What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-11-22 compared with 2023-12-21 · 642 added, 438 removed, 593 unchanged (65% of the section changed)

2 unchanged sentences

Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (PCAOB ID 34 )

Combined Balance Sheets as of September 29, 2023 and September 30, 2022

Combined Statements of Income for the fiscal years ended September 29, 2023 , September 30, 2022, and October 1, 2021

Combined Statements of Comprehensive Income for the fiscal years ended September 29, 2023 , September 30, 2022, and October 1, 2021

Combined Statements of Cash Flows for the fiscal years ended September 29, 2023 , September 30, 2022, and October 1, 2021

Combined Statements of Parent’s Equity for the fiscal years ended September 29, 2023 , September 30, 2022, and October 1, 2021

Notes to Combined Financial Statements

Consolidated and Combined Balance Sheets as of September 27, 2024 and September 29, 2023

Consolidated and Combined Statements of Income for the fiscal years ended September 27, 2024 , September 29, 2023, and September 30, 2022

Consolidated and Combined Statements of Comprehensive Income for the fiscal years ended September 27, 2024 , September 29, 2023, and September 30, 2022

Consolidated and Combined Statements of Cash Flows for the fiscal years ended September 27, 2024 , September 29, 2023, and September 30, 2022

Consolidated and Combined Statements of Changes in Equity for the fiscal years ended September 27, 2024 , September 29, 2023, and September 30, 2022

Notes to Consolidated and Combined Financial Statements

Nature of Business, Basis of Presentation and Summary of Significant Accounting Policies

Goodwill and Other Intangible Assets

Related Party Transactions and Parent Company Investment

Derivative Instruments

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Employee Pension and Profit Sharing Plans

Share-Based Compensation

Commitments and Contingencies

Business Segments

Share-Based Compensation

Earnings Per Share

Related Party Transactions and Parent Company Investment

Accounts Receivable Securitization Facility

Subsequent Events

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Opinion on the Financial Statements

We have audited the accompanying combined balance sheets of Vestis Corporation (the "Company") as of September 29, 2023 and September 30, 2022, the related combined statements of income, comprehensive income, cash flows and parent’s equity, for each of the three years in the period ended September 29, 2023, and the related notes (collectively, the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 29, 2023 and September 30, 2022, and the results of its operations and its cash flows for each of the three years in the period ended September 29, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated and combined balance sheets of Vestis Corporation and subsidiaries (the "Company") as of September 27, 2024 and September 29, 2023, respectively, the related consolidated and combined statements of income, comprehensive income, cash flows and changes in equity, for each of the three years in the period ended September 27, 2024, September 29, 2023 and September 30, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 27, 2024 and September 29, 2023, and the results of its operations and its cash flows for each of the three years in the period ended September 27, 2024, September 29, 2023 and September 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 27, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 22, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Insurance – Refer to Note 1 to the financial statements

Accounts Receivable Securitization – Refer to Note 1 and Note 16 to the financial statements

Critical Audit Matter Description

Aramark (the “Parent”) insures portions of its risk in general liability, automobile liability, workers’ compensation liability and property liability through a wholly owned captive insurance subsidiary, to enhance its risk financing strategies.

The Parent’s reserves for retained costs associated with the Parent’s casualty program are estimated through actuarial methods, with the assistance of third-party actuaries, using loss development assumptions based on claims history.

The Parent allocates certain costs associated to the captive insurance subsidiary to the Company.

The Company does not recognize liabilities related to claims from general liability, automobile liability, workers' compensation liability and property liability on the combined balance sheets as the Parent's captive insurance subsidiary is the primary responsible party related to these obligations.

The Parent's captive insurance subsidiary had estimated reserves of approximately $68.4 million and $61.7 million at September 29, 2023 and September 30, 2022, respectively, related to claims arising from the Company's operations.

We identified the valuation of insurance reserves and the allocation of associated costs to the Company as a critical audit matter because estimating projected settlement value of reported and unreported claims arising from the Company’s operations involves significant estimation by management.

This required high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists.

The Company entered into an accounts receivable securitization facility (the “A/R Facility”) to sell certain trade receivables arising from revenue transactions of the Company’s U.S.

subsidiaries on a revolving basis.

The A/R Facility is scheduled to terminate on August 2, 2027, unless terminated earlier pursuant to its terms.

As of September 27, 2024, the total value of accounts receivable sold under the A/R Facility and derecognized from the Company’s consolidated balance sheet was $229.0 million.

We identified the accounting for the A/R Facility as a critical audit matter because of the complexity involved in determining whether the receivables have been appropriately isolated from the Company and whether the Company has transferred control of the receivables such that the transfers should be accounted for as a sale of financial assets.

required a high degree of auditor judgment and an increased extent of effort, including the need to involve subject matter experts.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the insurance reserves and the allocation of associated costs to the Company included the following, among others:

• We evaluated the inputs used to estimate the insurance reserves by:

◦ Reading the insurance policies and comparing the coverage and terms to the assumptions used.

◦ Testing the underlying historical claims data that served as the basis for the actuarial analysis.

• With the assistance of our actuarial specialists, we:

◦ Evaluated the actuarial method used to estimate the insurance reserves.

◦ Compared prior-year assumptions of expected development and ultimate loss to actuals incurred during the current year to identify potential bias in the determination of the insurance reserves.

◦ Developed independent estimates of the insurance reserves, including loss data and industry claim development factors, and compared our estimates to recorded estimates.

• We tested the allocation of costs associated to the captive insurance subsidiary to the Company.

Our audit procedures related to accounts receivable securitization facility included the following, among others:

• We tested the design and operating effectiveness of management’s controls over the transfer of financial assets, including management’s controls over the evaluation of the accounting conclusion and the terms of the A/R Facility documents and other accompanying agreements.

• We evaluated the Company’s determination of sales of financial assets by evaluating, among other factors, if the transferred receivables have been isolated from the Company and the Company has transferred control of the receivables.

Specifically, we performed the following procedures:

• Obtained and evaluated opinions from outside legal counsel and evaluated whether the receivables have been appropriately isolated from the Company.

• Obtained the executed A/R Facility agreements and evaluated whether the Company:

• Assigned its rights, titles, interests, claims, and demands to the third-party assignee

• Retained any rights with respect to the payments assigned to the third-party assignee

• Obtained and inspected the cash proceeds support from the transfer and compared the cash received to the selling price.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

December 21, 2023

November 22, 2024

We have served as the Company’s auditor since 2023.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Vestis Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Vestis Corporation and subsidiaries (the “Company”) as of September 27, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 27, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended September 27, 2024, of the Company and our report dated November 22, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

November 22, 2024

VESTIS CORPORATION

COMBINED BALANCE SHEETS

CONSOLIDATED AND COMBINED BALANCE SHEETS

SEPTEMBER 27, 2024 AND SEPTEMBER 29, 2023

(in thousands)

(in thousands, except per share amounts)

September 27, 2024 September 29, 2023

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177,271 392,916

2022 - $29,100)

392,916 368,714

Inventories, net 164,913 174,719

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Total Assets $ 2,932,387 $ 3,157,124

LIABILITIES AND PARENT’S EQUITY

LIABILITIES AND EQUITY

Current Liabilities:

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Commitments and Contingencies (see Note 9)

Parent’s Equity:

Common stock, par value $ 0.01 per share, 350,000,000 shares authorized, 131,481,967 shares issued and outstanding as of September 27, 2024

Additional paid-in capital 928,082 —

Retained earnings 2,565 —

Net parent investment — 908,533

Accumulated other comprehensive loss ( 28,911 ) ( 31,173 )

Total parent’s equity 877,360 2,335,812

Total Liabilities and Parent’s Equity $ 3,157,124 $ 3,133,012

Th e accompanying notes are an integral part of these Combined Financial Statements.

Total Equity 903,051 877,360

Total Liabilities and Equity $ 2,932,387 $ 3,157,124

Th e accompanying notes are an integral part of these Consolidated and Combined Financial Statements.

VESTIS CORPORATION

COMBINED STATEMENTS OF INCOME

CONSOLIDATED AND COMBINED STATEMENTS OF INCOME

FOR THE FISCAL YEARS ENDED

SEPTEMBER 29, 2023, SEPTEMBER 30, 2022 AND OCTOBER 1, 2021

(in thousands)

SEPTEMBER 27, 2024, SEPTEMBER 29, 2023 AND SEPTEMBER 30, 2022

(in thousands, except per share amounts)

Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Revenue $ 2,805,820 $ 2,825,286 $ 2,687,005

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Gain on Sale of Equity Investment, net — ( 51,831 ) —

Interest Expense and Other, net 10 2,284 (1,120)

Interest Expense, net 126,563 2,109 4,548

Other (Income), net ( 642 ) ( 2,099 ) ( 2,264 )

Income Before Income Taxes 32,030 269,730 189,959

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Net Income $ 20,970 $ 213,158 $ 141,679

The accompanying notes are an integral part of these Combined Financial Statements.

Earnings per share:

Basic $ 0.16 $ 1.63 $ 1.08

Diluted $ 0.16 $ 1.63 $ 1.08

Weighted Average Shares Outstanding:

Basic 131,506 130,725 130,725

Diluted 131,787 130,725 130,725

The accompanying notes are an integral part of these Consolidated and Combined Financial Statements.

VESTIS CORPORATION

COMBINED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE FISCAL YEARS ENDED

SEPTEMBER 29, 2023, SEPTEMBER 30, 2022 AND OCTOBER 1, 2021

SEPTEMBER 27, 2024, SEPTEMBER 29, 2023 AND SEPTEMBER 30, 2022

(in thousands)

Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Net Income $ 20,970 $ 213,158 $ 141,679

Other Comprehensive (Loss) Income, net of tax:

Other Comprehensive Income (Loss), net of tax:

Pension plan adjustments ( 30 ) ( 655 ) 1,697

Foreign currency translation adjustments 2,292 1,162 ( 21,771 )

Other Comprehensive (Loss) Income, net of tax 507 (20,074) 6,717

Other Comprehensive Income (Loss), net of tax 2,262 507 ( 20,074 )

Comprehensive Income $ 23,232 $ 213,665 $ 121,605

The accompanying notes are an integral part of these Combined Financial Statements.

The accompanying notes are an integral part of these Consolidated and Combined Financial Statements.

VESTIS CORPORATION

COMBINED STATEMENTS OF CASH FLOWS

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

FOR THE FISCAL YEARS ENDED

SEPTEMBER 29, 2023, SEPTEMBER 30, 2022 AND OCTOBER 1, 2021

SEPTEMBER 27, 2024, SEPTEMBER 29, 2023 AND SEPTEMBER 30, 2022

(in thousands)

Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Cash flows from operating activities:

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Asset write-downs 980 7,698 —

Loss on disposals of property and equipment 1,042 — —

Amortization of debt issuance costs 4,683 — —

Loss on extinguishment of debt 3,883 — —

Personal protective equipment charges — — 26,183

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Purchases of property and equipment and other ( 78,905 ) ( 77,870 ) ( 76,449 )

Disposals of property and equipment 11,180 7,316 2,706

Proceeds from disposals of property and equipment 5,269 11,180 7,316

Acquisition of certain businesses, net of cash acquired — — ( 17,200 )

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Proceeds from long-term borrowings 798,000 1,500,000 —

Payments of long-term borrowings ( 1,137,500 ) — —

Payments of financing lease obligations ( 30,608 ) ( 27,601 ) ( 28,041 )

Dividend payments ( 13,801 ) — —

Debt issuance costs ( 11,134 ) ( 13,749 ) —

Other financing activities ( 1,881 ) — —

Net cash distributions to Parent ( 6,051 ) ( 1,688,919 ) ( 134,502 )

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Cash and cash equivalents, end of period $ 31,010 $ 36,051 $ 23,736

The accompanying notes are an integral part of these Combined Financial Statements.

The accompanying notes are an integral part of these Consolidated and Combined Financial Statements.

VESTIS CORPORATION

COMBINED STATEMENTS OF PARENT’S EQUITY

CONSOLIDATED AND COMBINED STATEMENTS OF CHANGES IN EQUITY

FOR THE FISCAL YEARS ENDED

SEPTEMBER 29, 2023, SEPTEMBER 30, 2022 AND OCTOBER 1, 2021

SEPTEMBER 27, 2024, SEPTEMBER 29, 2023 AND SEPTEMBER 30, 2022

(in thousands)

Investment Accumulated Other

Comprehensive Loss Total Parent’s Equity

Shares Outstanding Par Value Additional Paid-In Capital Retained Earnings Net Parent

Investment Accumulated

Comprehensive

Loss Total Parent’s

Balance, October 01, 2021 — $ — $ — $ — $ 2,343,591 $ ( 11,606 ) $ 2,331,985

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Other Comprehensive Loss — — — — — ( 20,074 ) ( 20,074 )

Balance, October 1, 2021 $ 2,343,591 $ (11,606) $ 2,331,985

Net Income 141,679 141,679

Net Transfers to Parent (117,778) (117,778)

Other Comprehensive Income (20,074) (20,074)

Balance, September 30, 2022 — $ — $ — $ — $ 2,367,492 $ ( 31,680 ) $ 2,335,812

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Balance, September 29, 2023 — $ — $ — $ — $ 908,533 $ ( 31,173 ) $ 877,360

The accompanying notes are an integral part of these Combined Financial Statements.

Separation-related adjustments — $ — $ — $ — $ 6,406 $ — $ 6,406

Issuance of common stock in connection with the Separation and reclassification of net parent investment (1)

131,225 1,312 913,627 — ( 914,939 ) — —

Net Income — — — 20,970 — — 20,970

Dividends Declared ($ 0.035 per common share)

— — — ( 18,405 ) — — ( 18,405 )

Other Comprehensive Income — — — — — 2,262 2,262

Share-based compensation expense — — 16,336 — — — 16,336

Issuance of common stock upon exercise of stock options or awards of restricted stock units 257 3 155 — — — 158

Tax payments related to shares withheld for share based compensation plans — — ( 2,036 ) — — — ( 2,036 )

Balance, September 27, 2024 131,482 $ 1,315 $ 928,082 $ 2,565 $ — $ ( 28,911 ) $ 903,051

__________________

(1) The issuance of common stock in connection with the Separation consists of 130.7 million shares of common stock distributed and 0.5 million shares contributed to an Aramark donor advised fund for charitable contributions.

The accompanying notes are an integral part of these Consolidated and Combined Financial Statements.

VESTIS CORPORATION

NOTES TO THE COMBINED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

NATURE OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Vestis Corporation ("Vestis", the "Company", “we” or “us”) is a carve-out business of Aramark (“Aramark”).

Unless the context otherwise requires, references to “Vestis,” “we,” “us,” “our,” and the “Company” refer to (i) Aramark’s uniform services business prior to the Separation and (ii) Vestis Corporation and its subsidiaries following the Separation.

On May 10, 2022, Aramark announced that its Board of Directors approved a plan to separate its Uniform and

Career Apparel business.

On September 30, 2023 (the "Distribution Date"), Aramark completed the previously announced spin-off of Vestis (the "Spin-Off," or the “Separation”).

The Separation was completed through a distribution of the Company's common stock to holders of record of Aramark’s common stock as of the close of business on September 20, 2023 (the “Distribution”), which resulted in the issuance of approximately 131 million shares of common stock.

Aramark stockholders of record received one share of Vestis common stock for every two shares of common stock, par value $0.01, of Aramark.

As a result of the Distribution, the Company became an independent public company.

Our common stock is listed under the symbol “VSTS” on the NYSE.

Vestis is a leading provider of uniforms and workplace supplies across the United States and Canada.

