Employee Benefit Plans

12 Months Ended

Aug. 29, 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 fiscal 2020, 2019 and 2018 were $16.6 million, $19.7 million and $18.1 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 $2.6 million, $2.1 million and $2.1 million for fiscal 2020, 2019 and 2018, 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 $0.2 million, $0.3 million and $0.3 million for fiscal 2020, 2019 and 2018.

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, $0.5 million and $0.2 million, respectively, for fiscal 2020, 2019 and 2018.

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 2020, 2019 and 2018 were as follows (in thousands):

	Pension Plans									SERP
	2020			2019			2018			2020		2019		2018
Service cost	$	113		$	114		$	115		$	918	$	725	$	694
Interest cost		131			260			257			1,027		1,148		1,027
Expected return on assets		(138	)		(199	)		(174	)		—		—		—
Amortization of prior service cost		66			66			66			—		—		—
Amortization of unrecognized loss		—			51			102			703		247		362
Other events		12			503			96			—		—		—
Net periodic benefit cost	$	184		$	795		$	462		$	2,648	$	2,120	$	2,083

The Company’s obligations and funded status related to its Pension Plans and SERP as of August 29, 2020 and August 31, 2019 were as follows (in thousands):

	Pension Plans						SERP
	2020			2019			2020			2019
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	5,566		$	7,449		$	35,967		$	27,547
Service cost		113			114			918			725
Interest cost		131			260			1,027			1,148
Actuarial loss		169			163			1,658			7,456
Benefits paid		(224	)		(50	)		(954	)		(909	)
Settlements		(287	)		(2,370	)		—			—
Projected benefit obligation, end of year	$	5,468		$	5,566		$	38,616		$	35,967
Change in plan assets:
Fair value of plan assets, beginning of year	$	4,603		$	6,325		$	—		$	—
Actual return on plan assets		54			170			—			—
Employer contributions		—			528			—			—
Benefits paid		(224	)		(50	)		—			—
Settlements		(287	)		(2,370	)		—			—
Fair value of plan assets, end of year	$	4,146		$	4,603		$	—		$	—
Funded status (net amount recognized):	$	(1,322	)	$	(963	)	$	(38,616	)	$	(35,967	)

As of August 29, 2020 and August 31, 2019, the accumulated benefit obligations for the Company’s Pension Plans were $5.5 million and $5.6 million, respectively. As of August 29, 2020 and August 31, 2019, the accumulated benefit obligations for the Company’s SERP were $30.7 million and $27.4 million, respectively.

The amounts recorded on the Consolidated Balance Sheet for the Company’s Pension Plans and SERP as of August 29, 2020 and August 19, 2019 were as follows (in thousands):

	Pension Plans						SERP
	2020			2019			2020			2019
Deferred tax assets	$	279		$	254		$	3,144		$	2,912
Accrued liabilities	$	1,322		$	963		$	38,616		$	35,967
Accumulated other comprehensive loss	$	(819	)	$	(741	)	$	(9,234	)	$	(8,509	)

As of August 29, 2020 and August 31, 2019, the amounts recognized in accumulated other comprehensive loss for the Company’s Pension Plans and SERP were as follows (in thousands):

	Pension Plans						SERP
	2020			2019			2020			2019
Net actuarial gain (loss)	$	(1,011	)	$	(549	)	$	(9,234	)	$	(8,509	)
Unrecognized prior service cost		192			(192	)		—			—
Accumulated other comprehensive loss	$	(819	)	$	(741	)	$	(9,234	)	$	(8,509	)

The weighted average assumptions used in calculating the Company’s projected benefit obligation as of August 29, 2020 and August 31, 2019, were as follows:

	Pension Plans						SERP
	2020			2019			2020			2019
Discount rate		2.0	%		2.7	%		2.5	%		2.9	%
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 29, 2020, August 31, 2019 and August 25, 2018, were as follows:

	Pension Plans									SERP
	2020			2019			2018			2020			2019			2018
Discount rate		2.7	%		3.8	%		3.2	%		2.9	%		4.0	%		3.6	%
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 following benefit payments, which reflect expected future service, that are expected to be paid for the five fiscal years subsequent to August 29, 2020 and thereafter are as follows (in thousands):

	Pension Plans		SERP
2021	$	723	$	1,194
2022		214		1,363
2023		313		1,364
2024		307		1,560
2025		379		1,625
Thereafter		3,532		31,510
Total benefit payments	$	5,468	$	38,616