24,842
—
156,934
Selling and general corporate expenses —
51,310
43,179
7,226
—
101,715
Interest and other financing costs, net —
85,080
(1,466 ) 7,651
—
91,265
Expense allocations —
(77,642 ) 73,564
4,078
—
—
—
299,308
2,505,837
1,069,573
—
3,874,718
Income (Loss) before Income Tax —
(37,925 ) 74,439
60,374
—
96,888
Provision (Benefit) for Income Taxes —
(9,612 ) 17,470
16,314
—
24,172
Equity in Net Income of Subsidiaries 72,577
—
—
—
(72,577 ) —
Net income (loss) 72,577
(28,313 ) 56,969
44,060
(72,577 ) 72,716
Less: Net income attributable to noncontrolling interest —
—
139
—
—
139
Net income (loss) attributable to Aramark stockholders 72,577
(28,313 ) 56,830
44,060
(72,577 ) 72,577
Other comprehensive income (loss), net of tax (35,371 ) 13,521
—
(100,736 ) 87,215
(35,371 )
Comprehensive income (loss) attributable to Aramark stockholders $ 37,206
$ (14,792 ) $ 56,830
$ (56,676 ) $ 14,638
$ 37,206

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the nine months ended June ~~29, 2018~~28, 2019

(in thousands)


	Aramark (Parent)		Issuers			Guarantors			Non Guarantors			Eliminations			Consolidated			Aramark (Parent)			Issuers			Guarantors			Non Guarantors			Eliminations			Consolidated
Sales	$	—	$	772,008		$	7,828,692		$	3,275,335		$	—		$	11,876,035
Revenue																		$	—		$	799,765		$	8,067,783		$	3,408,549		$	—		$	12,276,097
Costs and Expenses:
Cost of services provided	—		681,761			6,891,330			3,033,286			—			10,606,377			—			738,608			7,125,488			3,165,286			—			11,029,382
Depreciation and amortization	—		14,645			360,485			68,516			—			443,646			—			12,379			358,772			76,257			—			447,408
Selling and general corporate expenses	—		153,434			111,383			17,510			—			282,327			—			117,650			131,764			21,186			—			270,600
Gain on sale of Healthcare Technologies																		—			—			(156,309		)	—			—			(156,309		)
Interest and other financing costs, net	—		244,475			(2,053		)	19,295			—			261,717			—			234,808			2,539			12,028			—			249,375
Expense allocations	—		(223,650		)	210,863			12,787			—			—			—			(215,792		)	203,680			12,112			—			—
	—		870,665			7,572,008			3,151,394			—			11,594,067			—			887,653			7,665,934			3,286,869			—			11,840,456
Income (Loss) before Income Tax	—		(98,657		)	256,684			123,941			—			281,968
Income (Loss) before Income Taxes																		—			(87,888		)	401,849			121,680			—			435,641
Provision (Benefit) for Income Taxes	—		(37,516		)	(112,920		)	39,532			—			(110,904		)	—			(33,398		)	75,704			30,283			—			72,589
Equity in Net Income of Subsidiaries	392,430		—			—			—			(392,430		)	—			362,992			—			—			—			(362,992		)	—
Net income (loss)	392,430		(61,141		)	369,604			84,409			(392,430		)	392,872			362,992			(54,490		)	326,145			91,397			(362,992		)	363,052
Less: Net income attributable to noncontrolling interest	—		—			442			—			—			442			—			—			60			—			—			60
Net income (loss) attributable to Aramark stockholders	392,430		(61,141		)	369,162			84,409			(392,430		)	392,430			362,992			(54,490		)	326,085			91,397			(362,992		)	362,992
Other comprehensive income (loss), net of tax	25,694		36,344			2,181			(33,859		)	(4,666		)	25,694
Other comprehensive (loss), net of tax																		(79,615		)	(74,487		)	—			(30,781		)	105,268			(79,615		)
Comprehensive income (loss) attributable to Aramark stockholders	$	418,124	$	(24,797	)	$	371,343		$	50,550		$	(397,096	)	$	418,124		$	283,377		$	(128,977	)	$	326,085		$	60,616		$	(257,724	)	$	283,377

2628

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the three months ended June ~~30, 2017~~29, 2018

(in thousands)



	Aramark (Parent)			Issuers			Guarantors			Non Guarantors			Eliminations			Consolidated
Revenue	$	—		$	261,383		$	2,580,276		$	1,129,947		$	—		$	3,971,606
Costs and Expenses:
Cost of services provided	—			235,789			2,262,103			1,028,401			—			3,526,293
Depreciation and amortization	—			4,771			127,321			24,842			—			156,934
Selling and general corporate expenses	—			51,310			43,179			7,226			—			101,715
Interest and other financing costs	—			85,080			(330		)	5,026			—			89,776
Expense allocations	—			(77,642		)	73,564			4,078			—			—
	—			299,308			2,505,837			1,069,573			—			3,874,718
Income (Loss) before Income Tax	—			(37,925		)	74,439			60,374			—			96,888
Provision (Benefit) for Income Taxes	—			(9,612		)	17,470			16,314			—			24,172
Equity in Net Income of Subsidiaries	72,577			—			—			—			(72,577		)	—
Net income (loss)	72,577			(28,313		)	56,969			44,060			(72,577		)	72,716
Less: Net income attributable to noncontrolling interest	—			—			139			—			—			139
Net income (loss) attributable to Aramark stockholders	72,577			(28,313		)	56,830			44,060			(72,577		)	72,577
Other comprehensive income (loss), net of tax	(35,371		)	13,521			—			(100,736		)	87,215			(35,371		)
Comprehensive income (loss) attributable to Aramark stockholders	$	37,206		$	(14,792	)	$	56,830		$	(56,676	)	$	14,638		$	37,206

Aramark (Parent) Issuers
Guarantors
Non Guarantors Eliminations Consolidated
Sales $ —
$ 274,030
$ 2,346,917
$ 972,330
$ —
$ 3,593,277
Costs and Expenses:
Cost of services provided —
247,571
2,082,456
902,339
—
3,232,366
Depreciation and amortization —
4,288
104,394
17,758
—
126,440
Selling and general corporate expenses —
37,969
35,189
6,634
—
79,792
Interest and other financing costs, net —
58,831
(847 ) 3,499
—
61,483
Expense allocations —
(67,250 ) 62,913
4,337
—
—
—
281,409
2,284,105
934,567
—
3,500,081
Income (Loss) before Income Tax —
(7,379 ) 62,812
37,763
—
93,196
Provision (Benefit) for Income Taxes —
(3,087 ) 17,424
13,495
—
27,832
Equity in Net Income of Subsidiaries 65,295
—
—
—
(65,295 ) —
Net income (loss) 65,295
(4,292 ) 45,388
24,268
(65,295 ) 65,364
Less: Net income attributable to noncontrolling interest —
—
69
—
—
69
Net income (loss) attributable to Aramark stockholders 65,295
(4,292 ) 45,319
24,268
(65,295 ) 65,295
Other comprehensive income, net of tax 17,574
4,034
1,495
57,622
(63,151 ) 17,574
Comprehensive income (loss) attributable to Aramark stockholders $ 82,869
$ (258 ) $ 46,814
$ 81,890
$ (128,446 ) $ 82,869

2729

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the nine months ended June ~~30, 2017~~29, 2018

(in thousands)



	Aramark (Parent)		Issuers			Guarantors			Non Guarantors			Eliminations			Consolidated
Revenue	$	—	$	772,008		$	7,828,692		$	3,275,335		$	—		$	11,876,035
Costs and Expenses:
Cost of services provided	—		681,761			6,889,070			3,040,701			—			10,611,532
Depreciation and amortization	—		14,645			360,485			68,516			—			443,646
Selling and general corporate expenses	—		153,434			111,383			17,510			—			282,327
Interest and other financing costs	—		244,475			207			11,880			—			256,562
Expense allocations	—		(223,650		)	210,863			12,787			—			—
	—		870,665			7,572,008			3,151,394			—			11,594,067
Income (Loss) before Income Tax	—		(98,657		)	256,684			123,941			—			281,968
Provision (Benefit) for Income Taxes	—		(37,516		)	(112,920		)	39,532			—			(110,904		)
Equity in Net Income of Subsidiaries	392,430		—			—			—			(392,430		)	—
Net income (loss)	392,430		(61,141		)	369,604			84,409			(392,430		)	392,872
Less: Net income attributable to noncontrolling interest	—		—			442			—			—			442
Net income (loss) attributable to Aramark stockholders	392,430		(61,141		)	369,162			84,409			(392,430		)	392,430
Other comprehensive income (loss), net of tax	25,694		36,344			2,181			(33,859		)	(4,666		)	25,694
Comprehensive income (loss) attributable to Aramark stockholders	$	418,124	$	(24,797	)	$	371,343		$	50,550		$	(397,096	)	$	418,124

Aramark (Parent) Issuers Guarantors Non Guarantors Eliminations Consolidated
Sales $ —
$ 785,435
$ 7,310,795
$ 2,854,058
$ —
$ 10,950,288
Costs and Expenses:
Cost of services provided —
713,520
6,404,749
2,639,623
—
9,757,892
Depreciation and amortization —
12,851
313,350
52,057
—
378,258
Selling and general corporate expenses —
105,283
102,978
15,723
—
223,984
Interest and other financing costs, net —
212,651
(2,207 ) 14,347
—
224,791
Expense allocations —
(210,077 ) 201,245
8,832
—
—
—
834,228
7,020,115
2,730,582
—
10,584,925
Income (Loss) before Income Tax —
(48,793 ) 290,680
123,476
—
365,363
Provision (Benefit) for Income Taxes —
(19,186 ) 82,727
40,793
—
104,334
Equity in Net Income of Subsidiaries 260,785
—
—
—
(260,785 ) —
Net income (loss) 260,785
(29,607 ) 207,953
82,683
(260,785 ) 261,029
Less: Net income attributable to noncontrolling interest —
—
244
—
—
244
Net income (loss) attributable to Aramark stockholders 260,785
(29,607 ) 207,709
82,683
(260,785 ) 260,785
Other comprehensive income, net of tax 24,710
42,069
172
13,955
(56,196 ) 24,710
Comprehensive income attributable to Aramark stockholders $ 285,495
$ 12,462
$ 207,881
$ 96,638
$ (316,981 ) $ 285,495

