10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-08504

UNIFIRST CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Massachusetts	04-2103460
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
68 Jonspin Road, Wilmington, MA	01887
(Address of Principal Executive Offices)	(Zip Code)

(978) 658-8888

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 par value per share	UNF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of outstanding shares of UniFirst Corporation Common Stock and Class B Common Stock at July 2, 2020 were 15,248,511 and 3,643,009, respectively.

UniFirst Corporation

Quarterly Report on Form 10-Q

For the Quarter ended May 30, 2020

Table of Contents

Part I – FINANCIAL INFORMATION	3
Item  1 – Unaudited Financial Statements	3
Consolidated Statements of Income for the Thirteen and Thirty-nine Weeks ended May 30, 2020 and May 25, 2019	3
Consolidated Statements of Comprehensive Income for the Thirteen and Thirty-nine Weeks ended May 30, 2020 and May 25, 2019	4
Consolidated Balance Sheets as of May 30, 2020 and August 31, 2019	5
Consolidated Statements of Shareholders’ Equity for the Thirteen and Thirty-nine Weeks ended May 30, 2020 and May 25, 2019	6
Consolidated Statements of Cash Flows for the Thirty-nine Weeks ended May 30, 2020 and May 25, 2019	8
Notes to Consolidated Financial Statements	9
Item  2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item  3 – Quantitative and Qualitative Disclosures About Market Risk	36
Item 4 – Controls and Procedures	36
Part II – OTHER INFORMATION	37
Item 1 – Legal Proceedings	37
Item 1A – Risk Factors	37
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3 – Defaults Upon Senior Securities	39
Item 4 – Mine Safety Disclosures	39
Item 5 – Other Information	39
Item 6 – Exhibits	40
Signatures	41
Certifications
Ex-31.1 Section 302 Certification of CEO
Ex-31.2 Section 302 Certification of CFO
Ex-32.1 Section 906 Certification of CEO
Ex-32.2 Section 906 Certification of CFO

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Income

UniFirst Corporation and Subsidiaries

(Unaudited)

	Thirteen weeks ended						Thirty-nine weeks ended
(In thousands, except per share data)	May 30, 2020			May 25, 2019			May 30, 2020			May 25, 2019
Revenues	$	445,518		$	453,720		$	1,375,516		$	1,329,755
Operating expenses:
Cost of revenues (1)		303,223			279,900			893,961			838,621
Selling and administrative expenses (1)		88,405			88,207			272,013			242,487
Depreciation and amortization		26,182			25,401			77,612			75,563
Total operating expenses		417,810			393,508			1,243,586			1,156,671
Operating income		27,708			60,212			131,930			173,084
Other (income) expense:
Interest income, net		(1,054	)		(2,293	)		(5,590	)		(6,007	)
Other expense, net		1,556			805			2,623			2,037
Total other income, net		502			(1,488	)		(2,967	)		(3,970	)
Income before income taxes		27,206			61,700			134,897			177,054
Provision for income taxes		5,921			14,480			30,690			43,908
Net income	$	21,285		$	47,220		$	104,207		$	133,146
Income per share – Basic:
Common Stock	$	1.17		$	2.58		$	5.73		$	7.25
Class B Common Stock	$	0.94		$	2.06		$	4.58		$	5.80
Income per share – Diluted:
Common Stock	$	1.12		$	2.46		$	5.46		$	6.93
Income allocated to – Basic:
Common Stock	$	17,871		$	39,563		$	87,519		$	111,626
Class B Common Stock	$	3,414		$	7,657		$	16,688		$	21,520
Income allocated to – Diluted:
Common Stock	$	21,285		$	47,220		$	104,207		$	133,146
Weighted average shares outstanding – Basic:
Common Stock		15,255			15,341			15,285			15,400
Class B Common Stock		3,643			3,710			3,643			3,710
Weighted average shares outstanding    – Diluted:
Common Stock		18,995			19,168			19,074			19,220

(1) Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets.

The accompanying notes are an integral part of these

Consolidated Financial Statements.  

3

Consolidated Statements of Comprehensive Income

UniFirst Corporation and Subsidiaries

(Unaudited)

	Thirteen weeks ended						Thirty-nine weeks ended
(In thousands)	May 30, 2020			May 25, 2019			May 30, 2020			May 25, 2019
Net income	$	21,285		$	47,220		$	104,207		$	133,146
Other comprehensive income (loss):
Foreign currency translation adjustments		(3,835	)		(2,649	)		(3,615	)		(3,513	)
Pension benefit liabilities		—			—			350			—
Change in fair value of derivatives, net of    income taxes		79			184			156			277
Derivative financial instruments reclassified    to earnings		(47	)		(46	)		(107	)		(122	)
Other comprehensive income (loss)		(3,803	)		(2,511	)		(3,216	)		(3,358	)
Comprehensive income	$	17,482		$	44,709		$	100,991		$	129,788

The accompanying notes are an integral part of these

Consolidated Financial Statements.

4

Consolidated Balance Sheets

UniFirst Corporation and Subsidiaries

(Unaudited)

(In thousands, except share and par value data)	May 30, 2020			August 31, 2019
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	421,253		$	385,341
Receivables, less reserves of $17,611 and $9,935		200,110			203,457
Inventories		104,503			100,916
Rental merchandise in service		161,732			184,318
Prepaid taxes		1,713			4,060
Prepaid expenses and other current assets		36,201			35,699
Total current assets		925,512			913,791
Property, plant and equipment, net		584,299			574,509
Goodwill		424,588			401,178
Customer contracts, net		60,061			56,588
Other intangible assets, net		26,868			16,132
Deferred income taxes		458			448
Operating lease right-of-use assets, net		44,670			—
Other assets		86,817			84,674
Total assets	$	2,153,273		$	2,047,320
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	57,701		$	77,918
Accrued liabilities		126,342			111,721
Accrued taxes		—			205
Operating lease liabilities, current		12,191			—
Total current liabilities		196,234			189,844
Accrued liabilities		119,608			117,074
Accrued and deferred income taxes		98,192			99,172
Operating lease liabilities		31,139			—
Total liabilities		445,173			406,090
Commitments and contingencies (Note 12)
Shareholders’ equity:
Preferred Stock, $1.00 par value; 2,000,000 shares authorized; no shares issued and    outstanding		—			—
Common Stock, $0.10 par value; 30,000,000 shares authorized; 15,247,440 and   15,332,759 shares issued and outstanding as of May 30, 2020 and   August 31, 2019, respectively		1,525			1,533
Class B Common Stock, $0.10 par value; 20,000,000 shares authorized; 3,643,009    shares issued and outstanding as of May 30, 2020 and August 31, 2019, respectively		364			364
Capital surplus		85,572			84,946
Retained earnings		1,657,543			1,588,075
Accumulated other comprehensive loss		(36,904	)		(33,688	)
Total shareholders’ equity		1,708,100			1,641,230
Total liabilities and shareholders’ equity	$	2,153,273		$	2,047,320

The accompanying notes are an integral part of these

Consolidated Financial Statements

5

Consolidated Statements of Shareholders’ Equity

UniFirst Corporation and Subsidiaries

(In thousands)	Common Shares			Class B Common Shares		Common Stock			Class B Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
Balance, August 25, 2018		15,431			3,710	$	1,543		$	371	$	82,973		$	1,405,239		$	(25,159	)	$	1,464,967
Net income		—			—		—			—		—			38,320			—			38,320
Change in fair value of derivatives		—			—		—			—		—			—			88			88
Foreign currency translation		—			—		—			—		—			—			(2,282	)		(2,282	)
Dividends declared Common Stock    ($0.1125 per share)		—			—		—			—		—			(1,736	)		—			(1,736	)
Dividends declared Class B Common Stock    ($0.0900 per share)		—			—		—			—		—			(334	)		—			(334	)
Share-based compensation, net (2)		—			—		—			—		1,042			—			—			1,042
Share-based awards exercised, net (1)		2			—		—			—		—			—			—			—
Cumulative effect of change in accounting    principle, net		—			—		—			—		—			39,433			—			39,433
Balance, November 24, 2018		15,433			3,710		1,543			371		84,015			1,480,922			(27,353	)		1,539,498
Net income		—			—	$	—		$	—	$	—		$	47,606		$	—		$	47,606
Change in fair value of derivatives		—			—		—			—		—			—			(71	)		(71	)
Foreign currency translation		—			—		—			—		—			—			1,418			1,418
Dividends declared Common Stock    ($0.1125 per share)		—			—		—			—		—			(1,732	)		—			(1,732	)
Dividends declared Class B Common Stock    ($0.0900 per share)		—			—		—			—		—			(334	)		—			(334	)
Share-based compensation, net (2)		—			—		—			—		659			—			—			659
Share-based awards exercised, net (1)		12			—		1			—		25			—			—			26
Repurchase of Common Stock		(45	)		—		(4	)		—		(245	)		(6,031	)		—			(6,280	)
Balance, February 23, 2019		15,400			3,710	$	1,540		$	371	$	84,454		$	1,520,431		$	(26,006	)	$	1,580,790
Net income		—			—		—			—		—			47,220			—			47,220
Change in fair value of derivatives		—			—		—			—		—			—			138			138
Foreign currency translation		—			—		—			—		—			—			(2,649	)		(2,649	)
Dividends declared Common Stock    ($0.1125 per share)		—			—		—			—		—			(1,720	)		—			(1,720	)
Dividends declared Class B Common Stock    ($0.0900 per share)		—			—		—			—		—			(334	)		—			(334	)
Share-based compensation, net (2)		—			—		—			—		902			—			—			902
Share-based awards exercised, net (1)		7			—		1			—		21			—			—			22
Repurchase of Common Stock		(100	)		—		(10	)		—		(541	)		(14,122	)		—			(14,673	)
Balance, May 25, 2019		15,307			3,710	$	1,531		$	371	$	84,836		$	1,551,475		$	(28,517	)	$	1,609,696

6

Consolidated Statements of Shareholders’ Equity (Continued)

UniFirst Corporation and Subsidiaries

(In thousands)	Common Shares			Class B Common Shares		Common Stock			Class B Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
Balance, August 31, 2019		15,333			3,643	$	1,533		$	364	$	84,946		$	1,588,075		$	(33,688	)	$	1,641,230
Net income		—			—		—			—		—			48,242			—			48,242
Change in fair value of derivatives		—			—		—			—		—			—			(5	)		(5	)
Foreign currency translation		—			—		—			—		—			—			989			989
Dividends declared Common Stock    ($0.25 per share)		—			—		—			—		—			(3,825	)		—			(3,825	)
Dividends declared Class B Common Stock    ($0.20 per share)		—			—		—			—		—			(729	)		—			(729	)
Repurchase of Common Stock		(51	)				(5	)				(274	)		(9,694	)					(9,973	)
Share-based compensation, net (1)		—			—		—			—		1,575			—			—			1,575
Share-based awards exercised, net (2)		16			—		2			—		(1,498	)		—			—			(1,496	)
Balance, November 30, 2019		15,298			3,643		1,530			364		84,749			1,622,069			(32,704	)		1,676,008
Net income		—			—		—			—		—			34,680			—			34,680
Change in fair value of derivatives		—			—		—			—		—			—			22			22
Foreign currency translation		—			—		—			—		—			—			(769	)		(769	)
Pension benefit liabilities, net		—			—		—			—		—			—			350			350
Dividends declared Common Stock    ($0.25 per share)		—			—		—			—		—			(3,835	)		—			(3,835	)
Dividends declared Class B Common Stock    ($0.20 per share)		—			—		—			—		—			(729	)		—			(729	)
Repurchase of Common Stock		(21	)		—		(2	)		—		(112	)		(4,116	)					(4,230	)
Share-based compensation, net (1)		—			—		—			—		1,651			—			—			1,651
Share-based awards exercised, net (2)		16			—		1			—		(1,711	)		—			—			(1,710	)
Balance, February 29, 2020		15,293			3,643	$	1,529		$	364	$	84,577		$	1,648,069		$	(33,101	)	$	1,701,438
Net income		—			—		—			—		—			21,285			—			21,285
Change in fair value of derivatives		—			—		—			—		—			—			32			32
Foreign currency translation		—			—		—			—		—			—			(3,835	)		(3,835	)
Dividends declared Common Stock    ($0.25 per share)		—			—		—			—		—			(3,797	)		—			(3,797	)
Dividends declared Class B Common Stock    ($0.20 per share)		—			—		—			—		—			(729	)		—			(729	)
Share-based compensation, net (1)		—			—		—			—		1,390			—			—			1,390
Share-based awards exercised, net (2)		—			—		—			—		(142	)		—			—			(142	)
Repurchase of Common Stock		(46	)		—		(4	)		—		(253	)		(7,285	)		—			(7,542	)
Balance, May 30, 2020		15,247			3,643	$	1,525		$	364	$	85,572		$	1,657,543		$	(36,904	)	$	1,708,100

(1) These amounts are shown net of any shares withheld by the Company to satisfy certain tax withholdings obligations in connection with the vesting of certain shares of restricted stock or restricted stock units.

(2) These amounts are shown net of the effect of income taxes.  

The accompanying notes are an integral part of these

Consolidated Financial Statements.

7

Consolidated Statements of Cash Flows

UniFirst Corporation and Subsidiaries

(Unaudited)

Thirty-nine weeks ended (In thousands)	May 30, 2020			May 25, 2019
Cash flows from operating activities:
Net income	$	104,207		$	133,146
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		77,612			75,563
Amortization of deferred financing costs		84			84
Forgiveness of a liability		—			(7,346	)
Share-based compensation		4,617			4,281
Accretion on environmental contingencies		403			566
Accretion on asset retirement obligations		694			647
Deferred income taxes		81			733
Other		36			(954	)
Changes in assets and liabilities, net of acquisitions:
Receivables, less reserves		4,517			(3,117	)
Inventories		(3,570	)		(4,821	)
Rental merchandise in service		23,900			(7,606	)
Prepaid expenses and other current assets and Other assets		3,669			(2,346	)
Accounts payable		(17,846	)		(5,725	)
Accrued liabilities		5,246			(9,931	)
Prepaid and accrued income taxes		1,782			26,265
Net cash provided by operating activities		205,432			199,439
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired		(41,098	)		(2,379	)
Capital expenditures, including capitalization of software costs		(91,155	)		(88,198	)
Proceeds from sale of assets		261			238
Net cash used in investing activities		(131,992	)		(90,339	)
Cash flows from financing activities:
Proceeds from exercise of share-based awards		75			49
Taxes withheld and paid related to net share settlement of equity awards		(3,423	)		(1,678	)
Repurchase of Common Stock		(21,745	)		(20,953	)
Payment of cash dividends		(11,159	)		(6,204	)
Net cash used in financing activities		(36,252	)		(28,786	)
Effect of exchange rate changes		(1,276	)		(1,416	)
Net (decrease) increase in cash, cash equivalents and short-term investments		35,912			78,898
Cash, cash equivalents and short-term investments at beginning of period		385,341			270,512
Cash, cash equivalents and short-term investments at end of period	$	421,253		$	349,410
Supplemental disclosure of cash flow information:
Non-cash capital expenditures	$	7,672		$	8,114

The accompanying notes are an integral part of these

Consolidated Financial Statements.

8

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements

1. Basis of Presentation

These Consolidated Financial Statements of UniFirst Corporation (the “Company”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the information furnished reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period.

It is suggested that these Consolidated Financial Statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2019. There have been no material changes in the accounting policies followed by the Company during the current fiscal year other than the adoption of recent accounting pronouncements discussed in Note 2. Results for an interim period are not indicative of any future interim periods or for an entire fiscal year.

2. Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued updated guidance which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The Company adopted this standard on September 1, 2019 using the modified retrospective adoption method. The standard provides a number of optional practical expedients in transition and the Company has elected certain of these practical expedients upon adoption of this standard. Specifically, the Company elected the package of practical expedients permitted under the standard, which allows a lessee to carry forward its population of existing leases, the classification of each lease, as well as the treatment of initial direct lease costs as of the period of adoption. The Company also elected the practical expedient related to lease and non-lease components, as an accounting policy election which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. In addition, the Company elected the short-term lease recognition exemption for all leases with a term of 12 months or less, which means it will not recognize right-of-use assets or lease liabilities for these leases. The adoption of this standard resulted in the Company recognizing right-of-use assets, net of $48.7 million and corresponding lease liabilities of $46.2 million and reductions of prepaid expenses and other current assets of $1.2 million and $1.3 million, respectively. The adoption of this standard did not have a material impact on the Company's consolidated statement of income or consolidated statement of cash flows.

In June 2016, the FASB issued updated guidance that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company expects that adoption of this guidance will not have a material impact on its financial statements and related disclosures.

In August 2018, the FASB issued updated guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance will be effective for annual reporting periods, and any interim periods within those annual periods, ending after December 15, 2020 and will be required to be applied on a retrospective basis with early adoption permitted. Accordingly, the standard will be effective for the Company on August 29, 2021. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

In August 2018, the FASB issued guidance that addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. The amendments in this update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

9

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

In December 2019, the FASB issued updated guidance to simplify accounting for income taxes by removing certain exceptions and improving the consistent application of and simplifying U.S. GAAP in other areas of this topic. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2020 with early adoption permitted. Accordingly, the guidance will be effective for the Company on August 29, 2021. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

3. Revenue Recognition

The following table presents the Company’s revenues for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019, respectively, disaggregated by service type:

	Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	May 30, 2020					May 25, 2019					May 30, 2020					May 25, 2019
(In thousands, except percentages)	Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues
Core Laundry Operations	$	388,411		87.2	%	$	399,781		88.1	%	$	1,216,901		88.5	%	$	1,184,666		89.1	%
Specialty Garments		36,163		8.1	%		37,313		8.2	%		105,545		7.7	%		101,506		7.6	%
First Aid		20,944		4.7	%		16,626		3.7	%		53,070		3.9	%		43,583		3.3	%
Total Revenues	$	445,518		100.0	%	$	453,720		100.0	%	$	1,375,516		100.0	%	$	1,329,755		100.0	%

See Note 16 “Segment Reporting” for additional details of segment definitions.

Revenue Recognition Policy

During the thirteen weeks ended May 30, 2020 and May 25, 2019, approximately 85.7% and 91.0%, respectively, of the Company’s revenues were derived from fees for route servicing of Core Laundry Operations, Specialty Garments, and First Aid customers performed by the Company’s employees at the customer’s location of business. During the thirty-nine weeks ended May 30, 2020 and May 25, 2019, approximately 89.2% and 91.0%, respectively, of the Company’s revenues were derived from fees for route servicing of Core Laundry Operations, Specialty Garments, and First Aid customers performed by the Company’s employees at the customer’s location of business. Revenues from the Company’s route servicing customer contracts represent a single performance obligation. The Company recognizes these revenues over time as services are performed based on the nature of services provided and contractual rates (input method). Certain of the Company’s customer contracts, primarily within the Company’s Core Laundry Operations, include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration due to customer-based performance metrics specified within the contract. Specifically, some contracts contain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company’s actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period. When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company’s performance period generally corresponds with the monthly invoice period. No significant constraints on the Company’s revenue recognition were applied during the thirteen and thirty-nine weeks ended May 30, 2020 or May 25, 2019. The Company reassesses these estimates during each reporting period. The Company maintains a liability for these discounts and rebates within accrued liabilities on the consolidated balance sheets. Variable consideration also includes consideration paid to a customer at the beginning of a contract. The Company capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue in accordance with the updated accounting guidance for revenue recognition. These assets are included in other assets on the consolidated balance sheets.

10

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Costs to Obtain a Contract

The Company defers commission expenses paid to its employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. The Company reviews the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when the Company expects to recognize the expense. The current portion is included in prepaid expenses and other current assets and the non-current portion is included in other assets on the Company’s consolidated balance sheets. As of May 30, 2020, the current and non-current assets related to deferred commissions totaled $13.1 million and $54.9 million, respectively. As of August 31, 2019, the current and non-current assets related to deferred commissions totaled $12.4 million and $50.3 million, respectively. During the thirteen weeks ended May 30, 2020 and May 25, 2019, the Company recorded $3.4 million and $3.0 million, respectively, of amortization expense related to deferred commissions. During the thirty-nine weeks ended May 30, 2020 and May 25, 2019, the Company recorded $10.2 million and $8.7 million, respectively, of amortization expense related to deferred commissions. This expense is classified in selling and administrative expenses on the consolidated statements of income.

4. Acquisitions

During the thirty-nine weeks ended May 30, 2020, the Company completed 8 business acquisitions with an aggregate purchase price of approximately $41.3 million, which includes $38.8 million related to the acquisition of a Missouri-based industrial laundry business (the “Missouri Acquisition”). The Company has allocated $4.4 million, $23.5 million and $10.9 million to tangible assets, goodwill and intangibles, respectively, in the preliminary purchase accounting for the Missouri Acquisition. The initial allocations of the purchase prices are incomplete with respect to certain assets acquired. The results of operations of these acquisitions have been included in the Company’s consolidated financial results since their respective acquisition dates. These acquisitions were not significant in relation to the Company’s consolidated financial results and, therefore, pro-forma financial information has not been presented.

5. Fair Value Measurements

The assets or liabilities measured at fair value on a recurring basis are summarized in the tables below (in thousands):

	As of May 30, 2020
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents	$	195,978	$	—	$	—	$	195,978
Pension plan assets		—		4,342		—		4,342
Foreign currency forward contracts		—		323		—		323
Total assets at fair value	$	195,978	$	4,665	$	—	$	200,643

	As of August 31, 2019
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents	$	214,038	$	—	$	—	$	214,038
Pension plan assets		—		4,603		—		4,603
Foreign currency forward contracts		—		254		—		254
Total assets at fair value	$	214,038	$	4,857	$	—	$	218,895

The Company’s cash equivalents listed above represent money market securities and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments.

The Company’s pension plan assets listed above represent guaranteed deposit accounts that are maintained and operated by Prudential Retirement Insurance and Annuity Company (“PRIAC”). All assets are merged with the general assets of PRIAC and are invested predominantly in privately placed securities and mortgages. At the beginning of each calendar year, PRIAC notifies the Company of the annual rates of interest which will be applied to the amounts held in the guaranteed deposit account during the next calendar year. In determining the interest rate to be applied, PRIAC considers the investment performance of the underlying assets of the prior year; however, regardless of the investment performance the Company is contractually guaranteed a minimum rate of return. As such, the Company’s pension plan assets are included within Level 2 of the fair value hierarchy.

11

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Company’s foreign currency forward contracts represent contracts the Company has entered into to exchange Canadian dollars for U.S. dollars at fixed exchange rates in order to manage its exposure related to the certain forecasted Canadian dollar denominated sales of one of its subsidiaries. These contracts are included in prepaid expenses and other current assets and other long-term assets as of  May 30, 2020 and August 31, 2019. The fair value of the forward contracts is based on similar exchange traded derivatives and are, therefore, included within Level 2 of the fair value hierarchy.

6. Derivative Instruments and Hedging Activities

As of May 30, 2020, the Company had forward contracts with a notional value of approximately $5.9 million CAD outstanding and recorded the fair value of the contracts of $0.1 million in other long-term assets and $0.2 million in prepaid expenses and other current assets with a corresponding decrease in accumulated other comprehensive loss of $0.2 million, which was recorded net of tax. During both the thirteen and thirty-nine weeks ended May 30, 2020, the Company reclassified $0.1 million from accumulated other comprehensive income to revenue, related to the derivative financial instruments. The gain on these forward contracts that resulted in a decrease to accumulated other comprehensive loss as of May 30, 2020 is expected to be reclassified to revenues prior to its maturity on February 25, 2022.

7. Employee Benefit Plans

Defined Contribution Retirement Savings Plan

The Company has a defined contribution retirement savings plan with a 401(k) feature for all eligible U.S. and Canadian employees not under collective bargaining agreements. The Company matches a portion of the employee’s contribution and may make an additional contribution at its discretion. Contributions charged to expense under the plan for the thirteen weeks ended May 30, 2020 and May 25, 2019 were $1.9 million and $5.8 million, respectively. Contributions charged to expense under the plan for the thirty-nine weeks ended May 30, 2020 and May 25, 2019 were $12.4 million and $14.6 million, respectively.

