What changed in this filing

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Item 1. Financial Statements

2022-01-06 compared with 2021-07-06 · 128 added, 199 removed, 433 unchanged (43% of the section changed)

3 unchanged sentences

Thirteen weeks ended

Thirty-nine weeks ended

(In thousands, except per share data)

November 27, 2021

November 28, 2020

Operating expenses:

7 unchanged sentences

Other expense, net

Total other (income) expense, net

Total other expense, net

Income before income taxes

15 unchanged sentences

Thirteen weeks ended

Thirty-nine weeks ended

(In thousands)

November 27, 2021

November 28, 2020

Other comprehensive income (loss):

Foreign currency translation adjustments

Pension benefit liabilities

Change in fair value of derivatives, net of income taxes

7 unchanged sentences

(In thousands, except share and par value data)

November 27, 2021

August 28, 2021

30 unchanged sentences

15,219,531 and

15,251,176 shares issued and outstanding as of May 29, 2021 and

15,235,601 shares issued and outstanding as of November 27, 2021 and

August 28, 2021, respectively

1 unchanged sentence

20,000,000 shares authorized;

shares issued and outstanding as of May 29, 2021 and August 29, 2020,

shares issued and outstanding as of November 27, 2021 and August 28, 2021,

Capital surplus

20 unchanged sentences

Balance, November 28, 2020

Change in fair value of derivatives

Foreign currency translation

Pension benefit liabilities, net

Dividends declared Common Stock

($ 0.25 per share)

Dividends declared Class B Common Stock

($ 0.20 per share)

Repurchase of Common Stock

Share-based compensation, net (1)

Share-based awards exercised, net (2)

Balance, February 29, 2020

Change in fair value of derivatives

Foreign currency translation

Dividends declared Common Stock

($ 0.25 per share)

Dividends declared Class B Common Stock

($ 0.20 per share)

Share-based compensation, net (1)

Share-based awards exercised, net (2)

Repurchase of Common Stock

Balance, May 30, 2020

(In thousands)

11 unchanged sentences

Balance, November 27, 2021

Change in fair value of derivatives

Foreign currency translation

Dividends declared Common Stock

($ 0.25 per share)

Dividends declared Class B Common Stock

($ 0.20 per share)

Repurchase of Common Stock

Share-based compensation, net (1)

Share-based awards exercised, net (2)

Balance, February 27, 2021

Change in fair value of derivatives

Foreign currency translation

Dividends declared Common Stock

($ 0.25 per share)

Dividends declared Class B Common Stock

($ 0.20 per share)

Share-based compensation, net (1)

Share-based awards exercised, net (2)

Balance, May 29, 2021

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

4 unchanged sentences

UniFirst Corporation and Subsidiaries

Thirty-nine weeks ended

Thirteen weeks ended

(In thousands)

November 27, 2021

November 28, 2020

Cash flows from operating activities:

2 unchanged sentences

Amortization of deferred financing costs

Loss on sale of property, plant and equipment

Share-based compensation

16 unchanged sentences

Cash flows from financing activities:

Payment of deferred financing costs

Proceeds from exercise of share-based awards

4 unchanged sentences

Effect of exchange rate changes

Net increase in cash, cash equivalents and short-term investments

Net decrease in cash, cash equivalents and short-term investments

Cash, cash equivalents and short-term investments at beginning of period

15 unchanged sentences

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard update 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 requires 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.

The Company’s adoption of this guidance on August 30, 2020 did not have a material impact on its financial statements .

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 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.

The Company’s adoption of this guidance on August 30, 2020 did not have a material impact on its financial statements.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued updated guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

This guidance was effective for annual reporting periods ending after December 15, 2020 and was required to be applied on a retrospective basis with early adoption permitted.

Accordingly, the standard was effective for the Company on August 29, 2021 .

The Company’s adoption of this guidance on August 29, 2021 did not have a material impact on its financial statements or 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.

This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that began after December 15, 2020 with early adoption permitted.

The Company’s adoption of this guidance on August 29, 2021 did not have a material impact on its financial statements.

In October 2021, the FASB issued updated guidance to improve the accounting for acquired revenue contracts with customers in a business combination.

This guidance will be effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2023 and will be required to be applied on a prospective basis with early adoption permitted.

Accordingly, the standard will be effective for the Company on September 1, 2024.

The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

In November 2021, the FASB issued updated guidance to increase the transparency of government assistance, including the disclosure of the types of assistance, an entity’s accounting for the assistance and the effect of the assistance on an entity’s financial statements.

This guidance will be effective for annual reporting periods that begin after December 15, 2021 and will be required to be applied on a prospective basis with early adoption permitted.