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the nine months ended June ~~29, 2018~~28, 2019

(in thousands)


	Aramark (Parent)		Issuers			Guarantors			Non Guarantors			Eliminations			Consolidated			Aramark (Parent)		Issuers			Guarantors			Non Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	—	$	(11,280	)	$	(2,707	)	$	190,411		$	(35,002	)	$	141,422		$	—	$	(92,905	)	$	70,557		$	241,852		$	(11,317	)	$	208,187
Cash flows from investing activities:
Purchases of property and equipment, client contract investments and other	—		(8,926		)	(367,388		)	(56,465		)	—			(432,779		)
Purchases of property and equipment and other																		—		(37,891		)	(247,277		)	(55,281		)	—			(340,449		)
Disposals of property and equipment	—		2,142			2,393			3,151			—			7,686			—		6,040			1,730			3,250			—			11,020
Proceeds from divestiture																		—		—			293,711			—			—			293,711
Acquisitions of businesses, net of cash acquired	—		(2,381,800		)	236,613			(94,414		)	—			(2,239,601		)	—		—			(13,843		)	(21,672		)	—			(35,515		)
Other investing activities	—		(4,214		)	512			(3,783		)	—			(7,485		)	—		(46		)	24,239			(2,352		)	—			21,841
Net cash used in investing activities	—		(2,392,798		)	(127,870		)	(151,511		)	—			(2,672,179		)
Net cash provided by (used in) investing activities																		—		(31,897		)	58,560			(76,055		)	—			(49,392		)
Cash flows from financing activities:
Proceeds from long-term borrowings	—		2,982,209			—			163,860			—			3,146,069			—		—			—			107,796			—			107,796
Payments of long-term borrowings	—		(639,731		)	(19,962		)	(41,369		)	—			(701,062		)	—		(280,809		)	(25,858		)	(65,501		)	—			(372,168		)
Net change in funding under the Receivables Facility	—		—			—			145,800			—			145,800			—		—			—			255,000			—			255,000
Payments of dividends	—		(77,317		)	—			—			—			(77,317		)	—		(81,305		)	—			—			—			(81,305		)
Proceeds from issuance of common stock	—		15,961			—			—			—			15,961			—		21,339			—			—			—			21,339
Repurchase of stock	—		(24,410		)	—			—			—			(24,410		)	—		(50,000		)	—			—			—			(50,000		)
Other financing activities	—		(44,037		)	(2,686		)	(390		)	—			(47,113		)	—		(29,581		)	(1,628		)	(113		)	—			(31,322		)
Change in intercompany, net	—		107,363			141,746			(284,111		)	35,002			—			—		541,140			(108,070		)	(444,387		)	11,317			—
Net cash provided by (used in) financing activities	—		2,320,038			119,098			(16,210		)	35,002			2,457,928			—		120,784			(135,556		)	(147,205		)	11,317			(150,660		)
(Decrease) increase in cash and cash equivalents	—		(84,040		)	(11,479		)	22,690			—			(72,829		)
Effect of foreign exchange rates on cash and cash equivalents																		—		—			—			(3,105		)	—			(3,105		)
Increase (decrease) in cash and cash equivalents																		—		(4,018		)	(6,439		)	15,487			—			5,030
Cash and cash equivalents, beginning of period	5		111,512			37,513			89,767			—			238,797			5		50,716			29,844			134,460			—			215,025
Cash and cash equivalents, end of period	$	5	$	27,472		$	26,034		$	112,457		$	—		$	165,968		$	5	$	46,698		$	23,405		$	149,947		$	—		$	220,055

2931

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the nine months ended June ~~30, 2017~~29, 2018

(in thousands)



	Aramark (Parent)		Issuers			Guarantors			Non Guarantors			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	—	$	(11,280	)	$	(2,707	)	$	194,501		$	(35,002	)	$	145,512
Cash flows from investing activities:
Purchases of property and equipment and other	—		(8,926		)	(367,388		)	(56,465		)	—			(432,779		)
Disposals of property and equipment	—		2,142			2,393			3,151			—			7,686
Acquisitions of businesses, net of cash acquired	—		(2,381,800		)	236,613			(94,414		)	—			(2,239,601		)
Other investing activities	—		(4,214		)	512			(3,783		)	—			(7,485		)
Net cash used in investing activities	—		(2,392,798		)	(127,870		)	(151,511		)	—			(2,672,179		)
Cash flows from financing activities:
Proceeds from long-term borrowings	—		2,982,209			—			163,860			—			3,146,069
Payments of long-term borrowings	—		(639,731		)	(19,962		)	(41,369		)	—			(701,062		)
Net change in funding under the Receivables Facility	—		—			—			145,800			—			145,800
Payments of dividends	—		(77,317		)	—			—			—			(77,317		)
Proceeds from issuance of common stock	—		15,961			—			—			—			15,961
Repurchase of stock	—		(24,410		)	—			—			—			(24,410		)
Other financing activities	—		(44,037		)	(2,686		)	(390		)	—			(47,113		)
Change in intercompany, net	—		107,363			141,746			(284,111		)	35,002			—
Net cash provided by (used in) financing activities	—		2,320,038			119,098			(16,210		)	35,002			2,457,928
Effect of foreign exchange rates on cash and cash equivalents	—		—			—			(4,090		)	—			(4,090		)
Increase (decrease) in cash and cash equivalents	—		(84,040		)	(11,479		)	22,690			—			(72,829		)
Cash and cash equivalents, beginning of period	5		111,512			37,513			89,767			—			238,797
Cash and cash equivalents, end of period	$	5	$	27,472		$	26,034		$	112,457		$	—		$	165,968

Aramark (Parent) Issuers
Guarantors
Non
Guarantors Eliminations Consolidated
Net cash provided by operating activities $ —
$ 195,061
$ 202,300
$ 97,854
$ (46,026 ) $ 449,189
Cash flows from investing activities:
Purchases of property and equipment, client contract investments and other —
(15,791 ) (269,316 ) (55,187 ) —
(340,294 )
Disposals of property and equipment —
150
12,624
2,143
—
14,917
Acquisitions of businesses, net of cash acquired —
—
(88,313 ) (41,781 ) —
(130,094 )
Other investing activities —
(84,408 ) 6,011
80,098
—
1,701
Net cash used in investing activities —
(100,049 ) (338,994 ) (14,727 ) —
(453,770 )
Cash flows from financing activities:
Proceeds from long-term borrowings —
3,606,864
—
100,544
—
3,707,408
Payments of long-term borrowings —
(3,228,896 ) (14,492 ) (318,112 ) —
(3,561,500 )
Net change in funding under the Receivables Facility —
—
—
82,000
—
82,000
Payments of dividends —
(75,543 ) —
—
—
(75,543 )
Proceeds from issuance of common stock —
23,048
—
—
—
23,048
Repurchase of stock —
(100,000 ) —
—
—
(100,000 )
Other financing activities —
(73,175 ) 4,632
(195 ) —
(68,738 )
Change in intercompany, net —
(268,998 ) 146,205
76,767
46,026
—
Net cash provided by (used in) financing activities —
(116,700 ) 136,345
(58,996 ) 46,026
6,675
Increase (decrease) in cash and cash equivalents —
(21,688 ) (349 ) 24,131
—
2,094
Cash and cash equivalents, beginning of period 5
47,850
31,344
73,381
—
152,580
Cash and cash equivalents, end of period $ 5
$ 26,162
$ 30,995
$ 97,512
$ —
$ 154,674

Item 2.

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 three and nine months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017~~29, 2018 should be read in conjunction with our audited consolidated financial statements, and the notes to those statements for the fiscal year ended September ~~29, 2017~~28, 2018 included in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC") on November ~~22, 2017.~~21, 2018.

Our discussion contains forward-looking statements, ~~based upon current expectations that involve risks and uncertainties,~~ such as our plans, objectives, opinions, expectations, anticipations, intentions and ~~beliefs.~~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~~described under the heading "Special Note About Forward-Looking Statements" and elsewhere in this Quarterly Report on Form 10-Q. In the following discussion and analysis of financial condition and results of operations, certain financial measures may be considered "non-GAAP financial measures" under SEC rules. These rules require supplemental explanation and reconciliation, which is provided elsewhere in this Quarterly Report on Form 10-Q.

Overview

We are a leading global provider of food, facilities and uniform services to education, healthcare, business & industry and sports, leisure & corrections clients. Our core market is the United States, which is supplemented by an additional 18-country footprint. Through our established brand, broad geographic presence and employees, we anchor our business in our partnerships with thousands of education, healthcare, business, sports, leisure and corrections clients. Through these partnerships we serve millions of consumers including students, patients, employees, sports fans and guests worldwide. We operate our business in three reportable segments: Food and Support Services United States ("FSS United States"), Food and Support Services International ("FSS International") and Uniform and Career Apparel ("Uniform").

Our Food and Support Services 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 although it is more heavily weighted towards Business & Industry.~~sectors. Administrative expenses not allocated to our three reportable segments are presented separately as corporate expenses.

During the first quarter of fiscal 2018, we acquired Avendra, LLC ("Avendra") and during the second quarter of fiscal 2018, we acquired AmeriPride Services, Inc. ("AmeriPride") in separate ~~transactions (see Note 2 to the condensed consolidated financial statements).~~transactions. The Avendra acquisition consideration was $1,386.4 million, partially offset by $87.3 million of cash and restricted investments acquired. The AmeriPride acquisition consideration was $995.4 million, partially offset by $84.9 million of cash acquired. We incurred new debt to finance both the Avendra and AmeriPride ~~acquisitions (see Note 5 to the condensed consolidated financial statements).~~acquisitions. We expect our earnings for some period following the closings to be impacted as a result of these acquisitions, due to, among other factors, merger and integration costs as well as depreciation and amortization resulting from purchase accounting and higher interest expense as a result of the new debt to finance the transactions. As a part of the ~~merger~~integration of Avendra and ~~integration,~~AmeriPride, we expect to incur ~~an additional $80~~approximately $30 million to $35 million of additional charges over the next ~~three years.~~15 months.