Pension Plans and Supplemental Executive Retirement Plans

The Company maintains an unfunded Supplemental Executive Retirement Plan for certain eligible employees of the Company and two frozen non-contributory defined benefit pension plans. The amounts charged to expense related to these plans for the thirteen weeks ended May 30, 2020 and May 25, 2019 were $0.7 million and $0.5 million, respectively. The amounts charged to expense related to these plans for the thirty-nine weeks ended May 30, 2020 and May 25, 2019 were $0.7 million and $1.6 million, respectively.

8. Income Per Share

The Company calculates income per share by allocating income to its unvested participating securities as part of its income per share calculations. The following table sets forth the computation of basic income per share using the two-class method for amounts attributable to the Company’s shares of Common Stock and Class B Common Stock (in thousands, except per share data):

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	May 30, 2020		May 25, 2019		May 30, 2020		May 25, 2019
Net income available to shareholders	$	21,285	$	47,220	$	104,207	$	133,146
Allocation of net income for Basic:
Common Stock	$	17,871	$	39,563	$	87,519	$	111,626
Class B Common Stock		3,414		7,657		16,688		21,520
	$	21,285	$	47,220	$	104,207	$	133,146
Weighted average number of shares for Basic:
Common Stock		15,255		15,341		15,285		15,400
Class B Common Stock		3,643		3,710		3,643		3,710
		18,898		19,051		18,928		19,110
Income per share for Basic:
Common Stock	$	1.17	$	2.58	$	5.73	$	7.25
Class B Common Stock	$	0.94	$	2.06	$	4.58	$	5.80

12

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Company is required to calculate diluted income per share for Common Stock using the more dilutive of the following two methods:

• The treasury stock method; or

• The two-class method assuming a participating security is not exercised or converted.

For the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019, the Company’s diluted income per share assumes the conversion of all vested Class B Common Stock into Common Stock and uses the two-class method for its unvested participating shares. The following tables set forth the computation of diluted income per share of Common Stock for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019 (in thousands, except per share data):

	Thirteen weeks ended May 30, 2020						Thirty-nine weeks ended May 30, 2020
	Earnings to Common Shareholders		Common Shares		Income Per Share		Earnings to Common Shareholders		Common Shares		Income Per Share
As reported - Basic	$	17,871		15,255	$	1.17	$	87,519		15,285	$	5.73
Add: effect of dilutive potential common shares
Share-Based Awards		—		97				—		146
Class B Common Stock		3,414		3,643				16,688		3,643
As reported – Diluted	$	21,285		18,995	$	1.12	$	104,207		19,074	$	5.46

	Thirteen Weeks Ended May 25, 2019						Thirty-Nine Weeks Ended May 25, 2019
	Earnings to Common Shareholders		Common Shares		Income Per Share		Earnings to Common Shareholders		Common Shares		Income Per Share
As reported - Basic	$	39,563		15,341	$	2.58	$	111,626		15,400	$	7.25
Add: effect of dilutive potential common shares
Share-Based Awards		—		117				—		110
Class B Common Stock		7,657		3,710				21,520		3,710
As reported – Diluted	$	47,220		19,168	$	2.46	$	133,146		19,220	$	6.93

Share-based awards that would result in the issuance of 7,328 and 2,724 shares, respectively, of Common Stock were excluded from the calculation of diluted income per share for the thirteen and thirty-nine weeks ended May 30, 2020 because they were anti-dilutive. Share-based awards that would result in the issuance of 797 and 909 shares, respectively, of Common Stock were excluded from the calculation of diluted income per share for the thirteen and thirty-nine weeks ended May 25, 2019 because they were anti-dilutive.

9. Inventories

Inventories are stated at the lower of cost or net realizable value, net of any reserve for excess and obsolete inventory. Work-in-process and finished goods inventories consist of materials, labor and manufacturing overhead. Judgments and estimates are used in determining the likelihood that new goods on hand can be sold to customers or used in rental operations. Historical inventory usage and current revenue trends are considered in estimating both excess and obsolete inventories. If actual product demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required. The Company uses the first-in, first-out (“FIFO”) method to value its inventories.

The components of inventory as of May 30, 2020 and August 31, 2019 were as follows (in thousands):

	May 30, 2020		August 31, 2019
Raw materials	$	18,287	$	23,000
Work in process		2,908		2,864
Finished goods		83,308		75,052
Total inventories	$	104,503	$	100,916

13

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

10. Goodwill and Other Intangible Assets

When the Company acquires a business, the amount assigned to the tangible assets and liabilities and intangible assets acquired is based on their respective fair values determined as of the acquisition date. The excess of the purchase price over the tangible assets and liabilities and intangible assets is recorded as goodwill.

The changes in the carrying amount of goodwill are as follows (in thousands):

Balance as of August 31, 2019	$	401,178
Goodwill recorded during the period		23,544
Other		(134	)
Balance as of May 30, 2020	$	424,588

Despite the significant excess fair value identified in the Company’s fiscal 2019 impairment assessment, the Company determined that its reduced cash flow projections and the significant decline in its market capitalization as a result of the COVID-19 pandemic indicated that an impairment loss may have been incurred as of May 30, 2020. Therefore, the Company qualitatively assessed whether it was more likely than not that the goodwill in each of its reporting units was impaired as of May 30, 2020. The Company reviewed its previous forecasts and assumptions based on its current projections, which are subject to various risks and uncertainties, including: (1) forecasted revenues, expenses and cash flows, including the duration and extent of the impact of the COVID-19 pandemic on the Company’s business and (2) current discount rates, (3) the reduction in the Company’s market capitalization, (4) observable market transactions, (5) changes to the regulatory environment and (6) the nature and amount of government support that will be provided.

Based on the Company’s interim impairment assessment as of May 30, 2020, the Company has determined that its goodwill was not impaired. However, the Company is unable to predict how long these conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on its business.

Intangible assets, net in the Company’s accompanying Consolidated Balance Sheets are as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
May 30, 2020
Customer contracts	$	233,922	$	173,861	$	60,061
Software		63,011		37,971		25,040
Other intangible assets		35,567		33,739		1,828
	$	332,500	$	245,571	$	86,929
August 31, 2019
Customer contracts	$	221,306	$	164,718	$	56,588
Software		48,838		34,813		14,025
Other intangible assets		35,063		32,956		2,107
	$	305,207	$	232,487	$	72,720

11. Asset Retirement Obligations

The Company recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Company continues to depreciate, on a straight-line basis, the amount added to property, plant and equipment and recognizes accretion expense in connection with the discounted liability over the various remaining lives which range from approximately 1 to 24 years.

14

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

A reconciliation of the Company’s asset retirement liability for the thirty-nine weeks ended May 30, 2020 was as follows (in thousands):

	May 30, 2020
Beginning balance as of August 31, 2019	$	12,727
Accretion expense		694
Effect of exchange rate changes		34
Balance as of May 30, 2020	$	13,455

Asset retirement obligations are included in long-term accrued liabilities in the accompanying Consolidated Balance Sheets.

12. Commitments and Contingencies

The Company and its operations are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundries currently use and must dispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. The Company is attentive to the environmental concerns surrounding the disposal of these materials and has, through the years, taken measures to avoid their improper disposal. Over the years, the Company has settled, or contributed to the settlement of, actions or claims brought against the Company relating to the disposal of hazardous materials and there can be no assurance that the Company will not have to expend material amounts to remediate the consequences of any such disposal in the future.

U.S. GAAP requires that a liability for contingencies be recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Significant judgment is required to determine the existence of a liability, as well as the amount to be recorded. The Company regularly consults with attorneys and outside consultants in its consideration of the relevant facts and circumstances before recording a contingent liability. Changes in enacted laws, regulatory orders or decrees, management’s estimates of costs, risk-free interest rates, insurance proceeds, participation by other parties, the timing of payments, the input of the Company’s attorneys and outside consultants or other factual circumstances could have a material impact on the amounts recorded for environmental and other contingent liabilities.

Under environmental laws, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on, or in, or emanating from, such property, as well as related costs of investigation and property damage. Such laws often impose liability without regard to whether the owner or lessee knew of, or was responsible for the presence of such hazardous or toxic substances. There can be no assurances that acquired or leased locations have been operated in compliance with environmental laws and regulations or that future uses or conditions will not result in the imposition of liability upon the Company under such laws or expose the Company to third-party actions such as tort suits. The Company continues to address environmental conditions under terms of consent orders negotiated with the applicable environmental authorities or otherwise with respect to sites located in or related to Woburn, Massachusetts, Somerville, Massachusetts, Springfield, Massachusetts, Uvalde, Texas, Stockton, California, two sites related to former operations in Williamstown, Vermont, as well as sites located in Goldsboro, North Carolina and Wilmington, North Carolina.

The Company has accrued certain costs related to the sites described above as it has been determined that the costs are probable and can be reasonably estimated. The Company has potential exposure related to a parcel of land (the “Central Area”) related to the Woburn, Massachusetts site mentioned above. Currently, the consent decree for the Woburn site does not define or require any remediation work in the Central Area. The United States Environmental Protection Agency (the “EPA”) has provided the Company and other signatories to the consent decree with comments on the design and implementation of groundwater and soil remedies at the Woburn site and investigation of environmental conditions in the Central Area. The Company, and other signatories, have implemented and proposed to do additional work at the Woburn site but many of the EPA’s comments remain to be resolved. The Company has accrued costs to perform certain work responsive to the EPA’s comments. Additionally, the Company has implemented mitigation measures and continues to monitor environmental conditions at the Somerville, Massachusetts site. The Company has received and responded to a notice of audit findings from the Massachusetts Department of Environmental Protection concerning a regulatory submittal that the Company made in 2009 for a portion of the site. The Company has received demands from the local transit authority for reimbursement of certain costs associated with its construction of a new municipal transit station in the area of the Somerville site. This station is part of an ongoing extension of the transit system. The Company has reserved for costs in connection with this matter; however, in light of the uncertainties associated with this matter, these costs and the related reserve may change.

15

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Company routinely reviews and evaluates sites that may require remediation and monitoring and determines its estimated costs based on various estimates and assumptions. These estimates are developed using its internal sources or by third party environmental engineers or other service providers. Internally developed estimates are based on:

• Management’s judgment and experience in remediating and monitoring the Company’s sites;

• Information available from regulatory agencies as to costs of remediation and monitoring;  

• The number, financial resources and relative degree of responsibility of other potentially responsible parties (“PRPs”) who may be liable for remediation and monitoring of a specific site; and

• The typical allocation of costs among PRPs.

There is usually a range of reasonable estimates of the costs associated with each site. In accordance with U.S. GAAP, the Company’s accruals reflect the amount within the range that it believes is the best estimate or the low end of a range of estimates if no point within the range is a better estimate. Where it believes that both the amount of a particular liability and the timing of the payments are reliably determinable, the Company adjusts the cost in current dollars using a rate of 3% for inflation until the time of expected payment and discounts the cost to present value using current risk-free interest rates. As of May 30, 2020, the risk-free interest rates utilized by the Company ranged from 0.7% to 1.4%.

For environmental liabilities that have been discounted, the Company includes interest accretion, based on the effective interest method, in selling and administrative expenses on the accompanying Consolidated Statements of Income. The changes to the Company’s environmental liabilities for the thirty-nine weeks ended May 30, 2020 were as follows (in thousands):

	May 30, 2020
Beginning balance as of August 31, 2019	$	27,718
Revisions in estimates		1,200
Costs incurred for which reserves have been provided		(961	)
Insurance proceeds		90
Interest accretion		403
Changes in discount rates		1,426
Balance as of May 30, 2020	$	29,876

Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of May 30, 2020, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below.

(In thousands)	2020			2021			2022			2023			2024			Thereafter			Total
Estimated costs – current dollars	$	10,184		$	2,186		$	1,353		$	1,091		$	1,058		$	12,032		$	27,904
Estimated insurance proceeds		(69	)		(173	)		(159	)		(173	)		(159	)		(693	)		(1,426	)
Net anticipated costs	$	10,115		$	2,013		$	1,194		$	918		$	899		$	11,339		$	26,478
Effect of inflation																				7,656
Effect of discounting																				(4,258	)
Balance as of May 30, 2020																			$	29,876

Estimated insurance proceeds are primarily received from an annuity received as part of a legal settlement with an insurance company. Annual proceeds of approximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to former operations in Williamstown, Vermont. Annual proceeds received but not expended in the current year accumulate in this account and may be used in future years for costs related to this site through the year 2027. As of May 30, 2020, the balance in this escrow account, which is held in a trust and is not recorded in the Company’s accompanying Consolidated Balance Sheet, was approximately $4.5 million. Also included in estimated insurance proceeds are amounts the Company is entitled to receive pursuant to legal settlements as reimbursements from three insurance companies for estimated costs at the site in Uvalde, Texas.

The Company’s nuclear garment decontamination facilities are licensed by the Nuclear Regulatory Commission or, in certain cases, by the applicable state agency, and are subject to regulation by federal, state and local authorities. There can be no assurance that such regulation will not lead to material disruptions in the Company’s garment decontamination business.

16

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

During the year ended August 26, 2017 (“fiscal 2017”), the Company recorded a pre-tax non-cash impairment charge of $55.8 million once it was determined that it was not probable that the version of the Customer Relationship Management (“CRM”) system that was being developed would be completed and placed into service. On December 28, 2018, the Company entered into a settlement agreement with its lead contractor for the version of the CRM system with respect to which the Company recorded the impairment charge. As part of the settlement agreement, the Company recorded in the thirteen weeks ended February 23, 2019 a total gain of $21.1 million as a reduction of selling and administrative expenses, which includes the Company’s receipt of a one-time cash payment in the amount of $13.0 million as well as the forgiveness of amounts previously due the contractor. The Company also received hardware and related maintenance service with a fair value of $0.8 million as part of the settlement.  

From time to time, the Company is also subject to legal proceedings and claims arising from the conduct of its business operations, including personal injury claims, customer contract matters, employment claims and environmental matters as described above.

While it is impossible for the Company to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits and environmental contingencies, the Company believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance have been properly accrued in accordance with U.S. GAAP. It is possible, however, that the future financial position and/or results of operations for any particular future period could be materially affected by changes in the Company’s assumptions or strategies related to these contingencies or changes out of the Company’s control.

13. Income Taxes

In accordance with ASC 740, Income Taxes (“ASC 740”), each interim period is considered integral to the annual period and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its annual effective tax rate estimated for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, adjusted for discrete taxable events that occur during the interim period.

Effective tax rate

The Company’s effective tax rate for the thirteen weeks ended May 30, 2020 was 21.8% as compared to 23.5% for the corresponding period in the prior year. The Company’s effective tax rate for the thirty-nine weeks ended May 30, 2020 was 22.8% as compared to 24.8% for the corresponding period in the prior year. The decrease in the effective tax rate in the thirteen and thirty-nine weeks ended May 30, 2020 was primarily due to the benefit resulting from the release of certain tax reserves and to the tax benefit related to the exercise of stock appreciation rights. There was a $0.4 million and $1.8 million discrete tax benefit resulting from the release of certain tax reserves and a $0.5 million and $1.9 million discrete tax benefit related to the exercise of stock appreciation rights during the thirteen and thirty-nine weeks ended May 30, 2020, respectively.

Uncertain tax positions

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense, which is consistent with the recognition of these items in prior reporting periods. During the thirteen weeks ended May 30, 2020, there was a decrease of $0.4 million in unrecognized tax benefits to the Company. During the thirty-nine weeks ended May 30, 2020, there was a decrease in unrecognized tax benefits of $1.8 million due to a release of tax reserves.

All U.S. and Canadian federal income tax statutes have lapsed for filings up to and including fiscal years 2015 and 2012, respectively. With a few exceptions, the Company is no longer subject to state and local income tax examinations for periods prior to fiscal 2015. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.

17

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

14. Long-Term Debt

The Company has a $250 million unsecured revolving credit agreement (the “Credit Agreement”) with a syndicate of banks, which matures on April 11, 2021. Under the Credit Agreement, the Company is able to borrow funds at variable interest rates based on, at its election, the Eurodollar rate or a base rate, plus in each case a spread based on the Company’s consolidated funded debt ratio. Availability of credit requires compliance with certain financial and other covenants, including a maximum consolidated funded debt ratio and minimum consolidated interest coverage ratio as defined in the Credit Agreement. The Company tests its compliance with these financial covenants on a fiscal quarterly basis. As of May 30, 2020, the interest rates applicable to the Company’s borrowings under the Credit Agreement would be calculated as LIBOR plus 75 basis points at the time of the respective borrowing. As of May 30, 2020, the Company had no outstanding borrowings and had outstanding letters of credit amounting to $70.8 million, leaving $179.2 million available for borrowing under the Credit Agreement.

As of May 30, 2020, the Company was in compliance with all covenants under the Credit Agreement.

15. Accumulated Other Comprehensive Loss

The changes in each component of accumulated other comprehensive loss, net of tax, for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019 were as follows (in thousands):

	Thirteen Weeks Ended May 30, 2020
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Beginning balance as of February 29, 2020	$	(24,420	)	$	(8,889	)	$	208		$	(33,101	)
Other comprehensive income (loss) before reclassification		(3,835	)		—			79			(3,756	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(47	)		(47	)
Net current period other comprehensive (loss) income		(3,835	)		—			32			(3,803	)
Ending balance as of May 30, 2020	$	(28,255	)	$	(8,889	)	$	240		$	(36,904	)

	Thirty-nine weeks ended May 30, 2020
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Balance as of August 31, 2019	$	(24,640	)	$	(9,239	)	$	191		$	(33,688	)
Other comprehensive (loss) income before reclassification		(3,615	)		—			156			(3,459	)
Amounts reclassified from accumulated other    comprehensive loss		—			350			(107	)		243
Net current period other comprehensive (loss) income		(3,615	)		350			49			(3,216	)
Ending balance as of May 30, 2020	$	(28,255	)	$	(8,889	)	$	240		$	(36,904	)

	Thirteen Weeks Ended May 25, 2019
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Beginning balance as of February 23, 2019	$	(21,980	)	$	(4,135	)	$	109		$	(26,006	)
Other comprehensive (loss) income before reclassification		(2,649	)		—			184			(2,465	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(46	)		(46	)
Net current period other comprehensive (loss) income		(2,649	)		—			138			(2,511	)
Ending balance as of May 25, 2019	$	(24,629	)	$	(4,135	)	$	247		$	(28,517	)

18

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

	Thirty-nine weeks ended May 25, 2019
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Balance as of August 25, 2018	$	(21,116	)	$	(4,135	)	$	92		$	(25,159	)
Other comprehensive (loss) income before reclassification		(3,513	)		—			277			(3,236	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(122	)		(122	)
Net current period other comprehensive (loss) income		(3,513	)		—			155			(3,358	)
Ending balance as of May 25, 2019	$	(24,629	)	$	(4,135	)	$	247		$	(28,517	)

(1) Amounts are shown net of tax.  

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the thirty-nine weeks ended May 30, 2020 and May 25, 2019 were as follows (in thousands):

	Thirteen weeks ended						Thirty-nine weeks ended
	May 30, 2020			May 25, 2019			May 30, 2020			May 25, 2019
Pension benefit liabilities (net):
Reclassification to income statement (a)	$	—		$	—		$	350		$	—
Total, net of tax	$	—			—		$	350			—
Derivative financial instruments, net:
Forward contracts (b)		(47	)		(46	)		(107	)		(122	)
Total, net of tax		(47	)		(46	)		(107	)		(122	)
Total amounts reclassified, net of tax	$	(47	)	$	(46	)	$	243		$	(122	)

(a) Amounts included in selling and administrative expenses in the accompanying Consolidated Statements of Income.

(b) Amounts included in revenues in the accompanying Consolidated Statements of Income.  

16. Segment Reporting

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Company’s chief executive officer. The Company has six operating segments based on the information reviewed by its chief executive officer: U.S. Rental and Cleaning, Canadian Rental and Cleaning, Manufacturing (“MFG”), Corporate, Specialty Garments and First Aid. The U.S. Rental and Cleaning and Canadian Rental and Cleaning operating segments have been combined to form the U.S. and Canadian Rental and Cleaning reporting segment, and as a result, the Company has five reporting segments.

The U.S. and Canadian Rental and Cleaning reporting segment purchases, rents, cleans, delivers and sells uniforms and protective clothing and non-garment items in the United States and Canada. The laundry locations of the U.S. and Canadian Rental and Cleaning reporting segment are referred to by the Company as “industrial laundries” or “industrial laundry locations.”

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UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The MFG operating segment designs and manufactures uniforms and non-garment items primarily for the purpose of providing these goods to the U.S. and Canadian Rental and Cleaning reporting segment. MFG revenues are primarily generated when goods are shipped from the Company’s manufacturing facilities, or its subcontract manufacturers, to other Company locations. These intercompany revenues are recorded at a transfer price which is typically in excess of the actual manufacturing cost. Manufactured products are carried in inventory until placed in service at which time they are amortized at this transfer price. On a consolidated basis, intercompany revenues and income are eliminated and the carrying value of inventories and rental merchandise in service is reduced to the manufacturing cost. Income before income taxes from MFG net of the intercompany MFG elimination offsets the merchandise amortization costs incurred by the U.S. and Canadian Rental and Cleaning reporting segment as the merchandise costs of this reporting segment are amortized and recognized based on inventories purchased from MFG at the transfer price which is above the Company’s manufacturing cost.

The Corporate operating segment consists of costs associated with the Company’s distribution center, sales and marketing, information systems, engineering, procurement, supply chain, accounting and finance, human resources, other general and administrative costs and interest expense. The revenues generated from the Corporate operating segment represent certain direct sales made by the Company directly from its distribution center. The products sold by this operating segment are the same products rented and sold by the U.S. and Canadian Rental and Cleaning reporting segment. In the table below, no assets or capital expenditures are presented for the Corporate operating segment because no assets are allocated to this operating segment in the information reviewed by the chief executive officer. However, depreciation and amortization expense related to certain assets are reflected in operating income and income before income taxes for the Corporate operating segment. The assets that give rise to this depreciation and amortization are included in the total assets of the U.S. and Canadian Rental and Cleaning reporting segment as this is how they are tracked and reviewed by the Company. The majority of expenses accounted for within the Corporate segment relate to costs of the U.S. and Canadian Rental and Cleaning segment, with the remainder of the costs relating to the Specialty Garment and First Aid segments.

The Specialty Garments operating segment purchases, rents, cleans, delivers and sells, specialty garments and non-garment items primarily for nuclear and cleanroom applications and provides cleanroom cleaning services at limited customer locations. The First Aid operating segment sells first aid cabinet services and other safety supplies, provides certain safety training, as well as maintains wholesale distribution and pill packaging operations.