Vestis Corporation ("Vestis", the "Company", “we” or “us”) is a leading provider of uniforms and workplace supplies across the United States and Canada.

The Company provides uniforms, mats, towels, linens, restroom supplies, first-aid supplies and safety products.

The Company’s customer base participates in a wide variety of industries, including manufacturing, hospitality, retail, food processing, pharmaceuticals, healthcare and automotive.

The Company’s customer base participates in a wide variety of industries, including manufacturing, hospitality, retail, government, automotive, healthcare, food processing and pharmaceuticals.

The Company serves customers ranging from small, family-owned operations with a single location to large corporations and national franchises with multiple locations.

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The uniform options include shirts, pants, outerwear, gowns, scrubs, high visibility garments, particulate-free garments and flame-resistant garments, along with shoes and accessories.

The Company’s workplace supplies business (“Workplace Supplies”) generates revenue from the rental and servicing of workplace supplies, including managed restroom supply services, first-aid supplies and safety products, floor mats, towels and linens.

The Company’s workplace supplies business (“Workplace Supplies”) generates revenue from the rental and servicing of workplace supplies, including restroom supply services, first-aid supplies and safety products, floor mats, towels and linens.

On September 30, 2023 (the "Distribution Date"), Aramark completed the previously announced spin-off of Vestis (the “Separation”).

Aramark stockholders of record received one share of Vestis common stock for every two shares of common stock, par value $ 0.01 , of Aramark.

As a result of the Separation, the Company became an independent public company.

Our common stock is listed under the symbol “VSTS” on the NYSE.

In connection with the Separation, the Company entered into or adopted several agreements that provide a framework for the relationship between the Company and Aramark.

" Related Party Transactions and Parent Company Investment " for more information on these agreements.

During the fiscal year ended September 27, 2024 , certain Separation-related adjustments were recorded which included a net increase in total equity of $ 6.4 million.

These adjustments primarily consisted of:

(a) cash transfers paid to Aramark of $ 6.1 million to settle transactions related to the Separation, and (b) adjustments to the Company's deferred income tax liabilities totaling a $ 12.7 million net increase.

Basis of Presentation

The Combined Financial Statements reflect the combined historical results of operations, comprehensive income and cash flows for the years ended September 29, 2023, September 30, 2022 and October 1, 2021 and the financial position as of September 29, 2023 and September 30, 2022 for the Company and are denominated in United States (“U.S.”) dollars.

The Combined Financial Statements have been derived from Aramark’s historical accounting records and were prepared on a standalone basis in accordance with generally accepted accounting principles in the United States (“U.S.

The Consolidated and Combined Financial Statements (the "Financial Statements") were prepared in accordance with generally accepted accounting principles in the United States (“U.S.

GAAP”) and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”).

The assets, liabilities, revenue and expenses of the Company have been reflected in these Combined Financial Statements on a historical cost basis, as included in the consolidated financial statements of Aramark, using the historical accounting policies applied by Aramark.

Historically, separate financial statements have not been prepared for the Company, and it has not operated as a standalone business from Aramark.

The Company’s business has historically functioned together with other Aramark businesses.

Accordingly, the Company relied on certain of Aramark’s corporate support functions to operate.

The Combined Financial Statements include all revenues and costs directly attributable to the Company and an allocation of expenses related to certain Aramark corporate functions (see Note 5.

The Financial Statements reflect the historical results of operations, comprehensive income and cash flows for the years ended September 27, 2024, September 29, 2023 and September 30, 2022 and the financial position as of September 27, 2024 and September 29, 2023 for the Company and are denominated in United States (“U.S.”) dollars.

Prior to the Separation, the Company’s business functioned together with other Aramark businesses.

The assets, liabilities, revenue and expenses of the Company prior to the Separation have been reflected as Combined Financial Statements on a historical cost basis, as included in the consolidated financial statements of Aramark, using the historical accounting policies applied by Aramark.

Prior to the Separation, separate financial statements had not been prepared for the Company, and it had not operated as a standalone business from Aramark.

The historical results of operations, financial

position and cash flows of the Company prior to the Separation presented in these Combined Financial Statements may not be indicative of what they would have been had the Company actually been an independent standalone public company.

Transactions between the Company and Aramark for the years ended September 29, 2023 and September 30, 2022 have been included in the Combined Financial Statements and are considered related party transact ions (see Note 15.

" Related Party Transactions and Parent Company Investment ").

These expenses have been

allocated to the Company on the basis of direct usage where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount or other drivers.

The Company considers these allocations to be a reasonable reflection of the utilization of services or the benefit received.

However, the allocations may not be indicative of the actual expense that would have been incurred had the Company operated as an independent, standalone public entity, nor are they indicative of the Company’s future expenses.

Following the Separation, certain functions that Aramark provided to the Company prior to the separation are being provided to the Company by Aramark under a transition services agreement or using the Company’s own resources or third-party service providers.

The Company incurred certain one-time charges in its establishment as a standalone public company, and will incur ongoing additional costs associated with operating as an independent, publicly traded company.

It is impracticable to estimate the costs that would have been incurred as a standalone public company during fiscal 2023, fiscal 2022 and fiscal 2021.

The Combined Financial Statements include assets and liabilities that have been determined to be specifically identifiable or otherwise attributable to the Company.

The Company’s cash flows within the United States segment are transferred to Aramark regularly as part of Aramark’s centralized cash management program.

The Company’s cash flows within the Canada segment are reinvested locally.

The cash and cash equivalents held by Aramark at the corporate level are not specifically identifiable to the Company and therefore were not allocated to any of the periods presented.

Only cash amounts specifically attributable to the Company are reflected in the Combined Balance Sheets.

Transfers of cash, both to and from Aramark’s central cash management system, are reflected as a component of “Net parent investment” on the Combined Balance Sheets and in “Net cash used in financing activities” on the accompanying Combined Statements of Cash Flows.

Historically, Aramark’s long-term borrowings and related interest expense, exclusive of certain financing lease obligations, have not been attributed to the Company for any of the periods presented because the borrowings are neither directly attributable to the Company nor is the Company the primary legal obligor of such borrowings.

However, the Company and certain of its subsidiaries entered into a credit agreement on September 29, 2023 (the "Credit Agreement") and borrowings under the Credit Agreement have been included in the Combined Financial Statements (see Note 4.

All intercompany transactions and balances within the Company have been eliminated.

1 unchanged sentence

“Related Party Transactions and Parent Company Investment”).

The “Provision for Income Taxes” in the Combined Statements of Income has been calculated as if the Company filed a separate tax return and was operating as a standalone company.

The “Provision for Income Taxes” in the Combined Statements of Income for the years ended September 29, 2023 and September 30, 2022 has been calculated as if the Company filed a separate tax return and was operating as a standalone company.

Therefore, income tax expense, cash tax payments and items of current and deferred income taxes may not be reflective of the Company’s actual tax balances prior to or subsequent to the distribution.

After the Separation, Vestis became a standalone public company and the Consolidated Financial Statements were prepared in accordance with U.S.

GAAP and pursuant to the rules and regulations of the SEC.

These Consolidated and Combined Financial Statements reflect, in the opinion of management, all material adjustments (which include only normal recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.

All intercompany transactions and balances within the Company have been eliminated.

The Company’s fiscal year is the 52- or 53-week period which ends on the Friday nearest to September 30th.

The fiscal years ended September 29, 2023, September 30, 2022 and October 1, 2021 were each 52-week periods.

The fiscal years ended September 27, 2024, September 29, 2023 and September 30, 2022 were each 52-week periods.

New Accounting Standards Updates

Adopted Standards (from most to least recent date of issuance)

In November 2021, the FASB issued an ASU which required that an entity provide certain annual disclosures when they have received government assistance.

In September 2022, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") to enhance the transparency of supplier finance programs, which may be referred to as reverse factoring, payables finance or structured payables arrangements.

The guidance requires that a buyer in a supplier finance program disclose the program’s nature, activity and potential magnitude.

The guidance was effective for the Company in the first quarter of fiscal 2024.

The Company adopted the ASU prospectively and adoption of this guidance did not have a material impact on the Combined Financial Statements.

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

In September 2022, the FASB issued an ASU to enhance the transparency of supplier finance programs, which may be referred to as reverse factoring, payables finance or structured payables arrangements.

The guidance will require

that a buyer in a supplier finance program disclose the program’s nature, activity and potential magnitude.

The guidance is effective for the Company in the first quarter of fiscal 2024, and early adoption is permitted.

The adoption of this guidance is not expected to have a material impact on the Combined Financial Statements.

The Company adopted the ASU prospectively and adoption of this guidance did not have an impact on the Consolidated Financial Statements.

In October 2021, the FASB issued an ASU which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers as if it had originated the contracts.

The guidance is effective for the Company in the first quarter of fiscal 2024 and early adoption is permitted.

The adoption of this guidance is not expected to have a material impact on the Combined Financial Statements.

Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the Combined Financial Statements or are not expected to have a material impact on the Combined Financial Statements.

The guidance was effective for the Company in the first quarter of fiscal 2024.

The Company adopted the ASU prospectively and adoption of this guidance did not have an impact on the Consolidated Financial Statements.

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

In November 2024, the FASB issued an ASU which requires additional disclosure about certain expenses in the notes to financial statements.

The amendments are effective for the Company's annual periods beginning October 2, 2027, and interim periods beginning January 1, 2028, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

In December 2023, the FASB issued an ASU which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The amendments are effective for the Company’s annual periods beginning October 4, 2025, with early

adoption permitted, and should be applied either prospectively or retrospectively.

The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

In November 2023, the FASB issued an ASU which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss.

The amendments are effective for the Company's annual periods beginning September 28, 2024, and interim periods beginning October 4, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the Consolidated and Combined Financial Statements or are not expected to have a material impact on the Consolidated and Combined Financial Statements.

Revenue Recognition

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The Company reassesses these estimates during each reporting period.

The Company maintains a liability for these discounts and rebates within “Accrued expenses and other current liabilities” on the Combined Balance Sheets.

The Company maintains a liability for these discounts and rebates within “Accrued expenses and other current liabilities” on the Consolidated and Combined Balance Sheets.

Variable consideration can also include consideration paid to a customer at the beginning of a contract.

This type of variable consideration is capitalized as an asset (in “Other Assets” on the Combined Balance Sheets) and is amortized over the life of the contract as a reduction to revenue in accordance with the accounting guidance for revenue recognition.

This type of variable consideration is capitalized as an asset (in “Other Assets” on the Consolidated and Combined Balance Sheets) and is amortized over the life of the contract as a reduction to revenue in accordance with the accounting guidance for revenue recognition.

Use of Estimates

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts in the Combined Financial Statements and accompanying notes.

GAAP requires management to make estimates and assumptions that affect the reported amounts in the Consolidated and Combined Financial Statements and accompanying notes.

The Company utilizes key estimates in preparing the financial statements including environmental estimates, goodwill, intangibles, insurance reserves, income taxes and long-lived assets.

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Management believes that the carrying value of cash and cash equivalents, accounts receivable, accounts payable, financing leases and borrowings are representative of their respective fair values.

All derivatives are recognized as either assets or liabilities on the balance sheet at fair value at the end of each quarter (refer to Note 5.

"Derivative Instruments" for additional information).

Nonrecurring Fair Value Measurements

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The resulting fair value measurement of the assets are considered to be Level 3 measurements.

The Company had no business acquisitions during fiscal 2023.

The Company completed business acquisitions with aggregate purchase price of approximately $17.2 million and $15.8 million during fiscal 2022 and fiscal 2021, respectively.

The results of operations of these acquisitions have been included in the Company’s combined financial results since their respective acquisition dates.

The Company had no business acquisitions during fiscal 2024 and 2023.

The Company completed business acquisitions with aggregate purchase price of approximately $ 17.2 million during fiscal 2022.

The results of operations of these acquisitions have been included in the Company’s consolidated and combined financial results since their respective acquisition dates.

These acquisitions were not significant in relation to the Company’s combined financial results and, therefore, pro forma financial information has not been presented.

Merger and Integration Costs

During fiscal 2021, the Company incurred merger and integration costs of $22.2 million as a result of the AmeriPride acquisition that occurred during fiscal year 2018.

The expenses mainly related to costs for transitional employees and integration-related consulting costs and charges related to plant consolidations, mainly asset write-downs, the implementation of a new laundry enterprise resource planning system and other expenses.

Comprehensive Income

Comprehensive income includes all changes to parent’s equity during a period, except those related to the net parent investment.

Comprehensive income includes all changes to equity during a period, except those resulting from investments by and distributions to stockholders and except those related to the net parent investment.

Components of comprehensive income include net income, pension plan adjustments (net of tax) and changes in foreign currency translation adjustments (net of tax).

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Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Pre-Tax Amount Tax Effect After-Tax Amount Pre-Tax Amount Tax Effect After-Tax Amount Pre-Tax Amount Tax Effect After-Tax Amount

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Foreign currency translation adjustments 2,292 — 2,292 2,251 ( 1,089 ) 1,162 ( 22,893 ) 1,122 ( 21,771 )

Other Comprehensive (Loss) Income 1,367 (860) 507 (20,272) 198 (20,074) 7,099 (382) 6,717

Other Comprehensive Income (Loss) 2,253 9 2,262 1,367 ( 860 ) 507 ( 20,272 ) 198 ( 20,074 )

Comprehensive Income $ 23,232 $ 213,665 $ 121,605

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dollars using current exchange rates.

dollar results that arise from such translation are included as a component of accumulated other comprehensive loss in parent’s equity.

dollar results that arise from such translation are included as a component of accumulated other comprehensive loss in equity.

Cash and Cash Equivalents

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The Company estimates and reserves for its credit loss exposure based on historical experience, current general and specific industry economic conditions and reasonable and supportable forecasts that affect the collectability of the reported amount in estimating credit losses.

Credit loss expense is classified within “Cost of services provided (exclusive of depreciation and amortization)” in the Combined Statements of Income.

Credit loss expense is classified within “Cost of services provided (exclusive of depreciation and amortization)” in the Consolidated and Combined Statements of Income.

When an account is considered uncollectible, it is written off against the allowance for credit losses.

The amounts recognized in fiscal years 2023, 2022 and 2021 relating to allowance for credit losses, which are netted against “Receivables” in the Combined Balance Sheets, are as follows (in thousands):

The amounts recognized in fiscal years 2024 and 2023 relating to allowance for credit losses, which are netted against “Receivables” in the Consolidated and Combined Balance Sheets, are as follows (in thousands):

Fiscal Year Ended

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Charged to Income

33,705 20,500

Deductions from Reserves (1)

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(1) Amounts determined not to be collectible and charged against the reserve and translation.

Transfer of Financial Assets

The Company accounts for transfers of its financial assets in accordance with Accounting Standards Codification ("ASC") Topic No.

860, Transfers and Servicing.

When a transfer meets all the requirements for a sale of a financial asset, the Company derecognizes the financial asset.

Inventories are valued at the lower of cost (principally the first-in, first-out method) or net realizable value.

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During fiscal 2022, the Company decided to no longer sell certain personal protective equipment (“PPE”), which required inventory charges to reduce the carrying value of PPE to a zero net realizable value.

The Company recorded $26.2 million in inventory charges within “Cost of services provided (exclusive of depreciation and amortization)” in the Combined Statements of Income during fiscal 2022 to reflect the net realizable value of certain PPE inventory.

No charges were recorded in fiscal 2023 related to PPE and the decrease in the inventory reserve from fiscal 2022 to fiscal 2023 was primarily driven by the write-off of the previously reserved PPE inventory.