In the second quarter of fiscal 2018, ~~the Company~~we launched the next phase of ~~its~~our program related to food, labor and selling and general administrative initiatives to generate additional cost savings. These initiatives include a reduction in headcount through reorganization and integration, the relocation of our ~~headquarter~~headquarters facility and certain other costs. Efforts related to this ~~next~~ phase ~~of streamlining are already underway, and~~ have resulted in ~~a fiscal 2018 year-to-date charge~~charges of approximately ~~$62 million. The company~~$47 million in the nine months ended June 28, 2019. We currently ~~expects~~expect to incur additional charges ~~of up to approximately $45 million~~ related to ~~these initiatives.~~this phase of approximately $5 million within the remaining months of fiscal 2019.

Divestiture

On November 9, 2018, we completed the sale of our wholly-owned Healthcare Technologies ("HCT") business for $293.7 million in cash. The transaction resulted in a pretax gain of $156.3 million (tax effected gain of $139.2 million) in the Condensed Consolidated Statements of Income for the nine months ended June 28, 2019. We evaluated the sale under the rules for discontinued operations and concluded it did not meet all of the criteria required.

Seasonality

Our ~~sales~~revenue and operating results have varied from quarter to quarter as a result of different factors. Historically, within our FSS United States segment, there has been a lower level of activity during our first and second fiscal quarters in operations that provide services to sports and leisure clients. This lower level of activity, historically, has been partially offset during our first and second fiscal quarters by the increased activity levels in our educational operations. Conversely, historically there has been a significant increase in the provision of services to sports and leisure clients during our third and fourth fiscal quarters, which is partially offset by the effect of summer recess at colleges, universities and schools in our educational operations.

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 ~~our~~ business performance.

Fiscal Year

Our fiscal year is the fifty-two or fifty-three week period which ends on the Friday nearest September 30th. The fiscal years ending September ~~28, 2018~~27, 2019 and September ~~29, 2017~~28, 2018 are each fifty-two week periods.

Results of Operations

The following tables present an overview of our results on a consolidated and segment basis with the amount of and percentage change between periods for the three and nine months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017~~29, 2018 (dollars in millions). A majority of our Canadian operations were reclassified into the FSS International reportable segment beginning in fiscal 2018. The prior-year period balances were restated to conform to the current period presentation.


	Three Months Ended				Change					Three Months Ended				Change
	June 29, 2018		June 30, 2017		$			%		June 28, 2019		June 29, 2018		$			%
Sales	$	3,971.6	$	3,593.3	$	378.3		11	%
Revenue										$	4,010.8	$	3,971.6	$	39.2		1	%
Costs and Expenses:
Cost of services provided	3,524.8		3,232.4		292.4			9	%	3,595.0		3,526.3		68.7			2	%
Other operating expenses	258.6		206.2		52.4			25	%	227.0		258.6		(31.6		)	(12	)%
	3,783.4		3,438.6		344.8			10	%	3,822.0		3,784.9		37.1			1	%
Operating income	188.2		154.7		33.5			22	%	188.8		186.7		2.1			1	%
Interest and Other Financing Costs, net	91.3		61.5		29.8			48	%	82.2		89.8		(7.6		)	(8	)%
Income Before Income Taxes	96.9		93.2		3.7			4	%	106.6		96.9		9.7			10	%
Provision for Income Taxes	24.2		27.8		(3.6		)	(13	)%	23.5		24.2		(0.7		)	(3	)%
Net income	$	72.7	$	65.4	$	7.3		11	%	$	83.1	$	72.7	$	10.4		14	%


	Three Months Ended						Change					Three Months Ended						Change
Sales by Segment⁽¹⁾	June 29, 2018			June 30, 2017			$			%
Revenue by Segment⁽¹⁾												June 28, 2019			June 29, 2018			$			%
FSS United States	$	2,501.0		$	2,383.7		$	117.3		5	%	$	2,413.5		$	2,501.0		$	(87.5	)	(3	)%
FSS International	929.9			821.8			108.1			13	%	949.9			929.9			20.0			2	%
Uniform	540.7			387.8			152.9			39	%	647.4			540.7			106.7			20	%
	$	3,971.6		$	3,593.3		$	378.3		11	%	$	4,010.8		$	3,971.6		$	39.2		1	%

	Three Months Ended						Change					Three Months Ended						Change
Operating Income by Segment(1)	June 29, 2018			June 30, 2017			$			%		June 28, 2019			June 29, 2018			$			%
FSS United States	$	134.6		$	119.9		14.7			12	%	$	127.8		$	135.7		$	(7.9	)	(6	)%
FSS International	45.9			26.0			19.9			76	%	40.2			43.7			(3.5		)	(8	)%
Uniform	57.1			45.0			12.1			27	%	53.6			56.7			(3.1		)	(6	)%
Corporate	(49.4		)	(36.2		)	(13.2		)	37	%	(32.8		)	(49.4		)	16.6			(34	)%
	$	188.2		$	154.7		$	33.5		22	%	$	188.8		$	186.7		$	2.1		1	%

(1) As a percentage of total ~~sales,~~revenue, FSS United States represented ~~63%~~60% and ~~66%~~63%, FSS International represented 24% and 23% and Uniform represented 16% and 14% for the three month periods ended June 28, 2019 and June 29, 2018, respectively. The fiscal 2019 percentages were impacted by the adoption of ASC 606 (see Note 7 to the condensed consolidated financial statements). Revenue and operating income in the three and nine month periods of fiscal 2019 for the FSS United States segment were also impacted by the sale of Healthcare Technologies in the first quarter of fiscal 2019 (see Note 2 to the condensed consolidated financial statements).



	Nine Months Ended						Change
	June 28, 2019			June 29, 2018			$			%
Revenue	$	12,276.1		$	11,876.0		$	400.1		3	%
Costs and Expenses:
Cost of services provided	11,029.4			10,611.6			417.8			4	%
Other operating expenses	718.0			725.9			(7.9		)	(1	)%
Gain on sale of Healthcare Technologies	(156.3		)	—			(156.3		)	—	%
	11,591.1			11,337.5			253.6			2	%
Operating income	685.0			538.5			146.5			27	%
Interest and Other Financing Costs, net	249.4			256.5			(7.1		)	(3	)%
Income Before Income Taxes	435.6			282.0			153.6			54	%
(Benefit) Provision for Income Taxes	72.5			(110.9		)	183.4			(165	)%
Net income	$	363.1		$	392.9		$	(29.8	)	(8	)%



	Nine Months Ended						Change
Revenue by Segment⁽²⁾	June 28, 2019			June 29, 2018			$			%
FSS United States	$	7,490.8		$	7,657.0		$	(166.2	)	(2	)%
FSS International	2,845.1			2,768.1			77.0			3	%
Uniform	1,940.2			1,450.9			489.3			34	%
	$	12,276.1		$	11,876.0		$	400.1		3	%

	Nine Months Ended						Change
Operating Income by Segment⁽²⁾	June 28, 2019			June 29, 2018			$			%
FSS United States	$	560.4		$	453.6		$	106.8		24	%
FSS International	93.5			101.5			(8.0		)	(8	)%
Uniform	144.5			131.2			13.3			10	%
Corporate	(113.4		)	(147.8		)	34.4			(23	)%
	$	685.0		$	538.5		$	146.5		27	%

(2) As a percentage of total revenue, FSS United States represented 61% and 65%, FSS International represented 23% and 23% and Uniform represented ~~14%~~16% and ~~11% for the three month periods ended June 29, 2018 and June 30, 2017, respectively.~~

Nine Months Ended Change
June 29, 2018 June 30, 2017 $ %
Sales $ 11,876.0
$ 10,950.3
$ 925.7
8 %
Costs and Expenses:
Cost of services provided 10,606.4
9,757.9
848.5
9 %
Other operating expenses 725.9
602.2
123.7
21 %
11,332.3
10,360.1
972.2
9 %
Operating income 543.7
590.2
(46.5 ) (8 )%
Interest and Other Financing Costs, net 261.7
224.8
36.9
16 %
Income Before Income Taxes 282.0
365.4
(83.4 ) (23 )%
(Benefit) Provision for Income Taxes (110.9 ) 104.4
(215.3 ) (206 )%
Net income $ 392.9
$ 261.0
$ 131.9
51 %

Nine Months Ended Change
Sales by Segment⁽¹⁾
June 29, 2018 June 30, 2017 $ %
FSS United States $ 7,657.0
$ 7,341.6
$ 315.4
4 %
FSS International 2,768.1
2,437.8
330.3
14 %
Uniform 1,450.9
1,170.9
280.0
24 %
$ 11,876.0
$ 10,950.3
$ 925.7
8 %

Nine Months Ended Change
Operating Income by Segment June 29, 2018 June 30, 2017 $ %
FSS United States $ 451.5
$ 437.7
13.8
3 %
FSS International 108.0
108.2
(0.2 ) — %
Uniform 132.0
144.2
(12.2 ) (8 )%
Corporate (147.8 ) (99.9 ) (47.9 ) (48 )%
$ 543.7
$ 590.2
$ (46.5 ) (8 )%

~~(1) As a percentage of total sales, FSS United States represented 65% and 67%, FSS International represented 23% and 22% and Uniform represented~~ 12% ~~and 11%~~ for the nine month periods ended June 28, 2019 and June 29, 2018, respectively. The fiscal 2019 percentages were impacted by the adoption of ASC 606 (see Note 7 to the condensed consolidated financial statements). Revenue and ~~June 30, 2017, respectively.~~

~~Consolidated Overview~~

~~Sales were $3,971.6 million and $11,876.0 million for~~operating income in the three and nine month periods of fiscal ~~2018, respectively,~~2019 for the FSS United States segment were also impacted by the sale of Healthcare Technologies in the first quarter of fiscal 2019 (see Note 2 to the condensed consolidated financial statements).