Accordingly, the standard will be effective for the Company on August 28, 2022.

The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.

Revenue Recognition

The following table presents the Company’s revenues for the thirteen and thirty-nine weeks ended May 29, 2021 and May 30, 2020, respectively, disaggregated by service type:

The following table presents the Company’s revenues for the thirteen weeks ended November 27, 2021 and November 28, 2020, respectively, disaggregated by service type:

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

November 27, 2021

November 28, 2020

(In thousands, except percentages)

3 unchanged sentences

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

Revenue Recognition Policy

During the thirteen weeks ended November 27, 2021 and November 28, 2020, approximately 91.2 % and 91.0 %, respectively, of the Company’s revenues were derived from fees for route servicing in our Core Laundry Operations, Specialty Garments, and First Aid segments performed by the Company’s employees at the customer’s location of business.

Revenues from the Company’s route

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Revenue Recognition Policy

During the thirteen weeks ended May 29, 2021 and May 30, 2020, approximately 90.9 % and 85.7 %, respectively, of the Company’s revenues were derived from fees for route servicing of Core Laundry Operations, Specialty Garments, and First Aid performed by the Company’s employees at the customer’s location of business.

During the thirty-nine weeks ended May 29, 2021 and May 30, 2020, approximately 91.0 % and 89.2 %, respectively, of the Company’s revenues were derived from fees for route servicing of Core Laundry Operations, Specialty Garments, and First Aid 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).

servicing customer contracts represent a single performance obligation.

The Company recognizes these revenues over time as services are performed based on the nature of s ervices 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.

6 unchanged sentences

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 29, 2021 and May 30, 2020.

No significant constraints on the Company’s revenue recognition were applied during the thirteen weeks ended November 27, 2021 and November 28, 2020 .

The Company reassesses these estimates during each reporting period.

7 unchanged sentences

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.

Deferred commissions are classified as current or non-current 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 29, 2021, the current and non-current assets related to deferred commissions totaled $ 13.9 million and $ 59.1 million, respectively.

As of November 27, 2021, the current and non-current assets related to deferred commissions totaled $ 14.6 million and $ 62.6 million, respectively.

As of August 28, 2021, the current and non-current assets related to deferred commissions totaled $ 14.2 million and $ 60.6 million, respectively.

During the thirteen weeks ended May 29, 2021 and May 30, 2020, the Company recorded $ 3.6 million and $ 3.4 million, respectively, of amortization expense related to deferred commissions.

During the thirty-nine weeks ended May 29, 2021 and May 30, 2020, the Company recorded $ 10.8 million and $ 10.2 million, respectively, of amortization expense related to deferred commissions.

During the thirteen weeks ended November 27, 2021 and November 28, 2020, the Company recorded $ 3.8 million and $ 3.5 million, respectively, of amortization expense related to deferred commissions.

This expense is classified in selling and administrative expenses on the consolidated statements of income.

During the thirty-nine weeks ended May 29, 2021, the Company completed four business acquisitions with an aggregate purchase price of approximately $ 7.5 million, which was primarily assigned to goodwill and intangible assets.

During the thirteen weeks ended November 27, 2021, the Company completed four business acquisitions with an aggregate purchase price of approximately $ 0.5 million, all of which was assigned to intangible assets.

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.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 29, 2021

Assets (Liabilities):

As of November 27, 2021

Cash equivalents

2 unchanged sentences

Total assets at fair value

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

As of August 28, 2021

13 unchanged sentences

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 accrued liabilities as of May 29, 2021 and prepaid expenses and other current assets and other long-term assets as of August 29, 2020.

These contracts are included in prepaid expenses and other current assets and other long-term assets as of November 27, 2021 and August 28, 2021.

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.

Derivative Instruments and Hedging Activities

As of May 29, 2021, the Company had forward contracts with a notional value of approximately $ 2.2 million CAD outstanding and recorded the fair value of the contracts of $ 0.1 million in accrued liabilities with a corresponding nominal loss in accumulated other comprehensive loss, which was recorded net of tax.

During the thirteen and thirty-nine weeks ended May 29, 2021, the Company reclassified a nominal amount from accumulated other comprehensive loss to revenue, related to the derivative financial instruments.

The loss on these forward contracts that resulted in an increase to accumulated other comprehensive loss as of May 29, 2021 is expected to be reclassified to revenues prior to its maturity on February 25, 2022.

As of November 27, 2021, the Company had forward contracts with a notional value of approximately 11.5 million CAD outstanding and recorded the fair value of the contracts of $ 0.1 million in prepaid expenses and other current assets and other long-term assets with a corresponding gain in accumulated other comprehensive loss of $ 0.1 million, which was recorded net of tax.