The Company refers to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as its “Core Laundry Operations,” which is included as a subtotal in the following table (in thousands):

Thirteen weeks ended	U.S. and Canadian Rental and Cleaning			MFG		Net Interco MFG Elim			Corporate			Subtotal Core Laundry Operations			Specialty Garments		First Aid		Total
May 30, 2020
Revenues	$	362,288		$	44,949	$	(44,949	)	$	26,123		$	388,411		$	36,163	$	20,944	$	445,518
Operating income (loss)	$	42,994		$	13,226	$	5,398		$	(41,927	)	$	19,691		$	6,380	$	1,637	$	27,708
Interest income, net	$	(865	)	$	—	$	—		$	(189	)	$	(1,054	)	$	—	$	—	$	(1,054	)
Income (loss) before taxes	$	43,856		$	13,344	$	5,398		$	(42,543	)	$	20,055		$	5,514	$	1,637	$	27,206
May 25, 2019
Revenues	$	391,151		$	58,596	$	(58,596	)	$	8,630		$	399,781		$	37,313	$	16,626	$	453,720
Operating income (loss)	$	70,474		$	18,684	$	3,115		$	(38,830	)	$	53,443		$	5,368	$	1,401	$	60,212
Interest income, net	$	(1,008	)	$	—	$	—		$	(1,285	)	$	(2,293	)	$	—	$	—	$	(2,293	)
Income (loss) before taxes	$	71,480		$	18,606	$	3,116		$	(37,975	)	$	55,227		$	5,072	$	1,401	$	61,700

20

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Thirty-nine weeks ended
May 30, 2020
Revenues	$	1,173,252		$	163,620	$	(163,620	)	$	43,649		$	1,216,901		$	105,545	$	53,070	$	1,375,516
Operating income (loss)	$	178,289		$	52,486	$	5,965		$	(124,884	)	$	111,856		$	15,886	$	4,188	$	131,930
Interest income, net	$	(2,965	)	$	—	$	—		$	(2,625	)	$	(5,590	)	$	—	$	—	$	(5,590	)
Income (loss) before taxes	$	181,232		$	52,393	$	5,965		$	(123,852	)	$	115,738		$	14,971	$	4,188	$	134,897
May 25, 2019
Revenues	$	1,157,467		$	187,120	$	(187,120	)	$	27,199		$	1,184,666		$	101,506	$	43,583	$	1,329,755
Operating income (loss)	$	189,807		$	63,576	$	415		$	(96,460	)	$	157,338		$	12,073	$	3,673	$	173,084
Interest income, net	$	(3,113	)	$	—	$	—		$	(2,894	)	$	(6,007	)	$	—	$	—	$	(6,007	)
Income (loss) before taxes	$	192,899		$	63,322	$	415		$	(94,710	)	$	161,926		$	11,455	$	3,673	$	177,054

17. Shares Repurchased and Dividends

On October 23, 2019, the Company announced that it would be raising its quarterly dividend to $0.25 per share for Common Stock and to $0.20 per share for Class B Common Stock, up from $0.1125 and $0.09 per share, respectively. The amount and timing of any dividend payment is subject to the approval of the Board of Directors each quarter.

On January 2, 2019, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase from time to time up to $100.0 million of its outstanding shares of Common Stock. Repurchases made under the program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, the Company stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program will be funded using the Company’s available cash or capacity under its Credit Agreement and may be suspended or discontinued at any time. As of May 30, 2020, the Company had repurchased a total of 314,917 shares for an average price per share of $165.96 under the share repurchase program using cash on hand. During the thirteen and thirty-nine weeks ended May 30, 2020, the Company repurchased 46,667 and 117,767 shares, respectively, for an average price per share of $161.65 and $184.67, respectively.

18. Leases

The Company has operating leases for certain operating facilities, vehicles and equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. Each new contract is evaluated to determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated balance sheet with a corresponding operating lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. Short-term operating leases, which have an initial term of twelve months or less, are not recorded on the consolidated balance sheet.

Operating lease right-of-use assets, net and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available as of the lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. Both lease expense and variable lease costs are primarily recorded in cost of revenues on the Company's consolidated statements of income. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

21

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The following table presents the operating lease cost and information related to the operating lease right-of-use assets, net and operating lease liabilities for the thirty-nine weeks ended May 30, 2020:

(In thousands, except lease term and discount rate)
Lease cost
Operating lease costs including short-term lease expense and variable lease costs, which were immaterial in the period	$	13,528
Operating cash flow impacts
Cash paid for amounts included in the measurement of operating lease liabilities	$	9,805
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	5,893
Weighted-average remaining lease term - operating leases	4.5
Weighted-average discount rate - operating leases		2.85	%

The contractual future minimum lease payments of the Company's operating lease liabilities by fiscal year are as follows as of May 30, 2020:

(In thousands)
2020 (remaining three months)	$	3,298
2021		12,857
2022		10,041
2023		7,571
2024		5,152
Thereafter		6,954
Total payments		45,873
Less interest		(2,543	)
Total present value of lease payments	$	43,330

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and any documents incorporated by reference may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements contained in this Quarterly Report on Form 10-Q and any documents incorporated by reference are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “expects,” “intends,” “believes,” “seeks,” “could,” “should,” “may,” “will,” “strategy,” “objective,” “assume,” “strive,” or the negative versions thereof, and similar expressions and by the context in which they are used. Such forward-looking statements are based upon our current expectations and speak only as of the date made. Such statements are highly dependent upon a variety of risks, uncertainties and other important factors that could cause actual results to differ materially from those reflected in such forward-looking statements. Such factors include, but are not limited to, uncertainties caused by adverse economic conditions, including, without limitation, as a result of extraordinary events or circumstances such as the COVID-19 pandemic, and their impact on our customers’ businesses and workforce levels, disruptions of our business and operations, including limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers in connection with extraordinary events or circumstances such as the COVID-19 pandemic, uncertainties regarding our ability to consummate and successfully integrate acquired businesses, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, any adverse outcome of pending or future contingencies or claims, our ability to compete successfully without any significant degradation in our margin rates, seasonal and quarterly fluctuations in business levels, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the effect of currency fluctuations on our results of operations and financial condition, our dependence on third parties to supply us with raw materials, which such supply could be severely disrupted as a result of extraordinary events or circumstances such as the COVID-19 pandemic, any loss of key management or other personnel, increased costs as a result of any changes in federal or state laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the negative effect on our business from sharply depressed oil and natural gas prices, including, without limitation, as a result of extraordinary events or circumstances such as the COVID-19 pandemic, the continuing increase in domestic healthcare costs, increased workers’ compensation claim costs, increased healthcare claim costs, including as a result of extraordinary events or circumstances such as the COVID-19 pandemic, our ability to retain and grow our customer base, demand and prices for our products and services, fluctuations in our Specialty Garments business, instability, supply chain disruption or infection among our employees in Mexico and Nicaragua where our principal garment manufacturing plants are located, including, without limitation, as a result of extraordinary events or circumstances such as the COVID-19 pandemic, our ability to properly and efficiently design, construct, implement and operate a new customer relationship management (“CRM”) computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, additional professional and internal costs necessary for compliance with any changes in Securities and Exchange Commission, New York Stock Exchange and accounting rules, strikes and unemployment levels, our efforts to evaluate and potentially reduce internal costs, economic and other developments associated with the war on terrorism and its impact on the economy, the impact of foreign trade policies and tariffs or other impositions on imported goods on our business, results of operations and financial condition, general economic conditions, our ability to successfully implement our business strategies and processes, including our capital allocation strategies and the other factors described under “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended August 31, 2019 and in our other filings with the Securities and Exchange Commission, including, without limitation, under “Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. We undertake no obligation to update any forward-looking statements to reflect events or circumstances arising after the date on which they are made.

Business Overview

UniFirst Corporation, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, is one of the largest providers of workplace uniforms and protective work wear clothing in the United States. We design, manufacture, personalize, rent, clean, deliver, and sell a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks, aprons and specialized protective wear, such as flame resistant and high visibility garments. We also rent and sell industrial wiping products, floor mats, facility service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as provide certain safety training to a variety of manufacturers, retailers and service companies.

We serve businesses of all sizes in numerous industry categories. Typical customers include automobile service centers and dealers, delivery services, food and general merchandise retailers, food processors and service operations, light manufacturers, maintenance facilities, restaurants, service companies, soft and durable goods wholesalers, transportation companies, healthcare businesses and others who require employee clothing for image, identification, protection or utility purposes. We also provide our customers with restroom and cleaning supplies, including air fresheners, paper products and hand soaps.

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At certain specialized facilities, we also decontaminate and clean work clothes and other items that may have been exposed to radioactive materials and service special cleanroom protective wear and facilities. Typical customers for these specialized services include government agencies, research and development laboratories, high technology companies and utilities operating nuclear reactors.

We continue to expand into additional geographic markets through acquisitions and organic growth. We currently service over 300,000 customer locations in the United States, Canada and Europe from over 260 customer service, distribution and manufacturing facilities.

As mentioned and described in Note 16 to our Consolidated Financial Statements, we have five reporting segments: U.S. and Canadian Rental and Cleaning, MFG, Corporate, Specialty Garments and First Aid. We refer to the laundry locations of the U.S. and Canadian Rental and Cleaning reporting segment as “industrial laundries” or “industrial laundry locations”, and to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as our “Core Laundry Operations.”

Critical Accounting Policies and Estimates

The discussion of our financial condition and results of operations is based upon the Consolidated Financial Statements, which have been prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”). As such, management is required to make certain estimates, judgments and assumptions that are believed to be reasonable based on the information available. These estimates and assumptions affect the reported amount of assets and liabilities, revenues and expenses, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, the most important and pervasive accounting policies used and areas most sensitive to material changes from external factors. The critical accounting estimates that we believe affect our more significant judgments and estimates used in the preparation of our consolidated financial statements presented in this report are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2019.

COVID-19 Assessment

The outbreak of a novel strain of coronavirus (COVID-19) continues to impact a number of countries, including the United States, Canada and the European countries in which we operate.  Developments continue to occur rapidly with respect to the spread of COVID-19 and its impact on human health and businesses.  New and changing government actions to address the COVID-19 pandemic continue to occur on a daily basis. Our revenues in the third quarter of fiscal 2020 were significantly adversely impacted as a result of many customers closing their businesses or operating at limited capacities.  Although many of our customers have begun to reopen or increase their operating levels as government restrictions have begun to be lifted, our sales to many such customers are below their pre-pandemic levels and may not return to such pre-pandemic levels.  In addition, although some of our customers have begun to reopen or increase their operating levels, such customers may again be forced to close or limit operations as any new COVID-19 outbreaks occur.  Any such closures or reductions in operating levels could have a significant adverse impact on our business.  At times during the pandemic, we have also experienced supply chain disruptions with respect to certain products, including hand sanitizer and masks.  Such disruptions continue to occur, but have moderated to some extent more recently.

As of May 30, 2020, our cash, cash equivalents, and short-term investments were $421.3 million, and we had access to $179.2 million of borrowing capacity under our $250 million unsecured revolving credit facility, which we believe will continue to help us manage the impacts of the COVID-19 pandemic on our business and address related liquidity needs.

We remain focused on the safety and well-being of our team partners and on the service of our customers.  We will continue to review and assess the rapidly-changing COVID-19 pandemic and its impacts on our team partners, our customers, our suppliers and our business so that we can seek to address the impacts on our business and service our customers.  

Because developments with respect to the spread of COVID-19 and its impacts continue to occur so rapidly, and because of the unprecedented nature of the pandemic, we are unable to predict the extent and duration of the adverse impact of COVID-19 on our business, financial condition and results of operations.  

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National, state and local governments have responded to the COVID-19 pandemic in a variety of ways, including, without limitation, by declaring states of emergency, restricting people from gathering in groups or interacting within a certain physical distance (i.e., social distancing), and in certain cases, ordering businesses to close or limit operations or people to stay at home. Although we have been permitted to continue to operate in all of the jurisdictions in which we operate, including in jurisdictions that have mandated the closure of certain businesses and we expect to be permitted to continue to operate under any orders or other restrictions imposed by any government authorities in the future, there is no assurance that we will be permitted to operate under every future government order or other restriction and in every location.  If we were to be subject to government orders or other restrictions on the operation of our business, we may be required to limit, or close, our operations at certain locations in the future.  Any such limitations or closures could have a material adverse impact on our ability to service our customers and on our business, financial condition and results of operations.  In particular, any limitations on, or closures of, our manufacturing facilities in Mexico or Nicaragua, or our distribution center in Owensboro, Kentucky, could have a material adverse impact on our ability to manufacture products and service customers and could have a material adverse impact on our business, financial condition and results of operations.

The COVID-19 pandemic has caused significant disruptions to our business and operations and could cause material disruptions to our business and operations in the future as a result of, among other things, quarantines, worker illness, worker absenteeism as a result of illness or other factors, social distancing measures and other travel, health-related, business or other restrictions. For similar reasons, the COVID-19 pandemic has also adversely impacted, and may continue to adversely impact, our suppliers and their manufacturers.  Depending on the extent and duration of all of the above-described effects on our business and operations and the business and operations of our suppliers, our costs could continue to increase, including our costs to address the health and safety of personnel, our ability to obtain products or services from suppliers may be adversely impacted, our ability to service certain customers could be adversely impacted and, as a result, our business, financial condition and results of operations could be materially adversely affected.  In addition, depending on the extent and duration of the COVID-19 pandemic, we may be subject to significant increases in healthcare costs in the event that a significant number of our personnel become infected with COVID-19 and require medical treatment. As a result, any significant increases in healthcare costs as a result of COVID-19 or otherwise could have a material adverse impact on our business, financial condition and results of operations.

The COVID-19 pandemic has also resulted in material adverse economic conditions that are impacting, and may continue to impact, our business and the businesses of our suppliers and customers.  Unemployment levels have increased significantly, and the U.S. economy has entered an economic recession.  Some analysts have predicted that the current economic recession may persist for a significant period of time and become severe. Although the extent and duration of the impact of the COVID-19 pandemic on our business and operations and the business and operations of our customers and suppliers remain uncertain, the continued spread of COVID-19, the imposition of related public health measures and travel, health-related, business and other restrictions and the resulting materially adverse economic conditions may materially adversely impact our business, financial condition, results of operations and cash flows.

Please see “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for an additional discussion of risks and potential risks of the COVID-19 pandemic on our business, financial condition and results of operations.

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Results of Operations

The following table presents certain selected financial data, including the percentage of revenues represented by each item, for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019.

	Thirteen weeks ended														Thirty-nine weeks ended
(In thousands, except percentages)	May 30, 2020		% of Revenues			May 25, 2019			% of Revenues			% Change			May 30, 2020			% of Revenues			May 25, 2019			% of Revenues			% Change
Revenues	$	445,518		100.0	%	$	453,720			100.0	%		(1.8	)%	$	1,375,516			100.0	%	$	1,329,755			100.0	%		3.4	%
Operating expenses:
Cost of revenues (1)		303,223		68.1			279,900			61.7			8.3			893,961			65.0			838,621			63.1			6.6
Selling and administrative    expenses (1)		88,405		19.8			88,207			19.4			0.2			272,013			19.8			242,487			18.2			12.2
Depreciation and amortization		26,182		5.9			25,401			5.6			3.1			77,612			5.6			75,563			5.7			2.7
Total operating expenses		417,810		93.8			393,508			86.7			6.2			1,243,586			90.4			1,156,671			87.0			7.5
Operating income		27,708		6.2			60,212			13.3			(54.0	)		131,930			9.6			173,084			13.0			(23.8	)
Other income, net		502		0.1			(1,488	)		(0.3	)		(133.7	)		(2,967	)		(0.2	)		(3,970	)		(0.3	)		(25.3	)
Income before income taxes		27,206		6.1			61,700			13.6			(55.9	)		134,897			9.8			177,054			13.3			(23.8	)
Provision for income taxes		5,921		1.3			14,480			3.2			(59.1	)		30,690			2.2			43,908			3.3			(30.1	)
Net income	$	21,285		4.8	%	$	47,220			10.4	%		(54.9	)%	$	104,207			7.6	%	$	133,146			10.0	%		(21.7	)%

(1) Exclusive of depreciation on our property, plant and equipment and amortization on our intangible assets.

General

We derive our revenues through the design, manufacture, personalization, rental, cleaning, delivering, and selling of a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks and aprons and specialized protective wear, such as flame resistant and high visibility garments. We also rent industrial wiping products, floor mats, facility service products, other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies, to a variety of manufacturers, retailers and service companies. We have five reporting segments, U.S. and Canadian Rental and Cleaning, MFG, Specialty Garments, First Aid and Corporate. We refer to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as our “Core Laundry Operations.”

Cost of revenues include the amortization of rental merchandise in service and merchandise costs related to direct sales as well as labor and other production, service and delivery costs and distribution costs associated with operating our Core Laundry Operations, Specialty Garments facilities and First Aid locations. Selling and administrative costs include costs related to our sales and marketing functions as well as general and administrative costs associated with our corporate offices, non-operating environmental sites and operating locations including information systems, engineering, materials management, manufacturing planning, finance, budgeting and human resources.

We have a substantial number of plants and conduct a significant portion of our business in energy producing regions in the U.S. and Canada. In general, we are relatively more dependent on business in these regions than are many of our competitors. For example, the dramatic decrease in oil prices beginning in 2014 directly affected our customers in the oil industry as they curtailed their level of operations, which had a corresponding effect on our customers in businesses which service or supply the oil industry as well as our customers in unrelated businesses located in areas which had benefited from the economic expansion generated by the robust growth driven by the higher oil prices in prior years. As a result, our organic growth in periods following that dramatic decrease in oil prices was negatively impacted by elevated headcount reductions in our wearer base as well as increased lost accounts. Recent volatility in energy prices have had and may continue to have a significant impact on wearer levels at existing customers in our North American energy-dependent markets. Our operating results are also directly impacted by the costs of the gasoline used to fuel our vehicles and the natural gas used to operate our plants. While it is difficult to quantify the positive and negative impacts on our future financial results from changes in energy prices, in general, we believe that significant decreases in oil and natural gas prices would have an overall negative impact on our results due to cutbacks by our customers both in, and dependent upon, the oil and natural gas industries, which would outweigh the benefits in our operating costs from lower energy costs.

Our results of operations may also be adversely impacted by the decline in the Canadian exchange rate.

Our business is subject to various state and federal regulations, including employment laws and regulations, minimum wage requirements, overtime requirements, working condition requirements, citizenship requirements, healthcare insurance mandates and other laws and regulations that impact our labor costs. We expect that our labor costs will rise in fiscal 2020 as a result of increases in state and local minimum wage levels.

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On October 23, 2019, we announced that we would be raising our quarterly dividend to $0.25 per share for Common Stock and to $0.20 per share for Class B Common Stock, up from $0.1125 and $0.09 per share, respectively. The amount and timing of any future dividend payment is subject to the approval of the Board of Directors each quarter.

On January 2, 2019, our Board of Directors approved a share repurchase program authorizing the Company to repurchase from time to time up to $100.0 million of its outstanding shares of Common Stock. Repurchases made under the program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, the Company stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program will be funded using the Company’s available cash or capacity under its credit agreement and may be suspended or discontinued at any time. As of May 30, 2020, the Company had repurchased a total of 314,917 shares for an average price per share of $165.96 under the share repurchase program.

During the thirteen and thirty-nine weeks ended May 30, 2020, the Company repurchased 46,667 and 117,767 shares for an average price per share of $161.65 and $184.67 respectively. During the thirteen and thirty-nine weeks ended May 25, 2019, the Company repurchased 99,500 and 144,500 shares for an average price per share of $147.01 and $145.01, respectively.

During fiscal 2017, we recorded a pre-tax non-cash impairment charge of $55.8 million once it was determined that it was not probable that the version of the CRM system that was being developed would be completed and placed into service. On December 28, 2018, we entered into a settlement agreement with our lead contractor for the version of the CRM system with respect to which we recorded the impairment charge. As part of the settlement agreement, we recorded in the thirteen weeks ended February 23, 2019 a total gain of $21.1 million as a reduction of selling and administrative expenses, which includes our receipt of a one-time cash payment in the amount of $13.0 million as well as the forgiveness of amounts previously due the contractor. We also received hardware and related maintenance service with a fair value of $0.8 million as part of the settlement.

In our fourth fiscal quarter of 2018, we initiated a multiyear CRM project to further develop, implement and deploy a third-party application we licensed. This new solution is intended to improve functionality, capability and information flow as well as increase automation in servicing our customers. As of May 30, 2020, we have capitalized $20.6 million related to our new CRM project.

Thirteen weeks ended May 30, 2020 compared with thirteen weeks ended May 25, 2019

Revenues

(In thousands, except percentages)	May 30, 2020		May 25, 2019		Dollar Change			Percent Change
Core Laundry Operations	$	388,411	$	399,781	$	(11,370	)		(2.8	)%
Specialty Garments		36,163		37,313		(1,150	)		(3.1	)%
First Aid		20,944		16,626		4,318			26.0	%
Consolidated total	$	445,518	$	453,720	$	(8,202	)		(1.8	)%

Consolidated revenues during the thirteen weeks ended May 30, 2020 decreased compared to the thirteen weeks ended May 25, 2019 primarily driven by a decline in revenues in our Core Laundry Operations resulting from COVID-19 related customer closures as well as related wearer reductions at customers that remained open. This decline in revenues was partially offset by a large direct sale of $20.1 million as well as increased safety and personal protective equipment sales in the thirteen weeks ended May 30, 2020.

Specialty Garments revenues in the third quarter of fiscal 2020 decreased compared to the third quarter of fiscal 2019 due primarily to decreased direct sales activity in our nuclear operations in the U.S. and Canada, which was partially offset by growth in our cleanroom and European nuclear operations. Specialty Garments’ results are often affected by seasonality and the timing and length of its customers’ power reactor outages as well as its project-based activities.

First Aid revenues in the third quarter of fiscal 2020 increased compared to the third quarter of fiscal 2019 due primarily to increased demand for the segment’s safety and personal protective equipment offerings as a result of COVID-19.

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Cost of Revenues

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change		Percent Change
Cost of revenues	$	303,223		$	279,900		$	23,323		8.3	%
% of Revenues		68.1	%		61.7	%

Core Laundry Operations cost of revenues as a percentage of revenues increased in the thirteen weeks ended May 30, 2020 as compared to the prior year comparable period.  This increase was due to a number of items, including the impact of the decline in our rental revenues on our cost structure, higher merchandise amortization as a percentage of revenues due to the amortization of prior period expenditures, higher cost of revenues related to the large $20.1 million direct sale, additional costs we incurred related to certain temporary employee compensation programs we instituted during the quarter, higher bad debt expense as well as increased costs for internal-use safety supplies we sourced during the quarter for our employees. These items were partially offset by lower incentive compensation, healthcare, energy and travel-related costs.

Specialty Garments cost of revenues as a percentage of revenues decreased in the thirteen weeks ended May 30, 2020 as compared to the prior year comparable period. This decrease was due primarily to a bad debt recovery from a customer in bankruptcy as well as lower travel-related costs. These items were partially offset by higher merchandise expense and costs incurred responding to the COVID-19 pandemic, including employee compensation and amounts paid for internal-use safety supplies.

Selling and Administrative Expenses

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change		Percent Change
Selling and administrative expenses	$	88,405		$	88,207		$	198		0.2	%
% of Revenues		19.8	%		19.4	%

Our selling and administrative costs increased in the thirteen weeks ended May 30, 2020 as compared to the prior year comparable period. The increase was due primarily to higher indirect tax costs as well as additional costs we incurred related to certain temporary COVID-19 related employee compensation programs we instituted during the quarter. These items contributing to the increase were partially offset by lower incentive compensation, healthcare and travel-related costs as a percentage of revenues.

Depreciation and Amortization

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change		Percent Change
Depreciation and amortization	$	26,182		$	25,401		$	781		3.1	%
% of Revenues		5.9	%		5.6	%

Depreciation and amortization expense increased in the thirteen weeks ended May 30, 2020 as compared to the prior year comparable period due primarily to higher capital expenditures placed in service over the previous quarters. The increase in depreciation and amortization reflects the Company’s continued capital investments in the business.

Operating Income

For the thirteen weeks ended May 30, 2020 and May 25, 2019, changes in our revenues and costs as discussed above resulted in the following changes in our operating income and operating income margin:

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change			Percent Change
Core Laundry Operations	$	19,691		$	53,443		$	(33,752	)		(63.2	)%
Specialty Garments		6,380			5,368			1,012			18.9	%
First Aid		1,637			1,401			236			16.8	%
Operating income	$	27,708		$	60,212		$	(32,504	)		(54.0	)%
% of Revenues		6.2	%		13.3	%

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Other Income, net

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change		Percent Change
Interest income, net	$	(1,054	)	$	(2,293	)	$	1,239		(54.0	)%
Other expense, net		1,556			805			751		93.3	%
Total other income, net	$	502		$	(1,488	)	$	1,990		(133.7	)%

The decrease in other income, net during the thirteen weeks ended May 30, 2020 as compared to the prior year comparable period was due primarily to lower interest income from declining interest rates, an increase in foreign exchange losses and increased periodic pension costs.