The Company recorded $ 26.2 million in inventory charges within “Cost of services provided (exclusive of depreciation and amortization)” in the Combined Statement of Income during fiscal 2022 to reflect the net realizable value of certain PPE inventory.

No charges were recorded in fiscal 2023 or 2024 related to PPE.

The components of net inventories are as follows (in thousands):

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The amortization rates are based on the Company’s specific experience and wear tests performed by the Company.

These factors are critical to determining the amount of rental merchandise in service and related Cost of services provided (exclusive of depreciation and amortization) that are presented in the Combined Financial Statements.

Material differences may result in the amount and timing of operating income if management makes significant changes to these estimates.

During the fiscal years ended September 29, 2023, September 30, 2022 and October 1, 2021, the Company recorded $344.5 million, $313.4 million and $300.2 million, respectively, of amortization related to rental merchandise in service within “Cost of services provided (exclusive of depreciation and amortization)” on the Combined Statements of Income.

During the fiscal years ended September 27, 2024, September 29, 2023 and September 30, 2022, the Company record ed $ 323.9 million, $ 344.5 million and $ 313.4 million, respectively, of amortization related to rental merchandise in service within “Cost of services provided (exclusive of depreciation and amortization)” on the Consolidated and Combined Statements of Income.

Other current assets

“Other current assets” as presented in the Combined Balance Sheets is primarily comprised of prepaid insurance and prepaid taxes and licenses.

“Other current assets” as presented in the Consolidated and Combined Balance Sheets is primarily comprised of prepaid insurance and prepaid taxes and licenses.

Property and Equipment and Operating Lease Right-of-use Assets

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Maintenance and repairs are charged to current operations and replacements, and significant improvements that extend the useful life of the asset are capitalized.

The estimated useful lives for the major categories of property and equipment are 10 to 40 years for buildings and improvements and three to 10 years for equipment.

Depreciation expense during fiscal 2023, fiscal 2022 and fiscal 2021 was $103.8 million, $103.3 million and $102.3 million, respectively.

The estimated useful lives for the major categories of property and equipment are 10 to 40 years for buildings and improvements and 3 to 10 years for equipment.

Depreciation expense during fiscal 2024, fiscal 2023 and fiscal 2022 w as $ 106.3 million, $ 103.8 million and $ 103.3 million, respectively.

The Company had $ 10.2 million , $ 7.6 million, and $ 7.1 million, respectively, of capital expenditures recorded within “Accounts payable” and “Accrued expenses and other current liabilities” in the Consolidated and Combined Balance Sheets a s of September 27, 2024, September 29, 2023, and September 30, 2022.

During fiscal 2024, the Company completed the sale of a property for a net selling price of $ 5.3 million.

As a result, the Company recorded a loss on disposal of $ 0.2 million within the United States segment, which is included in “Selling, general and administrative expenses” in the Consolidated Statement of Income for fiscal 2024.

During fiscal 2023, the Company completed the sale of a property for cash proceeds of $ 9.6 million.

As a result, the Company recorded a gain on disposal of $ 6.8 million within the United States segment, which is included in “Selling, general and administrative expenses” in the Combined Statement of Income for fiscal 2023.

During fiscal 2023, the Company completed a strategic review of certain administrative locations, taking into account facility capacity and current utilization, among other factors.

Based on this review, the Company vacated or otherwise reduced its usage at certain of these locations, resulting in an analysis of the recoverability of the assets associated with the locations.

As a result, the Company recorded an impairment charge of $7.7 million within its United States segment, which is included in “Selling, general and administrative expenses” in the Combined Statements of Income for fiscal 2023.

As a result, the Company recorded an impairment charge of $ 7.7 million within its United States segment, which was included in “Selling, general and administrative expenses” in the Combined Statement of Income for fiscal 2023.

The non-cash impairment charge consisted of operating lease right-of-use assets ($ 7.1 million) and other costs ($ 0.6 million).

During fiscal 2023, the Company completed the sale of a property for cash proceeds of $9.6 million.

As a result, the Company recorded a gain on disposal of $6.8 million within the United States segment, which is included in “Selling, general and administrative expenses” in the Combined Statements of Income for fiscal 2023.

“Other assets” as presented in the Combined Balance Sheets is primarily comprised of employee sales commissions, computer software costs, equity method investments, consideration payable to a customer at the beginning of the contract, noncurrent pension assets, preparation costs and long-term receivables.

“Other assets” as presented in the Consolidated and Combined Balance Sheets is primarily comprised of employee sales commissions, computer software cos ts, equity method investment, consid eration payable to a customer at the beginning of the contract, noncurrent pension assets, preparation costs and long-term receivables.

Employee sales commissions represent commission payments made to employees related to new or retained business contracts (see Note 6.

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Under the equity method of accounting, the Company recognizes its share of the investee’s net income or loss.

Equity method investments represent the 39% ownership interest in ARATEX, a Japanese uniform solutions company.

Equity method investments represent the 39 % ownership interest in Aramark Uniform Services Japan Corporation.

The investment was sold in October 2024 (see Note 17.

“Subsequent Events”).

On September 22, 2023, the Company sold its 25 % interest in Sanikleen, a Japanese linen supply company for $ 51.9 million in cash resulting in a pre-tax gain on sale of this equity investment of $ 51.8 million for fiscal 2023.

The pre-tax gain is included in “Gain on Sale of Equity Investment, net” on the Combined Statements of Income.

The pre-tax gain is included in “Gain on Sale of Equity Investment, net” on the Combined Statement of Income for fiscal 2023.

Accrued Expenses and Other Current Liabilities

“Accrued Expenses and Other Current Liabilities” as presented in the Combined Balance Sheets is primarily comprised of current deferred income, taxes, insurance, environmental reserves (see Note 12.

Commitments and Contingencies), rebates and a deferral related to the employer portion of social security taxes as permitted under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

“Accrued Expenses and Other Current Liabilities” as presented in the Consolidated and Combined Balance Sheets is primarily comprised of current deferred income, taxes, insurance, environmental reserves (see Note 9.

Commitments and Contingencies) and rebates.

Other Noncurrent Liabilities

“Other Noncurrent Liabilities” as presented in the Combined Balance Sheets is primarily comprised of environmental reserves (see Note 12.

“Other Noncurrent Liabilities” as presented in the Consolidated and Combined Balance Sheets is primarily comprised of environmental reserves (see Note 9.

Commitments and Contingencies), asset retirement obligations (see Note 9.

Commitments and Contingencies) and noncurrent deferred income.

Aramark insures portions of its risk in general liability, automobile liability, workers’ compensation liability and property liability through a wholly owned captive insurance subsidiary (the “Captive”), to enhance its risk financing strategies.

The Captive is subject to regulations within its domicile of Bermuda, including regulations established by the Bermuda Monetary Authority (the “BMA”) relating to levels of liquidity and solvency as such concepts are defined by the BMA.

Prior to the Separation, Aramark insured portions of its risk in general liability, automobile liability, workers’ compensation liability and property liability through a wholly owned captive insurance subsidiary (the “Captive”), to enhance its risk financing strategies.

The Captive was subject to regulations within its domicile of Bermuda, including regulations established by the Bermuda Monetary Authority (the “BMA”) relating to levels of liquidity and solvency as such concepts are defined by the BMA.

The Captive was in compliance with these regulations as of September 29, 2023.

Aramark allocates certain costs associated to the Captive to the Company.

The Company does not recognize liabilities related to claims from general liability, automobile liability and workers’ compensation liability on the Combined Balance Sheets as Aramark’s Captive subsidiary is the primary responsible party related to these obligations.

Aramark’s Captive insurance subsidiary had estimated reserves of approximately $68.4 million and $61.7 million at September 29, 2023 and September 30, 2022, respectively, related to claims arising from the Company’s operations.

Aramark’s reserves for retained costs associated

with Aramark’s casualty program are estimated through actuarial methods, with the assistance of third-party actuaries, using loss development assumptions based on claims history.

Prior to the Separation, Aramark allocated certain costs associated to the Captive to the Company.

The Company did not recognize liabilities related to claims from general liability, automobile liability and workers’ compensation liability on the Combined Balance Sheet as of September 29, 2023 as Aramark’s Captive subsidiary was the primary responsible party related to these obligations.

Aramark’s Captive insurance subsidiary had estimated reserves of approximately $ 68.4 million at September 29, 2023 related to claims arising from the Company’s operations.

Aramark’s reserves for retained costs associated with Aramark’s casualty program were estimated through actuarial methods, with the assistance of third-party actuaries, using loss development assumptions based on claims history.

The Company entered into an independent general liability, automobile liability, workers’ compensation liability insurance policy effec tive September 29, 2023.

During the fiscal year ended September 27, 2024, the Company recorded $ 11.4 million, $ 16.5 million, and $ 22.8 million of g eneral liability, automobile liability, and workers’ compensation liability expenses, respectively, within “Cost of services provided (exclusive of depreciation and amortization)” and “Selling, general and administrative expenses” on the Consolidated Statement of Income.

The Company entered into an independent property insurance policy and was no longer under Aramark’s property insurance policy effective June 1, 2023.

No liabilities have been incurred as of September 29, 2023 under the new property insurance policy.

During the fiscal year ended September 27, 2024, the Company recorded $ 4.5 million of property insurance expenses within “Cost of services provided (exclusive of depreciation and amortization)” and “Selling, general and administrative expenses” on the Consolidated Statement of Income.

Environmental Matters

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Commitments and Contingencies).

The Company’s operations are included in the tax returns of Aramark.

Aramark remits funds to or receives refunds from governmental jurisdictions on behalf of the Company’s operations related to income taxes.

In the future, as a standalone entity, the Company will file tax returns on its own behalf.

Income taxes are presented in the Combined Financial Statements, whereas current and deferred income tax assets and liabilities of Aramark are attributed to the Company in a manner that is systematic, rational and consistent with the asset and liability method prescribed by the accounting guidance for income taxes.

The income tax provision of the Company is prepared using the separate return method, which applies the accounting guidance for income taxes to the standalone financial statements as if the Company was a separate taxpayer and a standalone enterprise.

The Company believes the assumptions supporting the allocation and presentation of income taxes on a separate return basis are reasonable.

The Company has reviewed its needs in the United States for possible repatriation of undistributed earnings of its Canadian subsidiary and continues to invest earnings outside of the United States to fund foreign investments or meet foreign working capital and property and equipment needs.

As a result, the Company is permanently reinvested with respect to all of its historical foreign earnings related to its Canadian subsidiary of $28.9 million and $17.2 million as of September 29, 2023 and September 30, 2022, respectively.

The foreign withholding tax associated with remitting these earnings is immaterial as of September 29, 2023 and September 30, 2022.

Deferred taxes are not provided on undistributed earnings of its Canadian subsidiary that are indefinitely reinvested.

Aramark conducts business and files tax returns in numerous countries and currently has tax audits in progress in a number of tax jurisdictions.

In evaluating the exposure associated with various tax filing positions, including foreign, the Company records accruals for uncertain tax positions, based on the technical support for the positions, past audit experience with similar situations and the potential interest and penalties related to the matters.

The effects of tax adjustments and settlements from taxing authorities are presented in the Combined Financial Statements in the period to which they relate as if the Company was a separate filer.

Aramark maintains valuation allowances where it is more likely than not that all or a portion of a deferred tax asset will not be realized.

Changes in valuation allowances are included in the tax provision in the period of change.

In determining whether a valuation allowance is warranted, Aramark’s management evaluates factors such as prior earnings history, expected future earnings, carryback and carryforward periods and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset.

The Company’s operations were included in Aramark’s U.S.

federal and state tax returns for taxable periods through the Company’s Separation from Aramark on September 30, 2023.

With respect to such taxable periods, income taxes on the Company’s financial statements were calculated on a separate tax return basis.

Beginning after the Separation, the Company is filing tax returns separate from Aramark, and its deferred taxes and effective tax rates may differ from those of the historical periods.

The Company and its subsidiaries file a federal consolidated income tax return in the United States, and separate legal entities file in various state, local and foreign jurisdictions.

The Company uses the asset and liability approach to determine its provision for income taxes based on its operations in each jurisdiction.

Deferred tax assets and liabilities are determined by the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which the deferred tax assets or liabilities are expected to be realized or settled.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.

Recognized income tax positions are measured at the largest amount that is greater than fifty percent likely of being realized.

Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

The Company accounts for deferred income taxes related to executive compensation deductions that are limited by IRC 162(m) by first allocating available tax deductions to stock-based compensation and then cash compensation.

The Company elects to treat global intangible low-taxed income (GILTI) inclusions as a current-period expense when incurred.

Therefore, the Company has not recorded deferred taxes for basis differences expected to reverse in future periods.

Refer to Note 11, “Income Taxes”, of these Consolidated Financial Statements for further details on income taxes.

Net Parent Investment

“Net parent investment” in the Combined Balance Sheets is presented in lieu of stockholders’ equity and represents Aramark’s historic investment in the Company, the accumulated net earnings after taxes of the Company and the net effect of the transactions with the allocations from Aramark.

All transactions reflected in “Net parent investment” in the accompanying Combined Balance Sheets have been considered as financing activities for purposes of the Combined Statements of Cash Flows.

“Net parent investment” in the Combined Balance Sheet for fiscal 2023 is presented in lieu of stockholders’ equity and represents Aramark’s historic investment in the Company, the accumulated net earnings after taxes of the Company and the net effect of the transactions with the allocations from Aramark.

All transactions reflected in “Net parent investment” in the accompanying Combined Balance Sheet for fiscal 2023 have been considered as financing activities for purposes of the Combined Statements of Cash Flows for fiscal 2022 and 2023.

For additional information, see Basis of Presentation above and Note 15.

Related Party Transactions and Parent Company Investment.

Interest Expense and Other, net

“Interest Expense and Other, net” as presented in the Combined Statements of Income is primarily comprised of interest expense recognized on financing leases (see Note 8.

Leases) and the Company’s share of the financial results for its equity method investment.

There was minimal interest expense incurred to date under the new Credit Agreement entered on September 29, 2023.

Borrowings for additional detail.

Interest Expense, net

“Interest Expense, net” as presented in the Consolidated and Combined Statements of Income is primarily comprised of interest expense on borrowings (see Note 4.

Borrowings) and interest expense recognized on financing leases (see Note 7.

Other (Income), net

“Other (Income), net ” as presented in the Consolidated and Combined Statements of Income is primarily comprised of fees incurred for the Company’s accounts receivable securitization facility (see Note 16.

Accounts Receivable Securitization Facility) and the Company’s share of the financial results for its equity method investment.

Impact of COVID-19

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Deferred social security taxes of $ 16.6 million were paid during both fiscal 2022 and fiscal 2023.

Regarding our operations within Canada, the Canadian government provided companies with various forms of relief from COVID-19, including labor related tax credits.

These labor related tax credits were generally earned if companies retained employees on their payroll, rather than furloughing or terminating employees as a result of the business disruption caused by COVID-19.

The Company qualified for these tax credits.

The Company recorded approximately $0.4 million and $17.9 million of labor related tax credits within “Cost of services provided (exclusive of depreciation and amortization)” and “Selling, general and administrative expenses” on the Combined Statements of Income during the fiscal years ended September 30, 2022 and October 1, 2021, respectively.

The Company does not expect to receive additional tax credits related to COVID-19 relief at this time.

The Company accounts for these labor related tax credits as a reduction to the expense that they were intended to compensate in the period in which the corresponding expense was incurred and there was reasonable assurance the Company would both receive the tax credits and comply with all conditions attached to the tax credits.

Supplemental Cash Flow Information

During fiscal 2023, fiscal 2022 and fiscal 2021, the Company executed finance lease transactions.

