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 2018, 2017 and 2016 were $18.1 million, $15.0 million and $13.8 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 $2.1 million, $2.5 million and $2.4 million for fiscal 2018, 2017 and 2016, 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 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 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 $0.3 million, $0.5 million and $0.4 million for fiscal 2018, 2017 and 2016.

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 pension benefits are based on years of service and the employee’s compensation. The Textilease Plan assets are held in a separate GDA with PRIAC; however the minimum interest rate per the Textilease Plan contract is 1.5%. The amount charged to expense related to this plan amounted to approximately for $0.2 million for fiscal 2018, 2017 and 2016.

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 2018, 2017 and 2016 were as follows (in thousands):



	Pension Plans									SERP
	2018			2017			2016			2018		2017		2016
Service cost	$	115		$	271		$	204		$	694	$	785	$	819
Interest cost	257			244			307			1,027		1,003		984
Expected return on assets	(174		)	(189		)	(177		)	—		—		—
Amortization of prior service cost	66			83			84			—		56		368
Amortization of unrecognized loss	102			149			105			362		653		274
Other events	96			125			43			—		—		—
Net periodic benefit cost	$	462		$	683		$	566		$	2,083	$	2,497	$	2,445

The Company’s obligations and funded status related to its Pension Plans and SERP as of August 25, 2018 and August 26, 2017 were as follows (in thousands):



	Pension Plans						SERP
	2018			2017			2018			2017
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	8,382		$	9,000		$	28,801		$	30,696
Service cost	115			271			694			785
Interest cost	257			244			1,027			1,003
Actuarial gain	(673		)	(441		)	(2,129		)	(3,130		)
Benefits paid	(84		)	(326		)	(846		)	(553		)
Settlements	(548		)	(366		)	—			—
Projected benefit obligation, end of year	$	7,449		$	8,382		$	27,547		$	28,801

Change in plan assets:
Fair value of plan assets, beginning of year	$	5,097		$	4,753		$	—		$	—
Actual return on plan assets	72			63			—			—
Employer contributions	1,788			973			—			—
Benefits paid	(84		)	(326		)	—			—
Settlements	(548		)	(366		)	—			—
Fair value of plan assets, end of year	$	6,325		$	5,097		$	—		$	—

Funded status (net amount recognized):	$	(1,124	)	$	(3,285	)	$	(27,547	)	$	(28,801	)

As of August 25, 2018 and August 26, 2017, the accumulated benefit obligations for the Company’s Pension Plans were $7.4 million and $8.3 million, respectively. As of August 25, 2018 and August 26, 2017, the accumulated benefit obligations for the Company’s SERP were $21.7 million and $22.3 million, respectively.

The amounts recorded on the Consolidated Balance Sheet for the Company’s Pension Plans and SERP as of August 25, 2018 and August 26, 2017 were as follows (in thousands):



	Pension Plans						SERP
	2018			2017			2018			2017
Deferred tax assets	$	362		$	860		$	1,081		$	2,568
Accrued liabilities	$	1,124		$	3,285		$	27,547		$	28,801
Accumulated other comprehensive loss	$	(1,037	)	$	(1,374	)	$	(3,098	)	$	(4,102	)

As of August 25, 2018 and August 26, 2017, the amounts recognized in accumulated other comprehensive loss for the Company’s Pension Plans and SERP (in thousands):



	Pension Plans						SERP
	2018			2017			2018			2017
Net actuarial loss	$	(797	)	$	(1,134	)	$	(3,098	)	$	(4,102	)
Unrecognized prior service cost	(240		)	(240		)	—			—
Accumulated other comprehensive loss	$	(1,037	)	$	(1,374	)	$	(3,098	)	$	(4,102	)

The weighted average assumptions used in calculating the Company’s projected benefit obligation as of August 25, 2018 and August 26, 2017, were as follows:



	Pension Plans				SERP
	2018		2017		2018		2017
Discount rate	3.9	%	3.2	%	4.0	%	3.6	%
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 25, 2018, August 26, 2017 and August 27, 2016, were as follows:



	Pension Plans						SERP
	2018		2017		2016		2018		2017		2016
Discount rate	3.2	%	2.9	%	3.8	%	3.6	%	3.3	%	4.2	%
Expected return on plan assets	3.5	%	3.9	%	3.9	%	N/A		N/A		N/A
Rate of compensation increase	N/A		N/A		N/A		5.0	%	5.0	%	5.0	%

The following benefit payments, which reflect expected future service, that are expected to be paid for the five fiscal years subsequent to August 25, 2018 and thereafter are as follows (in thousands):



	Pension Plans		SERP
2019	$	1,261	$	1,057
2020	545		1,114
2021	323		1,316
2022	469		1,314
2023	431		1,478
Thereafter	4,420		21,268
Total benefit payments	$	7,449	$	27,547