Consolidated Overview

Revenue increased by approximately 1% and ~~represented an increase of approximately 11% and 8% for~~3% during the three and nine month periods of fiscal ~~2018, respectively,~~2019, compared to the prior year ~~period. Sales for the three and nine month~~ periods, ~~of fiscal 2018 were primarily impacted by:~~respectively. The increase was attributable to:

growth in ~~all of~~ our ~~segments, excluding acquisitions;~~FSS International and Uniforms segments;

growth ~~due~~in the Sports, Leisure & Corrections, Business & Industry and Education sectors in our FSS United States segment; and

the adoption of the new revenue recognition standard as certain fees previously recognized as a reduction to “Cost of services provided,” are now recognized in “Revenue" (approximately 2% for both periods); which more than offset

the ~~Avendra~~effect of the divestiture of HCT (approximately -3% and ~~AmeriPride acquisitions (approximately 5% and 3%~~-2%); and

the ~~positive~~negative impact of foreign currency translation (approximately ~~$52 million or~~-2% for both periods).

During the nine month period of fiscal 2019, the Avendra and AmeriPride acquisitions contributed approximately ~~1% and approximately $195 million or approximately~~ 2%). revenue growth.

The following table presents the cost of services provided by segment and as a percent of ~~sales~~revenue for the three and nine month periods ended June ~~29, 2018~~28, 2019 and June ~~30, 2017.~~29, 2018.


	Three Months Ended								Nine Months Ended								Three Months Ended								Nine Months Ended
	June 29, 2018				June 30, 2017				June 29, 2018				June 30, 2017				June 28, 2019				June 29, 2018				June 28, 2019				June 29, 2018
Cost of services provided	$		% of Sales		$		% of Sales		$		% of Sales		$		% of Sales		$		% of Revenue		$		% of Revenue		$		% of Revenue		$		% of Revenue
FSS United States	$	2,239.2	90	%	$	2,148.8	90	%	$	6,836.1	89	%	$	6,560.6	89	%	$	2,170.5	90	%	$	2,238.1	89	%	$	6,719.4	90	%	$	6,834.0	89	%
FSS International	862.5		93	%	775.4		94	%	2,596.8		94	%	2,273.9		94	%	888.6		94	%	864.7		93	%	2,686.8		94	%	2,603.3		94	%
Uniform	423.1		78	%	308.2		79	%	1,173.5		81	%	923.4		79	%	535.9		83	%	423.5		78	%	1,623.2		84	%	1,174.3		81	%
	$	3,524.8	89	%	$	3,232.4	90	%	$	10,606.4	89	%	$	9,757.9	89	%	$	3,595.0	90	%	$	3,526.3	89	%	$	11,029.4	90	%	$	10,611.6	89	%

The following table presents the percentages attributable to the components in cost of services provided for the three and nine month periods ended June ~~29, 2018~~28, 2019 and June ~~30, 2017.~~29, 2018.


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
Cost of services provided components	June 29, 2018		June 30, 2017		June 29, 2018		June 30, 2017		June 28, 2019		June 29, 2018		June 28, 2019		June 29, 2018
Food and support service costs	25	%	25	%	26	%	26	%	28	%	25	%	28	%	26	%
Personnel costs	49	%	48	%	47	%	47	%	47	%	49	%	47	%	47	%
Other direct costs	26	%	27	%	27	%	27	%	25	%	26	%	25	%	27	%
	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%

Operating income ~~of $188.2~~increased by approximately $2.1 million and ~~$543.7~~$146.5 million ~~for~~during the three and nine month periods ~~ended June 29, 2018 represented an increase~~ of ~~approximately 22% and a decrease of approximately 8%~~fiscal 2019, compared to the prior year periods, respectively. The increase in operating income ~~for~~during the three month period ~~ended June 29,~~of fiscal 2019 was attributable to:

a decrease in share-based compensation expense primarily related to the increase in Performance Stock Unit ("PSU") attainment percentages during fiscal 2018 (approximately $19.6 million); and

profit growth in our Sports, Leisure & Corrections and Education sectors within our FSS U.S. segment; partially offset by

higher personnel costs (approximately $36.0 million), including employee incentive expenses and expenses for employee reinvestments funded by benefits from U.S. tax reform;

profit decline from the divestiture of HCT; and

closing costs mainly related to customer contracts within our FSS International segment (approximately $8.5 million).

The increase in operating income during the nine month period of fiscal 2019 was ~~impacted by:~~attributable to:

a gain from the divestiture of the HCT business (approximately $156.3 million);

an increase in profit related to the acquisitions of Avendra and ~~AmeriPride;~~

~~profit growth in the FSS International segment;~~AmeriPride and lower merger and integration costs (approximately $38.5 million);

lower severance and consulting costs related to streamlining initiatives ~~($18.3~~(approximately $23.4 million);

~~lower compensation and benefit costs; and~~

~~the positive impact of foreign currency translation ($3 million or approximately 2%); which more than offset~~

~~acquisition and merger and integration costs related to the Avendra and AmeriPride acquisitions ($9.7 million);~~

~~an increase in depreciation and amortization expense primarily related to the acquisitions and client contract investments ($30.5 million); and~~

~~an increase~~a decrease in share-based compensation expense primarily related to the increase in ~~the expected performance stock unit ("PSU") attainment percentage ($19.2 million).~~

~~The decrease in operating income for the nine month period ended June 29, 2018 was impacted by:~~

~~acquisition and merger and integration costs related to the Avendra and AmeriPride acquisitions ($64.8 million);~~

~~an increase in severance costs related to streamlining initiatives ($21.3 million);~~

~~an increase in depreciation and amortization expense primarily related to the acquisitions and client contract investments ($65.4 million);~~

~~an increase in share-based compensation expense primarily related to the increase in the expected~~ PSU attainment ~~percentage ($18.0~~percentages during fiscal 2018 (approximately $19.9 million); and

~~an increase~~income relating to the recovery of our investment (possessory interest) at one of the National Park Service ("NPS") sites in ~~consulting~~the FSS United States segment (approximately $16.2 million); partially offset by

higher personnel costs (approximately $117.2 million), including employee incentive expenses and expenses for employee reinvestments funded by benefits from U.S. tax reform;

profit decline in the Business & Industry sector, primarily due to reinvestment costs for new and retained business, and from the divestiture of HCT; and

closing costs mainly related to ~~streamlining initiatives ($16.5~~customer contracts within our FSS International segment (approximately $10.5 million)~~; which more than offset~~

~~an increase in income related to our casualty insurance program from prior years' loss experience that were favorable ($11.8 million);~~

~~lower compensation and benefits costs; and~~

~~the positive impact of foreign currency translation ($7 million or approximately 1%)~~.

Interest and Other Financing Costs, net, decreased 8% and 3% during the three and nine month periods of fiscal 2019, respectively, compared to the prior year periods. The decrease was primarily due to an increase in favorable returns on our interest rate swaps of $2.8 million and $11.8 million for the three and nine month periods of fiscal ~~2018 increased 48% and 16% compared to the prior year periods,~~2019, respectively. The ~~increase~~decrease for the three and nine month periods was primarily due to new borrowings in the current year to finance the Avendra and AmeriPride acquisitions. This increase was partially offset by a reduction in charges related to refinancing activity for which $30.0 million was incurred during the nine month period of fiscal ~~2017 for~~2019 was partially offset by higher borrowings from the ~~write-off of deferred~~ financing ~~costs, original issue discount and call premium compared to $17.7 million incurred during the nine month period of~~in fiscal 2018 for ~~the write-off of debt issuance costs and financing commitment fees related to~~ the Avendra and AmeriPride acquisitions.

The effective income tax rate for the three and nine month periods of fiscal ~~2018 was 24.9%~~2019 were 22.1% and ~~(39.3)%~~16.7%, respectively, compared to ~~29.9%~~24.9% and ~~28.6%~~(39.3)% in the prior year periods, respectively. The ~~decrease~~increase in the effective tax rate ~~in both~~during the ~~three and~~ nine month ~~periods~~period of fiscal ~~2018 is~~2019 was driven by prior year one-time benefits resulting from a reduction in the U.S. federal statutory rate from 35% to 21% and the re-measurement of ~~the Company’s~~our deferred tax assets and liabilities as a result of the “Tax Cuts and Jobs Act." AnA benefit of approximately $183.8 million ~~tax benefit~~ was recorded to the (benefit) provision for income taxes for the nine ~~months ended June 29,~~month period of fiscal 2018 in the Condensed Consolidated Statements of Income as a result of U.S. tax reform, ~~(see Note 7 to the condensed consolidated financial statements),~~ the impact of certain permanently reinvested foreign earnings and certain other tax adjustments. The

~~decrease is partially offset by a $7.4 million Canadian withholding~~ effective tax ~~incurred on~~rate for the ~~post-acquisition integration of AmeriPride, which was recognized during the second quarter~~nine month period of fiscal ~~2018.~~2019 also includes a tax benefit of approximately $10.4 million, mainly as a result of U.S. tax reform (see Note 8 to the condensed consolidated financial statements) and a $17 million tax provision related to the sale of HCT (see Note 2 to the condensed consolidated financial statements).

Segment Results

FSS United States Segment

The FSS United States reportable segment consists of five operating sectors which have similar economic characteristics and are aggregated into a single operating segment. The five operating sectors of the FSS United States reportable segment are Business & Industry, Education, Healthcare, Sports, Leisure & Corrections and Facilities & Other.

~~Sales~~Revenue for each of these sectors are summarized as follows (in millions):


	Three Months Ended				Nine Months Ended				Three Months Ended				Change		Nine Months Ended				Change
	June 29, 2018		June 30, 2017*		June 29, 2018		June 30, 2017*		June 28, 2019		June 29, 2018		%		June 28, 2019		June 29, 2018		%
Business & Industry	$	394.0	$	400.7	$	1,168.5	$	1,160.3	$	404.4	$	394.0	3	%	$	1,199.1	$	1,168.5	3	%
Education	703.0		679.0		2,609.9		2,528.3		707.6		703.0		1	%	2,625.5		2,609.9		1	%
Healthcare	328.1		310.5		977.2		949.0		224.0		328.1		(32	)%	708.7		977.2		(27	)%
Sports, Leisure & Corrections	662.6		644.4		1,714.0		1,643.6		681.4		662.6		3	%	1,780.4		1,714.0		4	%
Facilities & Other	413.3		349.1		1,187.4		1,060.4		396.1		413.3		(4	)%	1,177.1		1,187.4		(1	)%
	$	2,501.0	$	2,383.7	$	7,657.0	$	7,341.6	$	2,413.5	$	2,501.0	(3	)%	$	7,490.8	$	7,657.0	(2	)%
*A majority of our Canadian operations were reclassified into the FSS International reportable segment beginning in fiscal 2018. The prior-year period was restated to conform to the current period presentation. The effect was not material.