The present value of the future rental obligations was $42.6 million, $28.9 million and $27.6 million for the respective periods, which is included in “Property and Equipment, at cost” and “Noncurrent Financing Lease Obligations” on the Combined Balance Sheets.

The increase in fiscal 2023 was primarily driven by increasing the amount of finance lease transactions executed in connection with the Company’s plan.

During fiscal 2023, the Company approved headcount reductions to streamline and improve the efficiency and

effectiveness of operational and administrative functions.

As a result of these actions, severance charges of $7.6 million were recorded within “Selling, general and administrative expenses” on the Combined Statements of Income for the fiscal year ended September 29, 2023.

During fiscal 2024, the Company approved headcount reductions to streamline and improve the efficiency and effectiveness of operational and administrative functions.

As a result of these actions, severance charges of $ 5.2 million were recorded within “Selling, general and administrative expenses” on the Consolidated Statement of Income for the fiscal year ended September 27, 2024.

As of September 27, 2024, the Company had an accrual of approximately $ 2.7 million related to unpaid severance obligations.

During fiscal 2021, the Company approved action plans to streamline and improve the efficiency and effectiveness of its operations, including a series of facility consolidations and closures.

As a result of these actions, severance charges of $9.0 million were recorded within “Selling, general and administrative expenses” and “Cost of services provided (exclusive of depreciation and amortization)” on the Combined Statements of Income for the fiscal year ended October 1, 2021.

The following table summarizes the unpaid obligations for severance and related costs as of September 29, 2023, which are included in “Accrued payroll and related expenses” on the Combined Balance Sheets.

During fiscal 2023, the Company approved action plans to streamline and improve the efficiency and

effectiveness of operational and administrative functions.

As a result of these actions, severance charges of $ 7.6 million were recorded within “Selling, general and administrative expenses” and “Cost of services provided (exclusive of depreciation and amortization)” on the Combined Statement of Income for the fiscal year ended September 29, 2023.

The following table summarizes the unpaid obligations for severance and related costs as of September 27, 2024, which are included in “Accrued payroll and related expenses” on the Consolidated Balance Sheet.

(dollars in thousands) September 29, 2023 Charges Payments and Other September 27, 2024

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Total $ 3,414 $ 5,240 $ ( 5,951 ) $ 2,703

The following table summarizes the unpaid obligations for severance and related costs as of September 30, 2022, which are included in “Accrued payroll and related expenses” on the Combined Balance Sheets.

(dollars in thousands) October 1, 2021 Charges Payments and Other September 30, 2022

(dollars in thousands) September 30, 2022 Charges Payments and Other September 29, 2023

Fiscal 2023 Severance $ — $ 7,588 $ ( 4,174 ) $ 3,414

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Goodwill is not amortized and is subject to an impairment test that is conducted annually or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists.

Based on Aramark’s historical structure, goodwill for the Company is retained within one reporting unit.

Based on Aramark’s historical structure, goodwill for the Company was retained within one reporting unit for the fiscal years ended September 29, 2023 and September 30, 2022.

For the fiscal year ended September 27, 2024, Vestis had two reporting units, United States and Canada.

The annual impairment test is performed as of the end of the fiscal month of August.

If results of the qualitative assessment indicate a more likely than not determination or if a qualitative assessment is not performed, a quantitative test is performed by comparing the estimated fair value, calculated using a discounted cash flow method, of the reporting unit with its estimated net book value.

During the fourth quarter of fiscal 2023, fiscal 2022 and fiscal 2021, the annual impairment test for goodwill was performed by Aramark using a quantitative testing approach and no impairment was identified.

If results of the qualitative assessment indicate a more likely than not determination or if a qualitative assessment is not performed, a quantitative test is performed by comparing the estimated fair value using a discounted cash flow method or market method for each reporting unit with its estimated net book value.

During the fourth quarter of fiscal 2024 the annual impairment test for goodwill was performed using a quantitative testing approach and no impairment was identified.

During fiscal 2023, the annual impairment test for goodwill was performed by Aramark using a quantitative testing approach and no impairment was identified.

The determination of fair value for the reporting unit includes assumptions, which are considered Level 3 inputs, that are subject to risk and uncertainty.

The discounted cash flow calculations are dependent on several subjective factors, including the timing of future cash flows, the underlying margin projection assumptions, future growth rates and the discount rate.

The market method is dependent on several factors including the determination of market multiples and future cash flows.

If assumptions or estimates in the fair value calculations change or if future cash flows, margin projections or future growth rates vary from what was expected, this may impact the impairment analysis and could reduce the underlying cash flows used to estimate fair values and result in a decline in fair value that may trigger future impairment charges.

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Changes in total goodwill during fiscal 2023 are as follows (in thousands):

October 1, 2021 Acquisitions Translation September 30, 2022

September 30, 2022 Acquisitions Translation September 29, 2023

United States $ 896,237 $ — $ — $ 896,237

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$ 400,472 $ ( 187,699 ) $ 212,773 $ 400,381 $ ( 161,773 ) $ 238,608

During fiscal 2022, the Company acquired customer relationship assets with a value of $15.1 million.

Customer relationship assets are being amortized principally on a straight-line basis over the expected period of benefit with a weighted average life of approximately 14 years.

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The Company utilized the “relief-from-royalty” method, which considers the discounted estimated royalty payments that are expected to be avoided as a result of the trade name being owned.

The Company’s annual trade name impairment test was completed by Aramark for fiscal 2023, fiscal 2022 and fiscal 2021, which did not result in an impairment charge.

The Company’s annual trade name impairment test did not result in an impairment charge for fiscal 2024.

The Company’s annual trade name impairment test was completed by Aramark for fiscal 2023 which did not result in an impairment charge.

Amortization of other intangible assets for fiscal 2024, fiscal 2023 and fiscal 2022 was approximately $ 25.9 million, $ 26.0 million and $ 25.9 million, respectively.

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

September 29, 2023

September 27, 2024 September 29, 2023

Senior secured term loan facility, due September 2025 $ — $ 800,000

Senior secured term loan facility, due September 2028 497,500 700,000

Senior secured term loan facility, due February 2031 665,000 —

Total principal debt issued 1,162,500 1,500,000

Unamortized debt issuance costs ( 13,164 ) ( 11,057 )

Discounts ( 1,603 ) —

Less - current portion — ( 26,250 )

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Credit Agreement

The Company and certain of its subsidiaries entered into a credit agreement on September 29, 2023 (the "Credit Agreement").

The Credit Agreement includes senior secured term loan facilities consisting of the following as of September 29, 2023:

• A United States dollar denominated term loan A-1 tranche to the Company in the amount of $800 million ("Term Loan A-1"),

• A United States dollar denominated term loan A-2 tranche to the Company in the amount of $700 million ("Term Loan A-2").

The Term Loan A-2 includes $8.75M of principal payments each quarter until the maturity date in which the remaining unpaid principal amount is due.

The Company used approximately $1,457 million of the proceeds of the senior secured term loans to transfer cash to Aramark in connection with the separation and distribution.

The Company recorded approximately $11.1 million of debt issuance costs related to the term loans.

Debt issuance costs are presented as a reduction of debt in the Combined Balance Sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method.

The Credit Agreement also includes a revolving credit facility available for loans in United States dollars and Canadian dollars with aggregate commitments of $300 million as of September 29, 2023.

As of September 29, 2023, there was $300 million available for borrowing under the revolving credit facility.

On September 29, 2023, the Company and certain of its subsidiaries entered into a credit agreement (the “Credit Agreement”).

The Credit Agreement was initially comprised of an $ 800 million term loan A-1 due September 29, 2025 (“Term Loan A-1”), a $ 700 million term loan A-2 due September 29, 2028 (“Term Loan A-2”), and a revolving credit facility available for loans in United States dollars and Canadian dollars with aggregate commitments of $ 300 million and a maturity of September 29, 2028 (the “Revolving Credit Facility”).

The Company used approximately $ 1,457 million of the proceeds from the senior secured term loans to transfer cash to Aramark in connection with the separation and distribution.

The Company recorded approximately $ 11.1 million and $ 2.6 million of debt issuance costs associated with the term loans and the Revolving Credit Facility, respectively.

The term loan debt issuance costs are reflected as a reduction to debt in the Consolidated and Combined Balance Sheets and are amortized as a component of interest expense over the term of the related debt using the effective interest method.

The Revolving Credit Facility debt issuance costs are reflected within “Other Assets” in the Consolidated and Combined Balance Sheets and are amortized straight-line as a component of interest expense over the term of the facility.

The Revolving Credit Facility will mature on the earliest of (i) September 29, 2028, and (ii) the date of termination of all of the commitments under the revolving credit facility or the date on which the loans under the revolving credit facility become due and payable or the commitments under the revolving credit facility are terminated.

The Company's revolving credit facility includes a $ 50 million sublimit for swingline loans.

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The actual rate within the range is based on a Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement.

Additionally, the Company recorded approximately $2.6 million of debt issuance costs related to the revolving credit facility which are recorded as an asset in the Combined Balance Sheets and are amortized as a component of interest expense over the term of the related revolving credit facility using the effective interest method.

The Term Loan A-1 will mature on September 29, 2025 (the “Term A-1 Maturity Date”) and the Term Loan A-2 will mature on the earlier of (i) September 29, 2028 and (ii) the date (the “Springing Maturity Date”) that is 4 months prior to the Term A-1 Maturity Date if any portion of the Term Loan A-1 (or indebtedness which extends, renews, refunds or replaces any portion of the Term Loan A-1) remains outstanding as of such date and has, as of such date, a scheduled maturity date prior to September 29, 2028.

The Revolving Credit Facility will mature on the earliest of (i) September 29, 2028, (ii) the Springing Maturity Date, and (iii) the date of termination of all of the commitments under the Revolving Credit Facility or the date on which the loans under the Revolving Credit Facility become due and payable or the commitments under the Revolving Credit Facility are terminated.

The applicable margin on the Term Loan A-1 and the Term Loan A-2 for fiscal 2024 is 2.25% with respect to Secured Overnight Financing Rate (“SOFR”) borrowings, subject to a floor of 0.00%.

The applicable margin on the Term Loan A-1 and the Term Loan A-2 for fiscal 2025 and thereafter ranges from 1.50% to 2.50% based on the Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement.

The effective interest rate for the Term Loan A-1 and the Term Loan A-2 as of September 29, 2023 was 7.74%.

As of September 27, 2024, there was $ 5.3 million of letters of credit outstanding leaving $ 294.7 million available for borrowing under the revolving credit facility.

On February 22, 2024, the Company amended the Credit Agreement to refinance its Term Loan A-1 with an $ 800 million term loan B-1 due February 22, 2031 (“Term Loan B-1”).

The Term Loan B-1 requires $ 2.0 million of principal payments each quarter until the maturity date, at which the remaining unpaid principal amount is due.

The Company recorded approximately $ 11.1 million and $ 2.0 million of Term Loan B-1 debt issuance costs and original issue discount, respectively, which are reflected as a reduction to debt in the Consolidated Balance Sheet and are being amortized as a component of interest expense over the term of the related debt using the effective interest method.

As a result of the repayment of Term Loan A-1 using the proceeds from Term Loan B-1, the Company also recorded a $ 3.9 million non-cash expense during fiscal 2024 for the write-off of Term Loan A-1 unamortized debt issuance costs to “Interest Expense, net” on the Consolidated Statements of Income.

During fiscal 2024, the Company paid principal amounts of $ 202.5 million and $ 135.0 million on its Term Loan A-2 and Term Loan B-1.

As a result of these payments, the Company has met its quarterly principal payment obligations through the maturity of both term loans.

The Term Loan A-1 interest rate was, and Term Loan A-2 interest rate is, the Secured Overnight Financing Rate (“SOFR”), plus a Credit Spread Adjustment of 10 basis points and a margin from 1.50 % to 2.50 % depending on the Company’s Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement.

The applicable margin on these term loans was 2.25 % during fiscal 2024.

The Term Loan B-1 interest rate is SOFR plus a margin from 2.0 % to 2.25 % depending on the Company’s Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement.

The applicable margin on the Term Loan B-1 was 2.25 % during fiscal 2024.

The weighted-average interest rate for the Company’s senior secured term loans was 7.65 % for fiscal 2024.

During the fiscal year ended September 27, 2024, the Company paid $ 96.8 million of interest on its outstanding principal debt.

The Company did no t have interest payments during the fiscal year ended September 29, 2023.

The Company carries debt at historical cost and discloses fair value.

As of September 29, 2023, the book value of the Company’s debt approximated fair value as the debt was issued on September 29, 2023.

As of September 27, 2024, the carrying amounts of the Company’s senior secured term loans approximated their fair value as the interest rates are variable and reflective of market rates.

The Credit Agreement may be prepaid at any time.

The Credit Agreement requires the Company to prepay outstanding term loans, subject to certain exceptions, with:

• 100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property subject to certain exceptions and customary reinvestment rights;

provided, further, that such prepayment shall only be required to the extent net cash proceeds exceeds the greater of (a) $30,000,000 and (b) 7.5% of Covenant Adjusted EBITDA;

• 100% of the net cash proceeds of all casualty events with respect to any equipment, fixed assets, or real property;

provided, further, that such prepayment shall only be required to the extent proceeds related to the event in excess $10 million are not reinvested within the reinvestment period;

• 100 % of the net cash proceeds of all non-ordinary course asset sales or other dispositions of collateral subject to certain exceptions and customary reinvestment rights;

provided, further, that such prepayment shall only be required to the extent net cash proceeds during the applicable fiscal year exceeds the greater of (a) $ 30,000,000 and (b) 7.5 % of Covenant Adjusted EBITDA;

• 100 % of the net cash proceeds of all casualty events with respect to any equipment, fixed assets, or real property constituting collateral;

provided, that such prepayment shall only be required to the extent proceeds related to the event exceed $ 10 million and are not reinvested within the reinvestment period;

• 100 % of the net cash proceeds of any incurrence of debt, but excluding proceeds from certain debt permitted under the Credit Agreement.

All obligations under the Credit Agreement are unconditionally guaranteed by the Company and, subject to certain exceptions, substantially all of the Company’s existing and future wholly-owned domestic subsidiaries.

All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by (i) pledges of 100% of the capital stock

of the Company’s domestic subsidiaries, (ii) pledges of 65% of the capital stock of the Company’s foreign subsidiaries, and (iii) a security interest in, and mortgages on, substantially all tangible assets of the Company or any of the Guarantors.

In addition, the Term Loan B-1 is subject to mandatory prepayments using 50 % of the Company’s excess cash flow, with reductions to 25 % and 0% based upon achievement and maintenance of a secured net leverage ratio of 3.75 :1.00 and 3.25 :1.00, respectively.

All obligations under the Credit Agreement, and the guarantees of those obligations, are secured, subject to customary exceptions, by (i) pledges of 100 % of the capital stock of the Company’s and guarantors’ direct domestic subsidiaries, (ii) pledges of 65 % of the capital stock of the Company’s and guarantors’ direct foreign subsidiaries, and (iii) a security interest in, and mortgages on, substantially all tangible assets of the Company or any of the Guarantors.

The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability and the ability of its restricted subsidiaries to:

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create restrictions on the payment of dividends or other amounts to the Company from its restricted subsidiaries;

amend material agreements governing the Company’s subordinated debt;

amend material agreements governing the Company’s or guarantors’ subordinated debt;

repay or repurchase any subordinated debt, except as scheduled or at maturity;

make certain acquisitions;

change the Company’s fiscal year;

and fundamentally change the Company’s business.

change the Company’s or its restricted subsidiaries’ fiscal year;

and fundamentally change the Company’s or its restricted subsidiaries’ business.