Provision for Income Taxes

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change			Percent Change
Provision for income taxes	$	5,921		$	14,480		$	(8,559	)		(59.1	)%
Effective income tax rate		21.8	%		23.5	%

The decrease in our effective tax rate for the thirteen weeks ended May 30, 2020 as compared to the prior year comparable period was due primarily to a $0.4 million benefit as a result of the relief of certain tax reserves and a $0.5 million discrete tax benefit related to the exercise of stock appreciation rights.

Thirty-nine weeks ended May 30, 2020 compared with thirty-nine weeks ended May 25, 2019

Revenues

(In thousands, except percentages)	May 30, 2020		May 25, 2019		Dollar Change		Percent Change
Core Laundry Operations	$	1,216,901	$	1,184,666	$	32,235		2.7	%
Specialty Garments		105,545		101,506		4,039		4.0	%
First Aid		53,070		43,583		9,487		21.8	%
Consolidated total	$	1,375,516	$	1,329,755	$	45,761		3.4	%

Consolidated revenues in the thirty-nine weeks ended May 30, 2020 increased compared to the thirty-nine weeks ended May 25, 2019 due primarily to revenue growth in our Core Laundry Operations. Excluding the effect of acquisitions that increased our revenues by 0.7% and a weaker Canadian Dollar that decreased revenues by 0.1%, our organic growth for our Core Laundry Operations was 2.1%. Organic growth consists primarily of new sales, price increases, and net changes in the wearer levels at our existing customers, offset by lost accounts. During the thirty-nine weeks ended May 30, 2020, Core Laundry Operations rental revenues were negatively impacted by COVID-19 related customer closures as well as related wearer reductions at customers that remained open. During the thirty-nine weeks ended May 30, 2020, we had a large direct sale of $20.1 million that partially offset the decline in our rental revenues.

Specialty Garments revenues in the thirty-nine weeks ended May 30, 2020 increased compared to the thirty-nine weeks ended May 25, 2019 due primarily to increased direct sales activity in our nuclear operations in the U.S. and Canada as well as strong performance in our cleanroom operations. Specialty Garments results are often affected by seasonality and the timing and length of its customers’ power reactor outages as well as its project-based activities.

The increase in First Aid revenues in the thirty-nine weeks ended May 30, 2020 as compared to the thirty-nine weeks ended May 25, 2019 was due primarily to the strong performance in our wholesale distribution business and increased demand for the segment’s safety and personal protective equipment offerings as a result of COVID-19.

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Cost of Revenues

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change		Percent Change
Cost of revenues	$	893,961		$	838,621		$	55,340		6.6	%
% of Revenues		65.0	%		63.1	%

Core Laundry Operations cost of revenues as a percentage of revenues in the thirty-nine weeks ended May 30, 2020 increased from the prior year comparable period. This increase was due to a number of items, including the impact of the COVID-19 related decline in our rental revenues on our cost structure, higher merchandise amortization as a percentage of revenues due to the amortization of prior period expenditures, higher cost of revenues related to the large $20.1 million direct sale, additional employee compensation expense, higher bad debt expense as well as increased costs for internal-use safety supplies. These items were partially offset by lower incentive compensation, healthcare, energy and travel-related costs.

Our Specialty Garments cost of revenues as a percentage of revenues decreased in the thirty-nine weeks ended May 30, 2020 as compared to the prior year comparable period. The decrease in cost of revenues as a percentage of revenues was due primarily to lower production and service and delivery payroll costs as well as lower other delivery costs in the thirty-nine weeks ended May 30, 2020.

Selling and Administrative Expenses

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change		Percent Change
Selling and administrative expenses	$	272,013		$	242,487		$	29,526		12.2	%
% of Revenues		19.8	%		18.2	%

Our selling and administrative costs increased in the thirty-nine weeks ended May 30, 2020 as compared to the prior year comparable period. The increase was due primarily to a gain of $21.1 million in the thirty-nine weeks ended May 25, 2019 related to the settlement agreement with the lead contractor for the version of the CRM system with respect to which we recorded a $55.8 million impairment charge in fiscal 2017. Also contributing to the increase was a gain of $3.0 million from the settlement of environmental litigation in the first quarter of fiscal 2019 and higher indirect tax costs in the thirty-nine weeks ended May 30, 2020. These items driving the increase in thirty-nine weeks ended May 30, 2020 were partially offset by lower incentive compensation, healthcare and travel-related costs.

Depreciation and Amortization

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change		Percent Change
Depreciation and amortization	$	77,612		$	75,563		$	2,049		2.7	%
% of Revenues		5.6	%		5.7	%

Depreciation and amortization expense increased in the thirty-nine weeks ended May 30, 2020 as compared to the prior year comparable period due primarily to higher capital expenditures placed in service over the past several quarters. The increase in depreciation and amortization reflects the Company’s continued capital investments in the business.

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Operating Income

For the thirty-nine weeks ended May 30, 2020 and May 25, 2019, changes in our revenues and costs as discussed above resulted in the following changes in our operating income and operating income margin:

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change			Percent Change
Core Laundry Operations	$	111,856		$	157,338		$	(45,482	)		(28.9	)%
Specialty Garments		15,886			12,073			3,813			31.6	%
First Aid		4,188			3,673			515			14.0	%
Operating income	$	131,930		$	173,084		$	(41,154	)		(23.8	)%
Operating income margin		9.6	%		13.0	%

Other Income, net

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change		Percent Change
Interest income, net	$	(5,590	)	$	(6,007	)	$	417		(6.9	)%
Other expense, net		2,623			2,037			586		28.8	%
Total other income, net	$	(2,967	)	$	(3,970	)	$	1,003		(25.3	)%

The decrease in other income, net, during the thirty-nine weeks ended May 30, 2020 as compared to the prior year comparable period was due primarily to lower interest income from declining interest rates and increased periodic pension costs.

Provision for Income Taxes

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Dollar Change			Percent Change
Provision for income taxes	$	30,690		$	43,908		$	(13,218	)		(30.1	)%
Effective income tax rate		22.8	%		24.8	%

The decrease in our effective tax rate for the thirty-nine weeks ended May 30, 2020 as compared to the prior year comparable period was due primarily to a $1.5 million benefit as a result of the relief of certain tax reserves and a $1.9 million discrete tax benefit related to the exercise of stock appreciation rights.

Liquidity and Capital Resources

General

Cash, cash equivalents and short-term investments totaled $421.3 million as of May 30, 2020, an increase of $71.8 million from May 25, 2019 when the amount totaled $349.4 million. We generated $205.4 million and $199.4 million in cash from operating activities in the thirty-nine weeks ended May 30, 2020 and May 25, 2019, respectively.

Pursuant to a share repurchase program approved by our Board of Directors on January 2, 2019, we repurchased 117,767 shares of our Common Stock for an aggregate of approximately $21.7 million during the thirty-nine weeks ended May 30, 2020.

We believe, although there can be no assurance, that our current cash, cash equivalents and short-term investments balances, our cash generated from future operations and amounts available under our Credit Agreement (defined below) will be sufficient to meet our current anticipated working capital and capital expenditure requirements for at least the next 12 months and will help us manage the impacts of the COVID-19 pandemic on our business and address related liquidity needs.

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Cash flows provided by operating activities have historically been the primary source of our liquidity. We generally use these cash flows to fund most, if not all, of our operations, capital expenditure and acquisition activities as well as dividends on our common stock and stock repurchases. We may also use cash flows provided by operating activities, as well as proceeds from loans payable and long-term debt, to fund growth and acquisition opportunities, as well as other cash requirements.

Sources and uses of cash flows for the thirty-nine weeks ended May 30, 2020 and May 25, 2019, respectively, are summarized as follows:

(In thousands, except percentages)	May 30, 2020			May 25, 2019			Percent Change
Net cash provided by operating activities	$	205,432		$	199,439			3.0	%
Net cash used in investing activities		(131,992	)		(90,339	)		46.1	%
Net cash used in financing activities		(36,252	)		(28,786	)		25.9	%
Effect of exchange rate changes		(1,276	)		(1,416	)		(9.9	)%
Net increase (decrease) in cash, cash equivalents and    short-term investments	$	35,912		$	78,898			(54.5	)%

Cash Provided by Operating Activities

The increase in cash provided by operating activities was due primarily to lower expenditures on rental merchandise and improved collections on accounts receivable in the thirty-nine weeks ended May 30, 2020 as compared to the prior year comparable period.  Also contributing to the increase was the one-time bonus paid to our employees during the first quarter of fiscal 2019.  These increases were partially offset by cash received of $13.0 million in the second quarter of fiscal 2019 from the settlement agreement with the lead contractor for the version of the CRM system with respect to which we recorded a $55.8 million impairment charge in fiscal 2017. Also partially offsetting the increases was $3.0 million from the settlement of environmental litigation in the first quarter of fiscal 2019.

Cash Used in Investing Activities

The net increase in cash used in investing activities was due primarily to the acquisition of a Missouri-based industrial laundry business, which was completed in September 2019 for $38.8 million, using available cash on hand. Also contributing to the increase was an increase in capital expenditures of $3.0 million in the thirty-nine weeks ended May 30, 2020 as compared to the prior year comparable period.  

Cash Used in Financing Activities

The increase in cash used in financing activities was due primarily to an increase in dividends paid of $5.0 million in the thirty-nine weeks ended May 30, 2020 as compared to the prior year comparable period.  

Long-Term Debt and Borrowing Capacity

We have a $250 million unsecured revolving credit agreement (the “Credit Agreement”) with a syndicate of banks, which matures on April 11, 2021. Under the Credit Agreement, we are able to borrow funds at variable interest rates based on, at our election, the Eurodollar rate or a base rate, plus in each case a spread based on our consolidated funded debt ratio. Availability of credit requires compliance with certain financial and other covenants, including a maximum consolidated funded debt ratio and minimum consolidated interest coverage ratio as defined in the Credit Agreement. We test our compliance with these financial covenants on a fiscal quarterly basis. As of May 30, 2020, the interest rates applicable to our borrowings under the Credit Agreement would be calculated as LIBOR plus 75 basis points at the time of the respective borrowing. As of May 30, 2020, we had no outstanding borrowings and had outstanding letters of credit amounting to $70.8 million, leaving $179.2 million available for borrowing under the Credit Agreement.

As of May 30, 2020, we were in compliance with all covenants under the Credit Agreement.

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Derivative Instruments and Hedging Activities

In June 2018, we entered into twelve forward contracts to exchange CAD for U.S. dollars at fixed exchange rates in order to manage our exposure related to the certain forecasted CAD denominated sales of one of our subsidiaries. The hedged transactions are specified as the first amount of CAD denominated revenues invoiced by one of our domestic subsidiaries each fiscal quarter, beginning in the third fiscal quarter of 2019 and continuing through the second fiscal quarter of 2022. In total, we will sell approximately 10.7 million CAD at an average Canadian-dollar exchange rate of 0.7814 over these quarterly periods. We concluded that the forward contracts met the criteria to qualify as a cash flow hedge under U.S. GAAP.

As of May 30, 2020, we had forward contracts with a notional value of approximately $5.9 million CAD outstanding and recorded the fair value of the contracts of $0.1 million in other long-term assets and $0.2 million in prepaid expenses and other current assets with a corresponding decrease in accumulated other comprehensive loss of $0.2 million, which was recorded net of tax. During both the thirteen and thirty-nine weeks ended May 30, 2020, we reclassified $0.1 million from accumulated other comprehensive income to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in decrease to accumulated other comprehensive loss as of May 30, 2020 is expected to be reclassified to revenues prior to its maturity on February 25, 2022.

Commitments and Contingencies

We are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundries currently use and must dispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal. Over the years, we have settled, or contributed to the settlement of, actions or claims brought against us relating to the disposal of hazardous materials and there can be no assurance that we will not have to expend material amounts to remediate the consequences of any such disposal in the future.

U.S. GAAP requires that a liability for contingencies be recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Significant judgment is required to determine the existence of a liability, as well as the amount to be recorded. We regularly consult with attorneys and outside consultants in our consideration of the relevant facts and circumstances before recording a contingent liability. Changes in enacted laws, regulatory orders or decrees, our estimates of costs, risk-free interest rates, insurance proceeds, participation by other parties, the timing of payments, the input of our attorneys and outside consultants or other factual circumstances could have a material impact on the amounts recorded for our environmental and other contingent liabilities.

Under environmental laws, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on, or in, or emanating from such property, as well as related costs of investigation and property damage. Such laws often impose liability without regard to whether the owner or lessee knew of, or was responsible for, the presence of such hazardous or toxic substances. There can be no assurances that acquired or leased locations have been operated in compliance with environmental laws and regulations or that future uses or conditions will not result in the imposition of liability upon our Company under such laws or expose our Company to third party actions such as tort suits. We continue to address environmental conditions under terms of consent orders negotiated with the applicable environmental authorities or otherwise with respect to sites located in or related to Woburn, Massachusetts, Somerville, Massachusetts, Springfield, Massachusetts, Uvalde, Texas, Stockton, California, two sites related to former operations in Williamstown, Vermont, as well as sites located in Goldsboro, North Carolina and Wilmington, North Carolina.

We have accrued certain costs related to the sites described above as it has been determined that the costs are probable and can be reasonably estimated. We have potential exposure related to a parcel of land (the “Central Area”) related to the Woburn, Massachusetts site mentioned above. Currently, the consent decree for the Woburn site does not define or require any remediation work in the Central Area. The United States Environmental Protection Agency (the “EPA”) has provided us and other signatories to the consent decree with comments on the design and implementation of groundwater and soil remedies at the Woburn site and investigation of environmental conditions in the Central Area. We, and other signatories, have implemented and proposed to do additional work at the Woburn site but many of the EPA’s comments remain to be resolved. We have accrued costs to perform certain work responsive to the EPA’s comments. Additionally, we have implemented mitigation measures and continue to monitor environmental conditions at the Somerville, Massachusetts site. We have received and responded to a notice of audit findings from the Massachusetts Department of Environmental Protection concerning a regulatory submittal that we made in 2009 for a portion of the site. We have received demands from the local transit authority for reimbursement of certain costs associated with its construction of a new municipal transit station in the area of the Somerville site. This station is part of an ongoing extension of the transit system. We have reserved for costs in connection with this matter; however, in light of the uncertainties associated with this matter, these costs and the related reserve may change.  

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We routinely review and evaluate sites that may require remediation and monitoring and determine our estimated costs based on various estimates and assumptions. These estimates are developed using our internal sources or by third party environmental engineers or other service providers. Internally developed estimates are based on:

• Management’s judgment and experience in remediating and monitoring our sites;

• Information available from regulatory agencies as to costs of remediation and monitoring;

• The number, financial resources and relative degree of responsibility of other potentially responsible parties (“PRPs”) who may be liable for remediation and monitoring of a specific site; and

• The typical allocation of costs among PRPs.

There is usually a range of reasonable estimates of the costs associated with each site. In accordance with U.S. GAAP, our accruals represent the amount within the range that we believe is the best estimate or the low end of a range of estimates if no point within the range is a better estimate. When we believe that both the amount of a particular liability and the timing of the payments are reliably determinable, we adjust the cost in current dollars using a rate of 3% for inflation until the time of expected payment and discount the cost to present value using current risk-free interest rates. As of May 30, 2020, the risk-free interest rates we utilized ranged from 0.7% to 1.4%.

For environmental liabilities that have been discounted, we include interest accretion, based on the effective interest method, in selling and administrative expenses on the Consolidated Statements of Income. The changes to the amounts of our environmental liabilities for the thirty-nine weeks ended May 30, 2020 were as follows (in thousands):

	May 30, 2020
Beginning balance as of August 31, 2019	$	27,718
Revisions in estimates		1,200
Costs incurred for which reserves have been provided		(961	)
Insurance proceeds		90
Interest accretion		403
Changes in discount rates		1,426
Balance as of May 30, 2020	$	29,876

Anticipated payments and insurance proceeds relating to currently identified environmental remediation liabilities as of May 30, 2020, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below.

(In thousands)	2020			2021			2022			2023			2024			Thereafter			Total
Estimated costs – current dollars	$	10,184		$	2,186		$	1,353		$	1,091		$	1,058		$	12,032		$	27,904
Estimated insurance proceeds		(69	)		(173	)		(159	)		(173	)		(159	)		(693	)		(1,426	)
Net anticipated costs	$	10,115		$	2,013		$	1,194		$	918		$	899		$	11,339		$	26,478
Effect of inflation																				7,656
Effect of discounting																				(4,258	)
Balance as of May 30, 2020																			$	29,876

Estimated insurance proceeds are primarily received from an annuity received as part of our legal settlement with an insurance company. Annual proceeds of approximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to our former operations in Williamstown, Vermont. Annual proceeds received but not expended in the current year accumulate in this account and may be used in future years for costs related to this site through the year 2027. As of May 30, 2020, the balance in this escrow account, which is held in a trust and is not recorded in our Consolidated Balance Sheet, was approximately $4.5 million. Also included in estimated insurance proceeds are amounts we are entitled to receive pursuant to legal settlements as reimbursements from three insurance companies for estimated costs at the site in Uvalde, Texas.

Our nuclear garment decontamination facilities are licensed by the Nuclear Regulatory Commission or, in certain cases, by the applicable state agency, and are subject to regulation by federal, state and local authorities. We also have nuclear garment decontamination facilities in the United Kingdom and the Netherlands. These facilities are licensed and regulated by the respective country’s applicable federal agency. There can be no assurance that such regulation will not lead to material disruptions in our garment decontamination business.

34

From time to time, we are also subject to legal proceedings and claims arising from the conduct of our business operations, including personal injury claims, customer contract matters, employment claims and environmental matters as described above.

While it is impossible for us to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits and environmental contingencies, we believe that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance have been properly accrued in accordance with accounting principles generally accepted in the United States. It is possible, however, that the future financial position and/or results of operations for any particular future period could be materially affected by changes in our assumptions or strategies related to these contingencies or changes out of our control.

Off-Balance Sheet Arrangements

As of May 30, 2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Securities and Exchange Commission Regulation S-K.

Effects of Inflation

In general, we believe that our results of operations are not dependent on moderate changes in the inflation rate. Historically, we have been able to manage the impacts of more significant changes in inflation rates through our customer relationships, customer agreements that generally provide for price increases consistent with the rate of inflation and continued focus on improvements of operational productivity.

Contractual Obligations and Other Commercial Commitments

As of May 30, 2020, there were no material changes to our contractual obligations that were disclosed in our Annual Report on Form 10-K for the year ended August 31, 2019.

Recent Accounting Pronouncements

See Note 2, “Recent Accounting Pronouncements” to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for more information on recently implemented and issued accounting standards.

35

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Risk

We have determined that all of our foreign subsidiaries operate primarily in local currencies that represent the functional currencies of such subsidiaries. All assets and liabilities of our foreign subsidiaries are translated into U.S. dollars using the exchange rate prevailing at the balance sheet date. The effects of exchange rate fluctuations on the translation of assets and liabilities are recorded as a component of shareholders’ equity. Revenues and expenses are translated at the average exchange rates in effect during each month of the fiscal year. As such, our financial condition and operating results are affected by fluctuations in the value of the U.S. dollar as compared to currencies in foreign countries. Revenues denominated in currencies other than the U.S. dollar represented approximately 7.0% and 7.6% of total consolidated revenues for the thirteen and thirty-nine weeks ended May 30, 2020, respectively. Total assets denominated in currencies other than the U.S. dollar represented approximately 6.5% of total consolidated assets as of May 30, 2020 and August 31, 2019, respectively. If exchange rates had increased or decreased by 10% from the actual rates in effect during the thirteen and thirty-nine weeks ended May 30, 2020, our revenues would have increased or decreased by approximately $3.1 million and $10.5 million respectively, and total assets as of May 30, 2020 would have increased or decreased by approximately $14.0 million.

In June 2018, we entered into twelve forward contracts to exchange CAD for U.S. dollars at fixed exchange rates in order to manage our exposure related to the certain forecasted CAD denominated sales of one of our subsidiaries. The hedged transactions are specified as the first amount of CAD denominated revenues invoiced by one of our domestic subsidiaries each fiscal quarter, beginning in the third fiscal quarter of 2019 and continuing through the second fiscal quarter of 2022. In total, we will sell approximately 12.1 million CAD at an average Canadian-dollar exchange rate of 0.7814 over these quarterly periods. We concluded that the forward contracts met the criteria to qualify as a cash flow hedge under U.S. GAAP.

As of May 30, 2020, we had forward contracts with a notional value of approximately $5.9 million CAD outstanding and recorded the fair value of the contracts of $0.1 million in other long-term assets and $0.2 million in prepaid expenses and other current assets with a corresponding decrease in accumulated other comprehensive loss of $0.2 million, which was recorded net of tax. During both the thirteen and thirty-nine weeks ended May 30, 2020, we reclassified $0.1 million from accumulated other comprehensive income to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of May 30, 2020 is expected to be reclassified to revenues prior to its maturity on February 25, 2022.

Other than the forward contracts, discussed above, we do not operate a hedging program to mitigate the effect of a significant change in the value of the functional currencies of our foreign subsidiaries, which include the Canadian dollar, euro, British pound, Mexican peso and Nicaraguan cordoba, as compared to the U.S. dollar. Any losses or gains resulting from unhedged foreign currency transactions, including exchange rate fluctuations on intercompany accounts are reported as transaction losses (gains) in our other income, net. The intercompany payables and receivables are denominated in Canadian dollars, euros, British pounds, Mexican pesos and Nicaraguan cordobas. During the thirteen and thirty-nine weeks ended May 30, 2020, transaction losses of $1.0 million and $1.2 million, respectively, were included in other income. If exchange rates had increased or decreased by 10% during the thirteen and thirty-nine weeks ended May 30, 2020, we would have recognized exchange gains or losses of approximately $0.3 million and $0.5 million, respectively.

Please see “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q for an additional discussion of risks and potential risks of the COVID-19 pandemic on our business, financial performance and the market price of our Common Stock.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that material information relating to the Company required to be disclosed by the Company in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures. We continue to review our disclosure controls and procedures, and our internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the third quarter of fiscal year 2020 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

36

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are subject to legal proceedings and claims arising from the current conduct of our business operations, including personal injury, customer contract, employment claims and environmental matters as described in our Consolidated Financial Statements. We maintain insurance coverage providing indemnification against many of such claims, and we do not expect that we will sustain any material loss as a result thereof. Refer to Note 12, “Commitments and Contingencies,” to the Consolidated Financial Statements, as well as Item 1A. Risk Factors below, for further discussion.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended August 31, 2019, which could materially affect our business, financial condition, and future results. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. Except to the extent previously updated or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended August 31, 2019, except as follows:

The COVID-19 pandemic and resulting material adverse economic conditions have had, and may continue to have, a significant adverse impact on our business and could have a more material adverse impact on our business, financial condition and results of operations.

An outbreak of a novel strain of coronavirus (COVID-19) has occurred in a number of countries, including the United States, Canada and the European countries in which we operate.  National, state and local governments have responded to the COVID-19 pandemic in a variety of ways, including, without limitation, by declaring states of emergency, restricting people from gathering in groups or interacting within a certain physical distance (i.e., social distancing), and in certain cases, ordering businesses to close or limit operations or people to stay at home. Although we have been permitted to continue to operate in all of the jurisdictions in which we operate, including in jurisdictions that have mandated the closure of certain businesses and we expect to be permitted to operate under any orders or other restrictions imposed by any government authorities in the future, there is no assurance that we will be permitted to operate under every future government order or other restriction and in every location.  If we were to be subject to government orders or other restrictions on the operation of our business, we may be required to limit, or close, our operations at certain locations in the future.  Any such limitations or closures could have a material adverse impact on our ability to service our customers and on our business, financial condition and results of operations.  In particular, any limitations on, or closures of, our manufacturing facilities in Mexico or Nicaragua, or our distribution center in Owensboro, Kentucky, could have a material adverse impact on our ability to manufacture products and service customers and could have a material adverse impact on our business, financial condition and results of operations.