The Healthcare, Education and ~~Education~~Facilities & Other sectors generally have high-single digit operating income margins and the Business & Industry and Sports, Leisure & Corrections ~~and Facilities & Other~~ sectors generally have mid-single digit operating income margins.

FSS United States segment ~~sales for both~~revenue decreased by approximately 3% and 2% during the three and nine month periods of fiscal ~~2018 increased approximately 5% and 4%~~2019 compared to the prior year periods, ~~respectively, primarily due~~respectively. The decrease during the three and nine month periods of fiscal 2019 was attributable to:

a decrease in Healthcare sector revenue resulting from the divestiture of HCT (approximately -33% and -28% of Healthcare sector); and

a decrease in Facilities & Other sector revenue resulting from a decline in base business within our facilities business; which more than offset

an increase in ~~Education~~Sports, Leisure & Corrections sector ~~sales~~revenue resulting from net new business and base business growth ~~(approximately 4%~~in stadiums and ~~approximately 3%);~~arenas;

an increase in ~~Healthcare~~Business & Industry sector ~~sales resulting from base business growth (approximately 6% and 3%);~~

~~an increase in Sports, Leisure & Corrections sector sales~~revenue resulting from net new business and base business growth ~~(approximately 3%~~in business dining; and ~~4%);~~

an increase in ~~Facilities & Other~~Education sector ~~sales resulting from net new business, acquisitions and base business growth (approximately 18% and 12%); and~~

~~lower Business & Industry sector sales for the three month period of fiscal 2018 resulting from net lost business (approximately 2%) and an increase for the nine month period of fiscal 2018~~revenue resulting from base business ~~growth (approximately 1%).~~

growth.

Operating income decreased by approximately $7.9 million and increased by approximately ~~12% and 3% for~~$106.8 million during the three and nine month periods of fiscal ~~2018~~2019 compared to the prior year periods, respectively. The decrease in operating income during the three month period of fiscal 2019 was attributable to:

higher personnel costs (approximately $9.6 million), including employee incentive expenses and expenses for employee reinvestments funded by benefits from U.S. tax reform; and

profit decline from the divestiture of HCT (approximately $7.8 million); which more than offset

profit growth in our Education, Sports, Leisure & Corrections and Facilities & Other sectors.

The increase in operating income ~~for~~during the ~~three and~~ nine month ~~periods~~period of fiscal ~~2018~~2019 was ~~primarily~~ attributable to:

a gain from the divestiture of the HCT business (approximately $156.3 million);

income relating to the recovery of our investment (possessory interest) at one of the NPS sites within our Sports, Leisure & Corrections sector (approximately $16.2 million);

lower severance charges related to streamlining initiatives (approximately $11.7 million); and

an increase in profit related to the acquisition of ~~Avendra; partially~~Avendra and lower merger and integration costs (approximately $6.1 million); which more than offset

higher personnel costs (approximately $69.4 million), including employee incentive expenses and expenses for employee reinvestments funded by benefits from U.S. tax reform;

profit decline from the divestiture of HCT (approximately $22.1 million);

an increase in ~~amortization expense mainly from our client contract investments and the acquisition of Avendra ($10.3 million and $27.7 million);~~

~~merger and integration~~settlement charges related ~~costs from the Avendra acquisition ($2.0 million and $11.7~~to exiting a joint venture arrangement (approximately $4.5 million); and

~~a profit decline in the Education sector primarily driven by net new business conversion.~~

During the three month period of fiscal 2018, operating income also increased due to a $5.4 million decline in severance related to streamlining initiatives. During the nine month period of fiscal 2018, operating income also increased due to $10.8 million of income related tolower proceeds from our casualty insurance program ~~from prior years' loss experience that were favorable, which was partially offset by an $8.0 million increase in severance related to streamlining initiatives.~~(approximately $3.5 million).

FSS International Segment

~~Sales in the~~ FSS International segment ~~for~~revenue increased by approximately 2% and 3% during the three and nine month periods of fiscal ~~2018 increased approximately 13% and 14%~~2019 compared to the prior year periods, respectively. ~~Sales for the three and nine month period of fiscal 2018 were impacted by:~~The increase was attributable to:

~~sales~~revenue growth across ~~all regions, including growth due to acquisitions (approximately 4% and 2%); and~~regions; partially offset by

the ~~positive~~negative impact of foreign currency translation (approximately ~~$48 million or 6% and approximately $185 million or 8%)~~-8% for both periods).

~~Operating income increased approximately 76% for the three month period of fiscal 2018 and was down slightly for~~During the nine month period of fiscal ~~2018~~2019, the consolidation of a joint venture contributed approximately 2% revenue growth.

Operating income decreased by approximately $3.5 million and $8.0 million during the three and nine month periods of fiscal 2019 compared to the prior year ~~periods.~~periods, respectively. The ~~increase~~decrease in operating income ~~for~~during the three and nine month ~~period~~periods of fiscal ~~2018~~2019 was ~~primarily~~ attributable to:

~~profit growth in Canada, Spain~~higher personnel costs (approximately $11.0 million and ~~South America;~~$20.8 million), including employee incentive expenses;

~~lower severance~~closing costs mainly related to ~~streamlining initiatives ($10.6~~customer contracts (approximately $8.5 million and $10.5 million);

~~lower compensation and benefits costs;~~ and

the ~~positive~~negative impact of foreign currency translation (approximately ~~$2 million or 8%)~~-$2.7 and -$3.6 million); ~~which more than~~partially offset by

profit ~~decline~~growth in ~~Northern Europe.~~Germany, Canada and South America;

~~The slight decline in operating income for the nine month period of fiscal 2018 was primarily attributable to:~~

~~profit decline in Northern Europe;~~

~~an increase in severance costs related to streamlining initiatives ($12.8 million) and~~

prior year charges related to a joint venture partner liquidation and related acquisition ~~($7.5~~(approximately $1.9 million and $7.5 million); ~~partially offset by~~

~~profit growth in Canada;~~and

lower ~~compensation and benefits costs; and~~

severance costs related to streamlining initiatives (approximately $5.6 million for the ~~positive impact of foreign currency translation (approximately $6 million or 5%);~~nine month period).

Uniform Segment

Uniform segment ~~sales~~revenue increased ~~39%~~by approximately 20% and ~~24% for~~34% during the three and nine month periods of fiscal ~~2018 compared to the prior year periods, respectively, primarily due to the acquisition of AmeriPride.~~

~~Operating income increased 27% and decreased 8% for the three and nine month periods of fiscal 2018~~2019 compared to the prior year periods, respectively. The increase was primarily from the adoption of the new revenue recognition standard as certain fees previously recognized as a reduction to “Cost of services provided” are now recognized in “Revenue” (approximately 17% and 19%) and growth within our uniform rental business. During the nine month period of fiscal 2019, the acquisition of AmeriPride contributed approximately 12% to revenue growth.

Operating income decreased by approximately $3.1 million and increased by approximately $13.3 million during the three and nine month periods of fiscal 2019 compared to the prior year periods, respectively. The decrease for the three month period of fiscal ~~2018~~2019 was ~~primarily due~~attributable to:

~~productivity expansion in~~higher personnel costs (approximately $8.4 million), including employee incentive expenses and expenses for employee reinvestments funded by benefits from U.S. tax reform; which more than offset

profit growth within our uniform rental ~~market;~~business.

anThe increase in operating income during the nine month period of fiscal 2019 was attributable to:

profit growth related to the acquisition of ~~AmeriPride;~~AmeriPride and our legacy uniform rental business; and

lower ~~compensation and benefits costs; which more than offset~~

~~an increase in~~ merger and integration related costs from the AmeriPride acquisition ~~($6.9 million); and~~

~~an increase in depreciation and amortization expense mainly from the AmeriPride acquisition ($17.6 million).~~

~~The decrease for the nine month period of fiscal 2018 was primarily due to:~~

~~an increase in merger and integration related costs from the AmeriPride acquisition ($27.1 million); and~~

~~an increase in depreciation and amortization expense mainly from the AmeriPride acquisition ($32.9~~(approximately $6.3 million); which more than offset

higher personnel costs (approximately $20.3 million), including employee incentive expenses and expenses for employee reinvestments funded by benefits from U.S. tax reform ; and

lower ~~compensation and benefits costs;~~

~~an increase in income related to~~proceeds from our casualty insurance program ~~from prior years' loss experience that were favorable ($2.0 million for the six month period);~~

~~productivity expansion in our rental market.~~(approximately $3.4 million).

Corporate

Corporate expenses, those administrative expenses not allocated to the business segments, ~~increased~~decreased by approximately ~~37%~~$16.6 million and ~~48% for~~$34.4 million during the three and nine month periods of fiscal ~~2018~~2019 compared to the prior year periods, respectively. The ~~increase~~change for the three ~~and nine~~ month ~~periods~~period of fiscal ~~2018~~2019 was ~~primarily~~ attributable ~~to:~~

~~an increase~~to a decrease in share-based compensation expense primarily related to the increase in ~~the expected~~ PSU attainment ~~percentage ($19.2 million~~percentages during fiscal 2018 (approximately $19.6 million) and ~~$18.0 million); and~~

~~an increase in~~lower consulting costs (approximately $2.2 million), partially offset by higher personnel costs, including employee incentive expenses (approximately $7.0 million). The change for ~~streamlining initiatives ($4.5 million and $16.5 million); which more than offset~~the nine month period of fiscal 2019 was attributable to:

lower ~~compensation~~acquisition related costs from the Avendra and ~~benefits costs; and~~AmeriPride acquisitions (approximately $26.0 million);

a decrease in ~~the loss~~share-based compensation expense primarily related to the increase in PSU attainment percentages during fiscal 2018 (approximately $19.9 million); and

lower consulting costs (approximately $3.6 million); partially offset by

higher personnel costs (approximately $6.7 million), including employee incentive expenses and expenses for employee reinvestments funded by benefits from U.S. tax reform; and

banker fees related to the divestiture of Healthcare Technologies (approximately $6.1 million); and

the change in ~~the~~ fair value of certain gasoline and diesel agreements ~~($3.1 million and~~(a loss of approximately $4.5 million).