The Credit Agreement also contains certain customary affirmative covenants, such as financial and other reporting, and certain events of default.

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At September 27, 2024, annual maturities on long-term borrowings maturing in the next five fiscal years and thereafter are as follows (in thousands):

2024 $ 26,250

Thereafter 665,000

Total $ 1,162,500

RELATED PARTY TRANSACTIONS AND PARENT COMPANY INVESTMENT

Corporate Allocations

The Company’s Combined Financial Statements include general corporate expenses of Aramark, which were not historically allocated to the Company for certain support functions that are provided on a centralized basis by Aramark and are not recorded at the Company level, such as expenses related to finance, supply chain, human resources, information technology, share-based compensation, insurance and legal, among others (collectively, “General Corporate Expenses”).

For purposes of these Combined Financial Statements, General Corporate Expenses have been allocated to the Company.

General Corporate Expenses are included in the Combined Statements of Income in “Selling, general and administrative expenses” with the impact related to Aramark’s gasoline, diesel and natural gas derivative agreements included in “Cost of services provided”.

These expenses have been allocated to the Company on the basis of direct usage where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount or other drivers.

Management believes the assumptions underlying the Combined Financial Statements, including the assumptions regarding allocating General Corporate Expenses from Aramark, are reasonable.

Nevertheless, the Combined Financial Statements may not include all of the actual expenses that would have been incurred and may not reflect the Company’s combined results of operations, financial position and cash flows had it been a standalone public company during the periods presented.

Actual costs that would have been incurred if the Company had been a standalone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure.

During the years ended September 29, 2023, September 30, 2022 and October 1, 2021, General Corporate Expenses allocated to the Company were $24.4 million, $37.5 million and $30.6 million, respectively.

Transactions with the Parent

In the ordinary course of business, the Company provides uniforms to certain food and support services contracts of Aramark in the United States and Canada, the terms of which are at fair market value.

During the years ended September 29, 2023, September 30, 2022 and October 1, 2021, these related party revenues were $54.6 million, $47.6 million and $36.0 million, respectively, with related costs of $49.7 million, $43.3 million and $33.9 million, respectively.

Amounts receivable from Aramark for such revenues as of September 29, 2023 and September 30, 2022 were $1.2 million and $0.9 million, respectively.

Parent Company Investment

All significant intercompany transactions between the Company and Aramark have been included in the Combined Financial Statements.

The total net effect of these intercompany transactions is reflected in the Combined Statements of Cash Flows as a financing activity and in the Combined Balance Sheets as “Net parent investment.”

DERIVATIVE INSTRUMENTS:

Aramark enters into contractual derivative arrangements to manage changes in market conditions related to exposure to fluctuating gasoline, diesel and natural gas fuel prices at the Company.

Derivative instruments utilized during the period include gasoline, diesel and natural gas fuel agreements.

All derivative instruments are recognized as either assets or liabilities on the balance sheet of Aramark at fair value at the end of each quarter.

The counterparties to Aramark’s contractual derivative agreements are all major international financial institutions.

Aramark is exposed to credit loss in the event of nonperformance by these counterparties.

Aramark continually monitors its positions and the credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties.

Aramark’s contractual derivative arrangements have not been included within the Company’s Combined Balance Sheets as the Company did not enter into such arrangements.

The corresponding impact on earnings related to the contractual derivative arrangements have been allocated to the Company as the arrangements relate to gasoline, diesel and natural gas fuel utilized within the Company’s operations.

Prior to the Separation, Aramark entered into contractual derivative arrangements to manage changes in market conditions related to exposure to fluctuating gasoline, diesel and natural gas fuel prices at the Company.

These derivative arrangements transferred in-kind to the Company upon the execution of the Separation and Distribution Agreement between the Company and Aramark, which was effective upon the Separation on September 30, 2023.

Derivative instruments utilized during the period include pay fixed/receive floating gasoline and diesel fuel agreements based on the Department of Energy weekly retail on-highway index, and pay fixed/receive floating natural gas fuel agreements based on the Henry Hub New York Mercantile Exchange index in order to limit the Company's exposure to price fluctuations for gasoline, diesel, and natural gas fuel mainly for the Company’s operations.

The counterparties to the contractual derivative agreements are all major international financial institutions.

The Company is exposed to credit loss in the event of nonperformance by these counterparties.

The Company continually monitors its positions and the credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties.

The Company did not enter into any new derivative arrangements for the fiscal year ended September 27, 2024.

As of September 27, 2024, all derivative arrangements had reached maturity and thus, no derivative instruments were recognized as either assets or liabilities on the Consolidated Balance Sheet.

The corresponding impact on earnings related to the contractual derivative arrangements have been recorded within the Consolidated Statement of Income for the fiscal year ended September 27, 2024.

Additionally, prior to the Separation the impact on earnings related to the contractual derivative arrangements were allocated to the Company and recorded within the Combined Statements of Income for the fiscal years ended September 29, 2023 and September 30, 2022.

Derivatives not Designated in Hedging Relationships

Aramark 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 and natural gas agreements based on the Henry Hub New York Mercantile Exchange index in order to limit its exposure to price fluctuations for gasoline, diesel and natural gas fuel mainly for the Company’s operations.

As of September 29, 2023, Aramark has contracts for approximately 7.2 million gallons outstanding through June of fiscal 2024 related to the Company.

Aramark does not record its gasoline, diesel and natural gas fuel agreements as hedges for accounting purposes.

The impact on earnings related to the change in fair value of these unsettled contracts related to the Company was a gain of $1.6 million for fiscal 2023, a loss of $4.6 million for fiscal 2022 and a gain of $3.9 million for fiscal 2021.

The following table summarizes the location of loss (gain) for the Company’s derivatives not designated as hedging instruments in the Combined Statements of Income (in thousands):

The Company does not record its gasoline, diesel and natural gas fuel agreements as hedges for accounting purposes.

As of September 27, 2024, the Company did not have fuel contracts outstanding.

The impact on earnings related to the change in fair value of these contracts related to the Company was a gain of $ 0.1 million for fiscal 2024.

on earnings related to the change in fair value of these unsettled contracts related to the Company was a gain of $ 1.6 million for fiscal 2023 and a loss of $ 4.6 million for fiscal 2022.

The following table summarizes the location of realized and unrealized loss (gain) for the Company’s derivatives not designated as hedging instruments in the Consolidated and Combined Statements of Income (in thousands):

Fiscal Year Ended

Income Statement Location September 29, 2023 September 30, 2022 October 1, 2021

Income Statement Location September 27, 2024 September 29, 2023 September 30, 2022

Gasoline, diesel and natural gas fuel agreements Cost of services provided (exclusive of depreciation and amortization) $ 2,580 $ 3,488 $ ( 3,212 )

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Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

United States:

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The Company expenses sales commissions as incurred if the amortization period is one year or less.

As of September 29, 2023 and September 30, 2022, the Company has $104.4 million and $99.0 million, respectively, of employee sales commissions recorded as assets within “Other Assets” on the Company’s Combined Balance Sheets.

During the fiscal years ended September 29, 2023, September 30, 2022 and October 1, 2021, the Company recorded $20.1 million, $19.2 million and $18.0 million, respectively, of expense related to employee sales commissions within “Selling, general and administrative expenses” on the Combined Statements of Income.

As of September 27, 2024 and September 29, 2023, the Company has $ 105.8 million and $ 104.4 million, respectively, of employee sales commissions recorded as assets within “Other Assets” on the Company’s Consolidated and Combined Balance Sheets.

During the fiscal years ended September 27, 2024, September 29, 2023 and September 30, 2022, the Company recorded $ 21.1 million, $ 20.1 million and $ 19.2 million, respectively, of expense related to employee sales commissions within “Selling, general and administrative expenses” on the Consolidated and Combined Statements of Income.

The Company has lease arrangements primarily related to real estate, vehicles and equipment, which generally have terms of one to 20 years.

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A right-of-use asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”).

As a result of adopting ASC 842 on September 28, 2019 (the first day of fiscal 2020), the Company recognized operating lease liabilities and operating lease right-of-use assets on its Combined Balance Sheets.

Operating lease right-of-use assets represent the Company’s right to use the underlying assets for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Operating lease liabilities and

operating lease right-of-use assets are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term.

The Company recognizes operating lease liabilities and operating lease right-of-use assets on its Consolidated and Combined Balance Sheets.

Operating lease liabilities and operating lease right-of-use assets are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term.

Deferred rent, tenant improvement allowances and prepaid rent are included in the operating lease right-of-use asset balances.

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The Company is required to discount its future minimum lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate.

As the Company’s leases typically do not provide an implicit rate, the present value of our lease liability is determined using Aramark’s incremental borrowing rate at lease commencement based on the geographic location of the lease and the remaining lease term.

The incremental borrowing rate is calculated using a base line rate plus an applicable margin.

The following table summarizes the location of the operating and finance leases in the Company’s Combined Balance Sheets (in thousands), as well as the weighted average remaining lease term and weighted average discount rate:

As the Company’s leases typically do not provide an implicit rate, the present value of our lease liability is determined using an incremental borrowing rate based on the information available as of the lease commencement date.

The following table summarizes the location of the operating and finance leases in the Company’s Consolidated and Combined Balance Sheets (in thousands), as well as the weighted average remaining lease term and weighted average discount rate:

Leases Balance Sheet Location September 27, 2024 September 29, 2023

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Finance leases 4.6 % 4.3 %

The following table summarizes the location of lease related costs in the Combined Statements of Income (in thousands):

The following table summarizes the location of lease related costs in the Consolidated and Combined Statements of Income (in thousands):

Fiscal Year Ended

Lease Cost Income Statement Location September 29, 2023 September 30, 2022 October 1, 2021

Lease Cost Income Statement Location September 27, 2024 September 29, 2023 September 30, 2022

Operating lease cost :

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Amortization of right-of-use-assets Depreciation and amortization 31,647 30,360 29,135

Interest on lease liabilities Interest Expense and Other, net 4,174 3,205 3,399

Interest on lease liabilities Interest Expense, net 5,784 4,174 3,205

Net lease cost $ 79,935 $ 75,716 $ 73,201

__________________

(1) Excludes sublease income, which is immaterial.

(1) Excludes variable lease costs, which are immaterial.

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Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Cash paid for amounts included in the measurement of lease liabilities:

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For fiscal 2022, excludes cash paid for variable and short-term lease costs of $ 9.1 million and $ 6.4 million, respectively, that are not included within the measurement of lease liabilities.

Additionally, for fiscal 2024, includes $ 4.5 million of cash received for reimbursements of tenant improvement allowances.

Future minimum lease payments under non-cancelable leases as of September 27, 2024 are as follows (in thousands):

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In the United States and Canada, the Company maintains qualified contributory defined contribution retirement plans for all Company employees meeting certain eligibility requirements, with Company contributions to the plans based on earnings performance or salary level.

The total expense of the above plans for Company employees for fiscal 2023, fiscal 2022 and fiscal 2021 was $9.1 million, $8.7 million and $8.6 million, respectively, which were recorded in “Cost of services provided (exclusive of depreciation and amortization)” and “Selling, general and administrative expenses” on the Combined Statements of Income.

The total expense of the above plans for Company employees for fiscal 2024, fiscal 2023 and fiscal 2022 was $ 9.0 million, $ 9.1 million and $ 8.7 million, respectively, which were recorded in “Cost of services provided (exclusive of depreciation and amortization)” and “Selling, general and administrative expenses” on the Consolidated and Combined Statements of Income.

Multiemployer Defined Benefit Pension Plans

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The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented.

The contributions columns represent the recurring, required contributions made by the Company, which are typically based upon the number of employees participating

within the plan.

The contributions columns represent the recurring, required contributions made by the Company, which are typically based upon the number of employees participating within the plan.

The last column lists the expiration date(s) of the CBA(s) to which the plans are subject.

There have been no significant changes that affect the comparability of fiscal 2024, fiscal 2023 and fiscal 2022 contributions.

contributions by the Company were recorded in “Cost of services provided (exclusive of depreciation and amortization)” and “Selling, general and administrative expenses” on the Consolidated and Combined Statements of Income.

Pension Protection Act Zone Status Contributions by the Company (in thousands)

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National Retirement Fund 13-6130178/ 001 Critical Critical Implemented $ 3,219 $ 2,994 $ 2,400 No 10/30/2022 - 4/7/2028

Central States SE and SW Areas Pension Plan 36-6044243/ 001 Critical Critical and Declining Implemented 4,213 3,971 3,842 No 6/24/2022 - 9/22/2028

Retail, Wholesale and Department Store International Union and Industry Pension Fund(1) 63-0708442/ 001 Critical and Declining Critical and Declining Implemented 413 408 425 No 4/18/2025 - 5/22/2026

Central States SE and SW Areas Pension Plan 36-6044243/ 001 Critical Critical Implemented 4,440 4,213 3,971 No 7/19/2024 - 9/22/2028

Retail, Wholesale and Department Store International Union and Industry Pension Fund (1)

63-0708442/ 001 Critical and Declining Critical and Declining Implemented 404 413 408 No 4/18/2025 - 5/22/2026

Pension Fund 36-6513567/ 001 Green Green N/A 1,166 1,129 997 No 5/1/2026

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National Retirement Fund 12/31/2023, 12/31/2022, and 12/31/2021

Retail, Wholesale and Department Store International Union and Industry Pension Fund 12/31/2022

COMMITMENTS AND CONTINGENCIES:

The Company has capital and other purchase commitments of approximately $ 5.8 million at September 27, 2024, primarily in connection with commitments for the purchase of raw materials from vendors.

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 or otherwise related to the Company, including actions by customers, employees, government entities and third parties, including under federal, state, international, national, provincial and local employment laws, wage and hour laws, discrimination laws, immigration laws, human health and safety laws, import and export controls and customs laws, environmental laws, false claims or whistleblower statutes, tax codes, antitrust and competition laws, customer protection statutes, procurement regulations, intellectual property laws, supply chain laws, the Foreign Corrupt Practices Act and other anti-corruption laws, lobbying laws, motor carrier safety laws, data privacy and security 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, except as set forth below with respect to the shareholder class action lawsuits and shareholder derivative action lawsuit, 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.

The Company is involved with environmental investigation and remediation activities at certain sites that it currently or formerly owned or operated or to which it sent waste for disposal (including sites which were previously owned and/or operated by businesses acquired by the Company or sites to which such businesses sent waste for disposal).

The Company initially provides for estimated costs of environmental-related activities relating to its past operations and third-party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment.

These estimated costs, which are mostly undiscounted,

are determined based on currently available facts regarding each site.

If the reasonably estimable costs can only be identified as a range and no specific amount within that range can be determined more likely, the minimum of the range is used.

The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated.

As of September 27, 2024 and September 29, 2023, the Company has $ 6.6 million and $ 6.8 million, respectively, recorded as liabilities within “ Accrued expenses and other current liabilities ” and $ 19.0 million and $ 17.3 million, respectively, recorded as liabilities within “ Other Noncurrent Liabilities ” on the Company’s Consolidated and Combined Balance Sheets.

The Company records the fair value of a liability for an asset retirement obligation both as an asset and a liability when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated.

The Company has identified certain conditional asset retirement obligations at various current and closed facilities.

These obligations relate primarily to asbestos abatement, underground storage tank closures and restoration of leased properties to the original condition.

Using investigative, remediation and disposal methods that are currently available to the Company, the estimated costs of these obligations were accrued.