The COVID-19 pandemic has caused significant disruptions to our business and operations and could cause material disruptions to our business and operations in the future as a result of, among other things, quarantines, worker illness, worker absenteeism as a result of illness or other factors, social distancing measures and other travel, health-related, business or other restrictions. For similar reasons, the COVID-19 pandemic has also adversely impacted, and may continue to adversely impact, our suppliers and their manufacturers.  Depending on the extent and duration of all of the above-described effects on our business and operations and the business and operations of our suppliers, our costs could continue to increase, including our costs to address the health and safety of personnel, our ability to obtain products or services from suppliers may continue to be adversely impacted, our ability to service certain customers could be adversely impacted and, as a result, our business, financial condition and results of operations could be materially adversely affected.  In addition, depending on the extent and duration of the COVID-19 pandemic, we may be subject to significant increases in healthcare costs in the event that a significant number of our personnel become infected with COVID-19 and require medical treatment. As a result, any significant increases in healthcare costs as a result of COVID-19 or otherwise could have a material adverse impact on our business, financial condition and results of operations.

37

The COVID-19 pandemic has also resulted in material adverse economic conditions that are impacting, and may continue to impact, our business and the businesses of our suppliers and customers.  Unemployment levels have increased significantly, and the U.S. economy has entered an economic recession.  Some analysts have predicted that the current economic recession may persist for a significant period of time and become severe. Although the extent and duration of the impact of the COVID-19 pandemic on our business and operations and the business and operations of our customers and suppliers remain uncertain, the continued spread of COVID-19, the imposition of related public health measures and travel, health-related, business and other restrictions and the resulting materially adverse economic conditions may materially adversely impact our business, financial condition, results of operations and cash flows. The COVID-19 pandemic has also resulted in severe disruption and volatility in the financial markets, and the market price of our Common Stock on the New York Stock Exchange (“NYSE”) has, at times, declined dramatically.  Depending on the extent and duration of the COVID-19 pandemic, the price of our Common Stock on the NYSE may continue to experience volatility and declines.

As a result of our significant presence in energy producing regions, a prolonged drop in energy prices could negatively impact our financial results.

We have a substantial number of plants and conduct a significant portion of our business in energy producing regions in the U.S. and Canada. In general, we are relatively more dependent on business in these regions than are many of our competitors. For example, the dramatic decrease in oil prices beginning in 2014 directly affected our customers in the oil industry as they curtailed their level of operations, which had a corresponding effect on our customers in businesses which service or supply the oil industry as well as our customers in unrelated businesses located in areas which had benefited from the economic expansion generated by the robust growth driven by the higher oil prices in prior years. As a result, our organic growth in periods following that dramatic decrease in oil prices was negatively impacted by elevated headcount reductions in our wearer base as well as increased lost accounts.  Recent volatility in energy prices have had and may continue to have a significant impact on wearer levels at existing customers in our North American energy-dependent markets. Our operating results are also directly impacted by the costs of the gasoline used to fuel our vehicles and the natural gas used to operate our plants. While it is difficult to quantify the positive and negative impacts on our future financial results from changes in energy prices, in general, we believe that significant decreases in oil and natural gas prices would have an overall negative impact on our results due to cutbacks by our customers both in, and dependent upon, the oil and natural gas industries, which would outweigh the benefits in our operating costs from lower energy costs.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information about repurchases of our equity securities during the thirteen weeks ended May 30, 2020:

	(a) Total Number of Shares of Stock Purchased(1)		(b) Average Price Paid per Share(1)		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs(1)
March 1, 2020 - March 28, 2020		46,667	$	161.65		46,667	$	47,736,951
March 29, 2020 - April 26, 2020		—	$	—		—	$	47,736,951
April 26, 2020 - May 30 , 2020		—	$	—		—	$	47,736,951
		46,667	$	161.65		46,667

(1) On January 2, 2019, our Board of Directors approved a share repurchase program authorizing the Company to repurchase from time to time up to $100.0 million of our outstanding shares of common stock. Repurchases made under the program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, the Company stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program has been funded to date using our available cash and may be suspended or discontinued at any time.

38

In the thirteen weeks ended May 30, 2020, we repurchased 46,667 shares for an average price per share of $161.65.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

39

ITEM 6. EXHIBITS

31.1	Rule 13a-14(a)/15d-14(a) Certification of Steven S. Sintros (filed herewith).
31.2	Rule 13a-14(a)/15d-14(a) Certification of Shane O’Connor (filed herewith).
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.SCH	Inline XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101*) (filed herewith).

40

SIGNATURES

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

		UniFirst Corporation
July 9, 2020	By:	/s/ Steven S. Sintros
		Steven S. Sintros
		President and Chief Executive Officer
July 9, 2020	By:	/s/ Shane O’Connor
		Shane O’Connor
		Senior Vice President and Chief Financial Officer

41

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIES

EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION

302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven S. Sintros, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of UniFirst Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant, and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: July 9, 2020	By:	/s/ Steven S. Sintros
		Steven S. Sintros
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIES

EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION

302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shane O’Connor, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of UniFirst Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant, and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: July 9, 2020	By:	/s/ Shane O’Connor
		Shane O’Connor
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION

906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Steven S. Sintros, President and Chief Executive Officer of UniFirst Corporation (the “Company”), and the Company’s Principal Executive Officer, do hereby certify, to the best of my knowledge, that:

(1) The Company’s Quarterly Report on Form 10-Q for the quarter ended May 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 9, 2020	By:	/s/ Steven S. Sintros
		Steven S. Sintros
		President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION

906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Shane O’Connor, Senior Vice President and Chief Financial Officer of UniFirst Corporation (the “Company”), do hereby certify, to the best of my knowledge, that:

(1) The Company’s Quarterly Report on Form 10-Q for the quarter ended May 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 9, 2020	By:	/s/ Shane O’Connor
		Shane O’Connor
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information - shares	9 Months Ended
	May 30, 2020	Jul. 02, 2020
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	May 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Registrant Name	UNIFIRST CORP
Entity Central Index Key	0000717954
Current Fiscal Year End Date	--08-29
Entity Filer Category	Large Accelerated Filer
Title of 12(b) Security	Common Stock, $0.10 par value per share
Trading Symbol	UNF
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity File Number	001-08504
Entity Tax Identification Number	04-2103460
Entity Address, Address Line One	68 Jonspin Road
Entity Address, City or Town	Wilmington
Entity Address, State or Province	MA
Entity Incorporation, State or Country Code	MA
Entity Address, Postal Zip Code	01887
City Area Code	(978)
Local Phone Number	658-8888
Document Quarterly Report	true
Document Transition Report	false
Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		15,248,511
Class B Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		3,643,009

XML

Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019
Revenues		$ 445,518	$ 453,720	$ 1,375,516	$ 1,329,755
Operating expenses:
Cost of revenues	[1]	303,223	279,900	893,961	838,621
Selling and administrative expenses	[1]	88,405	88,207	272,013	242,487
Depreciation and amortization		26,182	25,401	77,612	75,563
Total operating expenses		417,810	393,508	1,243,586	1,156,671
Operating income		27,708	60,212	131,930	173,084
Other (income) expense:
Interest income, net		(1,054)	(2,293)	(5,590)	(6,007)
Other expense, net		1,556	805	2,623	2,037
Total other income, net		502	(1,488)	(2,967)	(3,970)
Income before income taxes		27,206	61,700	134,897	177,054
Provision for income taxes		5,921	14,480	30,690	43,908
Net income		$ 21,285	$ 47,220	$ 104,207	$ 133,146
Income per share – Diluted:
Common stock (in dollars per share)		$ 1.12	$ 2.46	$ 5.46	$ 6.93
Income allocated to – Basic:
Common stock		$ 21,285	$ 47,220	$ 104,207	$ 133,146
Income allocated to – Diluted:
Common stock		$ 21,285	$ 47,220	$ 104,207	$ 133,146
Weighted average shares outstanding – Basic:
Common stock (in shares)		18,898	19,051	18,928	19,110
Weighted average shares outstanding – Diluted:
Common stock (in shares)		18,995	19,168	19,074	19,220
Common Stock
Income per share – Basic:
Common stock (in dollars per share)		$ 1.17	$ 2.58	$ 5.73	$ 7.25
Income allocated to – Basic:
Common stock		$ 17,871	$ 39,563	$ 87,519	$ 111,626
Weighted average shares outstanding – Basic:
Common stock (in shares)		15,255	15,341	15,285	15,400
Class B Common Stock
Income per share – Basic:
Common stock (in dollars per share)		$ 0.94	$ 2.06	$ 4.58	$ 5.80
Income allocated to – Basic:
Common stock		$ 3,414	$ 7,657	$ 16,688	$ 21,520
Weighted average shares outstanding – Basic:
Common stock (in shares)		3,643	3,710	3,643	3,710

[1] Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets.

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 21,285	$ 47,220	$ 104,207	$ 133,146
Other comprehensive income (loss):
Foreign currency translation adjustments	(3,835)	(2,649)	(3,615)	(3,513)
Pension benefit liabilities			350
Change in fair value of derivatives, net of income taxes	79	184	156	277
Derivative financial instruments reclassified to earnings	(47)	(46)	(107)	(122)
Other comprehensive income (loss)	(3,803)	(2,511)	(3,216)	(3,358)
Comprehensive income	$ 17,482	$ 44,709	$ 100,991	$ 129,788

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Consolidated Balance Sheets - USD ($) $ in Thousands	May 30, 2020	Aug. 31, 2019
Current assets:
Cash, cash equivalents and short-term investments	$ 421,253	$ 385,341
Receivables, less reserves of $17,611 and $9,935	200,110	203,457
Inventories	104,503	100,916
Rental merchandise in service	161,732	184,318
Prepaid taxes	1,713	4,060
Prepaid expenses and other current assets	36,201	35,699
Total current assets	925,512	913,791
Property, plant and equipment, net	584,299	574,509
Goodwill	424,588	401,178
Customer contracts, net	60,061	56,588
Other intangible assets, net	26,868	16,132
Deferred income taxes	458	448
Operating lease right-of-use assets, net	44,670
Other assets	86,817	84,674
Total assets	2,153,273	2,047,320
Current liabilities:
Accounts payable	57,701	77,918
Accrued liabilities	126,342	111,721
Accrued taxes		205
Operating lease liabilities, current	12,191
Total current liabilities	196,234	189,844
Accrued liabilities	119,608	117,074
Accrued and deferred income taxes	98,192	99,172
Operating lease liabilities	31,139
Total liabilities	445,173	406,090
Commitments and contingencies (Note 12)
Shareholders’ equity:
Preferred Stock, $1.00 par value; 2,000,000 shares authorized; no shares issued and outstanding	0	0
Capital surplus	85,572	84,946
Retained earnings	1,657,543	1,588,075
Accumulated other comprehensive loss	(36,904)	(33,688)
Total shareholders’ equity	1,708,100	1,641,230
Total liabilities and shareholders’ equity	2,153,273	2,047,320
Common Stock
Shareholders’ equity:
Common Stock	1,525	1,533
Class B Common Stock
Shareholders’ equity:
Common Stock	$ 364	$ 364

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Consolidated Balance Sheets - Parenthetical - USD ($) $ in Thousands	May 30, 2020	Aug. 31, 2019
Receivables, reserves	$ 17,611	$ 9,935
Preferred stock, par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common Stock
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	15,247,440	15,332,759
Common stock, shares outstanding (in shares)	15,247,440	15,332,759
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	3,643,009	3,643,009
Common stock, shares outstanding (in shares)	3,643,009	3,643,009

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Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands		Total	Common Shares	Class B Common Stock	Common Stock Common Shares	Common Stock Class B Common Stock	Capital Surplus	Retained Earnings	Retained Earnings Common Shares	Retained Earnings Class B Common Stock	Accumulated Other Comprehensive Loss
Balance at beginning of period at Aug. 25, 2018		$ 1,464,967			$ 1,543	$ 371	$ 82,973	$ 1,405,239			$ (25,159)
Balance at beginning of period (in shares) at Aug. 25, 2018			15,431,000	3,710,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		38,320						38,320
Change in fair value of derivatives		88									88
Foreign currency translation		(2,282)									(2,282)
Dividends declared Common Stock			$ (1,736)	$ (334)					$ (1,736)	$ (334)
Share-based compensation, net	[1]	1,042					1,042
Share-based awards exercised, net (in shares)	[2]		2,000
Balance at end of period at Nov. 24, 2018		1,539,498			1,543	371	84,015	1,480,922			(27,353)
Balance at end of period (in shares) at Nov. 24, 2018			15,433,000	3,710,000
Balance at beginning of period at Aug. 25, 2018		1,464,967			1,543	371	82,973	1,405,239			(25,159)
Balance at beginning of period (in shares) at Aug. 25, 2018			15,431,000	3,710,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		133,146
Foreign currency translation		(3,513)
Balance at end of period at May. 25, 2019		1,609,696			1,531	371	84,836	1,551,475			(28,517)
Balance at end of period (in shares) at May. 25, 2019			15,307,000	3,710,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative effect of change in accounting principle, net		39,433						39,433
Balance at beginning of period at Nov. 24, 2018		1,539,498			1,543	371	84,015	1,480,922			(27,353)
Balance at beginning of period (in shares) at Nov. 24, 2018			15,433,000	3,710,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		47,606						47,606
Change in fair value of derivatives		(71)									(71)
Foreign currency translation		1,418									1,418
Dividends declared Common Stock			$ (1,732)	$ (334)					(1,732)	(334)
Share-based compensation, net	[1]	659					659
Share-based awards exercised, net	[2]	26			1		25
Share-based awards exercised, net (in shares)	[2]		12,000
Repurchase of Common Stock		(6,280)			(4)		(245)	(6,031)
Repurchase of common stock (in shares)			(45,000)
Balance at end of period at Feb. 23, 2019		1,580,790			1,540	371	84,454	1,520,431			(26,006)
Balance at end of period (in shares) at Feb. 23, 2019			15,400,000	3,710,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		47,220						47,220
Change in fair value of derivatives		138									138
Foreign currency translation		(2,649)									(2,649)
Dividends declared Common Stock									(1,720)	(334)
Share-based compensation, net	[1]	902					902
Share-based awards exercised, net	[2]	22			1		21
Share-based awards exercised, net (in shares)	[2]		7,000
Repurchase of Common Stock		(14,673)			(10)		(541)	(14,122)
Repurchase of common stock (in shares)			(100,000)
Balance at end of period at May. 25, 2019		1,609,696			1,531	371	84,836	1,551,475			(28,517)
Balance at end of period (in shares) at May. 25, 2019			15,307,000	3,710,000
Balance at beginning of period at Aug. 31, 2019		1,641,230			1,533	364	84,946	1,588,075			(33,688)
Balance at beginning of period (in shares) at Aug. 31, 2019			15,333,000	3,643,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		48,242						48,242
Change in fair value of derivatives		(5)									(5)
Foreign currency translation		989									989
Dividends declared Common Stock			$ (3,825)	$ (729)					(3,825)	(729)
Share-based compensation, net	[2]	1,575					1,575
Share-based awards exercised, net	[1]	(1,496)			2		(1,498)
Share-based awards exercised, net (in shares)	[1]		16,000
Repurchase of Common Stock		(9,973)			(5)		(274)	(9,694)
Repurchase of common stock (in shares)			(51,000)
Balance at end of period at Nov. 30, 2019		1,676,008			1,530	364	84,749	1,622,069			(32,704)
Balance at end of period (in shares) at Nov. 30, 2019			15,298,000	3,643,000
Balance at beginning of period at Aug. 31, 2019		1,641,230			1,533	364	84,946	1,588,075			(33,688)
Balance at beginning of period (in shares) at Aug. 31, 2019			15,333,000	3,643,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		104,207
Foreign currency translation		(3,615)
Pension benefit liabilities		$ 350
Shares repurchased (in shares)		(117,767)
Balance at end of period at May. 30, 2020		$ 1,708,100			1,525	364	85,572	1,657,543			(36,904)
Balance at end of period (in shares) at May. 30, 2020			15,247,000	3,643,000
Balance at beginning of period at Nov. 30, 2019		1,676,008			1,530	364	84,749	1,622,069			(32,704)
Balance at beginning of period (in shares) at Nov. 30, 2019			15,298,000	3,643,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		34,680						34,680
Change in fair value of derivatives		22									22
Foreign currency translation		(769)									(769)
Pension benefit liabilities		350									350
Dividends declared Common Stock			$ (3,835)	$ (729)					(3,835)	(729)
Share-based compensation, net	[2]	1,651					1,651
Share-based awards exercised, net	[1]	(1,710)			1		(1,711)
Share-based awards exercised, net (in shares)	[1]		16,000
Repurchase of Common Stock		(4,230)			(2)		(112)	(4,116)
Repurchase of common stock (in shares)			(21,000)
Balance at end of period at Feb. 29, 2020		1,701,438			1,529	364	84,577	1,648,069			(33,101)
Balance at end of period (in shares) at Feb. 29, 2020			15,293,000	3,643,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income		21,285						21,285
Change in fair value of derivatives		32									32
Foreign currency translation		$ (3,835)									(3,835)
Dividends declared Common Stock			$ (3,797)	$ (729)					$ (3,797)	$ (729)
Shares repurchased (in shares)		(46,667)
Share-based compensation, net	[2]	$ 1,390					1,390
Share-based awards exercised, net	[1]	(142)					(142)
Repurchase of Common Stock		(7,542)			(4)		(253)	(7,285)
Repurchase of common stock (in shares)			(46,000)
Balance at end of period at May. 30, 2020		$ 1,708,100			$ 1,525	$ 364	$ 85,572	$ 1,657,543			$ (36,904)
Balance at end of period (in shares) at May. 30, 2020			15,247,000	3,643,000

[1] These amounts are shown net of the effect of income taxes.

[2] These amounts are shown net of any shares withheld by the Company to satisfy certain tax withholdings obligations in connection with the vesting of certain shares of restricted stock or restricted stock units.

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Consolidated Statements of Shareholders' Equity - Parenthetical - $ / shares			3 Months Ended
	Oct. 23, 2019	Oct. 22, 2019	May 30, 2020	Feb. 29, 2020	Nov. 30, 2019	May 25, 2019	Feb. 23, 2019	Nov. 24, 2018
Common Shares
Dividends declared (in dollars per share)	$ 0.25	$ 0.1125	$ 0.25	$ 0.25	$ 0.25	$ 0.1125	$ 0.1125	$ 0.1125
Class B Common Stock
Dividends declared (in dollars per share)	$ 0.20	$ 0.09	$ 0.20	$ 0.20	$ 0.20	$ 0.0900	$ 0.0900	$ 0.0900

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	May 30, 2020	May 25, 2019
Cash flows from operating activities:
Net income	$ 104,207	$ 133,146
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	77,612	75,563
Amortization of deferred financing costs	84	84
Forgiveness of a liability		(7,346)
Share-based compensation	4,617	4,281
Accretion on environmental contingencies	403	566
Accretion on asset retirement obligations	694	647
Deferred income taxes	81	733
Other	36	(954)
Changes in assets and liabilities, net of acquisitions:
Receivables, less reserves	4,517	(3,117)
Inventories	(3,570)	(4,821)
Rental merchandise in service	23,900	(7,606)
Prepaid expenses and other current assets and Other assets	3,669	(2,346)
Accounts payable	(17,846)	(5,725)
Accrued liabilities	5,246	(9,931)
Prepaid and accrued income taxes	1,782	26,265
Net cash provided by operating activities	205,432	199,439
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired	(41,098)	(2,379)
Capital expenditures, including capitalization of software costs	(91,155)	(88,198)
Proceeds from sale of assets	261	238
Net cash used in investing activities	(131,992)	(90,339)
Cash flows from financing activities:
Proceeds from exercise of share-based awards	75	49
Taxes withheld and paid related to net share settlement of equity awards	(3,423)	(1,678)
Repurchase of Common Stock	(21,745)	(20,953)
Payment of cash dividends	(11,159)	(6,204)
Net cash used in financing activities	(36,252)	(28,786)
Effect of exchange rate changes	(1,276)	(1,416)
Net (decrease) increase in cash, cash equivalents and short-term investments	35,912	78,898
Cash, cash equivalents and short-term investments at beginning of period	385,341	270,512
Cash, cash equivalents and short-term investments at end of period	421,253	349,410
Supplemental disclosure of cash flow information:
Non-cash capital expenditures	$ 7,672	$ 8,114

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Basis of Presentation

9 Months Ended

May 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

1. Basis of Presentation

These Consolidated Financial Statements of UniFirst Corporation (the “Company”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the information furnished reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period.

It is suggested that these Consolidated Financial Statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2019. There have been no material changes in the accounting policies followed by the Company during the current fiscal year other than the adoption of recent accounting pronouncements discussed in Note 2. Results for an interim period are not indicative of any future interim periods or for an entire fiscal year.

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Recent Accounting Pronouncements

9 Months Ended

May 30, 2020

Accounting Policies [Abstract]

Recent Accounting Pronouncements

2. Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued updated guidance which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The Company adopted this standard on September 1, 2019 using the modified retrospective adoption method. The standard provides a number of optional practical expedients in transition and the Company has elected certain of these practical expedients upon adoption of this standard. Specifically, the Company elected the package of practical expedients permitted under the standard, which allows a lessee to carry forward its population of existing leases, the classification of each lease, as well as the treatment of initial direct lease costs as of the period of adoption. The Company also elected the practical expedient related to lease and non-lease components, as an accounting policy election which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. In addition, the Company elected the short-term lease recognition exemption for all leases with a term of 12 months or less, which means it will not recognize right-of-use assets or lease liabilities for these leases. The adoption of this standard resulted in the Company recognizing right-of-use assets, net of $48.7 million and corresponding lease liabilities of $46.2 million and reductions of prepaid expenses and other current assets of $1.2 million and $1.3 million, respectively. The adoption of this standard did not have a material impact on the Company's consolidated statement of income or consolidated statement of cash flows.

In June 2016, the FASB issued updated guidance that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company expects that adoption of this guidance will not have a material impact on its financial statements and related disclosures.

In August 2018, the FASB issued updated guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance will be effective for annual reporting periods, and any interim periods within those annual periods, ending after December 15, 2020 and will be required to be applied on a retrospective basis with early adoption permitted. Accordingly, the standard will be effective for the Company on August 29, 2021. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

In August 2018, the FASB issued guidance that addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. The amendments in this update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

In December 2019, the FASB issued updated guidance to simplify accounting for income taxes by removing certain exceptions and improving the consistent application of and simplifying U.S. GAAP in other areas of this topic. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2020 with early adoption permitted. Accordingly, the guidance will be effective for the Company on August 29, 2021. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

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Revenue Recognition

9 Months Ended

May 30, 2020

Revenue From Contract With Customer [Abstract]

Revenue Recognition

3. Revenue Recognition

The following table presents the Company’s revenues for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019, respectively, disaggregated by service type:

	Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	May 30, 2020					May 25, 2019					May 30, 2020					May 25, 2019
(In thousands, except percentages)	Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues
Core Laundry Operations	$	388,411		87.2	%	$	399,781		88.1	%	$	1,216,901		88.5	%	$	1,184,666		89.1	%
Specialty Garments		36,163		8.1	%		37,313		8.2	%		105,545		7.7	%		101,506		7.6	%
First Aid		20,944		4.7	%		16,626		3.7	%		53,070		3.9	%		43,583		3.3	%
Total Revenues	$	445,518		100.0	%	$	453,720		100.0	%	$	1,375,516		100.0	%	$	1,329,755		100.0	%

See Note 16 “Segment Reporting” for additional details of segment definitions.