~~During the nine month period of fiscal 2018, corporate expenses increased due to $27.3 million of acquisition related costs, mainly banker fees, from the Avendra and AmeriPride acquisitions.~~

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 June ~~29, 2018,~~28, 2019, we had ~~$166.0~~$220.1 million of cash and cash equivalents and approximately ~~$932.4~~$891.0 million of availability under our senior secured revolving credit facility. A significant portion of our cash and cash equivalents is held in mature, liquid markets where we have operations. As of June ~~29, 2018,~~28, 2019, there was approximately ~~$997.6~~$942.9 million of outstanding foreign currency borrowings.

We believe that our cash generated from operations, cash and cash equivalents and the unused portion of our committed credit availability under the senior secured revolving credit facility will be adequate to meet anticipated cash requirements to fund working capital, capital spending, debt service obligations, refinancings, dividends and other cash needs. As part of our ongoing liquidity assessments, we routinely monitor our cash flow (including the mix of domestic and international inflows and outflows) and the condition of the capital markets in order to be prepared to respond to changing ~~conditions, including~~conditions.

On February 5, 2019, we announced that we would invest $90 million in our workforce through targeted wage adjustments, retirement contributions and special recognition awards, as well as employee training programs and scholarships. We expect to fund the ~~impacts~~majority of ~~tax reform.~~these investments during fiscal 2019 of which $62.5 million was paid during the nine month period of fiscal 2019 in special recognition awards and employee training programs.

The table below summarizes our cash activity (in millions):


	Nine Months Ended						Nine Months Ended
	June 29, 2018			June 30, 2017			June 28, 2019			June 29, 2018
Net cash provided by operating activities	$	141.4		$	449.2		$	208.2		$	145.5
Net cash used in investing activities	(2,672.2		)	(453.8		)	(49.4		)	(2,672.2		)
Net cash provided by financing activities	2,457.9			6.7
Net cash provided by (used in) financing activities							(150.7		)	2,457.9

Reference to the Condensed Consolidated Statements of Cash Flows will facilitate understanding of the discussion that follows.

Cash Flows Provided by Operating Activities

~~During the nine month period of fiscal 2018, the~~The increase ~~in net income and non-cash charges resulted from higher operating income discussed above. The decrease~~ in cash flows provided by operating activities was primarily attributable to the change in operating assets and liabilities ($~~345.3~~95.2 million). The change in operating assets and liabilities compared to the prior year period was primarily due to the following:

Accrued expenses were less of a ~~greater~~ use of cash primarily due to the timing of ~~payments for client advances and the timing of~~ one-time payments made during the nine month period of fiscal 2018 for certain liabilities assumed related to the Avendra and AmeriPride ~~acquisitions;~~acquisitions and from lower accrued payroll and related expenses, partially offset by the timing of insurance payments;

Prepayments were ~~less of~~ a ~~source~~greater use of cash due to the timing of prepayments made related to ~~interest, insurance premiums~~income tax payments;

Accounts payable were a greater use of cash compared to the prior year period due to the timing of disbursements;

Inventories were a greater use of cash due to new business within our Uniform segment; and ~~taxes;~~

Accounts receivable were less of a ~~greater~~ use of cash due to the timing of collections and sales growth;

~~Inventories were a greater use of cash due to new business in our Uniform segment; and~~

~~Accounts payable were a greater use of cash due to the timing of disbursements.~~

During the nine month period of fiscal ~~2018,~~2019, we paid approximately $62.5 million of special recognition awards and employee training costs funded by benefits from U.S. tax reform. The Company also received gross proceeds of approximately ~~$18.9~~$14.6 million related to our casualty insurance program from our loss experience being favorable related to a prior ~~year.~~year during the nine month period of fiscal 2019. We received approximately ~~$9.7~~$18.9 million of comparable insurance proceeds during the prior year period. During the nine month period of fiscal 2018, we incurred approximately $58.2 million of acquisition related costs. The "Other operating activities" caption ~~mainly~~in the current year also reflects ~~the adjustments~~an adjustment to net income related to a non-operating gain. As a result of the adoption of the new revenue recognition standard in the ~~prior year period related~~first quarter of fiscal 2019, certain payments made to ~~certain financing related charges~~our clients, previously included within "Purchases of property and equipment and other" in ~~connection with our refinancing activity.~~Cash Flows Used in Investing Activities, are now included within "Payments made to clients on contracts" in Cash Flows Provided by Operating Activities. These client payments were approximately $30.2 million during the nine months ended June 28, 2019.

Cash Flows Used in Investing Activities

The ~~increase~~decrease in net cash flows used in investing activities ~~between periods~~during the nine month period of fiscal 2019 compared to the nine month period of fiscal 2018 relates primarily to ~~a higher level~~the proceeds from the sale of Healthcare Technologies in the first quarter of fiscal 2019 and lower levels of capital expenditures and spending for acquisitions ~~mainly AmeriPride and Avendra (see Note 2~~for the nine month period of fiscal 2019 compared to the ~~condensed consolidated financial statements)~~spending for Avendra and ~~higher spending on client contract investments and capital expenditures.~~AmeriPride in the nine month period of fiscal 2018. The "Other investing activities" includes $16.2 million of proceeds relating to the recovery of our investment (possessory interest) at one of the NPS sites within our Sports, Leisure & Corrections sector.

Cash Flows Provided by (Used in) Financing Activities

During the nine month period of fiscal 2019, cash used in financing activities was impacted by the following:

a repayment of borrowings on term loans and the revolving credit facility ($297.0 million, which includes $200.0 million of optional prepayments from the proceeds of the HCT divestiture); and

an increase in funding under the Receivables Facility ($255.0 million).

During the nine month period of fiscal 2018, cash provided by financing activities was impacted by the ~~following (see Note 5 to the condensed consolidated financial statements):~~following:

issuance of a new $1.785 billion U.S. Term Loan B due 2025;

issuance of $1.150 billion aggregate principal amount of 5.000% senior unsecured notes due 2028;

repayment of the U.S. dollar denominated term loan to Aramark Services, Inc. ("ASI") due 2022 ($633.8 million of principal); and

payment of fees ~~primarily~~ related to the U.S. Term Loan B due 2025 and the 5.000% senior unsecured notes due 2028 (approximately $24.7 ~~million).~~

~~During the nine month period of fiscal 2017, cash provided by financing activities was impacted by the following:~~

~~issuance of $600.0 million of 5.000% senior unsecured notes due 2025;~~

~~issuance of €325.0 million of 3.125% senior unsecured notes due 2025;~~

~~issuance of $2,400.0 million in the aggregate of new U.S. term loans, a CAD133.4 million term loan denominated in Canadian dollars and a ¥11,107.0 million term loan denominated in yen;~~

~~repayment of all existing term loan facilities under the Company's then existing senior secured credit facilities;~~

~~repayment of $228.8 million of the 5.750% senior unsecured notes due 2020; and~~

~~payment of fees and expenses related to the refinancings (approximately $43.0~~ million).

During fiscal 2017, the Board of Directors authorized a new share repurchase program providing for purchases of up to $250 million of Aramark common stock through February 1, 2019. ~~We repurchased approximately 2.8~~During the nine month period of fiscal 2019, we completed a repurchase of 1.6 million shares of our common stock for ~~$100.0 million in fiscal 2017.~~$50.0 million. During the nine month period of fiscal 2018, we completed a repurchase of 0.6 million shares of our common stock for $24.4 million. We may utilize various methods to effect repurchases of our common stock under the repurchase program, which could include open market repurchases, privately negotiated transactions, block transactions, accelerated share repurchase or open market solicitations for shares, some of which may be effected through Rule 10b5-1 plans. Repurchases will be made at our discretion, based on ongoing assessments of the capital needs of the business, the market price of our common stock and general market conditions. We do not currently expect to repurchase any additional shares during fiscal 2018.

The "Other financing activities" also reflects a use of cash during the nine month periods of fiscal ~~2018~~2019 and fiscal ~~2017,~~2018, primarily related to taxes paid by the Company when the Company withholds shares upon an employee's exercise or vesting of equity awards to cover income taxes.

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 June ~~29, 2018,~~28, 2019, 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 U.S. GAAP. Covenant Adjusted EBITDA is defined as net income (loss) of Aramark Services, Inc. and its restricted subsidiaries plus interest and other financing costs, net, provision (benefit) 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 Aramark Services, Inc. ("ASI") stockholder, which is a U.S. GAAP measure of Aramark Services, Inc.'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 Aramark Services, Inc. and its restricted subsidiaries only and does not include the results of Aramark.


	Three Months Ended		Three Months Ended		Three Months Ended			Three Months Ended		Twelve Months Ended			Three Months Ended		Three Months Ended		Three Months Ended			Three Months Ended			Twelve Months Ended
(in millions)	June 29, 2018		March 30, 2018		December 29, 2017			September 29, 2017		June 29, 2018			June 28, 2019		March 29, 2019		December 28, 2018			September 28, 2018			June 28, 2019
Net income attributable to ASI stockholder	$	72.6	$	27.6	$	292.3		$	113.1	$	505.6		$	83.0	$	29.4	$	250.7		$	175.4		$	538.5
Interest and other financing costs, net	91.2		94.2		76.3			62.6		324.3			82.2		84.3		83.0			92.5			342.0
(Benefit) Provision for income taxes	24.1		14.7		(149.7		)	42.1		(68.8		)
Provision for income taxes													23.5		9.5		39.7			14.3			87.0
Depreciation and amortization	156.9		152.9		133.8			130.0		573.6			148.8		147.9		150.7			152.6			600.0
Share-based compensation expense⁽¹⁾	34.8		17.1		16.4			14.9		83.2			15.2		14.6		18.6			19.8			68.2
Pro forma EBITDA for equity method investees⁽²⁾	2.9		4.0		5.0			4.3		16.2
Pro forma EBITDA for certain transactions⁽³⁾	6.8		21.4		38.2			39.0		105.4
Other⁽⁴⁾	14.9		83.4		20.0			15.6		133.9
Unusual or non-recurring (gains) and losses⁽²⁾													—		1.0		(157.3		)	—			(156.3		)
Pro forma EBITDA for equity method investees⁽³⁾													2.1		3.0		3.9			3.4			12.4
Pro forma EBITDA for certain transactions⁽⁴⁾													27.8		17.3		(7.3		)	(18.0		)	19.8
Other⁽⁵⁾													20.9		85.3		59.9			25.7			191.8
Covenant Adjusted EBITDA	$	404.2	$	415.3	$	432.3		$	421.6	$	1,673.4		$	403.5	$	392.3	$	441.9		$	465.7		$	1,703.4


(1)	Represents share-based compensation expense resulting from the application of accounting for stock options, restricted stock units, performance stock, performance stock units, and deferred stock unit awards (see Note 910 to the condensed consolidated financial statements).