As of September 27, 2024 and September 29, 2023, the Company has $ 11.8 million and $ 12.3 million, respectively, recorded as liabilities within “Other Noncurrent Liabilities” on the Company’s Consolidated and Combined Balance Sheets.

On May 13, 2022, Cake Love Co.

(“Cake Love”) commenced a putative class action lawsuit against AmeriPride Services, LLC (“AmeriPride”), a subsidiary of Vestis, in the United States District Court for the District of Minnesota.

The lawsuit was subsequently updated to add an additional named plaintiff, Q-Mark Manufacturing, Inc.

(“Q-Mark” and, together with Cake Love, the “Plaintiffs”).

Plaintiffs allege that the defendants increased certain pricing charged to members of the purported class without the proper notice required by service agreements between AmeriPride and members of the purported class and that AmeriPride breached the duty of good faith and fair dealing.

Plaintiffs seek damages on behalf of the purported class representing the amount of the allegedly improperly noticed price increases along with attorneys’ fees, interest and costs.

In the third quarter of fiscal 2024, the parties reached a settlement in principle, subject to court approval.

The settlement includes, among other terms, a monetary component of $ 3.1 million.

The full amount of the proposed settlement has been provided for in the Consolidated Financial Statements.

With respect to the below matters, the Company cannot predict the outcome of these legal matters, nor can it predict whether any outcome may be materially adverse to its business, financial condition, results of operations or cash flows.

The Company intends to vigorously defend these matters.

On May 17, 2024, a purported Vestis shareholder commenced a putative class action lawsuit against Vestis and certain of its officers, in the United States District Court for the Northern District of Georgia, captioned Plumbers, Pipefitters and Apprentices Local No.

112 Pension Fund v.

Vestis Corporation, et al., Case No.

24-cv-02175-SDG.

The lawsuit is purportedly brought on behalf of purchasers of Vestis’ common stock between October 2, 2023 and May 1, 2024, inclusive.

The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, based on allegedly false or misleading statements generally related to the Company’s business and operations, pricing practices, and financial results and outlook.

The lawsuit seeks unspecified damages and other relief.

On September 23, 2024, the Court appointed co-lead plaintiffs.

On October 30, 2024, the Court entered an amended scheduling order.

On June 4, 2024, a purported Vestis shareholder commenced a putative class action lawsuit against Vestis, in the Court of Chancery of the State of Delaware, captioned O’Neill v.

Vestis Corp., Case No.

2024-0600-JTL .

The lawsuit is purportedly brought on behalf of Vestis shareholders.

The complaint alleges a single claim for declaratory judgment, seeking to invalidate and void Section II.5(d) of Vestis’ Amended and Restated Bylaws, effective September 29, 2023.

On October 7, 2024, the Court granted a stipulation to consolidate multiple related actions involving similar company defendants, including the Vestis action, solely for purposes of adjudicating an omnibus motion to dismiss the complaints in each of those actions.

On October 11, 2024, Vestis and the other consolidated defendants filed an omnibus motion to dismiss.

On July 10, 2024, a purported Vestis shareholder commenced a derivative action against Vestis’ directors and certain of its officers, in the United States District Court for the Northern District of Georgia, captioned Hollin v.

Scott, et al., Case No.

24-cv-03059-SDG.

The complaint seeks unspecified damages on behalf of Vestis and certain other relief, such as certain reforms to corporate governance and internal procedures.

The complaint (in which Vestis is named as a nominal defendant) generally alleges, among other things, breaches of fiduciary duties in connection with the oversight of Vestis’ public statements and internal controls, and that Vestis was damaged as a result of the breaches of fiduciary duties.

The complaint also alleges, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934, aiding and abetting breach of fiduciary duty, unjust enrichment, and waste of corporate assets.

BUSINESS SEGMENTS:

The Company manages and evaluates its business activities based on geography and, as a result, determined that its United States and Canada businesses are its operating segments.

The United States and Canada operating segments both provide a full range of uniform programs, restroom supply services and first-aid and safety products, as well as ancillary items such as floor mats, towels and linens.

The Company’s operating segments are also its reportable segments.

Corporate includes administrative expenses not specifically allocated to an individual segment.

The Company evaluates the performance of each operating segment based on several factors of which the primary financial measure is operating income.

The accounting policies of the operating segments are the same as those described in Note 1 "Nature of Business, Basis of Presentation and Summary of Significant Accounting Policies".

Financial information by segment is as follows (in thousands):

Fiscal Year Ended

Revenue September 27, 2024 September 29, 2023 September 30, 2022

United States $ 2,555,922 $ 2,575,352 $ 2,447,027

Canada 249,898 249,934 239,978

$ 2,805,820 $ 2,825,286 $ 2,687,005

Fiscal Year Ended

Operating Income (Loss) September 27, 2024 September 29, 2023 September 30, 2022

United States $ 264,709 $ 303,762 $ 242,971

Canada 8,162 13,707 18,008

Total Segment Operating Income 272,871 317,469 260,979

Corporate ( 114,920 ) ( 99,560 ) ( 68,736 )

Total Operating Income $ 157,951 $ 217,909 $ 192,243

Fiscal Year Ended

Reconciliation to Income Before Income Taxes September 27, 2024 September 29, 2023 September 30, 2022

Total Operating Income $ 157,951 $ 217,909 $ 192,243

Gain on Sale of Equity Investment, net — ( 51,831 ) —

Interest Expense, net 126,563 2,109 4,548

Other (Income) Expense, net ( 642 ) ( 2,099 ) ( 2,264 )

Income Before Income Taxes $ 32,030 $ 269,730 $ 189,959

Fiscal Year Ended

Depreciation and Amortization September 27, 2024 September 29, 2023 September 30, 2022

United States $ 129,201 $ 125,167 $ 122,347

Canada 11,331 10,819 11,484

Corporate 249 518 521

$ 140,781 $ 136,504 $ 134,352

Fiscal Year Ended

Capital Expenditures September 27, 2024 September 29, 2023 September 30, 2022

United States $ 75,112 $ 72,353 $ 72,197

Canada 3,793 5,517 4,252

$ 78,905 $ 77,870 $ 76,449

Property and Equipment, net September 27, 2024 September 29, 2023

United States $ 580,060 $ 578,997

Canada 68,138 72,907

Corporate 22,660 12,627

$ 670,858 $ 664,531

Total Assets September 27, 2024 September 29, 2023

United States $ 2,629,457 $ 2,863,616

Canada 268,800 266,804

Corporate 34,130 26,704

$ 2,932,387 $ 3,157,124

INCOME TAXES:

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Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

United States $ 24,683 $ 254,027 $ 172,948

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Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Federal $ 22,949 $ 29,704 $ 19,663

State and local 3,283 10,126 6,958

Non-United States 2,372 1,056 6,436

Foreign 4,404 2,372 1,056

30,636 42,202 27,677

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State and local ( 3,019 ) 2,860 3,322

Non-United States 1,160 4,211 (2,252)

Foreign ( 1,658 ) 1,160 4,211

( 19,576 ) 14,370 20,603

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Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

United States statutory income tax rate 21.0 % 21.0 % 21.0 %

2 unchanged sentences

Foreign taxes 2.6 ( 0.1 ) 0.9

Foreign valuation allowances — — (2.3)

Separation related adjustments ( 2.9 ) — —

Permanent book/tax differences 3.8 0.3 —

1 unchanged sentence

Uncertain tax positions 0.7 0.5 0.1

Deferred tax on foreign investments 4.3 — —

Share-based compensation 3.5 — —

Tax credits & other ( 3.5 ) ( 0.5 ) ( 0.8 )

Effective income tax rate 34.5 % 21.0 % 25.4 %

The effective tax rate is based on expected income, statutory tax rates and tax planning opportunities available to the Company in the various jurisdictions in which it operates.

Judgment is required in determining the effective tax rate and in evaluating the tax return positions.

Reserves are established when positions are “more likely than not” to be challenged and not sustained.

Reserves are adjusted at each financial statement date to reflect the impact of audit settlements, expiration of statutes of limitation, developments in tax law and ongoing discussions with tax authorities.

Accrued interest and penalties associated with uncertain tax positions are recognized as part of the income tax provision.

As of September 27, 2024 and September 29, 2023, the components of Deferred Income Taxes are as follows (in thousands):

September 27, 2024 September 29, 2023

Deferred tax assets:

Accruals and allowances 22,777 16,939

Employee compensation 18,485 14,401

Operating lease right-of-use liability 19,924 16,086

Business interest expense carryforward 16,795 —

Research and development expenses 5,622 2,881

NOL/credit carryforward and other 7,290 3,704

Deferred tax asset 90,893 54,011

Valuation allowances $ ( 4,662 ) $ —

Deferred tax asset (net of valuation allowance) 86,231 54,011

Deferred tax liabilities:

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Rental merchandise in service 78,542 80,579

Operating Lease Right-of-use Asset 14,025 18,625

Employee compensation and benefits 10,806 14,119

Operating lease asset 16,746 14,025

Capitalized contract costs 24,541 24,506

Internally developed software 7,846 8,399

Other $ 5,752 $ 4,251

Gross deferred tax liability 257,327 241,400

Deferred tax assets:

Accruals and allowances 16,939 18,200

Operating lease liabilities 16,086 19,304

NOL/credit carryforward and other 6,655 2,070

Gross deferred tax asset 39,680 39,574

Deferred tax liability 276,135 271,658

Net deferred tax liability $ 189,904 $ 217,647

As of September 29, 2023 and September 30, 2022, the Company did not have a valuation allowance against deferred tax assets.

Deferred tax assets of $ 1.6 million and $ 0 million as of September 27, 2024 and September 29, 2023, respectively, are included in "Other Assets" on the Consolidated and Combined Balance Sheets.

Deferred tax liabilities of $ 191.5 million and $ 217.6 million as of September 27, 2024 and September 29, 2023, respectively, are included in "Deferred Income Taxes" on the Consolidated and Combined Balance Sheets.

In connection with the Separation, the

Company's net deferred tax liabilities decreased by $ 8.5 million, primarily related to shared-based compensation, inventoriable costs and tax attributes that were not part of the Company while consolidated with Aramark.

As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact the need for valuation allowances against deferred tax assets.

As of September 27, 2024, the Company has $ 4.7 million of United States foreign tax credit carryforwards from periods prior to the Separation.

However, the Company maintains a full valuation allowance against these credit carryforwards.

The Company assessed the remaining deferred tax assets and believes it is more-likely-than-not that they are realizable.

As of September 27, 2024, the Company had $ 2 million of tax-effected state net operating loss carryforwards.

The earliest expiration of the state net operating loss carryforwards is fiscal 2029 and the Company believes all carryforwards will be utilized prior to expiration.

A reconciliation of the beginning and ending amount of valuation allowances follows (in thousands):

September 27, 2024 September 29, 2023 September 30, 2022

Balance, beginning of year $ — $ — $ —

Separation related adjustments 4,662 — —

Balance, end of year $ 4,662 $ — $ —

Under the Tax Matters Agreement, the Company is responsible for income taxes on prior period returns filed on a separate company basis in state, local, and foreign jurisdictions.

Prior to the Separation, the Company was included on Aramark’s United States federal and various state consolidated and combined tax returns that remain the responsibility of Aramark.

Adjustments to Aramark’s consolidated and combined federal and state tax returns could affect the tax attributes allocated to the Company under the Tax Matters Agreement.

While it is often difficult to predict the timing or resolution of a particular tax matter, the Company does not anticipate any adjustments resulting from United States federal, state or foreign tax audits that would result in a material change to the financial condition or results of operations.

Currently, none of the Company’s income tax returns are under examination by a taxing authority.

With few exceptions, the Company is no longer subject to foreign or state and local tax examinations by tax authorities for fiscal years before 2020.

Undistributed earnings and profits ("E&P") of our foreign subsidiaries amounted to $ 21.7 million as of September 27, 2024.

Currently, $ 21.7 million of the undistributed E&P of our foreign subsidiaries is considered to be indefinitely reinvested and, accordingly, no deferred income taxes have been provided thereon.

Upon distribution of those earnings to the U.S.

in the form of dividends or otherwise, the Company could be subject to U.S.

state and local taxes and withholding taxes payable in various jurisdictions, which may be partially offset by a U.S.

foreign tax credit.

The unrecorded withholding tax on undistributed E&P is not significant to the Consolidated and Combined Financial Statements.

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate, was approximately $ 0.4 million, $ 4.4 million, and $ 3.0 million as of September 27, 2024, September 29, 2023 and September 30, 2022, respectively.

In connection with the Separation, our unrecognized benefits with respect to our uncertain tax positions decreased by $ 4.2 million as these remained the obligation of Aramark under the Tax Matters Agreement.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits follows (in thousands):

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Balance, beginning of year $ 4,392 $ 2,963 $ 2,854

1 unchanged sentence

Additions for tax positions taken in prior years — 875 —

Reductions for remeasurements, settlements and payments — — (138)

Separation related adjustments ( 4,175 ) — —

Balance, end of year $ 412 $ 4,392 $ 2,963

The Company has $1.1 million, $0.2 million and $0.2 million accrued for interest and penalties as of September 29, 2023, September 30, 2022 and October 1, 2021, respectively, in the Combined Balance Sheets.

Interest and penalties related to unrecognized tax benefits are recorded in "Provision for Income Taxes" on the Combined Statements of Income.

Generally, a number of years may elapse before a tax reporting year is audited and finally resolved.

With few exceptions, Aramark is no longer subject to United States federal, state or local examinations by tax authorities before 2015.

While it is often difficult to predict the final outcome or the timing of or resolution of a particular tax matter, Aramark does not anticipate any adjustments resulting from United States federal, state or foreign tax audits that would result in a material change to the financial condition or results of operations.

Adequate amounts are established for any adjustments that may result from examinations for tax years after 2015.

However, an unfavorable settlement of a particular issue may impact the Company.

The Company has $ 0.1 million, $ 1.1 million and $ 0.2 million accrued for interest and penalties as of September 27, 2024, September 29, 2023 and September 30, 2022, respectively, in the Consolidated and Combined Balance Sheets.

Interest and penalties related to unrecognized tax benefits are recorded in "Provision for Income Taxes" on the Consolidated and Combined Statements of Income.

It is reasonably possible that the amount of unrecognized benefits with respect to certain of our unrecognized tax positions will change within the next 12 months.

At this time, the Company does not anticipate the amount of gross unrecognized tax positions to decrease within the next 12 months.

During the fiscal years ended September 27, 2024, September 29, 2023 and September 30, 2022 , the Company paid cash for inco me taxes, net of refunds received, of $ 19.1 million, $ 0.2 million, and $ 3.5 million, respectively.

SHARE-BASED COMPENSATION:

The Company had no share-based compensation plans as of September 29, 2023.

Certain employees of the Company have historically participated in Aramark’s Stock Incentive Plan (“Aramark Stock Plan”).

All awards granted under Aramark Stock Plan are approved by Aramark’s Compensation Committee of the Board of Directors or another committee authorized by Aramark’s Board of Directors.

As such, all related equity account balances, other than allocations of share-based compensation expense (see Note 5.

Related Party Transactions and Parent Company Investment), remain at the Aramark level.

The following disclosure represents share-based compensation

attributable to the Company based on the awards and terms previously granted to Company employees under Aramark’s share-based payment plans and is representative of only those employees who are dedicated to the Company.

Share-based compensation expense allocated to the Company for Aramark corporate employees who are not dedicated to the Company are included as a component of General Corporate Expenses.

The allocation of share-based compensation expense for Aramark corporate employees was $3.9 million, $4.2 million and $3.6 million, respectively in fiscal 2023, 2022 and 2021.