Revenue Recognition Policy

During the thirteen weeks ended May 30, 2020 and May 25, 2019, approximately 85.7% and 91.0%, respectively, of the Company’s revenues were derived from fees for route servicing of Core Laundry Operations, Specialty Garments, and First Aid customers performed by the Company’s employees at the customer’s location of business. During the thirty-nine weeks ended May 30, 2020 and May 25, 2019, approximately 89.2% and 91.0%, respectively, of the Company’s revenues were derived from fees for route servicing of Core Laundry Operations, Specialty Garments, and First Aid customers performed by the Company’s employees at the customer’s location of business. Revenues from the Company’s route servicing customer contracts represent a single performance obligation. The Company recognizes these revenues over time as services are performed based on the nature of services provided and contractual rates (input method). Certain of the Company’s customer contracts, primarily within the Company’s Core Laundry Operations, include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration due to customer-based performance metrics specified within the contract. Specifically, some contracts contain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company’s actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period. When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company’s performance period generally corresponds with the monthly invoice period. No significant constraints on the Company’s revenue recognition were applied during the thirteen and thirty-nine weeks ended May 30, 2020 or May 25, 2019. The Company reassesses these estimates during each reporting period. The Company maintains a liability for these discounts and rebates within accrued liabilities on the consolidated balance sheets. Variable consideration also includes consideration paid to a customer at the beginning of a contract. The Company capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue in accordance with the updated accounting guidance for revenue recognition. These assets are included in other assets on the consolidated balance sheets.

Costs to Obtain a Contract

The Company defers commission expenses paid to its employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. The Company reviews the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when the Company expects to recognize the expense. The current portion is included in prepaid expenses and other current assets and the non-current portion is included in other assets on the Company’s consolidated balance sheets. As of May 30, 2020, the current and non-current assets related to deferred commissions totaled $13.1 million and $54.9 million, respectively. As of August 31, 2019, the current and non-current assets related to deferred commissions totaled $12.4 million and $50.3 million, respectively. During the thirteen weeks ended May 30, 2020 and May 25, 2019, the Company recorded $3.4 million and $3.0 million, respectively, of amortization expense related to deferred commissions. During the thirty-nine weeks ended May 30, 2020 and May 25, 2019, the Company recorded $10.2 million and $8.7 million, respectively, of amortization expense related to deferred commissions. This expense is classified in selling and administrative expenses on the consolidated statements of income.

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Acquisitions

9 Months Ended

May 30, 2020

Business Combinations [Abstract]

Acquisitions

4. Acquisitions

During the thirty-nine weeks ended May 30, 2020, the Company completed 8 business acquisitions with an aggregate purchase price of approximately $41.3 million, which includes $38.8 million related to the acquisition of a Missouri-based industrial laundry business (the “Missouri Acquisition”). The Company has allocated $4.4 million, $23.5 million and $10.9 million to tangible assets, goodwill and intangibles, respectively, in the preliminary purchase accounting for the Missouri Acquisition. The initial allocations of the purchase prices are incomplete with respect to certain assets acquired. The results of operations of these acquisitions have been included in the Company’s consolidated financial results since their respective acquisition dates. These acquisitions were not significant in relation to the Company’s consolidated financial results and, therefore, pro-forma financial information has not been presented.

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Fair Value Measurements

9 Months Ended

May 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. Fair Value Measurements

The assets or liabilities measured at fair value on a recurring basis are summarized in the tables below (in thousands):

	As of May 30, 2020
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents	$	195,978	$	—	$	—	$	195,978
Pension plan assets		—		4,342		—		4,342
Foreign currency forward contracts		—		323		—		323
Total assets at fair value	$	195,978	$	4,665	$	—	$	200,643

	As of August 31, 2019
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents	$	214,038	$	—	$	—	$	214,038
Pension plan assets		—		4,603		—		4,603
Foreign currency forward contracts		—		254		—		254
Total assets at fair value	$	214,038	$	4,857	$	—	$	218,895

The Company’s cash equivalents listed above represent money market securities and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments.

The Company’s pension plan assets listed above represent guaranteed deposit accounts that are maintained and operated by Prudential Retirement Insurance and Annuity Company (“PRIAC”). All assets are merged with the general assets of PRIAC and are invested predominantly in privately placed securities and mortgages. At the beginning of each calendar year, PRIAC notifies the Company of the annual rates of interest which will be applied to the amounts held in the guaranteed deposit account during the next calendar year. In determining the interest rate to be applied, PRIAC considers the investment performance of the underlying assets of the prior year; however, regardless of the investment performance the Company is contractually guaranteed a minimum rate of return. As such, the Company’s pension plan assets are included within Level 2 of the fair value hierarchy.

The Company’s foreign currency forward contracts represent contracts the Company has entered into to exchange Canadian dollars for U.S. dollars at fixed exchange rates in order to manage its exposure related to the certain forecasted Canadian dollar denominated sales of one of its subsidiaries. These contracts are included in prepaid expenses and other current assets and other long-term assets as of  May 30, 2020 and August 31, 2019. The fair value of the forward contracts is based on similar exchange traded derivatives and are, therefore, included within Level 2 of the fair value hierarchy.

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Derivative Instruments and Hedging Activities

9 Months Ended

May 30, 2020

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

6. Derivative Instruments and Hedging Activities

As of May 30, 2020, the Company had forward contracts with a notional value of approximately $5.9 million CAD outstanding and recorded the fair value of the contracts of $0.1 million in other long-term assets and $0.2 million in prepaid expenses and other current assets with a corresponding decrease in accumulated other comprehensive loss of $0.2 million, which was recorded net of tax. During both the thirteen and thirty-nine weeks ended May 30, 2020, the Company reclassified $0.1 million from accumulated other comprehensive income to revenue, related to the derivative financial instruments. The gain on these forward contracts that resulted in a decrease to accumulated other comprehensive loss as of May 30, 2020 is expected to be reclassified to revenues prior to its maturity on February 25, 2022.

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Employee Benefit Plans

9 Months Ended

May 30, 2020

Postemployment Benefits [Abstract]

Employee Benefit Plans

7. Employee Benefit Plans

Defined Contribution Retirement Savings Plan

The Company has a defined contribution retirement savings plan with a 401(k) feature for all eligible U.S. and Canadian employees not under collective bargaining agreements. The Company matches a portion of the employee’s contribution and may make an additional contribution at its discretion. Contributions charged to expense under the plan for the thirteen weeks ended May 30, 2020 and May 25, 2019 were $1.9 million and $5.8 million, respectively. Contributions charged to expense under the plan for the thirty-nine weeks ended May 30, 2020 and May 25, 2019 were $12.4 million and $14.6 million, respectively.

Pension Plans and Supplemental Executive Retirement Plans

The Company maintains an unfunded Supplemental Executive Retirement Plan for certain eligible employees of the Company and two frozen non-contributory defined benefit pension plans. The amounts charged to expense related to these plans for the thirteen weeks ended May 30, 2020 and May 25, 2019 were $0.7 million and $0.5 million, respectively. The amounts charged to expense related to these plans for the thirty-nine weeks ended May 30, 2020 and May 25, 2019 were $0.7 million and $1.6 million, respectively.

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Income Per Share

9 Months Ended

May 30, 2020

Earnings Per Share [Abstract]

Income Per Share

8. Income Per Share

The Company calculates income per share by allocating income to its unvested participating securities as part of its income per share calculations. The following table sets forth the computation of basic income per share using the two-class method for amounts attributable to the Company’s shares of Common Stock and Class B Common Stock (in thousands, except per share data):

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	May 30, 2020		May 25, 2019		May 30, 2020		May 25, 2019
Net income available to shareholders	$	21,285	$	47,220	$	104,207	$	133,146
Allocation of net income for Basic:
Common Stock	$	17,871	$	39,563	$	87,519	$	111,626
Class B Common Stock		3,414		7,657		16,688		21,520
	$	21,285	$	47,220	$	104,207	$	133,146
Weighted average number of shares for Basic:
Common Stock		15,255		15,341		15,285		15,400
Class B Common Stock		3,643		3,710		3,643		3,710
		18,898		19,051		18,928		19,110
Income per share for Basic:
Common Stock	$	1.17	$	2.58	$	5.73	$	7.25
Class B Common Stock	$	0.94	$	2.06	$	4.58	$	5.80

The Company is required to calculate diluted income per share for Common Stock using the more dilutive of the following two methods:

• The treasury stock method; or

• The two-class method assuming a participating security is not exercised or converted.

For the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019, the Company’s diluted income per share assumes the conversion of all vested Class B Common Stock into Common Stock and uses the two-class method for its unvested participating shares. The following tables set forth the computation of diluted income per share of Common Stock for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019 (in thousands, except per share data):

	Thirteen weeks ended May 30, 2020						Thirty-nine weeks ended May 30, 2020
	Earnings to Common Shareholders		Common Shares		Income Per Share		Earnings to Common Shareholders		Common Shares		Income Per Share
As reported - Basic	$	17,871		15,255	$	1.17	$	87,519		15,285	$	5.73
Add: effect of dilutive potential common shares
Share-Based Awards		—		97				—		146
Class B Common Stock		3,414		3,643				16,688		3,643
As reported – Diluted	$	21,285		18,995	$	1.12	$	104,207		19,074	$	5.46

	Thirteen Weeks Ended May 25, 2019						Thirty-Nine Weeks Ended May 25, 2019
	Earnings to Common Shareholders		Common Shares		Income Per Share		Earnings to Common Shareholders		Common Shares		Income Per Share
As reported - Basic	$	39,563		15,341	$	2.58	$	111,626		15,400	$	7.25
Add: effect of dilutive potential common shares
Share-Based Awards		—		117				—		110
Class B Common Stock		7,657		3,710				21,520		3,710
As reported – Diluted	$	47,220		19,168	$	2.46	$	133,146		19,220	$	6.93

Share-based awards that would result in the issuance of 7,328 and 2,724 shares, respectively, of Common Stock were excluded from the calculation of diluted income per share for the thirteen and thirty-nine weeks ended May 30, 2020 because they were anti-dilutive. Share-based awards that would result in the issuance of 797 and 909 shares, respectively, of Common Stock were excluded from the calculation of diluted income per share for the thirteen and thirty-nine weeks ended May 25, 2019 because they were anti-dilutive.

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Inventories

9 Months Ended

May 30, 2020

Inventory Disclosure [Abstract]

Inventories

9. Inventories

Inventories are stated at the lower of cost or net realizable value, net of any reserve for excess and obsolete inventory. Work-in-process and finished goods inventories consist of materials, labor and manufacturing overhead. Judgments and estimates are used in determining the likelihood that new goods on hand can be sold to customers or used in rental operations. Historical inventory usage and current revenue trends are considered in estimating both excess and obsolete inventories. If actual product demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required. The Company uses the first-in, first-out (“FIFO”) method to value its inventories.

The components of inventory as of May 30, 2020 and August 31, 2019 were as follows (in thousands):

	May 30, 2020		August 31, 2019
Raw materials	$	18,287	$	23,000
Work in process		2,908		2,864
Finished goods		83,308		75,052
Total inventories	$	104,503	$	100,916

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Goodwill and Other Intangible Assets

9 Months Ended

May 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

10. Goodwill and Other Intangible Assets

When the Company acquires a business, the amount assigned to the tangible assets and liabilities and intangible assets acquired is based on their respective fair values determined as of the acquisition date. The excess of the purchase price over the tangible assets and liabilities and intangible assets is recorded as goodwill.

The changes in the carrying amount of goodwill are as follows (in thousands):

Balance as of August 31, 2019	$	401,178
Goodwill recorded during the period		23,544
Other		(134	)
Balance as of May 30, 2020	$	424,588

Despite the significant excess fair value identified in the Company’s fiscal 2019 impairment assessment, the Company determined that its reduced cash flow projections and the significant decline in its market capitalization as a result of the COVID-19 pandemic indicated that an impairment loss may have been incurred as of May 30, 2020. Therefore, the Company qualitatively assessed whether it was more likely than not that the goodwill in each of its reporting units was impaired as of May 30, 2020. The Company reviewed its previous forecasts and assumptions based on its current projections, which are subject to various risks and uncertainties, including: (1) forecasted revenues, expenses and cash flows, including the duration and extent of the impact of the COVID-19 pandemic on the Company’s business and (2) current discount rates, (3) the reduction in the Company’s market capitalization, (4) observable market transactions, (5) changes to the regulatory environment and (6) the nature and amount of government support that will be provided.

Based on the Company’s interim impairment assessment as of May 30, 2020, the Company has determined that its goodwill was not impaired. However, the Company is unable to predict how long these conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on its business.

Intangible assets, net in the Company’s accompanying Consolidated Balance Sheets are as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
May 30, 2020
Customer contracts	$	233,922	$	173,861	$	60,061
Software		63,011		37,971		25,040
Other intangible assets		35,567		33,739		1,828
	$	332,500	$	245,571	$	86,929
August 31, 2019
Customer contracts	$	221,306	$	164,718	$	56,588
Software		48,838		34,813		14,025
Other intangible assets		35,063		32,956		2,107
	$	305,207	$	232,487	$	72,720

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Asset Retirement Obligations

9 Months Ended

May 30, 2020

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

11. Asset Retirement Obligations

The Company recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Company continues to depreciate, on a straight-line basis, the amount added to property, plant and equipment and recognizes accretion expense in connection with the discounted liability over the various remaining lives which range from approximately 1 to 24 years.

A reconciliation of the Company’s asset retirement liability for the thirty-nine weeks ended May 30, 2020 was as follows (in thousands):

	May 30, 2020
Beginning balance as of August 31, 2019	$	12,727
Accretion expense		694
Effect of exchange rate changes		34
Balance as of May 30, 2020	$	13,455

Asset retirement obligations are included in long-term accrued liabilities in the accompanying Consolidated Balance Sheets.

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Commitments and Contingencies

9 Months Ended

May 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

The Company and its operations are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundries currently use and must dispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. The Company is attentive to the environmental concerns surrounding the disposal of these materials and has, through the years, taken measures to avoid their improper disposal. Over the years, the Company has settled, or contributed to the settlement of, actions or claims brought against the Company relating to the disposal of hazardous materials and there can be no assurance that the Company will not have to expend material amounts to remediate the consequences of any such disposal in the future.

U.S. GAAP requires that a liability for contingencies be recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Significant judgment is required to determine the existence of a liability, as well as the amount to be recorded. The Company regularly consults with attorneys and outside consultants in its consideration of the relevant facts and circumstances before recording a contingent liability. Changes in enacted laws, regulatory orders or decrees, management’s estimates of costs, risk-free interest rates, insurance proceeds, participation by other parties, the timing of payments, the input of the Company’s attorneys and outside consultants or other factual circumstances could have a material impact on the amounts recorded for environmental and other contingent liabilities.

Under environmental laws, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on, or in, or emanating from, such property, as well as related costs of investigation and property damage. Such laws often impose liability without regard to whether the owner or lessee knew of, or was responsible for the presence of such hazardous or toxic substances. There can be no assurances that acquired or leased locations have been operated in compliance with environmental laws and regulations or that future uses or conditions will not result in the imposition of liability upon the Company under such laws or expose the Company to third-party actions such as tort suits. The Company continues to address environmental conditions under terms of consent orders negotiated with the applicable environmental authorities or otherwise with respect to sites located in or related to Woburn, Massachusetts, Somerville, Massachusetts, Springfield, Massachusetts, Uvalde, Texas, Stockton, California, two sites related to former operations in Williamstown, Vermont, as well as sites located in Goldsboro, North Carolina and Wilmington, North Carolina.

The Company has accrued certain costs related to the sites described above as it has been determined that the costs are probable and can be reasonably estimated. The Company has potential exposure related to a parcel of land (the “Central Area”) related to the Woburn, Massachusetts site mentioned above. Currently, the consent decree for the Woburn site does not define or require any remediation work in the Central Area. The United States Environmental Protection Agency (the “EPA”) has provided the Company and other signatories to the consent decree with comments on the design and implementation of groundwater and soil remedies at the Woburn site and investigation of environmental conditions in the Central Area. The Company, and other signatories, have implemented and proposed to do additional work at the Woburn site but many of the EPA’s comments remain to be resolved. The Company has accrued costs to perform certain work responsive to the EPA’s comments. Additionally, the Company has implemented mitigation measures and continues to monitor environmental conditions at the Somerville, Massachusetts site. The Company has received and responded to a notice of audit findings from the Massachusetts Department of Environmental Protection concerning a regulatory submittal that the Company made in 2009 for a portion of the site. The Company has received demands from the local transit authority for reimbursement of certain costs associated with its construction of a new municipal transit station in the area of the Somerville site. This station is part of an ongoing extension of the transit system. The Company has reserved for costs in connection with this matter; however, in light of the uncertainties associated with this matter, these costs and the related reserve may change.

The Company routinely reviews and evaluates sites that may require remediation and monitoring and determines its estimated costs based on various estimates and assumptions. These estimates are developed using its internal sources or by third party environmental engineers or other service providers. Internally developed estimates are based on:

• Management’s judgment and experience in remediating and monitoring the Company’s sites;

• Information available from regulatory agencies as to costs of remediation and monitoring;  

• The number, financial resources and relative degree of responsibility of other potentially responsible parties (“PRPs”) who may be liable for remediation and monitoring of a specific site; and

• The typical allocation of costs among PRPs.

There is usually a range of reasonable estimates of the costs associated with each site. In accordance with U.S. GAAP, the Company’s accruals reflect the amount within the range that it believes is the best estimate or the low end of a range of estimates if no point within the range is a better estimate. Where it believes that both the amount of a particular liability and the timing of the payments are reliably determinable, the Company adjusts the cost in current dollars using a rate of 3% for inflation until the time of expected payment and discounts the cost to present value using current risk-free interest rates. As of May 30, 2020, the risk-free interest rates utilized by the Company ranged from 0.7% to 1.4%.

For environmental liabilities that have been discounted, the Company includes interest accretion, based on the effective interest method, in selling and administrative expenses on the accompanying Consolidated Statements of Income. The changes to the Company’s environmental liabilities for the thirty-nine weeks ended May 30, 2020 were as follows (in thousands):

	May 30, 2020
Beginning balance as of August 31, 2019	$	27,718
Revisions in estimates		1,200
Costs incurred for which reserves have been provided		(961	)
Insurance proceeds		90
Interest accretion		403
Changes in discount rates		1,426
Balance as of May 30, 2020	$	29,876

Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of May 30, 2020, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below.

(In thousands)	2020			2021			2022			2023			2024			Thereafter			Total
Estimated costs – current dollars	$	10,184		$	2,186		$	1,353		$	1,091		$	1,058		$	12,032		$	27,904
Estimated insurance proceeds		(69	)		(173	)		(159	)		(173	)		(159	)		(693	)		(1,426	)
Net anticipated costs	$	10,115		$	2,013		$	1,194		$	918		$	899		$	11,339		$	26,478
Effect of inflation																				7,656
Effect of discounting																				(4,258	)
Balance as of May 30, 2020																			$	29,876

Estimated insurance proceeds are primarily received from an annuity received as part of a legal settlement with an insurance company. Annual proceeds of approximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to former operations in Williamstown, Vermont. Annual proceeds received but not expended in the current year accumulate in this account and may be used in future years for costs related to this site through the year 2027. As of May 30, 2020, the balance in this escrow account, which is held in a trust and is not recorded in the Company’s accompanying Consolidated Balance Sheet, was approximately $4.5 million. Also included in estimated insurance proceeds are amounts the Company is entitled to receive pursuant to legal settlements as reimbursements from three insurance companies for estimated costs at the site in Uvalde, Texas.

The Company’s nuclear garment decontamination facilities are licensed by the Nuclear Regulatory Commission or, in certain cases, by the applicable state agency, and are subject to regulation by federal, state and local authorities. There can be no assurance that such regulation will not lead to material disruptions in the Company’s garment decontamination business.

During the year ended August 26, 2017 (“fiscal 2017”), the Company recorded a pre-tax non-cash impairment charge of $55.8 million once it was determined that it was not probable that the version of the Customer Relationship Management (“CRM”) system that was being developed would be completed and placed into service. On December 28, 2018, the Company entered into a settlement agreement with its lead contractor for the version of the CRM system with respect to which the Company recorded the impairment charge. As part of the settlement agreement, the Company recorded in the thirteen weeks ended February 23, 2019 a total gain of $21.1 million as a reduction of selling and administrative expenses, which includes the Company’s receipt of a one-time cash payment in the amount of $13.0 million as well as the forgiveness of amounts previously due the contractor. The Company also received hardware and related maintenance service with a fair value of $0.8 million as part of the settlement.  

From time to time, the Company is also subject to legal proceedings and claims arising from the conduct of its business operations, including personal injury claims, customer contract matters, employment claims and environmental matters as described above.

While it is impossible for the Company to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits and environmental contingencies, the Company believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance have been properly accrued in accordance with U.S. GAAP. It is possible, however, that the future financial position and/or results of operations for any particular future period could be materially affected by changes in the Company’s assumptions or strategies related to these contingencies or changes out of the Company’s control.

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Income Taxes

9 Months Ended

May 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

In accordance with ASC 740, Income Taxes (“ASC 740”), each interim period is considered integral to the annual period and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its annual effective tax rate estimated for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, adjusted for discrete taxable events that occur during the interim period.

Effective tax rate

The Company’s effective tax rate for the thirteen weeks ended May 30, 2020 was 21.8% as compared to 23.5% for the corresponding period in the prior year. The Company’s effective tax rate for the thirty-nine weeks ended May 30, 2020 was 22.8% as compared to 24.8% for the corresponding period in the prior year. The decrease in the effective tax rate in the thirteen and thirty-nine weeks ended May 30, 2020 was primarily due to the benefit resulting from the release of certain tax reserves and to the tax benefit related to the exercise of stock appreciation rights. There was a $0.4 million and $1.8 million discrete tax benefit resulting from the release of certain tax reserves and a $0.5 million and $1.9 million discrete tax benefit related to the exercise of stock appreciation rights during the thirteen and thirty-nine weeks ended May 30, 2020, respectively.

Uncertain tax positions

The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense, which is consistent with the recognition of these items in prior reporting periods. During the thirteen weeks ended May 30, 2020, there was a decrease of $0.4 million in unrecognized tax benefits to the Company. During the thirty-nine weeks ended May 30, 2020, there was a decrease in unrecognized tax benefits of $1.8 million due to a release of tax reserves.

All U.S. and Canadian federal income tax statutes have lapsed for filings up to and including fiscal years 2015 and 2012, respectively. With a few exceptions, the Company is no longer subject to state and local income tax examinations for periods prior to fiscal 2015. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.

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Long-Term Debt

9 Months Ended

May 30, 2020

Debt Disclosure [Abstract]

Long-Term Debt

14. Long-Term Debt

The Company has a $250 million unsecured revolving credit agreement (the “Credit Agreement”) with a syndicate of banks, which matures on April 11, 2021. Under the Credit Agreement, the Company is able to borrow funds at variable interest rates based on, at its election, the Eurodollar rate or a base rate, plus in each case a spread based on the Company’s consolidated funded debt ratio. Availability of credit requires compliance with certain financial and other covenants, including a maximum consolidated funded debt ratio and minimum consolidated interest coverage ratio as defined in the Credit Agreement. The Company tests its compliance with these financial covenants on a fiscal quarterly basis. As of May 30, 2020, the interest rates applicable to the Company’s borrowings under the Credit Agreement would be calculated as LIBOR plus 75 basis points at the time of the respective borrowing. As of May 30, 2020, the Company had no outstanding borrowings and had outstanding letters of credit amounting to $70.8 million, leaving $179.2 million available for borrowing under the Credit Agreement.

As of May 30, 2020, the Company was in compliance with all covenants under the Credit Agreement.