During the thirteen weeks ended November 27, 2021, the Company reclassified a nominal amount from accumulated other comprehensive loss 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 November 27, 2021 is expected to be reclassified to revenues prior to their maturity on February 25, 2022 and August 29, 2026, respectively.

Employee Benefit Plans

3 unchanged sentences

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 29, 2021 and May 30, 2020 were $ 5.1 million and $ 1.9 million, respectively.

Contributions charged to expense under the plan for the thirty-nine weeks ended May 29, 2021 and May 30, 2020 were $ 15.2 million and $ 12.4 million, respectively.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Contributions charged to expense under the plan for the thirteen weeks ended November 27, 2021 and November 28, 2020 were $ 5.5 million and $ 5.8 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 one frozen non-contributory defined benefit pension plan.

The amounts charged to expense related to these plans for the thirteen weeks ended May 29, 2021 and May 30, 2020 were $ 0.8 million and $ 0.7 million, respectively.

The amounts charged to expense related to these plans for the thirty-nine weeks ended May 29, 2021 and May 30, 2020 were $ 2.3 million and $ 1.2 million, respectively.

The amounts charged to expense related to these plans for the thirteen weeks ended November 27, 2021 and November 28, 2020 were $ 0.6 million and $ 0.8 million, respectively.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Income Per Share

2 unchanged sentences

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

November 27, 2021

November 28, 2020

Net income available to shareholders

8 unchanged sentences

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

For the thirteen and thirty-nine weeks ended May 29, 2021 and May 30, 2020, 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 29, 2021 and May 30, 2020 (in thousands, except per share data):

Thirteen weeks ended May 29, 2021

Thirty-nine weeks ended May 29, 2021

For the thirteen weeks ended November 27, 2021 and November 28, 2020, 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 weeks ended November 27, 2021 and November 28, 2020 (in thousands, except per share data):

Thirteen weeks ended November 27, 2021

As reported - Basic

3 unchanged sentences

As reported – Diluted

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Thirteen weeks ended May 30, 2020

Thirty-nine weeks ended May 30, 2020

Thirteen weeks ended November 28, 2020

As reported - Basic

3 unchanged sentences

As reported – Diluted

Share-based awards that would result in the issuance of 2,189 and 1,770 shares, respectively, of Common Stock were excluded from the calculation of diluted income per share for the thirteen and thirty-nine weeks ended May 29, 2021 because they were anti-dilutive.

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.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Share-based awards that would result in the issuance of 11,119 shares of Common Stock were excluded from the calculation of diluted income per share for the thirteen weeks ended November 27, 2021 because they were anti-dilutive.

Share-based awards that would result in the issuance of 11,008 shares of Common Stock were excluded from the calculation of diluted income per share for the thirteen weeks ended November 28, 2020 because they were anti-dilutive.

Inventories are stated at the lower of cost or net realizable value, net of any reserve for excess and obsolete inventory.

4 unchanged sentences

The Company uses the first-in, first-out (“FIFO”) method to value its inventories.

The components of inventory as of May 29, 2021 and August 29, 2020 were as follows (in thousands):

The components of inventory as of November 27, 2021 and August 28, 2021 were as follows (in thousands):

November 27, 2021

August 28, 2021

9 unchanged sentences

Goodwill recorded during the period

Balance as of May 29, 2021

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

Balance as of November 27, 2021

Intangible assets, net in the Company’s consolidated balance sheets are as follows (in thousands):

Gross Carrying

November 27, 2021

Customer contracts

6 unchanged sentences

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 23 years .

A reconciliation of the Company’s asset retirement liability for the thirty-nine weeks ended May 29, 2021 was as follows (in thousands):

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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 23 years.

A reconciliation of the Company’s asset retirement liability for the thirteen weeks ended November 27, 2021 was as follows (in thousands):

November 27, 2021

Beginning balance as of August 28, 2021

1 unchanged sentence

Effect of exchange rate changes

Balance as of May 29, 2021

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

Balance as of November 27, 2021

Asset retirement obligations are included in long-term accrued liabilities in the Company’s consolidated balance sheets.

Commitments and Contingencies

9 unchanged sentences

The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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 29, 2021:

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 thirteen weeks ended November 27, 2021:

(In thousands, except lease term and discount rate)

5 unchanged sentences

Weighted-average discount rate - operating leases

The contractual future minimum lease payments of the Company's operating lease liabilities by fiscal year are as follows as of May 29, 2021:

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The contractual future minimum lease payments of the Company's operating lease liabilities by fiscal year are as follows as of November 27, 2021:

(In thousands)

2021 (remaining three months)

2022 (remaining nine months)

Total payments

14 unchanged sentences

The Company continues to address environmental conditions under terms of consent orders negotiated with the applicable environmental authorities or otherwise with respect to certain sites.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The Company has accrued certain costs related to certain sites, including but not limited to sites in Woburn and Somerville, Massachusetts, as it has been determined that the costs are probable and can be reasonably estimated.