The following table summarizes the share-based compensation expense (reversal) and related information for Time-Based Options (“TBOs”), Time-Based Restricted Stock Units (“RSUs”), Performance Stock Units (“PSUs”) and Employee Stock Purchase Plan (“ESPP”) classified as “Selling, general and administrative expenses” on the Combined Statements of Income (in thousands).

On September 30, 2023, Aramark completed the previously announced spin-off of Vestis through a distribution of the Company's common stock to holders of record of Aramark’s common stock as of the close of business on September 20, 2023, which resulted in previous Aramark equity awards being converted to Vestis equity awards.

Additionally, the Company adopted the Vestis Corporation 2023 Long-Term Incentive Plan (“LTIP”) effective as of September 30, 2023.

The Compensation and Human Resources Committee of the Board of Directors approves grants under the LTIP.

Under the LTIP, we are authorized to issue up to 15.0 million shares for future Vestis equity awards and issued approximately 1.7 million shares related to the conversion of Aramark equity awards outstanding as of September 30, 2023 into Vestis equity awards upon the Separation from Aramark.

Prior to the Separation, the Company had no share-based compensation plans.

Certain employees of the Company historically participated in Aramark’s Stock Incentive Plan (“Aramark Stock Plan”) prior to the Separation.

All awards granted under Aramark Stock Plan were approved by Aramark’s Compensation Committee of the Board of Directors or another committee authorized by Aramark’s Board of Directors.

The following disclosure for the fiscal years ended September 29, 2023 and September 30, 2022 represents share-based compensation attributable to the Company based on the awards and terms previously granted to Company employees under Aramark’s share-based payment plans and is representative of only those employees who are dedicated to the Company.

Share-based compensation expense allocated to the Company for Aramark corporate employees who were not dedicated to the Company are included as a component of General Corporate Expenses.

The allocation of share-based compensation expense for Aramark corporate employees was $ 3.9 million and $ 4.2 million, respectively in fiscal 2023 and 2022.

The following table summarizes the share-based compensation expense (reversal) and related information for Time-Based Options (“TBOs”), Time-Based Restricted Stock Units (“RSUs”), Performance Stock Units (“PSUs”), Deferred Stock Units (“DSUs”) and Employee Stock Purchase Plan (“ESPP”) classified as “Selling, general and administrative expenses” on the Consolidated and Combined Statements of Income (in thousands).

Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

TBOs $ 1,125 $ 1,064 $ 2,319

September 27, 2024 September 29, 2023 September 30, 2022

$ 3,960 $ 1,125 $ 1,064

1 unchanged sentence

4,264 866 451

Taxes related to share-based compensation $ 2,568 $ 2,729 $ 2,751

$ 16,336 $ 10,601 $ 13,116

(1) Share-based compensation expense for RSUs decreased during fiscal 2023 compared to fiscal 2022 due to a decrease in annual grants issued in fiscal 2023 compared to fiscal 2022 and due to an increase in the vesting period from three years to four years for fiscal 2023 grants.

(2) Share-based compensation expense related to PSUs increased during fiscal 2023 compared to fiscal 2022 due to the issuance of new 2023 PSU grants.

No PSUs were issued in fiscal 2021.

(3) Share-based compensation expense related to the ESPP decreased during fiscal 2023 compared to fiscal 2022 as Aramark suspended its ESPP beginning in the second quarter of 2023.

Income tax benefit related to share-based compensation $ 3,180 $ 2,568 $ 2,729

__________________

(1) Share-based compensation expense for TBOs increased during fiscal 2024 compared to fiscal 2023 due to an increase in annual grants issued in fiscal 2024 compared to fiscal 2023.

(2) Share-based compensation expense for RSUs decreased during fiscal 2024 compared to fiscal 2023 due to a decrease in annual grants in fiscal 2024 compared to prior years.

(3) Share-based compensation expense for PSUs increased during fiscal 2024 compared to fiscal 2023 due to an increase in annual grants issued in fiscal 2024 compared to fiscal 2023.

(4) Share-based compensation expense related to DSUs increased during fiscal 2024 compared to fiscal 2023 due to the issuance of new DSU grants in fiscal 2024.

No DSUs were granted in fiscal 2023 or fiscal 2022.

(5) Share-based compensation expense related to the ESPP decreased during fiscal 2024 compared to fiscal 2023 as the Company does not have an ESPP.

No compensation expense was capitalized.

Prior to the fourth quarter of fiscal 2020, Aramark applied a forfeiture assumption of approximately 6.4% per annum in the calculation of such expenses.

During the fourth quarter of fiscal 2020, Aramark increased its estimated forfeiture assumption to 9.0% per annum based on actual forfeiture activity, which remained in effect throughout fiscal 2021, 2022 and 2023.

The Company records forfeitures as they occur.

The below table summarizes the unrecognized compensation expense as of September 27, 2024 related to non-vested awards and the weighted-average period they are expected to be recognized:

7 unchanged sentences

Time-Based Options

Aramark’s annual TBO grants for fiscal 2023 were awarded in November 2022, while Aramark’s annual TBO grants for fiscal 2022 were awarded in November 2021 and Aramark’s annual TBO grants for fiscal 2021 were awarded early in September 2020.

The fiscal 2023 grants and TBO grants prior to September 2020 vest solely based upon continued employment over a four-year time period.

The Company granted TBOs to the Company's executives and directors on October 2, 2023.

Additionally, the Company’s annual TBO grants for fiscal 2024 were awarded in December 2023.

Aramark’s annual TBO grants for fiscal 2023 were awarded in November 2022, while Aramark’s annual TBO grants for fiscal 2022 were awarded in November 2021.

The fiscal 2024 and 2022 TBO grants vest solely based upon continued employment over a three-year time period.

The fiscal 2023 TBO grants vest solely based upon continued employment over a four-year time period.

All TBOs remain exercisable for 10 years from the date of grant.

The fair value of the TBOs granted was estimated using the Black-Scholes option pricing model.

The expected volatility is based on the historic volatility of Aramark’s stock price over the expected term of the stock options.

For fiscal 2024 TBO grants, the expected volatility was derived from a peer group’s historical volatility as Vestis did not have sufficient historical volatility based on the expected term of the underlying options.

For fiscal 2023 and 2022 TBO grants, the expected volatility is based on the historic volatility of Aramark’s stock price over the expected term of the stock options.

For fiscal 2024 TBO grants, the expected dividend yield was 0.0% for the October 2, 2023 grants as the Company had not declared a dividend prior to the grant date, and was 0.8 % for the December 6, 2023 grants based on the dividend announced by the Company on November 29, 2023.

The expected life represents the period of time that options granted are expected to be outstanding and is calculated using the simplified method, as permitted under SEC rules and regulations, due to the method providing a reasonable estimate in comparison to actual experience.

2 unchanged sentences

Compensation expense for TBOs is recognized on a straight-line basis over the vesting period during which employees perform related services.

The unvested TBOs are subject to forfeiture if employment is terminated other than due to death, disability or retirement, and the TBOs are nontransferable while subject to forfeiture.

Cash received from TBOs exercised for the fiscal year ended September 27, 2024 was $ 0.1 million.

The table below presents the weighted average assumptions and related valuations for TBOs.

Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Expected volatility 32.3 % - 33.5 %

Expected dividend yield 0.0 % - 0.8 %

1.00 % - 1.19 %

1.18 % - 1.29 %

Expected life (in years) 6.0 - 6.5

Risk-free interest rate 4.1 % - 4.7 %

3.65 % - 4.21 %

1.35 % - 2.96 %

Weighted-average grant-date fair value $ 6.5 $ 16.9 $ 13.4

3 unchanged sentences

($000s) Weighted-Average Remaining Term

Outstanding at September 30, 2022 700 $ 35.48

Outstanding at October 2, 2023 (1)

Granted 1,768 $ 19.42

4 unchanged sentences

Expected to vest at September 27, 2024 1,655 $ 19.35 $ — 9.0

__________________

(1) On October 2, 2023 our common stock began regular-way trading on the New York Stock Exchange (“NYSE”).

The shares outstanding as of October 2, 2023 pertain to Aramark equity awards issued by Aramark in prior periods to employees of the Company that were converted to Vestis equity awards as part of the Separation.

Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Total intrinsic value exercised (in thousands) $ 63 $ 2,040 $ 3,054

1 unchanged sentence

Time-Based Restricted Stock Units

Aramark’s annual RSU grants for fiscal 2023 were awarded in November 2022, while Aramark’s annual RSU grants for fiscal 2022 were awarded in November 2021 and Aramark’s annual RSU grants for fiscal 2021 were awarded early in September 2020.

For RSU grants awarded in fiscal 2023 or prior to September 2020, the RSU agreement provides that 25% of each grant will vest and be settled in shares on each of the first four anniversaries of the grant date, subject to the participant’s continued employment with Aramark through each such anniversary.

For RSU grants awarded during or subsequent to September 2020 and prior to fiscal 2023, the RSU agreement provides that 33% of each grant will vest and be settled in shares on each of the first three anniversaries of the date of grant, subject to the participant’s continued employment with Aramark through each such anniversary.

The grant-date fair value of RSUs is based on the fair value of Aramark’s common stock.

Participants holding RSUs will receive the benefit of any dividends paid on shares in the form

of additional RSUs.

The unvested units are subject to forfeiture if employment is terminated other than due to death, disability or retirement, and the units are nontransferable while subject to forfeiture.

The Company granted RSUs to the Company's executives and directors on October 2, 2023.

Additionally, the Company’s annual RSU grants for fiscal 2024 were awarded in December 2023.

Aramark’s annual RSU grants for fiscal 2023 were awarded in November 2022, while Aramark’s annual RSU grants for fiscal 2022 were awarded in November 2021.

For RSU grants awarded during fiscal 2024 and fiscal 2022, the RSU agreement provides that 33 % of each grant will vest and be settled in shares on each of the first three anniversaries of the date of grant, subject to the participant’s continued employment through each such anniversary.

For RSU grants awarded in fiscal 2023, the RSU agreement provides that 25 % of each grant will vest and be settled in shares on each of the first four anniversaries of the grant date, subject to the participant’s continued employment through each such anniversary.

The grant-date fair value of RSUs granted in fiscal 2024 is based on the fair value of the Company’s common stock.

The grant-date fair value of RSUs granted in fiscal 2023 and 2022 is based on the fair value of Aramark’s common stock.

Participants holding RSUs will receive the benefit of any dividends paid on shares in the form of additional RSUs.

The unvested RSUs are subject to forfeiture if employment is terminated other than due to death, disability or retirement, and the RSUs are nontransferable while subject to forfeiture.

Restricted Stock Units Units

(000s) Weighted Average Grant-Date Fair Value

Outstanding at September 30, 2022 557 $ 35.94

Outstanding at October 2, 2023 (1)

Granted 492 $ 17.71

2 unchanged sentences

Outstanding at September 27, 2024 838 $ 18.22

__________________

(1) On October 2, 2023 our common stock began regular-way trading on the New York Stock Exchange (“NYSE”).

Fiscal Year Ended

September 29, 2023 September 30, 2022 October 1, 2021

September 27, 2024 September 29, 2023 September 30, 2022

Total fair value that vested (in thousands) $ 6,950 $ 9,396 $ 7,084

Performance Stock Units

Under the Aramark Stock Plan, Aramark is authorized to grant PSUs to its employees.

A participant is eligible to become vested in a number of PSUs equal to a percentage, higher or lower, of the target number of PSUs granted based on the level of Aramark’s achievement of the performance condition.

During fiscal 2020, Aramark granted PSUs subject to the level of achievement of adjusted revenue growth, adjusted operating income growth, return on invested capital and a total shareholder return multiplier for the cumulative performance period of three years and the participant’s continued employment with Aramark.

During fiscal 2022, Aramark granted PSUs subject to the level of achievement of adjusted revenue growth, adjusted operating income growth and a total shareholder return multiplier for the cumulative performance period of three years and the participant’s continued employment with Aramark.

Aramark also granted PSUs during fiscal 2022 subject to the level of achievement of actual return on invested capital for the cumulative performance period of three years and the participant’s continued employment with Aramark.

During fiscal 2023, Aramark granted PSUs subject to the level of achievement of adjusted revenue growth, cumulative adjusted earnings per share, return on invested capital and a total shareholder return multiplier for the cumulative performance period of three years and the participant’s continued employment with Aramark which was increased to four years for fiscal 2023 grants.

Aramark is accounting for the fiscal 2023 grants as performance-based awards, with a market condition, valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair value based on the most likely outcome.

The grant-date fair value of the PSUs is based on the fair value of Aramark’s common stock.

No share-based compensation expense was recorded during fiscal 2022 or 2021 related to PSUs awards granted during fiscal 2020 as the performance targets for the awards were not met.

Under the LTIP, Vestis is authorized to grant PSUs to its employees.

A participant is eligible to become vested in a number of PSUs equal to a percentage, higher or lower, of the target number of PSUs granted based on the level of Vestis’ achievement of the performance condition.

During fiscal 2024, Vestis granted PSUs on October 2, 2023 subject to the level of achievement of adjusted EBITDA margin percentage and revenue growth (measured as compound annual growth rate) over three years with no additional market conditions.

Additionally, on October 2, 2023 and December 6, 2023 Vestis granted PSUs subject to the level of achievement of cumulative adjusted EBITDA, cumulative adjusted free cash flow conversion rate and a total shareholder return modifier for the cumulative performance period of three years and the participant’s continued employment with Vestis.

Vestis is accounting for the October 2, 2023 grants that do not include a market condition as performance-based awards, with grant date fair value based on the fair value of Vestis' common stock.

Vestis is accounting for the October 2, 2023 and December 6, 2023 grants that include a market condition as performance-based awards, with a market condition, valued utilizing the Monte Carlo Simulation pricing model, which calculates multiple potential outcomes for an award and establishes fair value based on the most likely outcome.

The unvested PSUs are subject to forfeiture if employment is terminated other than due to death, disability or retirement, and the PSUs are nontransferable while subject to forfeiture.

Performance Stock Units Units

(000s) Weighted Average Grant-Date Fair Value

Outstanding at September 30, 2022 97 $ 40.17

Outstanding at October 2, 2023 (1)

Granted 663 $ 17.86

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Outstanding at September 27, 2024 698 $ 18.76

Employee Stock Purchase Plan

On February 2, 2021, Aramark’s stockholders approved the Aramark 2021 ESPP.

The ESPP allows eligible employees to contribute up to 10% of their eligible pay toward the quarterly purchase of Aramark’s common stock, subject to an annual maximum dollar amount.

The purchase price is 85% of the lesser of the (i) fair market value per share of Aramark’s common stock as determined on the purchase date or (ii) fair market value per share of Aramark’s common stock as determined on the first trading day of the quarterly offering period.

Purchases under the ESPP are made in March, June, September, and December.

Aramark suspended its ESPP beginning in the second quarter of 2023.

COMMITMENTS AND CONTINGENCIES:

The Company has capital and other purchase commitments of approximately $7.4 million at September 29, 2023, primarily in connection with commitments for the purchase of raw materials from vendors.

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 customers, employees, government entities and third parties, including under federal, state, international, national, provincial and local employment laws, wage and hour laws, discrimination laws, immigration laws, human health and safety laws, import and export controls and customs laws, environmental laws, false claims or whistleblower statutes, tax codes, antitrust and competition laws, customer protection statutes, procurement regulations, intellectual property laws, supply chain laws, the Foreign Corrupt Practices Act and other anti-corruption laws, lobbying laws, motor carrier safety laws, data privacy and security 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.