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Accumulated Other Comprehensive Loss

9 Months Ended

May 30, 2020

Stockholders Equity Note [Abstract]

Accumulated Other Comprehensive Loss

15. Accumulated Other Comprehensive Loss

The changes in each component of accumulated other comprehensive loss, net of tax, for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019 were as follows (in thousands):

	Thirteen Weeks Ended May 30, 2020
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Beginning balance as of February 29, 2020	$	(24,420	)	$	(8,889	)	$	208		$	(33,101	)
Other comprehensive income (loss) before reclassification		(3,835	)		—			79			(3,756	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(47	)		(47	)
Net current period other comprehensive (loss) income		(3,835	)		—			32			(3,803	)
Ending balance as of May 30, 2020	$	(28,255	)	$	(8,889	)	$	240		$	(36,904	)

	Thirty-nine weeks ended May 30, 2020
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Balance as of August 31, 2019	$	(24,640	)	$	(9,239	)	$	191		$	(33,688	)
Other comprehensive (loss) income before reclassification		(3,615	)		—			156			(3,459	)
Amounts reclassified from accumulated other    comprehensive loss		—			350			(107	)		243
Net current period other comprehensive (loss) income		(3,615	)		350			49			(3,216	)
Ending balance as of May 30, 2020	$	(28,255	)	$	(8,889	)	$	240		$	(36,904	)

	Thirteen Weeks Ended May 25, 2019
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Beginning balance as of February 23, 2019	$	(21,980	)	$	(4,135	)	$	109		$	(26,006	)
Other comprehensive (loss) income before reclassification		(2,649	)		—			184			(2,465	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(46	)		(46	)
Net current period other comprehensive (loss) income		(2,649	)		—			138			(2,511	)
Ending balance as of May 25, 2019	$	(24,629	)	$	(4,135	)	$	247		$	(28,517	)

	Thirty-nine weeks ended May 25, 2019
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Balance as of August 25, 2018	$	(21,116	)	$	(4,135	)	$	92		$	(25,159	)
Other comprehensive (loss) income before reclassification		(3,513	)		—			277			(3,236	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(122	)		(122	)
Net current period other comprehensive (loss) income		(3,513	)		—			155			(3,358	)
Ending balance as of May 25, 2019	$	(24,629	)	$	(4,135	)	$	247		$	(28,517	)

(1) Amounts are shown net of tax.  

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the thirty-nine weeks ended May 30, 2020 and May 25, 2019 were as follows (in thousands):

	Thirteen weeks ended						Thirty-nine weeks ended
	May 30, 2020			May 25, 2019			May 30, 2020			May 25, 2019
Pension benefit liabilities (net):
Reclassification to income statement (a)	$	—		$	—		$	350		$	—
Total, net of tax	$	—			—		$	350			—
Derivative financial instruments, net:
Forward contracts (b)		(47	)		(46	)		(107	)		(122	)
Total, net of tax		(47	)		(46	)		(107	)		(122	)
Total amounts reclassified, net of tax	$	(47	)	$	(46	)	$	243		$	(122	)

(a) Amounts included in selling and administrative expenses in the accompanying Consolidated Statements of Income.

(b) Amounts included in revenues in the accompanying Consolidated Statements of Income.  

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Segment Reporting

9 Months Ended

May 30, 2020

Segment Reporting [Abstract]

Segment Reporting

16. Segment Reporting

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Company’s chief executive officer. The Company has six operating segments based on the information reviewed by its chief executive officer: U.S. Rental and Cleaning, Canadian Rental and Cleaning, Manufacturing (“MFG”), Corporate, Specialty Garments and First Aid. The U.S. Rental and Cleaning and Canadian Rental and Cleaning operating segments have been combined to form the U.S. and Canadian Rental and Cleaning reporting segment, and as a result, the Company has five reporting segments.

The U.S. and Canadian Rental and Cleaning reporting segment purchases, rents, cleans, delivers and sells uniforms and protective clothing and non-garment items in the United States and Canada. The laundry locations of the U.S. and Canadian Rental and Cleaning reporting segment are referred to by the Company as “industrial laundries” or “industrial laundry locations.”

The MFG operating segment designs and manufactures uniforms and non-garment items primarily for the purpose of providing these goods to the U.S. and Canadian Rental and Cleaning reporting segment. MFG revenues are primarily generated when goods are shipped from the Company’s manufacturing facilities, or its subcontract manufacturers, to other Company locations. These intercompany revenues are recorded at a transfer price which is typically in excess of the actual manufacturing cost. Manufactured products are carried in inventory until placed in service at which time they are amortized at this transfer price. On a consolidated basis, intercompany revenues and income are eliminated and the carrying value of inventories and rental merchandise in service is reduced to the manufacturing cost. Income before income taxes from MFG net of the intercompany MFG elimination offsets the merchandise amortization costs incurred by the U.S. and Canadian Rental and Cleaning reporting segment as the merchandise costs of this reporting segment are amortized and recognized based on inventories purchased from MFG at the transfer price which is above the Company’s manufacturing cost.

The Corporate operating segment consists of costs associated with the Company’s distribution center, sales and marketing, information systems, engineering, procurement, supply chain, accounting and finance, human resources, other general and administrative costs and interest expense. The revenues generated from the Corporate operating segment represent certain direct sales made by the Company directly from its distribution center. The products sold by this operating segment are the same products rented and sold by the U.S. and Canadian Rental and Cleaning reporting segment. In the table below, no assets or capital expenditures are presented for the Corporate operating segment because no assets are allocated to this operating segment in the information reviewed by the chief executive officer. However, depreciation and amortization expense related to certain assets are reflected in operating income and income before income taxes for the Corporate operating segment. The assets that give rise to this depreciation and amortization are included in the total assets of the U.S. and Canadian Rental and Cleaning reporting segment as this is how they are tracked and reviewed by the Company. The majority of expenses accounted for within the Corporate segment relate to costs of the U.S. and Canadian Rental and Cleaning segment, with the remainder of the costs relating to the Specialty Garment and First Aid segments.

The Specialty Garments operating segment purchases, rents, cleans, delivers and sells, specialty garments and non-garment items primarily for nuclear and cleanroom applications and provides cleanroom cleaning services at limited customer locations. The First Aid operating segment sells first aid cabinet services and other safety supplies, provides certain safety training, as well as maintains wholesale distribution and pill packaging operations.

The Company refers to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as its “Core Laundry Operations,” which is included as a subtotal in the following table (in thousands):

Thirteen weeks ended	U.S. and Canadian Rental and Cleaning			MFG		Net Interco MFG Elim			Corporate			Subtotal Core Laundry Operations			Specialty Garments		First Aid		Total
May 30, 2020
Revenues	$	362,288		$	44,949	$	(44,949	)	$	26,123		$	388,411		$	36,163	$	20,944	$	445,518
Operating income (loss)	$	42,994		$	13,226	$	5,398		$	(41,927	)	$	19,691		$	6,380	$	1,637	$	27,708
Interest income, net	$	(865	)	$	—	$	—		$	(189	)	$	(1,054	)	$	—	$	—	$	(1,054	)
Income (loss) before taxes	$	43,856		$	13,344	$	5,398		$	(42,543	)	$	20,055		$	5,514	$	1,637	$	27,206
May 25, 2019
Revenues	$	391,151		$	58,596	$	(58,596	)	$	8,630		$	399,781		$	37,313	$	16,626	$	453,720
Operating income (loss)	$	70,474		$	18,684	$	3,115		$	(38,830	)	$	53,443		$	5,368	$	1,401	$	60,212
Interest income, net	$	(1,008	)	$	—	$	—		$	(1,285	)	$	(2,293	)	$	—	$	—	$	(2,293	)
Income (loss) before taxes	$	71,480		$	18,606	$	3,116		$	(37,975	)	$	55,227		$	5,072	$	1,401	$	61,700

Thirty-nine weeks ended
May 30, 2020
Revenues	$	1,173,252		$	163,620	$	(163,620	)	$	43,649		$	1,216,901		$	105,545	$	53,070	$	1,375,516
Operating income (loss)	$	178,289		$	52,486	$	5,965		$	(124,884	)	$	111,856		$	15,886	$	4,188	$	131,930
Interest income, net	$	(2,965	)	$	—	$	—		$	(2,625	)	$	(5,590	)	$	—	$	—	$	(5,590	)
Income (loss) before taxes	$	181,232		$	52,393	$	5,965		$	(123,852	)	$	115,738		$	14,971	$	4,188	$	134,897
May 25, 2019
Revenues	$	1,157,467		$	187,120	$	(187,120	)	$	27,199		$	1,184,666		$	101,506	$	43,583	$	1,329,755
Operating income (loss)	$	189,807		$	63,576	$	415		$	(96,460	)	$	157,338		$	12,073	$	3,673	$	173,084
Interest income, net	$	(3,113	)	$	—	$	—		$	(2,894	)	$	(6,007	)	$	—	$	—	$	(6,007	)
Income (loss) before taxes	$	192,899		$	63,322	$	415		$	(94,710	)	$	161,926		$	11,455	$	3,673	$	177,054

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Shares Repurchased and Dividends

9 Months Ended

May 30, 2020

Equity [Abstract]

Shares Repurchased and Dividends

17. Shares Repurchased and Dividends

On October 23, 2019, the Company announced that it would be raising its quarterly dividend to $0.25 per share for Common Stock and to $0.20 per share for Class B Common Stock, up from $0.1125 and $0.09 per share, respectively. The amount and timing of any dividend payment is subject to the approval of the Board of Directors each quarter.

On January 2, 2019, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase from time to time up to $100.0 million of its outstanding shares of Common Stock. Repurchases made under the program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, the Company stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program will be funded using the Company’s available cash or capacity under its Credit Agreement and may be suspended or discontinued at any time. As of May 30, 2020, the Company had repurchased a total of 314,917 shares for an average price per share of $165.96 under the share repurchase program using cash on hand. During the thirteen and thirty-nine weeks ended May 30, 2020, the Company repurchased 46,667 and 117,767 shares, respectively, for an average price per share of $161.65 and $184.67, respectively.

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Leases

9 Months Ended

May 30, 2020

Leases [Abstract]

Leases

18. Leases

The Company has operating leases for certain operating facilities, vehicles and equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. Each new contract is evaluated to determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated balance sheet with a corresponding operating lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. Short-term operating leases, which have an initial term of twelve months or less, are not recorded on the consolidated balance sheet.

Operating lease right-of-use assets, net and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available as of the lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. Both lease expense and variable lease costs are primarily recorded in cost of revenues on the Company's consolidated statements of income. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table presents the operating lease cost and information related to the operating lease right-of-use assets, net and operating lease liabilities for the thirty-nine weeks ended May 30, 2020:

(In thousands, except lease term and discount rate)
Lease cost
Operating lease costs including short-term lease expense and variable lease costs, which were immaterial in the period	$	13,528
Operating cash flow impacts
Cash paid for amounts included in the measurement of operating lease liabilities	$	9,805
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	5,893
Weighted-average remaining lease term - operating leases	4.5
Weighted-average discount rate - operating leases		2.85	%

The contractual future minimum lease payments of the Company's operating lease liabilities by fiscal year are as follows as of May 30, 2020:

(In thousands)
2020 (remaining three months)	$	3,298
2021		12,857
2022		10,041
2023		7,571
2024		5,152
Thereafter		6,954
Total payments		45,873
Less interest		(2,543	)
Total present value of lease payments	$	43,330

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Recent Accounting Pronouncements (Policies)

9 Months Ended

May 30, 2020

Accounting Policies [Abstract]

Recent Accounting Pronouncements

2. Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued updated guidance which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The Company adopted this standard on September 1, 2019 using the modified retrospective adoption method. The standard provides a number of optional practical expedients in transition and the Company has elected certain of these practical expedients upon adoption of this standard. Specifically, the Company elected the package of practical expedients permitted under the standard, which allows a lessee to carry forward its population of existing leases, the classification of each lease, as well as the treatment of initial direct lease costs as of the period of adoption. The Company also elected the practical expedient related to lease and non-lease components, as an accounting policy election which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. In addition, the Company elected the short-term lease recognition exemption for all leases with a term of 12 months or less, which means it will not recognize right-of-use assets or lease liabilities for these leases. The adoption of this standard resulted in the Company recognizing right-of-use assets, net of $48.7 million and corresponding lease liabilities of $46.2 million and reductions of prepaid expenses and other current assets of $1.2 million and $1.3 million, respectively. The adoption of this standard did not have a material impact on the Company's consolidated statement of income or consolidated statement of cash flows.

In June 2016, the FASB issued updated guidance that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company expects that adoption of this guidance will not have a material impact on its financial statements and related disclosures.

In August 2018, the FASB issued updated guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This guidance will be effective for annual reporting periods, and any interim periods within those annual periods, ending after December 15, 2020 and will be required to be applied on a retrospective basis with early adoption permitted. Accordingly, the standard will be effective for the Company on August 29, 2021. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

In August 2018, the FASB issued guidance that addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. The amendments in this update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

In December 2019, the FASB issued updated guidance to simplify accounting for income taxes by removing certain exceptions and improving the consistent application of and simplifying U.S. GAAP in other areas of this topic. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2020 with early adoption permitted. Accordingly, the guidance will be effective for the Company on August 29, 2021. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

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Revenue Recognition (Tables)

9 Months Ended

May 30, 2020

Revenue From Contract With Customer [Abstract]

Schedule of Total Revenue Disaggregated by Service Type

The following table presents the Company’s revenues for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019, respectively, disaggregated by service type:

	Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	May 30, 2020					May 25, 2019					May 30, 2020					May 25, 2019
(In thousands, except percentages)	Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues
Core Laundry Operations	$	388,411		87.2	%	$	399,781		88.1	%	$	1,216,901		88.5	%	$	1,184,666		89.1	%
Specialty Garments		36,163		8.1	%		37,313		8.2	%		105,545		7.7	%		101,506		7.6	%
First Aid		20,944		4.7	%		16,626		3.7	%		53,070		3.9	%		43,583		3.3	%
Total Revenues	$	445,518		100.0	%	$	453,720		100.0	%	$	1,375,516		100.0	%	$	1,329,755		100.0	%

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Fair Value Measurements (Tables)

9 Months Ended

May 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Assets or Liabilities Measured at Fair Value on a Recurring Basis

The assets or liabilities measured at fair value on a recurring basis are summarized in the tables below (in thousands):

	As of May 30, 2020
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents	$	195,978	$	—	$	—	$	195,978
Pension plan assets		—		4,342		—		4,342
Foreign currency forward contracts		—		323		—		323
Total assets at fair value	$	195,978	$	4,665	$	—	$	200,643

	As of August 31, 2019
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents	$	214,038	$	—	$	—	$	214,038
Pension plan assets		—		4,603		—		4,603
Foreign currency forward contracts		—		254		—		254
Total assets at fair value	$	214,038	$	4,857	$	—	$	218,895

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Income Per Share (Tables)

9 Months Ended

May 30, 2020

Earnings Per Share [Abstract]

Schedule of Computation of Basic Income Per Share

The following table sets forth the computation of basic income per share using the two-class method for amounts attributable to the Company’s shares of Common Stock and Class B Common Stock (in thousands, except per share data):

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	May 30, 2020		May 25, 2019		May 30, 2020		May 25, 2019
Net income available to shareholders	$	21,285	$	47,220	$	104,207	$	133,146
Allocation of net income for Basic:
Common Stock	$	17,871	$	39,563	$	87,519	$	111,626
Class B Common Stock		3,414		7,657		16,688		21,520
	$	21,285	$	47,220	$	104,207	$	133,146
Weighted average number of shares for Basic:
Common Stock		15,255		15,341		15,285		15,400
Class B Common Stock		3,643		3,710		3,643		3,710
		18,898		19,051		18,928		19,110
Income per share for Basic:
Common Stock	$	1.17	$	2.58	$	5.73	$	7.25
Class B Common Stock	$	0.94	$	2.06	$	4.58	$	5.80

Schedule of Computation of Diluted Income Per Share

The following tables set forth the computation of diluted income per share of Common Stock for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019 (in thousands, except per share data):

	Thirteen weeks ended May 30, 2020						Thirty-nine weeks ended May 30, 2020
	Earnings to Common Shareholders		Common Shares		Income Per Share		Earnings to Common Shareholders		Common Shares		Income Per Share
As reported - Basic	$	17,871		15,255	$	1.17	$	87,519		15,285	$	5.73
Add: effect of dilutive potential common shares
Share-Based Awards		—		97				—		146
Class B Common Stock		3,414		3,643				16,688		3,643
As reported – Diluted	$	21,285		18,995	$	1.12	$	104,207		19,074	$	5.46

	Thirteen Weeks Ended May 25, 2019						Thirty-Nine Weeks Ended May 25, 2019
	Earnings to Common Shareholders		Common Shares		Income Per Share		Earnings to Common Shareholders		Common Shares		Income Per Share
As reported - Basic	$	39,563		15,341	$	2.58	$	111,626		15,400	$	7.25
Add: effect of dilutive potential common shares
Share-Based Awards		—		117				—		110
Class B Common Stock		7,657		3,710				21,520		3,710
As reported – Diluted	$	47,220		19,168	$	2.46	$	133,146		19,220	$	6.93

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Inventories (Tables)

9 Months Ended

May 30, 2020

Inventory Disclosure [Abstract]

Schedule of Components of Inventory

The components of inventory as of May 30, 2020 and August 31, 2019 were as follows (in thousands):

	May 30, 2020		August 31, 2019
Raw materials	$	18,287	$	23,000
Work in process		2,908		2,864
Finished goods		83,308		75,052
Total inventories	$	104,503	$	100,916

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

May 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill are as follows (in thousands):

Balance as of August 31, 2019	$	401,178
Goodwill recorded during the period		23,544
Other		(134	)
Balance as of May 30, 2020	$	424,588

Schedule of Intangible Assets, Net

Intangible assets, net in the Company’s accompanying Consolidated Balance Sheets are as follows (in thousands):

	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
May 30, 2020
Customer contracts	$	233,922	$	173,861	$	60,061
Software		63,011		37,971		25,040
Other intangible assets		35,567		33,739		1,828
	$	332,500	$	245,571	$	86,929
August 31, 2019
Customer contracts	$	221,306	$	164,718	$	56,588
Software		48,838		34,813		14,025
Other intangible assets		35,063		32,956		2,107
	$	305,207	$	232,487	$	72,720

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Asset Retirement Obligations (Tables)

9 Months Ended

May 30, 2020

Asset Retirement Obligation Disclosure [Abstract]

Reconciliation of Asset Retirement Liability

A reconciliation of the Company’s asset retirement liability for the thirty-nine weeks ended May 30, 2020 was as follows (in thousands):

	May 30, 2020
Beginning balance as of August 31, 2019	$	12,727
Accretion expense		694
Effect of exchange rate changes		34
Balance as of May 30, 2020	$	13,455

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Commitments and Contingencies (Tables)

9 Months Ended

May 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Schedule of Changes to Environmental Liabilities

The changes to the Company’s environmental liabilities for the thirty-nine weeks ended May 30, 2020 were as follows (in thousands):

	May 30, 2020
Beginning balance as of August 31, 2019	$	27,718
Revisions in estimates		1,200
Costs incurred for which reserves have been provided		(961	)
Insurance proceeds		90
Interest accretion		403
Changes in discount rates		1,426
Balance as of May 30, 2020	$	29,876

Schedule of Anticipated Payments and Insurance Proceeds of Currently Identified Environmental Remediation Liabilities

Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of May 30, 2020, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below.

(In thousands)	2020			2021			2022			2023			2024			Thereafter			Total
Estimated costs – current dollars	$	10,184		$	2,186		$	1,353		$	1,091		$	1,058		$	12,032		$	27,904
Estimated insurance proceeds		(69	)		(173	)		(159	)		(173	)		(159	)		(693	)		(1,426	)
Net anticipated costs	$	10,115		$	2,013		$	1,194		$	918		$	899		$	11,339		$	26,478
Effect of inflation																				7,656
Effect of discounting																				(4,258	)
Balance as of May 30, 2020																			$	29,876

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Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

May 30, 2020

Stockholders Equity Note [Abstract]

Schedule of Changes in Components of Accumulated Other Comprehensive Loss, Net of Tax

The changes in each component of accumulated other comprehensive loss, net of tax, for the thirteen and thirty-nine weeks ended May 30, 2020 and May 25, 2019 were as follows (in thousands):

	Thirteen Weeks Ended May 30, 2020
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Beginning balance as of February 29, 2020	$	(24,420	)	$	(8,889	)	$	208		$	(33,101	)
Other comprehensive income (loss) before reclassification		(3,835	)		—			79			(3,756	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(47	)		(47	)
Net current period other comprehensive (loss) income		(3,835	)		—			32			(3,803	)
Ending balance as of May 30, 2020	$	(28,255	)	$	(8,889	)	$	240		$	(36,904	)

	Thirty-nine weeks ended May 30, 2020
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Balance as of August 31, 2019	$	(24,640	)	$	(9,239	)	$	191		$	(33,688	)
Other comprehensive (loss) income before reclassification		(3,615	)		—			156			(3,459	)
Amounts reclassified from accumulated other    comprehensive loss		—			350			(107	)		243
Net current period other comprehensive (loss) income		(3,615	)		350			49			(3,216	)
Ending balance as of May 30, 2020	$	(28,255	)	$	(8,889	)	$	240		$	(36,904	)

	Thirteen Weeks Ended May 25, 2019
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Beginning balance as of February 23, 2019	$	(21,980	)	$	(4,135	)	$	109		$	(26,006	)
Other comprehensive (loss) income before reclassification		(2,649	)		—			184			(2,465	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(46	)		(46	)
Net current period other comprehensive (loss) income		(2,649	)		—			138			(2,511	)
Ending balance as of May 25, 2019	$	(24,629	)	$	(4,135	)	$	247		$	(28,517	)

	Thirty-nine weeks ended May 25, 2019
	Foreign Currency Translation			Pension- related (1)			Derivative Financial Instruments (1)			Total Accumulated Other Comprehensive Loss
Balance as of August 25, 2018	$	(21,116	)	$	(4,135	)	$	92		$	(25,159	)
Other comprehensive (loss) income before reclassification		(3,513	)		—			277			(3,236	)
Amounts reclassified from accumulated other    comprehensive loss		—			—			(122	)		(122	)
Net current period other comprehensive (loss) income		(3,513	)		—			155			(3,358	)
Ending balance as of May 25, 2019	$	(24,629	)	$	(4,135	)	$	247		$	(28,517	)

(1) Amounts are shown net of tax.  

Schedule of Amounts Reclassified from Accumulated Other Comprehensive Loss, Net of Tax

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the thirty-nine weeks ended May 30, 2020 and May 25, 2019 were as follows (in thousands):

	Thirteen weeks ended						Thirty-nine weeks ended
	May 30, 2020			May 25, 2019			May 30, 2020			May 25, 2019
Pension benefit liabilities (net):
Reclassification to income statement (a)	$	—		$	—		$	350		$	—
Total, net of tax	$	—			—		$	350			—
Derivative financial instruments, net:
Forward contracts (b)		(47	)		(46	)		(107	)		(122	)
Total, net of tax		(47	)		(46	)		(107	)		(122	)
Total amounts reclassified, net of tax	$	(47	)	$	(46	)	$	243		$	(122	)

(a) Amounts included in selling and administrative expenses in the accompanying Consolidated Statements of Income.

(b) Amounts included in revenues in the accompanying Consolidated Statements of Income.  

