Employee Benefit Plans

12 Months Ended

Aug. 27, 2022

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 fiscal 2022, 2021 and 2020 were $18.2 million, $19.9 million and $16.6 million, respectively.

Pension Plans and Supplemental Executive Retirement Plans

The Company accounts for its pension plans and Supplemental Executive Retirement Plan on an accrual basis over employees’ estimated service periods.

The Company maintains an unfunded Supplemental Executive Retirement Plan (“SERP”) for certain eligible employees of the Company. The benefits are based on the employee’s compensation upon retirement. The amount charged to expense related to this plan amounted to approximately $1.5 million, $2.9 million and $2.6 million for fiscal 2022, 2021 and 2020, respectively.

The Company maintains a non-contributory defined benefit pension plan (“UniFirst Plan”) covering employees at one of its locations. The benefits are based on years of service. The UniFirst Plan assets are invested in a Guaranteed Deposit Account (“GDA”) that is 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 GDA 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 annual interest rate applied per the contract must be a minimum of 3.25%. The amount charged to expense related to this plan amounted to approximately $0.1 million for fiscal 2022 and $0.2 million for fiscal 2021 and 2020, respectively.

In connection with one of the Company’s acquisitions, the Company assumed liabilities related to a frozen pension plan covering many of the acquired Company’s former employees (“Textilease Plan”). The Textilease Plan was terminated in fiscal 2020. The pension benefits were based on years of service and the employee’s compensation. The Textilease Plan assets were held in a separate GDA with PRIAC; however the minimum interest rate per the Textilease Plan contract was 1.5%. The amount charged to expense related to this plan amounted to approximately $0.5 million for fiscal 2020. There was no expense incurred related to this plan in either fiscal 2022 or 2021.

The Company refers to its UniFirst Plan and Textilease Plan collectively as its “Pension Plans”.

The components of net periodic benefit cost related to the Company’s Pension Plans and SERP for fiscal 2022, 2021 and 2020 were as follows (in thousands):

	Pension Plans									SERP
	2022			2021			2020			2022			2021		2020
Service cost	$	72		$	71		$	113		$	919		$	1,100	$	918
Interest cost		104			104			131			928			943		1,027
Expected return on assets		(118	)		(131	)		(138	)		—			—		—
Amortization of prior service cost		21			55			66			—			—		—
Amortization of net loss		20			36			12			516			821		703
Other events		(10	)		49			—			(855	)		—		—
Net periodic benefit cost	$	89		$	184		$	184		$	1,508		$	2,864	$	2,648

The Company’s obligations and funded status related to its Pension Plans and SERP as of August 27, 2022 and August 28, 2021 were as follows (in thousands):

	Pension Plans						SERP
	2022			2021			2022			2021
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	5,035		$	5,468		$	36,644		$	38,616
Service cost		72			71			919			1,100
Interest cost		104			104			928			943
Actuarial (gain) loss		(861	)		(225	)		(8,871	)		(2,890	)
Benefits paid		(23	)		(28	)		(1,203	)		(1,125	)
Settlements/Curtailments		(490	)		(355	)		(855	)		—
Projected benefit obligation, end of year	$	3,837		$	5,035		$	27,562		$	36,644
Change in plan assets:
Fair value of plan assets, beginning of year	$	3,796		$	4,146		$	—		$	—
Actual return on plan assets		17			33			—			—
Employer contributions		—			—			—			—
Benefits paid		(23	)		(28	)		—			—
Settlements/Curtailments		(490	)		(355	)		—			—
Fair value of plan assets, end of year	$	3,300		$	3,796		$	—		$	—
Funded status (net amount recognized):	$	(537	)	$	(1,239	)	$	(27,562	)	$	(36,644	)

As of August 27, 2022 and August 28, 2021, the accumulated benefit obligations for the Company’s Pension Plans were $3.8 million and $5.0 million, respectively. As of August 27, 2022 and August 28, 2021, the accumulated benefit obligations for the Company’s SERP were $24.6 million and $30.6 million, respectively.

The amounts recorded on the Consolidated Balance Sheet for the Company’s Pension Plans and SERP as of August 27, 2022 and August 28, 2021 were as follows (in thousands):

	Pension Plans					SERP
	2022		2021			2022			2021
Deferred tax assets (liabilities)	$	184	$	213		$	(10	)	$	2,218
Accrued liabilities	$	537	$	1,240		$	27,562		$	36,644
Accumulated other comprehensive loss	$	40	$	(1,044	)	$	(720	)	$	(6,449	)

As of August 27, 2022 and August 28, 2021, the amounts recognized in accumulated other comprehensive loss for the Company’s Pension Plans and SERP were as follows (in thousands):

	Pension Plans						SERP
	2022			2021			2022			2021
Net actuarial gain (loss)	$	(75	)	$	(1,180	)	$	(720	)	$	(6,449	)
Unrecognized prior service cost		115			136			—			—
Accumulated other comprehensive loss	$	40		$	(1,044	)	$	(720	)	$	(6,449	)

The weighted average assumptions used in calculating the Company’s projected benefit obligation as of August 27, 2022 and August 28, 2021, were as follows:

	Pension Plans						SERP
	2022			2021			2022			2021
Discount rate		4.3	%		2.3	%		4.4	%		2.6	%
Rate of compensation increase	N/A			N/A				5.0	%		5.0	%

The weighted average assumptions used in calculating the Company’s net periodic service cost for the years ended August 27, 2022, August 28, 2021 and August 29, 2020, were as follows:

	Pension Plans									SERP
	2022			2021			2020			2022			2021			2020
Discount rate		2.3	%		2.0	%		2.7	%		2.6	%		2.5	%		2.9	%
Expected return on plan assets		3.5	%		3.5	%		3.5	%	N/A			N/A			N/A
Rate of compensation increase	N/A			N/A			N/A				5.0	%		5.0	%		5.0	%

The benefit payments, which reflect expected future service, that are expected to be paid for the five fiscal years subsequent to August 27, 2022 and thereafter are as follows (in thousands):

	Pension Plans		SERP
2023	$	740	$	1,352
2024		189		1,535
2025		297		1,591
2026		314		1,723
2027		139		1,780
Thereafter		2,158		19,581
Total benefit payments	$	3,837	$	27,562

Nonqualified Deferred Compensation Plan

The Company adopted the UniFirst Corporation Deferred Compensation Plan (the “NQDC Plan”) effective on February 1, 2022. The NQDC Plan is an unfunded, nonqualified deferred compensation plan that allows eligible participants to voluntarily defer receipt of their salary and annual cash bonuses up to approved limits. In its discretion, the Company may credit one or more additional contributions to participant accounts. NQDC Plan participants who are not accruing benefits under the Supplemental Executive Retirement Plan are eligible to have discretionary annual employer contributions credited to their NQDC Plan accounts. All participants are also eligible to have employer supplemental contributions and employer discretionary contributions credited to their NQDC Plan accounts. The amounts of such contributions may differ from year to

year and from participant to participant. During the fiscal year ended August 27, 2022, the NQDC Plan had aggregate contributions of $1.3 million credited to participant accounts. The amount charged to expense was nominal for the year ended August 27, 2022. The Company, at its discretion, may also elect to transfer funds to a trust account with the intention to fund the future liability. Total NQDC Plan assets were $1.3 million as of August 27, 2022 and are included within other long-term assets on the balance sheet.