Aramark(US:ARMK)2024-08-06 20:11PART I - Financial Information This section provides Aramark's unaudited condensed consolidated financial statements, management's discussion and analysis, and disclosures on market risk and controls Item 1. Financial Statements (Unaudited) This section presents Aramark's unaudited condensed consolidated financial statements and detailed accounting notes Condensed Consolidated Balance Sheets This statement provides a snapshot of Aramark's assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | June 28, 2024 | September 29, 2023 | | :-------------------- | :------------ | :----------------- | | Cash and cash equivalents | $436,075 | $1,927,088 | | Total current assets | $3,330,366 | $5,220,027 | | Total Assets | $12,548,711 | $16,871,241 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | | | | Total current liabilities | $3,452,966 | $5,029,967 | | Long-Term Borrowings | $5,034,327 | $5,098,662 | | Total stockholders' equity | $2,943,924 | $3,712,718 | | Total Liabilities and Stockholders' Equity | $12,548,711 | $16,871,241 | Condensed Consolidated Statements of Income This statement details Aramark's revenues, operating income, and net income for the reported periods Condensed Consolidated Statements of Income (in thousands) | (in thousands) | Three Months Ended June 28, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 28, 2024 | Nine Months Ended June 30, 2023 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $4,376,076 | $4,053,050 | $12,983,754 | $11,882,926 | | Operating income | $161,679 | $132,512 | $487,715 | $409,554 | | Net income from Continuing Operations attributable to Aramark stockholders | $58,126 | $286,606 | $140,111 | $339,353 | | Net income attributable to Aramark stockholders | $58,126 | $338,484 | $140,111 | $468,676 | | Basic earnings per share attributable to Aramark stockholders | $0.22 | $1.30 | $0.53 | $1.80 | | Diluted earnings per share attributable to Aramark stockholders | $0.22 | $1.29 | $0.53 | $1.79 | Condensed Consolidated Statements of Comprehensive Income This statement presents Aramark's net income and other comprehensive income components Condensed Consolidated Statements of Comprehensive Income (in thousands) | (in thousands) | Three Months Ended June 28, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 28, 2024 | Nine Months Ended June 30, 2023 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $58,121 | $338,555 | $139,640 | $468,088 | | Other comprehensive (loss) income, net of tax | $(4,618) | $29,515 | $(38,043) | $45,463 | | Comprehensive income attributable to Aramark stockholders | $53,508 | $367,999 | $102,068 | $514,139 | Condensed Consolidated Statements of Cash Flows This statement outlines Aramark's cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Nine Months Ended June 28, 2024 | Nine Months Ended June 30, 2023 | | :------------- | :------------------------------ | :------------------------------ | | Net cash used in operating activities of Continuing Operations | $(295,101) | $(415,007) | | Net cash (used in) provided by investing activities of Continuing Operations | $(379,404) | $323,504 | | Net cash (used in) provided by financing activities of Continuing Operations | $(800,564) | $76,166 | | (Decrease) Increase in cash and cash equivalents and restricted cash | $(1,476,838) | $81,816 | | Cash and cash equivalents and restricted cash, end of period | $495,529 | $447,247 | Condensed Consolidated Statements of Stockholders' Equity This statement details changes in Aramark's stockholders' equity, including net income and stock transactions - Total stockholders' equity decreased from $3,712,718 thousand as of September 29, 2023, to $2,943,924 thousand as of June 28, 2024, primarily due to the separation of the Uniform Segment, payments of dividends, and repurchases of common stock, partially offset by net income and capital contributions1820 Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed explanations and disclosures for the consolidated financial statements NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note describes Aramark's business, reporting segments, and key accounting policies - Aramark is a global provider of food and facilities services, operating in two segments: FSS United States and FSS International, with the Uniform segment separated into Vestis Corporation on September 30, 2023, and reported as discontinued operations24 - The company adopted new accounting standards for supplier finance programs and business combinations in fiscal 2024 with no material impact, while new SEC climate-related disclosure rules and FASB standards are being evaluated for future fiscal years24 Accumulated Other Comprehensive Loss (in thousands) | Accumulated Other Comprehensive Loss (in thousands) | June 28, 2024 | September 29, 2023 | | :-------------------------------------------------- | :------------ | :----------------- | | Pension plan adjustments | $(9,165) | $(14,241) | | Foreign currency translation adjustments | $(170,501) | $(193,115) | | Cash flow hedges | $74,795 | $109,119 | | Total | $(104,871) | $(98,237) | NOTE 2. DISCONTINUED OPERATIONS This note details the spin-off of Aramark's Uniform segment and its treatment as discontinued operations - On September 30, 2023, Aramark completed the tax-free spin-off of its Uniform segment into Vestis Corporation, distributing one share of Vestis common stock for every two shares of Aramark common stock held, with historical results reflected as discontinued operations39 - In connection with the spin-off, Aramark entered into several agreements with Vestis, including Separation and Distribution, Transition Services, Tax Matters, and Employee Matters Agreements, with services provided to Vestis totaling $10.4 million for the nine months ended June 28, 20243941 Uniform Segment (Discontinued Operations, in thousands) | Uniform Segment (Discontinued Operations, in thousands) | Nine Months Ended June 30, 2023 | | :------------------------------------------------------ | :------------------------------ | | Revenue | $2,069,366 | | Operating income | $175,457 | | Income from Discontinued Operations, net of tax | $129,323 | NOTE 3. SEVERANCE This note outlines severance charges incurred from headcount reductions - During the second quarter of fiscal 2023, Aramark approved headcount reductions, resulting in $29.7 million in severance charges for the nine months ended June 30, 2023, primarily within FSS International ($25.8 million)46[49