Note 6 - Employee Benefit Plans

12 Months Ended

Aug. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

6. 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 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 years ended August 30, 2014, August 31, 2013 and August 25, 2012 were $16.4 million, $17.0 million and $11.5 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 (1) recognizes in its statement of financial position the over-funded or under-funded status of its defined benefit postretirement plans measured as the difference between the fair value of plan assets and the benefit obligation, (2) recognizes as a component of other comprehensive income, net of tax, the actuarial gains and losses and the prior service costs and credits that arise during the period but are not recognized as components of net periodic benefit cost, (3) measures defined benefit plan assets and defined benefit plan obligations as of the date of its statement of financial position, and (4) discloses additional information in the notes to financial statements about certain effects on net periodic benefit cost in the upcoming fiscal year that arise from delayed recognition of the actuarial gains and losses and the prior service costs and credits.

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, $1.9 million and $1.8 million for the fiscal years ended 2014, 2013 and 2012, respectively.

The Company maintains a non-contributory defined benefit pension plan (“UniFirst Plan”) covering union 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 $0.4 million, $0.4 million and $0.3 million for fiscal years ended 2014, 2013 and 2012, 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 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 $0.2 million, $0.1 million and $0.1 million for fiscal years ended 2014, 2013 and 2012, respectively

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 the years ended August 30, 2014, August 31, 2013 and August 25, 2012 were as follows (in thousands):

	Pension Plans									SERP
	2014			2013			2012			2014		2013		2012
Service cost	$	172		$	178		$	152		$	615	$	547	$	512
Interest cost		328			268			322			942		912		858
Expected return on assets		(183	)		(198	)		(199	)		—		—		—
Amortization of prior service cost		62			62			62			368		368		368
Amortization of unrecognized loss		113			138			65			151		104		107
Other events		72			44			43			—		—		—
Net periodic benefit cost	$	564		$	492		$	445		$	2,076	$	1,931	$	1,845

The calculation of pension expense and the corresponding liability requires the use of a number of critical assumptions, including the expected long-term rates of return on plan assets, the assumed discount rate, the assumed rate of compensation increases and life expectancy of participants. Changes in these assumptions can result in different expense and liability amounts, and future actual experience can differ from these assumptions. Pension expense increases as the expected rate of return on pension plan assets decreases. Future changes in plan asset returns, assumed discount rates and various other factors related to the participants in the Company’s pension plans will impact its future pension expense and liabilities. The Company cannot predict with certainty what these factors will be in the future.

The Company’s obligations and funded status related to its Pension Plans and SERP as of August 30, 2014 and August 31, 2013 were as follows (in thousands):

	Pension Plans						SERP
	2014			2013			2014			2013
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	7,954		$	8,301		$	18,110		$	16,399
Service cost		172			178			615			547
Interest cost		328			268			942			912
Actuarial (gain) loss		708			(379	)		2,272			827
Benefits paid		(198	)		(259	)		(655	)		(575	)
Settlements		(209	)		(155	)		—			—
Projected benefit obligation, end of year	$	8,755		$	7,954		$	21,284		$	18,110
Change in plan assets:
Fair value of plan assets, beginning of year	$	4,939		$	5,114		$	—		$	—
Actual return on plan assets		154			33			—			—
Employer contributions		322			206			—			—
Benefits paid		(198	)		(259	)		—			—
Settlements		(209	)		(155	)		—			—
Fair value of plan assets, end of year	$	5,008		$	4,939		$	—		$	—
Funded status (net amount recognized):	$	(3,747	)	$	(3,015	)	$	(21,284	)	$	(18,110	)

As of August 30, 2014 and August 31, 2013, the accumulated benefit obligations for the Company’s Pension Plans were $8.8 million and $8.0 million, respectively. As of August 30, 2014 and August 31, 2013, the accumulated benefit obligations for the Company’s SERP were $17.0 million and $14.4 million, respectively.

The amounts recorded on the Consolidated Balance Sheet for the Company’s Pension Plans and SERP as of August 30, 2014 and August 31, 2013 were as follows (in thousands):

	Pension Plans						SERP
	2014			2013			2014			2013
Deferred tax assets	$	1,097		$	913		$	2,193		$	1,665
Accrued liabilities	$	3,747		$	3,015		$	21,284		$	18,110
Accumulated other comprehensive loss	$	(1,753	)	$	(1,458	)	$	(3,503	)	$	(2,660	)

As of August 30, 2014 and August 31, 2013, the amounts recognized in accumulated other comprehensive income for the Company’s Pension Plans and SERP (in thousands):

	Pension Plans						SERP
	2014			2013			2014			2013
Net actuarial loss	$	(1,534	)	$	(1,201	)	$	(3,016	)	$	(1,947	)
Unrecognized prior service cost		(219	)		(257	)		(487	)		(713	)
	$	(1,753	)	$	(1,458	)	$	(3,503	)	$	(2,660	)

The weighted average assumptions used in calculating the Company’s projected benefit obligation as of August 30, 2014 and August 31, 2013, were as follows:

	Pension Plans						SERP
	2014			2013			2014			2013
Discount rate		3.6	%		4.3	%		3.8	%		4.6	%
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 30, 2014, August 31, 2013 and August 25, 2012, were as follows:

	Pension Plans									SERP
	2014			2013			2012			2014			2013			2012
Discount rate		4.3	%		3.3	%		4.6	%		4.6	%		3.6	%		4.9	%
Expected return on plan assets		4.0	%		4.0	%		4.0	%	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 30, 2014 and thereafter are as follows (in thousands):

	Pension Plans		SERP
2015	$	510	$	761
2016		398		929
2017		383		936
2018		290		960
2019		639		1,015
Thereafter		6,535		16,683
	$	8,755	$	21,284