The Company is involved with environmental investigation and remediation activities at some of its currently and formerly owned sites (including sites which were previously owned and/or operated by businesses acquired by the Company).

These estimated costs, which are mostly undiscounted, are determined based on currently available facts regarding each site.

If the reasonably estimable costs can only be identified as a range and no specific amount within that range can be determined more likely, the minimum of the range is used.

As of September 29, 2023 and September 30, 2022, the Company has $6.8 million and $6.3 million, respectively, recorded as liabilities within “Accrued expenses and other current liabilities” and $17.3 million and $18.0 million, respectively, recorded as liabilities within “Other Noncurrent Liabilities” on the Company’s Combined Balance Sheets.

The Company has identified certain conditional asset retirement obligations at various current and closed facilities.

These obligations relate primarily to asbestos abatement, underground storage tank closures and restoration of leased properties to the original condition.

Using investigative, remediation and disposal methods that are currently available to the Company, the estimated costs of these obligations were accrued.

As of September 29, 2023 and September 30, 2022, the Company has $12.3 million and $12.1 million, respectively, recorded as liabilities within “Other Noncurrent Liabilities” on the Company’s Combined Balance Sheets.

On May 13, 2022, Cake Love Co.

The lawsuit was subsequently updated to add an additional named plaintiff, Q-Mark Manufacturing, Inc.

(“Q-Mark” and, together with Cake Love, the “Plaintiffs”).

Plaintiffs seek damages on behalf of the purported class representing the amount of the allegedly improperly noticed price increases along with attorneys’ fees, interest and costs.

The parties continue to engage in discovery.

AmeriPride has moved for summary judgment related to Cake Love.

The Company believes it has numerous defenses and intends to continue to vigorously defend the action.

The Company cannot predict the outcome of this legal matter, nor can it predict whether any outcome will have a material adverse effect on the combined statements of income and/or combined statements of cash flows.

Accordingly, the Company has made no provisions for this legal matter in the combined financial statements.

BUSINESS SEGMENTS:

The Company manages and evaluates its business activities based on geography and, as a result, determined that its United States and Canada businesses are its operating segments.

The United States and Canada operating segments both provide a full range of uniform programs, managed restroom supply services and first-aid and safety products, as well as ancillary items such as floor mats, towels and linens.

The Company’s operating segments are also its reportable segments.

Corporate includes administrative expenses not specifically allocated to an individual segment.

The Company evaluates the performance of each operating segment based on several factors of which the primary financial measure is operating income.

The accounting policies of the operating segments are the same as those described in Note 1.

COVID-19 had a negative impact on revenue, operating income, capital expenditures and other identifiable assets for all segments in fiscal 2021.

The Company’s financial results began to improve during the second half of fiscal 2021 and throughout fiscal 2022 as lockdowns were lifted and operations re-opened.

Financial information by segment is as follows (in thousands):

Fiscal Year Ended

Revenue September 29, 2023 September 30, 2022 October 1, 2021

United States $ 2,575,352 $ 2,447,027 $ 2,250,756

Canada 249,934 239,978 205,821

__________________

Fiscal Year Ended

Operating Income (Loss) September 29, 2023 September 30, 2022 October 1, 2021

United States $ 303,762 $ 242,971 $ 136,293

Canada 13,707 18,008 22,740

Total Segment Operating Income 317,469 260,979 159,033

Corporate (99,560) (68,736) (62,794)

Total Operating Income $ 217,909 $ 192,243 $ 96,239

Fiscal Year Ended

Reconciliation to Income Before Income Taxes September 29, 2023 September 30, 2022 October 1, 2021

Total Operating Income $ 217,909 $ 192,243 $ 96,239

Gain on Sale of Equity Investment, net (51,831) — —

Interest Expense and Other, net 10 2,284 (1,120)

Income Before Income Taxes $ 269,730 $ 189,959 $ 97,359

Fiscal Year Ended

Depreciation and Amortization September 29, 2023 September 30, 2022 October 1, 2021

United States $ 125,167 $ 122,347 $ 120,941

Canada 10,819 11,484 11,727

Corporate 518 521 638

$ 136,504 $ 134,352 $ 133,306

(1) On October 2, 2023 our common stock began regular-way trading on the New York Stock Exchange (“NYSE”).

Deferred Stock Units

DSUs are issued only to non-employee members of the Board of Directors and represent the right to receive shares of the Company's common stock in the future.

Each DSU will be converted to one share of the Company's common stock on the first day of the seventh month after which such director ceases to serve as a member of the Board of Directors.

The grant-date fair value of DSUs is based on the fair value of the Company's common stock.

On October 2, 2023 the Company granted 65,850 DSUs which vested immediately and 19,208 DSUs which vested January 31, 2024.

In addition, directors may elect to defer their cash retainer payable in the next calendar year into a fixed income fund which will be paid in cash no less than three years after the cash retainer is deferred or payable upon the first day of the seven th month after which such director ceases to serve as a member of the Board of Directors.

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.

On September 30, 2023, the Company separated from Aramark.

As referenced in Note 1.

"Nature of Business, Basis of Presentation and Summary of Significant Accounting Policies", the Separation resulted in the initial issuance of approximately 131.2 million shares of Vestis common stock.

For purposes of computing basic and diluted earnings per common share for the fiscal years ended September 29, 2023 and September 30, 2022, the number of Vestis common shares issued upon completion of the Separation were used to reflect the outstanding shares.

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):

Fiscal Year Ended

Capital Expenditures September 29, 2023 September 30, 2022 October 1, 2021

United States $ 72,353 $ 72,197 $ 84,864

Canada 5,517 4,252 5,274

$ 77,870 $ 76,449 $ 90,138

Property and Equipment, net September 29, 2023 September 30, 2022

United States $ 578,997 $ 574,127

Canada 72,907 69,405

Corporate 12,627 6,067

$ 664,531 $ 649,599

Total Assets September 29, 2023 September 30, 2022

United States $ 2,863,616 $ 2,844,010

Canada 266,804 272,976

Corporate 26,704 16,026

September 27,

2024 September 29,

2023 September 30,

Net Income $ 20,970 $ 213,158 $ 141,679

Basic weighted-average shares outstanding 131,506 130,725 130,725

Effect of dilutive securities 281 — —

Diluted weighted-average shares outstanding 131,787 130,725 130,725

Basic Earnings Per Share $ 0.16 $ 1.63 $ 1.08

Diluted Earnings Per Share $ 0.16 $ 1.63 $ 1.08

Antidilutive securities (1)

__________________

SUBSEQUENT EVENTS:

(1) Diluted earnings per share excludes certain shares issuable under share-based compensation plans because the effect would have been antidilutive .

Accumulated Other Comprehensive Loss

The changes in each component of accumulated other comprehensive loss, net of tax, for the fiscal years ended September 27, 2024, September 29, 2023 and September 30, 2022 were as follows (in thousands):

Fiscal Year Ended September 29, 2024

Foreign Currency Translation Pension-related Total Accumulated Other Comprehensive Loss

Balance as of September 29, 2023 $ ( 26,104 ) $ ( 5,069 ) $ ( 31,173 )

Other comprehensive income (loss) 2,292 ( 30 ) 2,262

Balance as of September 27, 2024 $ ( 23,812 ) $ ( 5,099 ) $ ( 28,911 )

Fiscal Year Ended September 29, 2023

Foreign Currency Translation Pension-related Total Accumulated Other Comprehensive Loss

Balance as of September 30, 2022 $ ( 27,266 ) $ ( 4,414 ) $ ( 31,680 )

Other comprehensive income (loss) 1,162 ( 655 ) 507

Balance as of September 29, 2023 $ ( 26,104 ) $ ( 5,069 ) $ ( 31,173 )

Fiscal Year Ended September 30, 2022

Foreign Currency Translation Pension-related Total Accumulated Other Comprehensive Loss

Balance as of October 01, 2021 $ ( 5,495 ) $ ( 6,111 ) $ ( 11,606 )

Other comprehensive loss before reclassification ( 21,771 ) ( 1,311 ) ( 23,082 )

Amounts reclassified from accumulated other comprehensive loss — 3,008 3,008

Net current period other comprehensive (loss) income ( 21,771 ) 1,697 ( 20,074 )

Balance as of September 30, 2022 $ ( 27,266 ) $ ( 4,414 ) $ ( 31,680 )

For the fiscal year ended September 30, 2022 $ 3.0 million was reclassified from Accumulated other comprehensive loss” in the Combined Balance Sheet and into “Interest expense, net” within the Combined Statement of Income for the wind-up of one of the Company’s defined benefit pension plans.

The Company declared and paid a quarterly cash dividend of $ 0.035 per common share to its shareholders of record for the first, second, and third quarters of fiscal 2024 of $ 4.6 million each quarter.

On August 19, 2024 , the Company announced that its Board of Directors declared a quarterly cash dividend of $ 0.035 per common share payable on October 3, 2024 to shareholders of record at the close of business on September 13, 2024.

The dividend payable of $ 4.6 million was recorded within "Accrued expenses and other current liabilities" on the Consolidated Balance Sheet as of September 27, 2024.

The amount and timing of any future dividend payment is subject to the approval of the Company's Board of Directors.

The Company’s Board of Directors declared a quarterly cash dividend of $ 0.035 per common share payable on January 6, 2025 to shareholders of record at the close of business on December 13, 2024.

RELATED PARTY TRANSACTIONS AND PARENT COMPANY INVESTMENT

Prior to Separation

Corporate Allocations

The Company’s Combined Financial Statements for the fiscal years ended September 29, 2023 and September 30, 2022 include general corporate expenses of Aramark, which were not historically allocated to the Company for certain support functions that are provided on a centralized basis by Aramark and are not recorded at the Company level, such as expenses related to finance, supply chain, human resources, information technology, share-based compensation, insurance and legal, among others (collectively, “General Corporate Expenses”).

For purposes of these Combined Financial Statements, General Corporate Expenses have been allocated to the Company.

These expenses have been allocated to the Company on the basis of direct usage where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount or other drivers.

Management believes the assumptions underlying the Combined Financial Statements, including the assumptions regarding allocating General Corporate Expenses from Aramark, are reasonable.

During the years ended September 29, 2023 and September 30, 2022, General Corporate Expenses allocated to the Company were $ 24.4 million and $ 37.5 million, respectively.

Transactions with the Parent

In the ordinary course of business, the Company provided uniforms to certain food and support services contracts of Aramark in the United States and Canada, the terms of which were at fair market value.

During the years ended September 29, 2023 and September 30, 2022, these related party revenues were $ 54.6 million and $ 47.6 million, respectively, with related costs of $ 49.7 million and $ 43.3 million, respectively.

Amounts receivable from Aramark for such revenues as of September 29, 2023 were $ 1.2 million.

Parent Company Investment

All significant intercompany transactions between the Company and Aramark have been included in the Combined Financial Statements for the fiscal years ended September 29, 2023 and September 30, 2022.

After Separation

On September 30, 2023, the Separation was completed through the Distribution of the Company’s common stock to Aramark shareholders who held shares of Aramark common stock as of the close of business on September 20, 2023, the record date for the Distribution, which resulted in the issuance of approximately 131.2 million shares of common stock.

6 unchanged sentences

The services commenced on the distribution date and terminate no later than 24 months following the distribution date.

As of September 27, 2024, the services under the Transition Services Agreement were completed.

Tax Matters Agreement - governs the parties’ respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.

2 unchanged sentences

Employee Matters Agreement - governs the allocation of liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs and other related matters.

Effective as of September 30, 2023, the Company adopted the Vestis Corporation 2023 Long-Term Incentive Plan.

Additionally, on November 28, 2023, the Vestis Compensation Committee adopted the Vestis’ Deferred Compensation Plan (the “Deferred Compensation Plan”).

Under the Deferred Compensation Plan, non-employee directors will be able to elect to defer all or a portion of their annual retainer, chair fees and annual equity compensation payable to the director pursuant to restricted stock unit awards or similar awards under the Vestis Corporation 2023 Long-Term Incentive Plan.

After the Separation, our Board of Directors declared a quarterly cash dividend of $0.035 per common share payable on January 4, 2024 to shareholders of record at the close of business on December 15, 2023.

For the fiscal year ended September 27, 2024 , the Company paid $ 10.7 million, respectively, to Aramark under the various agreements described above.

As of September 27, 2024, current amounts due from and to Aramark were not material .

ACCOUNTS RECEIVABLE SECURITIZATION FACILITY:

On August 2, 2024, Vestis Services, LLC (“Vestis Services”) and certain other subsidiaries (together with Vestis Services, the “Originators”) entered into a three-year $ 250 million accounts receivable securitization facility (the “A/R Facility”).

Under the A/R Facility, the Originators transfer accounts receivable and certain related assets (collectively, the “Receivables”) to VS Financing, LLC, a bankruptcy remote special purpose entity (“SPE”) formed as a wholly-owned subsidiary of Vestis Services, who in turn, may sell Receivables to one or more financial institutions party to the facility

(“Purchasers”).

Transfers of the Receivables from the SPE to the Purchasers are accounted for as a sale of financial assets, and those accounts receivable are derecognized from the consolidated financial statements.

Other than collection and administrative responsibilities, Originators have no continuing involvement in the transferred Receivables.

The Receivables, once sold to the SPE, are no longer available to satisfy creditors of any Originator in the event of its bankruptcy.

These sales are priced at the face value of the relevant accounts receivable less a fair market value discount.

The A/R Facility is structured on a revolving basis under which cash collections from Receivables are used to fund additional purchases of Receivables.

The future outstanding balance of Receivables that will be sold is expected to vary based on the level of originations and other factors.

The Purchasers benefit from the SPE’s guarantee of repayment on Receivables transferred as well as its pledge of additional Receivables as collateral.

The Company has agreed to guarantee the performance of the Originators’ respective obligations under the A/R Facility.

Neither the Company (except for the SPE referenced above) nor the Originators guarantees the collectability of the Receivables under the A/R Facility.

The Company controls and therefore consolidates the SPE in its consolidated financial statements.

The A/R Facility is scheduled to terminate on August 2, 2027 , unless terminated earlier pursuant to its terms.

As of September 27, 2024, the total value of accounts receivable sold from SPE to the Purchaser under the A/R Facility and derecognized from the Company's Consolidated Balance Sheet was $ 229.0 million , Additionally, during the year ended September 27, 2024, the Company transferred accounts receivable of $ 585.5 million to the SPE and the Company collected $ 198.7 million of accounts receivable transferre d to the SPE under the A/R Facility.

The Company continuously transfers receivables to the SPE and the SPE transfers ownership and control of certain receivables that meet certain qualifying conditions which are sold to the Purchasers in exchange for cash.

Unsold accounts receivable of $ 157.8 million were pledged by the SPE as collateral to the Purchasers as of September 27, 2024.

The Company incurred fees for the A/R Facility of $ 1.7 million for the year ended September 27, 2024, which were reflected within “Other (Income), net ” in the Consolidated Statement of Income.

The fees are due to the Purchaser and relate to the monthly utilization of the A/R Facility.

Additionally, the Company incurred approximately $ 1.4 million of costs in connection with the A/R Facility which are reco rded within “Other Assets” in the Consolidated Balance Sheet and are amortized straight-line to “ Other (Income), net ” over the term of the related A/R Facility.

Cash activity related to the facility is reflected in “Net cash provided by operating activities” in the Consolidated Statement of Cash Flows.

SUBSEQUENT EVENTS:

On October 4, 2024, the Company sold its equity stake in Aramark Uniform Services Japan Corporation for approximately $ 36.8 million.

The Company will use the net proceeds from the transaction towards debt repayment.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data