(2)	Represents the gain from the divestiture of Healthcare Technologies.


(3)	Represents our estimated share of EBITDA, primarily from our AIM Services Co., Ltd. equity method investment, not already reflected in our Net income attributable to ASI stockholder. EBITDA for this equity method investee is calculated in a manner consistent with consolidated Covenant Adjusted EBITDA but does not represent cash distributions received from this investee.


~~(3)~~(4)	Represents the annualizing of net EBITDA from acquisitions and divestitures made during the period.

~~(4)~~(5)

Other for the twelve months ended June ~~29, 2018~~28, 2019 includes organizational streamlining initiatives ($~~40.6~~16.7 million), the impact of the change in fair value related to certain gasoline and diesel agreements ($~~4.1~~4.2 million ~~gain)~~loss), expenses related to merger and integration related charges ($~~66.9~~39.6 million), ~~estimated~~compensation expense for employee reinvestments funded by benefits from U.S. tax reform ($70.5 million), adjustments to remove the impact attributable to the adoption of ~~natural disasters, net of insurance proceeds~~certain new accounting standards, including Accounting Standards Codification 606, Revenue from Contracts with Customers, in accordance with the Credit Agreement and indentures ($~~13.3 million, of which $6.1 million related to asset write-downs), property and other asset write-downs related to a joint venture partner liquidation and related acquisition ($7.5~~16.2 million), duplicate rent charges, moving costs, opening costs to build out and ready ~~our~~the Company's new headquarters while occupying ~~our then-existing~~its existing headquarters and closing costs ($~~4.9~~11.1 million), banker fees and other charges related to the sale of Healthcare Technologies ($8.0 million), closing costs mainly related to customer contracts ($8.5 million), certain environmental charges ($5.0 million), settlement charges related to exiting a joint venture arrangement ($4.5 million), the impact of hyperinflation in Argentina ($3.8 million) and other miscellaneous expenses.

Our covenant requirements and actual ratios for the twelve months ended June ~~29, 2018~~28, 2019 are as follows:



	Covenant Requirements	Actual Ratios
Consolidated Secured Debt Ratio⁽¹⁾	5.125x	~~2.52~~2.08
Interest Coverage Ratio (Fixed Charge Coverage Ratio)⁽²⁾	2.000x	~~4.66~~4.89

(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, of 5.125x. Consolidated total indebtedness secured by a lien is defined in the Credit Agreement as total indebtedness consisting of debt for borrowed money, capital leases, debt in respect of sale-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 sheet 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 our Credit Agreement, which, if ASI's lenders under the Credit Agreement (other than the lenders in respect of ASI's U.S. Term Loan B, which lenders do not benefit from the maximum Consolidated Secured 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 indebtedness and to make certain restricted payments. 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 incur additional indebtedness, other than the incremental capacity provided for under the Credit Agreement and pursuant to specified exceptions, and make certain restricted payments, other than pursuant to certain exceptions. The minimum Interest Coverage Ratio is 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, further adjusted for certain non-cash or nonrecurring interest expense and our estimated share of interest expense from one equity method ~~investee.The~~investee. The indentures governing our senior notes include a similar requirement which is referred to as a Fixed Charge Coverage Ratio.

The Company and its subsidiaries and affiliates may from time to time, in their 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.

During the ~~nine month period~~first quarter of fiscal ~~2018,~~2019, we extended the ~~Company had material changes to its debt structure (see Note 5 to the condensed consolidated financial statements). As a result~~maturity dates of the ~~material changes~~Revolving Credit Facility, Yen Term Loan due 2022, Canadian Term Loan due 2022, Canadian Term Loan due 2023 and Euro Term Loan due 2022 to October 1, 2023.

On August 6, 2019, we announced a share repurchase program authorizing us to repurchase up to $200.0 million of our common stock, expiring in July 2022. We may utilize various methods to effect repurchases of our common stock under the ~~debt structure,~~repurchase program, which could include open market repurchases, privately negotiated transactions, block transactions, accelerated share repurchase or open market solicitations for shares, some of which may be effected through Rule 10b5-1 plans. Repurchases will be made based on ongoing assessments of the ~~following table summarizes~~capital needs of the business, the market price of our ~~estimated future obligations for debt repayments~~common stock and ~~estimated interest payments as of June 29, 2018 (dollars in thousands):~~general market conditions. The program may be suspended or discontinued at any time.

Payments Due by Period
Contractual Obligations as of June 29, 2018 Total Less than
1 year 1-3 years 3-5 years More than
5 years
Long-term borrowings⁽¹⁾
$ 7,780,769
$ 52,799
$ 565,720
$ 600,025
$ 6,562,225
Capital lease obligations 137,068
29,171
46,990
24,773
36,134
Estimated interest payments⁽²⁾
2,177,200
312,800
625,700
640,800
597,900
$ 10,095,037
$ 394,770
$ 1,238,410
$ 1,265,598
$ 7,196,259


~~(1)~~	~~Excludes the $60.5 million reduction to long-term borrowings from debt issuance costs and the increase of $13.0 million from the premium on the 5.125% Senior Notes due 2024.~~


~~(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 considering any current hedging relationships. Payments related to variable debt are based on applicable rates at June 29, 2018 plus the specified margin in the associated debt agreements for each period presented.

Critical Accounting Policies and Estimates

Our significant accounting policies are described in the notes to the consolidated financial statements included in our Form 10-K filed with the SEC on November ~~22, 2017.~~21, 2018. As described in such notes, we recognize ~~sales~~revenue in the period in which ~~services are provided pursuant~~the performance obligation is satisfied. During the first quarter of fiscal 2019, we adopted the new accounting standard related to revenue recognition. See Notes 1 and 7 to the ~~terms~~condensed consolidated financial statement for more information on the impact of ~~our contractual relationships with our clients. Sales from direct marketing activities are recognized upon shipment.~~adoption. For a more complete discussion of the critical accounting policies and estimates that we have identified in the preparation of our condensed consolidated financial statements, please refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K filed with the SEC on November ~~22, 2017.~~21, 2018.

In preparing our financial statements, management is required to make estimates and assumptions that, among other things, affect the reported amounts of assets, liabilities, ~~sales~~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.

New Accounting Standard Updates

See Note 1 to the condensed consolidated financial statements for a full description of recent accounting standard updates, including the expected dates of adoption.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We are exposed to the impact of interest rate changes and manage this exposure through the use of variable-rate and fixed-rate debt and by utilizing interest rate swaps. We do not enter into contracts for trading purposes and do not use leveraged

instruments. The ~~information below summarizes our~~ market ~~risks~~risk associated with debt obligations ~~and other significant financial instruments~~ as of June ~~29,~~28, 2019 has not materially changed from September 28, 2018 (see ~~Note 5~~Item 7A "Quantitative and Qualitative Disclosure About Market Risk" in our Form 10-K for the fiscal year ended September 28, 2018 filed with the SEC on November 21, 2018). See Note 6 to the condensed consolidated financial ~~statements). Fair values were computed using market quotes, if available, or based on discounted cash flows using market interest rates~~statements for a discussion of the Company's derivative instruments and Note 14 for the disclosure of the fair value and related carrying value of the Company's debt obligations as of the end of the respective periods. For debt obligations, the table presents principal cash flows and related interest rates by contractual fiscal year of maturity. Variable interest rates disclosed represent the weighted-average rates of the portfolio at June 29, 2018. For interest rate swaps, the table presents the notional amounts and related weighted-average interest rates by fiscal year of maturity. The variable rates presented are the average forward rates for the term of each contract.

(US$ equivalent in millions)
Expected Fiscal Year of Maturity
As of June 29, 2018 2018 - 2019 2020 2021 2022 2023 Thereafter Total Fair Value
Debt:
Fixed rate $ 37
$ 25
$ 19
$ 13
$ 11
$ 3,562
$ 3,667
$ 3,603
Average interest rate 5.0 % 5.0 % 5.0 % 5.0 % 5.0 % 4.8 % — %
Variable rate $ 53
$ 96
$ 497
$ 456
$ 125
$ 3,024
$ 4,251
$ 4,262
Average interest rate 4.7 % 3.4 % 3.1 % 2.9 % 3.7 % 4.1 % — %
Interest Rate Swaps:
Receive variable/pay fixed $ 725
$ 425
$ —
$ —
$ 1,550
$ —
$ 2,700
$ 48
Average pay rate 1.9 % 2.2 % — % — % 2.1 %
Average receive rate 2.1 % 2.1 % — % — % 2.1 %
28, 2019.

Item 4. Controls and Procedures

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that the Company's disclosure controls and procedures, as of the end of the period covered by this report, are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the

Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosures. As discussed in Note 2 to the condensed consolidated financial statements included in this Quarterly Report, we completed our acquisitions of Avendra and AmeriPride on December 11, 2017 and January 19, 2018, respectively. As part of our post-closing integration activities, we are engaged in the process of assessing the internal controls of Avendra and AmeriPride. As permitted by interpretive guidance for newly acquired businesses issued by the staff of the Securities and Exchange Commission, management has excluded the internal control over financial reporting of Avendra and AmeriPride from the evaluation of the Company’s effectiveness of its disclosure controls and procedures as of June 29, 2018. As set forth in more detail in Note 2 to the condensed consolidated financial statements included in this Quarterly Report, total assets of Avendra and AmeriPride included in the Company’s preliminary purchase price allocation of these acquisitions were $1,500.7 million and $1,197.6 million, respectively. A controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. ~~Other than these acquisitions, no~~No change in the Company's internal control over financial reporting occurred during the Company's third quarter of fiscal ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II

Item 1. Legal Proceedings

Our business is subject to various federal, state and local laws and regulations governing, among other things, the generation, handling, storage, transportation, treatment and disposal of water wastes and other substances. We engage in informal settlement discussions with federal, state, local and foreign authorities regarding allegations of violations of environmental laws in connection with our operations or businesses conducted by our predecessors or companies that we have acquired, the aggregate amount of which and related remediation costs we do not believe should have a material adverse effect on our financial condition or results of ~~operations.~~operations as of June 28, 2019.