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Segment Reporting (Tables)

9 Months Ended

May 30, 2020

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

The Company refers to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as its “Core Laundry Operations,” which is included as a subtotal in the following table (in thousands):

Thirteen weeks ended	U.S. and Canadian Rental and Cleaning			MFG		Net Interco MFG Elim			Corporate			Subtotal Core Laundry Operations			Specialty Garments		First Aid		Total
May 30, 2020
Revenues	$	362,288		$	44,949	$	(44,949	)	$	26,123		$	388,411		$	36,163	$	20,944	$	445,518
Operating income (loss)	$	42,994		$	13,226	$	5,398		$	(41,927	)	$	19,691		$	6,380	$	1,637	$	27,708
Interest income, net	$	(865	)	$	—	$	—		$	(189	)	$	(1,054	)	$	—	$	—	$	(1,054	)
Income (loss) before taxes	$	43,856		$	13,344	$	5,398		$	(42,543	)	$	20,055		$	5,514	$	1,637	$	27,206
May 25, 2019
Revenues	$	391,151		$	58,596	$	(58,596	)	$	8,630		$	399,781		$	37,313	$	16,626	$	453,720
Operating income (loss)	$	70,474		$	18,684	$	3,115		$	(38,830	)	$	53,443		$	5,368	$	1,401	$	60,212
Interest income, net	$	(1,008	)	$	—	$	—		$	(1,285	)	$	(2,293	)	$	—	$	—	$	(2,293	)
Income (loss) before taxes	$	71,480		$	18,606	$	3,116		$	(37,975	)	$	55,227		$	5,072	$	1,401	$	61,700

Thirty-nine weeks ended
May 30, 2020
Revenues	$	1,173,252		$	163,620	$	(163,620	)	$	43,649		$	1,216,901		$	105,545	$	53,070	$	1,375,516
Operating income (loss)	$	178,289		$	52,486	$	5,965		$	(124,884	)	$	111,856		$	15,886	$	4,188	$	131,930
Interest income, net	$	(2,965	)	$	—	$	—		$	(2,625	)	$	(5,590	)	$	—	$	—	$	(5,590	)
Income (loss) before taxes	$	181,232		$	52,393	$	5,965		$	(123,852	)	$	115,738		$	14,971	$	4,188	$	134,897
May 25, 2019
Revenues	$	1,157,467		$	187,120	$	(187,120	)	$	27,199		$	1,184,666		$	101,506	$	43,583	$	1,329,755
Operating income (loss)	$	189,807		$	63,576	$	415		$	(96,460	)	$	157,338		$	12,073	$	3,673	$	173,084
Interest income, net	$	(3,113	)	$	—	$	—		$	(2,894	)	$	(6,007	)	$	—	$	—	$	(6,007	)
Income (loss) before taxes	$	192,899		$	63,322	$	415		$	(94,710	)	$	161,926		$	11,455	$	3,673	$	177,054

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Leases (Tables)

9 Months Ended

May 30, 2020

Leases [Abstract]

Schedule of Operating Lease Cost and Information Related to Operating Lease Right-of-use Assets, Net and Operating Lease Liabilities

The following table presents the operating lease cost and information related to the operating lease right-of-use assets, net and operating lease liabilities for the thirty-nine weeks ended May 30, 2020:

(In thousands, except lease term and discount rate)
Lease cost
Operating lease costs including short-term lease expense and variable lease costs, which were immaterial in the period	$	13,528
Operating cash flow impacts
Cash paid for amounts included in the measurement of operating lease liabilities	$	9,805
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	5,893
Weighted-average remaining lease term - operating leases	4.5
Weighted-average discount rate - operating leases		2.85	%

Schedule of Contractual Future Minimum Lease Payments of Operating Lease Liabilities

The contractual future minimum lease payments of the Company's operating lease liabilities by fiscal year are as follows as of May 30, 2020:

(In thousands)
2020 (remaining three months)	$	3,298
2021		12,857
2022		10,041
2023		7,571
2024		5,152
Thereafter		6,954
Total payments		45,873
Less interest		(2,543	)
Total present value of lease payments	$	43,330

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Recent Accounting Pronouncements - Narrative (Details) - USD ($) $ in Thousands	Sep. 01, 2019	May 30, 2020
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Operating lease, right-of-use asset		$ 44,670
Operating lease, liability		$ 43,330
Accounting Standards Update 2016-02
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Operating lease, right-of-use asset	$ 48,700
Operating lease, liability	46,200
Reductions of prepaid expenses	(1,200)
Reductions of other current assets	$ (1,300)

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Revenue Recognition - Schedule of Total Revenue Disaggregated by Service Type (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019
Disaggregation of Revenue [Line Items]
Total revenues	$ 445,518	$ 453,720	$ 1,375,516	$ 1,329,755
Revenue | Revenues
Disaggregation of Revenue [Line Items]
Percentage of revenues	100.00%	100.00%	100.00%	100.00%
Core Laundry Operations
Disaggregation of Revenue [Line Items]
Total revenues	$ 388,411	$ 399,781	$ 1,216,901	$ 1,184,666
Core Laundry Operations | Revenue | Revenues
Disaggregation of Revenue [Line Items]
Percentage of revenues	87.20%	88.10%	88.50%	89.10%
Specialty Garments
Disaggregation of Revenue [Line Items]
Total revenues	$ 36,163	$ 37,313	$ 105,545	$ 101,506
Specialty Garments | Revenue | Revenues
Disaggregation of Revenue [Line Items]
Percentage of revenues	8.10%	8.20%	7.70%	7.60%
First Aid
Disaggregation of Revenue [Line Items]
Total revenues	$ 20,944	$ 16,626	$ 53,070	$ 43,583
First Aid | Revenue | Revenues
Disaggregation of Revenue [Line Items]
Percentage of revenues	4.70%	3.70%	3.90%	3.30%

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Revenue Recognition - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019	Aug. 31, 2019
Revenue From Contract With Customer [Abstract]
Percentage of revenues derived from route servicing fees	85.70%	91.00%	89.20%	91.00%
Current assets related to deferred commissions	$ 13.1		$ 13.1		$ 12.4
Noncurrent assets related to deferred commissions	54.9		54.9		$ 50.3
Amortization expense related to deferred commissions	$ 3.4	$ 3.0	$ 10.2	$ 8.7

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Acquisitions - Narrative (Details) $ in Millions	9 Months Ended
	May 30, 2020 USD ($) Business
Business Acquisition [Line Items]
Number of business acquired | Business	8
Business acquisitions, aggregate purchase price	$ 41.3
Missouri Acquisition
Business Acquisition [Line Items]
Business acquisitions, aggregate purchase price	38.8
Business combination, provisional information, initial accounting incomplete, adjustment, tangible assets	4.4
Business combination, provisional information, initial accounting incomplete, adjustment, goodwill	23.5
Business combination, provisional information, initial accounting incomplete, adjustment, intangibles	$ 10.9

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Fair Value Measurements - Schedule of Assets or Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	May 30, 2020	Aug. 31, 2019
Assets:
Cash equivalents	$ 195,978	$ 214,038
Pension plan assets	4,342	4,603
Foreign currency forward contracts	323	254
Total assets at fair value	200,643	218,895
Level 1
Assets:
Cash equivalents	195,978	214,038
Pension plan assets	0	0
Foreign currency forward contracts	0	0
Total assets at fair value	195,978	214,038
Level 2
Assets:
Cash equivalents	0	0
Pension plan assets	4,342	4,603
Foreign currency forward contracts	323	254
Total assets at fair value	4,665	4,857
Level 3
Assets:
Cash equivalents	0	0
Pension plan assets	0	0
Foreign currency forward contracts	0	0
Total assets at fair value	$ 0	$ 0

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Derivative Instruments and Hedging Activities - Narrative (Details) $ in Thousands, $ in Millions	9 Months Ended
	May 30, 2020 USD ($)	May 30, 2020 CAD ($)	Aug. 31, 2019 USD ($)
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Amount reclassified from accumulated other comprehensive loss	$ (36,904)		$ (33,688)
Forward Contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional value (CAD)		$ 5.9
Amount reclassified from accumulated other comprehensive loss	200
Reclassification from accumulated other comprehensive loss to revenue	100
Other Long-Term Assets | Forward Contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Fair value of the contracts	100
Prepaid Expenses and Other Current Assets | Forward Contracts
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Fair value of the contracts	$ 200

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Employee Benefit Plans - Narrative (Details) $ in Millions	3 Months Ended		9 Months Ended
	May 30, 2020 USD ($) Retirement-Plan	May 25, 2019 USD ($)	May 30, 2020 USD ($) Retirement-Plan	May 25, 2019 USD ($)
Postemployment Benefits [Abstract]
Contributions charged to expense under the plan	$ 1.9	$ 5.8	$ 12.4	$ 14.6
Number of frozen non-contributory defined benefit pension plans | Retirement-Plan	2		2
Amounts charged to expense related to the plans	$ 0.7	$ 0.5	$ 0.7	$ 1.6

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Income Per Share - Schedule of Computation of Basic Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	May 30, 2020	Feb. 29, 2020	Nov. 30, 2019	May 25, 2019	Feb. 23, 2019	Nov. 24, 2018	May 30, 2020	May 25, 2019
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income available to shareholders	$ 21,285	$ 34,680	$ 48,242	$ 47,220	$ 47,606	$ 38,320	$ 104,207	$ 133,146
Allocation of net income for Basic:
Common stock	$ 21,285			$ 47,220			$ 104,207	$ 133,146
Weighted average number of shares for Basic:
Common stock (in shares)	18,898			19,051			18,928	19,110
Common Stock
Allocation of net income for Basic:
Common stock	$ 17,871			$ 39,563			$ 87,519	$ 111,626
Weighted average number of shares for Basic:
Common stock (in shares)	15,255			15,341			15,285	15,400
Income per share for Basic:
Common stock (in dollars per share)	$ 1.17			$ 2.58			$ 5.73	$ 7.25
Class B Common Stock
Allocation of net income for Basic:
Common stock	$ 3,414			$ 7,657			$ 16,688	$ 21,520
Weighted average number of shares for Basic:
Common stock (in shares)	3,643			3,710			3,643	3,710
Income per share for Basic:
Common stock (in dollars per share)	$ 0.94			$ 2.06			$ 4.58	$ 5.80

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Income Per Share - Schedule of Computation of Diluted Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
As reported - Basic	$ 21,285	$ 47,220	$ 104,207	$ 133,146
As reported - Basic (in shares)	18,898	19,051	18,928	19,110
As reported – Diluted	$ 21,285	$ 47,220	$ 104,207	$ 133,146
As reported - Diluted (in shares)	18,995	19,168	19,074	19,220
As reported - Diluted (in dollars per share)	$ 1.12	$ 2.46	$ 5.46	$ 6.93
Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
As reported - Basic	$ 17,871	$ 39,563	$ 87,519	$ 111,626
As reported - Basic (in shares)	15,255	15,341	15,285	15,400
As reported - Basic (in dollars per share)	$ 1.17	$ 2.58	$ 5.73	$ 7.25
Add: effect of dilutive potential common shares	$ 0	$ 0	$ 0	$ 0
Add: effect of dilutive potential common shares (in shares)	97	117	146	110
Class B Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
As reported - Basic	$ 3,414	$ 7,657	$ 16,688	$ 21,520
As reported - Basic (in shares)	3,643	3,710	3,643	3,710
As reported - Basic (in dollars per share)	$ 0.94	$ 2.06	$ 4.58	$ 5.80

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Income Per Share - Narrative (Details) - shares	3 Months Ended		9 Months Ended
	May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019
Earnings Per Share [Abstract]
Anti-dilutive securities excluded from calculation of diluted earnings per share (in shares)	7,328	797	2,724	909

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Inventories - Schedule of Components of Inventory (Details) - USD ($) $ in Thousands	May 30, 2020	Aug. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 18,287	$ 23,000
Work in process	2,908	2,864
Finished goods	83,308	75,052
Total inventories	$ 104,503	$ 100,916

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Goodwill and Other Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	May 30, 2020 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Beginning balance	$ 401,178
Goodwill recorded during the period	23,544
Other	(134)
Ending balance	$ 424,588

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Goodwill and Other Intangible Assets - Schedule of Intangible Assets, Net (Details) - USD ($) $ in Thousands	May 30, 2020	Aug. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 332,500	$ 305,207
Accumulated Amortization	245,571	232,487
Net Carrying Amount	86,929	72,720
Customer contracts
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	233,922	221,306
Accumulated Amortization	173,861	164,718
Net Carrying Amount	60,061	56,588
Software
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	63,011	48,838
Accumulated Amortization	37,971	34,813
Net Carrying Amount	25,040	14,025
Other intangible assets
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	35,567	35,063
Accumulated Amortization	33,739	32,956
Net Carrying Amount	$ 1,828	$ 2,107

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Asset Retirement Obligations - Narrative (Details)	9 Months Ended
	May 30, 2020
Minimum
Asset Retirement Obligations [Line Items]
Remaining lives	1 year
Maximum
Asset Retirement Obligations [Line Items]
Remaining lives	24 years

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Asset Retirement Obligations - Reconciliation of Asset Retirement Liability (Details) - USD ($) $ in Thousands	9 Months Ended
	May 30, 2020	May 25, 2019
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
Beginning balance	$ 12,727
Accretion expense	694	$ 647
Effect of exchange rate changes	34
Balance	$ 13,455

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Commitments and Contingencies - Narrative (Details) $ in Millions	3 Months Ended	9 Months Ended	12 Months Ended
	Feb. 23, 2019 USD ($)	May 30, 2020 USD ($) site company	Aug. 26, 2017 USD ($)
Gain Contingencies [Line Items]
Estimated rate of inflation		3.00%
Annual proceeds		$ 0.3
Balance in escrow account		$ 4.5
Number of insurance companies | company		3
Pre-tax non-cash impairment charge			$ 55.8
Gain (loss) related to litigation settlement	$ 21.1
One-time cash payment received for sale of CRM system	13.0
Hardware received at fair value	$ 0.8
Minimum
Gain Contingencies [Line Items]
Risk-free interest rates utilized		0.70%
Maximum
Gain Contingencies [Line Items]
Risk-free interest rates utilized		1.40%
Williamstown, Vermont
Gain Contingencies [Line Items]
Number of sites related to former operations | site		2

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Commitments and Contingencies - Changes to Environmental Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	May 30, 2020	May 25, 2019
Accrual For Environmental Loss Contingencies Roll Forward
Beginning balance	$ 27,718
Revisions in estimates	1,200
Costs incurred for which reserves have been provided	(961)
Insurance proceeds	90
Accretion on environmental contingencies	403	$ 566
Changes in discount rates	1,426
Ending balance	$ 29,876

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Commitments and Contingencies - Anticipated Payments and Insurance Proceeds of Identified Environmental Remediation Liabilities (Details) - USD ($) $ in Thousands	May 30, 2020	Aug. 31, 2019
Estimated costs – current dollars
2020	$ 10,184
2021	2,186
2022	1,353
2023	1,091
2024	1,058
Thereafter	12,032
Total	27,904
Estimated insurance proceeds
2020	(69)
2021	(173)
2022	(159)
2023	(173)
2024	(159)
Thereafter	(693)
Total	(1,426)
Net anticipated costs
2020	10,115
2021	2,013
2022	1,194
2023	918
2024	899
Thereafter	11,339
Total	26,478
Effect of inflation	7,656
Effect of discounting	(4,258)
Balance at end of period	$ 29,876	$ 27,718

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Income Taxes - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019
Income Tax Disclosure [Abstract]
Effective income tax rate	21.80%	23.50%	22.80%	24.80%
Discrete tax benefit due to exercise of stock appreciation rights	$ 0.5		$ 1.9
Discrete tax benefit resulting from release of tax reserves	0.4		1.8
Decrease in unrecognized tax benefits of due to release of tax reserves	$ 0.4		$ 1.8

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Long-Term Debt - Narrative (Details) - Revolving Credit Facility - Credit Agreement $ in Millions	9 Months Ended
	May 30, 2020 USD ($)
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 250.0
Maturity date	Apr. 11, 2021
Outstanding borrowings	$ 0.0
Outstanding letters of credit	70.8
Amount available for borrowing	$ 179.2
LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (as percent)	0.75%

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Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Loss, Net of Tax (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period		$ 1,701,438	$ 1,580,790	$ 1,641,230	$ 1,464,967
Other comprehensive income (loss)		(3,803)	(2,511)	(3,216)	(3,358)
Balance at end of period		1,708,100	1,609,696	1,708,100	1,609,696
Foreign Currency Translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period		(24,420)	(21,980)	(24,640)	(21,116)
Other comprehensive income (loss) before reclassification		(3,835)	(2,649)	(3,615)	(3,513)
Amounts reclassified from accumulated other comprehensive loss		0	0	0	0
Other comprehensive income (loss)		(3,835)	(2,649)	(3,615)	(3,513)
Balance at end of period		(28,255)	(24,629)	(28,255)	(24,629)
Pension-related
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	[1]	(8,889)	(4,135)	(9,239)	(4,135)
Other comprehensive income (loss) before reclassification	[1]	0	0	0	0
Amounts reclassified from accumulated other comprehensive loss	[1]	0	0	350	0
Other comprehensive income (loss)	[1]	0	0	350	0
Balance at end of period	[1]	(8,889)	(4,135)	(8,889)	(4,135)
Derivative Financial Instruments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	[1]	208	109	191	92
Other comprehensive income (loss) before reclassification	[1]	79	184	156	277
Amounts reclassified from accumulated other comprehensive loss	[1]	(47)	(46)	(107)	(122)
Other comprehensive income (loss)	[1]	32	138	49	155
Balance at end of period	[1]	240	247	240	247
Accumulated Other Comprehensive Loss
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period		(33,101)	(26,006)	(33,688)	(25,159)
Other comprehensive income (loss) before reclassification		(3,756)	(2,465)	(3,459)	(3,236)
Amounts reclassified from accumulated other comprehensive loss		(47)	(46)	243	(122)
Other comprehensive income (loss)		(3,803)	(2,511)	(3,216)	(3,358)
Balance at end of period		$ (36,904)	$ (28,517)	$ (36,904)	$ (28,517)

[1] Amounts are shown net of tax.

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Accumulated Other Comprehensive Loss - Amounts Reclassified from Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands		3 Months Ended						9 Months Ended
		May 30, 2020	Feb. 29, 2020	Nov. 30, 2019	May 25, 2019	Feb. 23, 2019	Nov. 24, 2018	May 30, 2020	May 25, 2019
Accumulated Other Comprehensive Income Loss [Line Items]
Selling and administrative expenses	[1]	$ 88,405			$ 88,207			$ 272,013	$ 242,487
Net income		21,285	$ 34,680	$ 48,242	47,220	$ 47,606	$ 38,320	104,207	133,146
Reclassification out of Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income Loss [Line Items]
Net income		(47)			(46)			243	(122)
Pension Benefit Liabilities, Net | Reclassification out of Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income Loss [Line Items]
Selling and administrative expenses	[2]	0			0			350	0
Net income		0			0			350	0
Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income Loss [Line Items]
Net income		(47)			(46)			(107)	(122)
Derivative Financial Instruments | Forward Contracts | Reclassification out of Accumulated Other Comprehensive Income
Accumulated Other Comprehensive Income Loss [Line Items]
Forward contracts	[3]	$ (47)			$ (46)			$ (107)	$ (122)

[1] Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets.

[2] Amounts included in selling and administrative expenses in the accompanying Consolidated Statements of Income.

[3] Amounts included in revenues in the accompanying Consolidated Statements of Income.

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Segment Reporting - Narrative (Details)	9 Months Ended
	May 30, 2020 segment
Segment Reporting [Abstract]
Number of operating segments	6
Number of reporting segments	5

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Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	May 30, 2020	May 25, 2019	May 30, 2020	May 25, 2019
Segment Reporting Information [Line Items]
Revenues	$ 445,518	$ 453,720	$ 1,375,516	$ 1,329,755
Operating income (loss)	27,708	60,212	131,930	173,084
Interest income, net	(1,054)	(2,293)	(5,590)	(6,007)
Income (loss) before taxes	27,206	61,700	134,897	177,054
U.S. and Canadian Rental and Cleaning | Operating Segments
Segment Reporting Information [Line Items]
Revenues	362,288	391,151	1,173,252	1,157,467
Operating income (loss)	42,994	70,474	178,289	189,807
Interest income, net	(865)	(1,008)	(2,965)	(3,113)
Income (loss) before taxes	43,856	71,480	181,232	192,899
MFG | Operating Segments
Segment Reporting Information [Line Items]
Revenues	44,949	58,596	163,620	187,120
Operating income (loss)	13,226	18,684	52,486	63,576
Income (loss) before taxes	13,344	18,606	52,393	63,322
MFG | Net Interco MFG Elim
Segment Reporting Information [Line Items]
Revenues	(44,949)	(58,596)	(163,620)	(187,120)
Operating income (loss)	5,398	3,115	5,965	415
Income (loss) before taxes	5,398	3,116	5,965	415
Corporate | Operating Segments
Segment Reporting Information [Line Items]
Revenues	26,123	8,630	43,649	27,199
Operating income (loss)	(41,927)	(38,830)	(124,884)	(96,460)
Interest income, net	(189)	(1,285)	(2,625)	(2,894)
Income (loss) before taxes	(42,543)	(37,975)	(123,852)	(94,710)
Subtotal Core Laundry Operations
Segment Reporting Information [Line Items]
Revenues	388,411	399,781	1,216,901	1,184,666
Operating income (loss)	19,691	53,443	111,856	157,338
Interest income, net	(1,054)	(2,293)	(5,590)	(6,007)
Income (loss) before taxes	20,055	55,227	115,738	161,926
Specialty Garments
Segment Reporting Information [Line Items]
Revenues	36,163	37,313	105,545	101,506
Specialty Garments | Operating Segments
Segment Reporting Information [Line Items]
Revenues	36,163	37,313	105,545	101,506
Operating income (loss)	6,380	5,368	15,886	12,073
Income (loss) before taxes	5,514	5,072	14,971	11,455
First Aid
Segment Reporting Information [Line Items]
Revenues	20,944	16,626	53,070	43,583
First Aid | Operating Segments
Segment Reporting Information [Line Items]
Revenues	20,944	16,626	53,070	43,583
Operating income (loss)	1,637	1,401	4,188	3,673
Income (loss) before taxes	$ 1,637	$ 1,401	$ 4,188	$ 3,673

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Shares Repurchased and Dividends - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions					3 Months Ended						9 Months Ended
	May 30, 2020	Oct. 23, 2019	Oct. 22, 2019	Jan. 02, 2019	May 30, 2020	Feb. 29, 2020	Nov. 30, 2019	May 25, 2019	Feb. 23, 2019	Nov. 24, 2018	May 30, 2020
Equity, Class of Treasury Stock [Line Items]
Stock Repurchased During Period, Value				$ 100.0
Shares repurchased (in shares)	314,917				46,667						117,767
Total cost of shares repurchased divided by the total number of shares repurchased	$ 165.96				$ 161.65						$ 184.67
Class B Common Stock
Equity, Class of Treasury Stock [Line Items]
Quarterly dividend amount (in dollars per share)		$ 0.20	$ 0.09		0.20	$ 0.20	$ 0.20	$ 0.0900	$ 0.0900	$ 0.0900
Common Stock
Equity, Class of Treasury Stock [Line Items]
Quarterly dividend amount (in dollars per share)		$ 0.25	$ 0.1125		$ 0.25	$ 0.25	$ 0.25	$ 0.1125	$ 0.1125	$ 0.1125

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Leases - Narrative (Details)	9 Months Ended
	May 30, 2020
Leases [Abstract]
Operating lease, existence of option to extend	true
Operating lease, existence of option to terminate	true

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Leases - Schedule of Operating Lease Cost and Information Related to Operating Lease Right-of-use Assets, Net and Operating Lease Liabilities (Details) $ in Thousands	9 Months Ended
	May 30, 2020 USD ($)
Lease cost
Operating lease costs including short-term lease expense and variable lease costs, which were immaterial in the period	$ 13,528
Operating cash flow impacts
Cash paid for amounts included in the measurement of operating lease liabilities	9,805
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$ 5,893
Weighted-average remaining lease term - operating leases	4 years 6 months
Weighted-average discount rate - operating leases	2.85%

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Leases - Schedule of Contractual Future Minimum Lease Payments of Operating Lease Liabilities (Details) $ in Thousands	May 30, 2020 USD ($)
Leases [Abstract]
2020 (remaining three months)	$ 3,298
2021	12,857
2022	10,041
2023	7,571
2024	5,152
Thereafter	6,954
Total payments	45,873
Less interest	(2,543)
Total present value of lease payments	$ 43,330