From time to time, the Company and its subsidiaries are a party to various legal actions, proceedings and investigations involving claims incidental to the conduct of their business, including those brought by clients, consumers, employees, government entities and third parties under, among others, 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, 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 negligence and/or breaches of contractual and other obligations. Based on information currently available, advice of counsel, available insurance coverage, established reserves and other resources, the Company does not believe that any such actions, proceedings or investigations are likely to be, individually or in the aggregate, material to its business, financial condition, results of operations or cash flows. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company's business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Part I, Item 1A of the Form 10-K for the fiscal year ended September ~~29, 2017~~28, 2018 and filed with the SEC on November ~~22, 2017.~~21, 2018.

Item 6. Exhibits

See the Exhibit Index which is incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August ~~7, 2018.~~6, 2019.



				Aramark

				By:		/s/ B~~RIAN~~P~~RESSLER~~ STEPHEN P. BRAMLAGE, JR.
				Name:		~~Brian Pressler~~Stephen P. Bramlage, Jr.
				Title:		~~Senior~~Executive Vice President and Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer ~~(Principal Accounting Officer~~ and Authorized Signatory)

Exhibit Index



Exhibit No.		Description
~~10.1~~	31.1	Incremental Amendment No. 4, dated as of May 11, 2018, among Aramark Services, Inc. (the “Company”), Sumitomo Mitsui Banking Corp. (the “Yen Term C Lender”) and JPMorgan Chase Bank, N.A. as administrative agent for the Lenders (as defined below) and collateral agent for the secured parties thereunder to the credit agreement, dated March 28, 2017, among the Company, Aramark Intermediate Holdco Corporation, ARAMARK Canada Ltd., ARAMARK Investments Limited, ARAMARK Ireland Holdings Limited, ARAMARK Regional Treasury Europe, Designated Activity Company, ARAMARK Holdings GmbH & Co. KG, Aramark International Finance S.à r.l. and certain wholly-owned domestic subsidiaries of the Company, the financial institutions from time to time party thereto (including the financial institutions party to the Incremental Amendment, the “Lenders”), the issuing banks named therein and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and collateral agent for the secured parties thereunder.
~~10.2~~		Incremental Amendment No. 5, dated as of May 24, 2018, among Aramark Services, Inc. (the “Company”), Aramark Intermediate HoldCo Corporation (“Holdings”), certain wholly-owned subsidiaries of the Company, each Converting U.S. Term B-2 Lender (as defined therein), the Additional U.S. Term B-2 Lender (as defined therein), the financial institutions party thereto and JPMorgan Chase Bank, N.A. as administrative agent for the Lenders (as defined below) and collateral agent for the secured parties thereunder to the credit agreement, dated March 28, 2017, among the Company, Holdings, ARAMARK Canada Ltd., ARAMARK Investments Limited, ARAMARK Ireland Holdings Limited, ARAMARK Regional Treasury Europe, Designated Activity Company, ARAMARK Holdings GmbH & Co. KG, Aramark International Finance S.à r.l. and certain wholly-owned domestic subsidiaries of the Company, the financial institutions from time to time party thereto (including the financial institutions party to the Incremental Amendment, the “Lenders”), the issuing banks named therein and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and collateral agent for the secured parties thereunder (incorporated herein by reference to Exhibit 10.1 to Aramark’s Current Report on Form 8-K filed with the SEC on May 31, 2018 pursuant to the Exchange Act (file number 001-36223)).
~~10.3~~		Incremental Amendment No. 6, dated as of June 12, 2018, among Aramark Services, Inc. (the “Company”), Aramark Intermediate HoldCo Corporation (“Holdings”), certain wholly-owned subsidiaries of the Company, each Converting U.S. Term B-3 Lender (as defined therein), the Additional U.S. Term B-3 Lender (as defined therein), the financial institutions party thereto and JPMorgan Chase Bank, N.A. as administrative agent for the Lenders (as defined below) and collateral agent for the secured parties thereunder to the credit agreement, dated March 28, 2017, among the Company, Holdings, ARAMARK Canada Ltd., ARAMARK Investments Limited, ARAMARK Ireland Holdings Limited, ARAMARK Regional Treasury Europe, Designated Activity Company, ARAMARK Holdings GmbH & Co. KG, Aramark International Finance S.à r.l. and certain wholly-owned domestic subsidiaries of the Company, the financial institutions from time to time party thereto (including the financial institutions party to the Incremental Amendment, the “Lenders”), the issuing banks named therein and JPMorgan Chase Bank, N.A., as administrative agent for the Lenders and collateral agent for the secured parties thereunder (incorporated herein by reference to Exhibit 10.1 to Aramark’s Current Report on Form 8-K filed with the SEC on June 18, 2018 pursuant to the Exchange Act (file number 001-36223)).
~~31.1~~		Certification of Eric Foss, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Stephen P. Bramlage Jr., Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Eric Foss, Chief Executive Officer, and Stephen P. Bramlage Jr., Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following financial information from Aramark's Quarterly Report on Form 10-Q for the period ended June ~~29, 2018~~28, 2019 formatted in inline XBRL: (i) Condensed Consolidated Balance Sheets as of June ~~29, 2018~~28, 2019 and September ~~29, 2017;~~28, 2018; (ii) Condensed Consolidated Statements of Income for the three and nine months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017;~~29, 2018; (iii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017;~~29, 2018; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended June ~~29, 2018~~28, 2019 and June ~~30, 2017;~~29, 2018; (v) Condensed Consolidated Statements of Stockholders' Equity for the three and ~~(v)~~nine months ended June 28, 2019 and June 29, 2018; and (vi) Notes to condensed consolidated financial statements.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and should not be relied upon for that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

The XBRL instance document does not appear in the interactive data file because the XBRL tags are embedded within the inline XBRL document.

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TABLE OF CONTENTS
			Page
PART I - Financial Information
	Item 1.	Financial Statements	1
		Condensed Consolidated Balance Sheets (Unaudited)	1
		Condensed Consolidated Statements of Income (Unaudited)	2
		Condensed Consolidated Statements of Comprehensive Income (Unaudited)	3
		Condensed Consolidated Statements of Cash Flows (Unaudited)	4
		~~Notes to~~ Condensed Consolidated ~~Financial~~ Statements of Stockholders' Equity (Unaudited)	5
		~~Item 2.~~Notes to Condensed Consolidated Financial Statements (Unaudited)	7
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3133
	Item 3.	Quantitative and Qualitative ~~Disclosures~~Disclosure About Market Risk	4143
	Item 4.	Controls and Procedures	4144

PART II - Other Information
	Item 1.	Legal Proceedings	4345
	Item 1A.	Risk Factors	4345
	Item 6.	Exhibits	4345



Current assets	$	237,538
Noncurrent assets	960,035
Total assets	$	1,197,573

Current liabilities	$	135,427
Noncurrent liabilities	66,718
Total liabilities	$	202,145



	Estimated Fair Value (in millions)		Weighted- Average Estimated Useful Life (in years)
Customer relationship assets	$	297.0	15
Trade names		24.0	3	to indefinite
Total intangible assets	$	321.0



Current assets	$	157,675
Noncurrent assets	1,343,035
Total assets	$	1,500,710

Current liabilities	$	108,384
Noncurrent liabilities	5,949
Total liabilities	$	114,333



	Three Months Ended					Nine Months Ended
Unaudited (in thousands)		June 29, 2018		June 30, 2017			June 29, 2018		June 30, 2017
Total sales		$	3,971,606	$	3,789,191		$	12,100,865	$	11,526,351
Net income			79,817		55,107			435,707		226,264



Segment	September 29, 2017		Acquisitions		Translation			June 29, 2018
FSS United States	$	3,493,756	$	532,201	$	—		$	4,025,957
FSS International	637,816		2,656		(14,433		)	626,039
Uniform	583,939		370,856		(557		)	954,238
	$	4,715,511	$	905,713	$	(14,990	)	$	5,606,234



2018	$	26,067
2019	63,980
2020	120,216
2021	515,768
2022	468,881
Thereafter	6,722,925



	Payments Due by Period
Contractual Obligations as of June 29, 2018	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term borrowings⁽¹⁾	$	7,780,769	$	52,799	$	565,720	$	600,025	$	6,562,225
Capital lease obligations	137,068		29,171		46,990		24,773		36,134
Estimated interest payments⁽²⁾	2,177,200		312,800		625,700		640,800		597,900
	$	10,095,037	$	394,770	$	1,238,410	$	1,265,598	$	7,196,259



	(US$ equivalent in millions)
	Expected Fiscal Year of Maturity
As of June 29, 2018	2018 - 2019			2020			2021			2022			2023			Thereafter			Total			Fair Value
Debt:
Fixed rate	$	37		$	25		$	19		$	13		$	11		$	3,562		$	3,667		$	3,603
Average interest rate	5.0		%	5.0		%	5.0		%	5.0		%	5.0		%	4.8		%	—		%
Variable rate	$	53		$	96		$	497		$	456		$	125		$	3,024		$	4,251		$	4,262
Average interest rate	4.7		%	3.4		%	3.1		%	2.9		%	3.7		%	4.1		%	—		%
Interest Rate Swaps:
Receive variable/pay fixed	$	725		$	425		$	—		$	—		$	1,550		$	—		$	2,700		$	48
Average pay rate	1.9		%	2.2		%	—		%	—		%	2.1		%
Average receive rate	2.1		%	2.1		%	—		%	—		%	2.1		%