The Company , together with multiple other companies, is party to a consent decree related to its property and parcel s of land (the “Central Area”) at a site in Woburn, Massachusetts.

The Company, together with multiple other companies, is party to a consent decree related to its property and parcels of land (the “Central Area”) at a site in Woburn, Massachusetts.

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.

3 unchanged sentences

Additionally, the Company has implemented mitigation measures and continues to monitor environmental conditions at the Somerville, Massachusetts site.

The Company has received, responded, and agreed to undertake additional response actions pertaining 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 agreed to undertake additional actions responsive 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.

2 unchanged sentences

however, in light of the uncertainties associated with this matter, these costs and the related reserve may change.

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.

9 unchanged sentences

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 29, 2021, the risk-free interest rates utilized by the Company ranged from 1.58 % to 2.26 %.

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 29, 2021 were as follows (in thousands):

As of November 27, 2021, the risk-free interest rates utilized by the Company ranged from 0.81 % to 1.89 %.

The changes to the Company’s environmental liabilities for the thirteen weeks ended November 27, 2021 were as follows (in thousands):

November 27, 2021

Balance as of August 28, 2021

4 unchanged sentences

Changes in discount rates

Balance as of May 29, 2021

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of May 29, 2021, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below.

Balance as of November 27, 2021

Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of November 27, 2021, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below.

(In thousands)

4 unchanged sentences

Effect of discounting

Balance as of May 29, 2021

Balance as of November 27, 2021

Estimated insurance proceeds are primarily received from an annuity received as part of a legal settlement with an insurance company.

1 unchanged sentence

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 29, 2021, 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 $ 4.8 million.

As of November 27, 2021, the balance in this escrow account, which is held in a trust and is not recorded in the Company’s consolidated balance sheet, was approximately $ 4.7 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.

2 unchanged sentences

There can be no assurance that such regulation will not lead to material disruptions in the Company’s garment decontamination business.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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.

4 unchanged sentences

Effective tax rate

The Company’s effective tax rate for the thirteen weeks ended May 29, 2021 was 22.9 % as compared to 21.8 % for the corresponding period in the prior year.

The increase in the effective tax rate for the thirteen weeks ended May 29, 2021 as compared to the corresponding period in the prior year was due primarily to the impact of discrete tax benefits on lower income before taxes in the corresponding period in the prior year.

The Company’s effective tax rate for the thirty-nine weeks ended May 29, 2021 was 23.6 % as compared to 22.8 % for the corresponding period in the prior year.

The increase in the effective tax rate in the thirty-nine weeks ended May 29, 2021 as compared to the corresponding period in the prior year was due to the release of certain tax reserves.

The Company’s effective tax rate for the thirteen weeks ended November 27, 2021 was 24.6 % as compared to 25.0 % for the corresponding period in the prior year.

The decrease in the effective tax rate for the thirteen weeks ended November 27, 2021 as compared to the corresponding period in the prior year was due primarily to an increased tax benefit related to the foreign derived intangible income deduction during the thirteen weeks ended November 27, 2021.

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 thirty-nine weeks ended May 29, 2021, there was a net increase in unrecognized tax position of $ 2.7 million.

The increase was comprised of a $ 3.5 million increase for new tax reserves offset by an $ 0.8 million decrease for the release of certain existing reserves due to the expiration of the statute of limitations.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

During the thirteen weeks ended November 27, 2021, there was a net increase in unrecognized tax position of $ 0.5 million related to existing reserves.

and Canadian federal income tax statutes have lapsed for filings up to and including fiscal years 2015 and 2013, respectively.

3 unchanged sentences

On March 26, 2021, the Company entered into an amended and restated $ 175.0 million unsecured revolving credit agreement (the “2021 Credit Agreement”) with a syndicate of banks, which matures on March 26, 2026 .

The 2021 Credit Agreement amended and restated the Company’s prior Credit Agreement (defined below), which was scheduled to mature on April 11, 2021 .

The 2021 Credit Agreement amended and restated the Company’s prior credit agreement, which was scheduled to mature on April 11, 2021 .

Under the 2021 Credit Agreement, the Company is able to borrow funds at variable interest rates based on, at the Company’s election, the Eurodollar rate or a base rate, plus in each case a spread based on the Company’s consolidated funded debt ratio.

1 unchanged sentence

The Company tests its compliance with these financial covenants on a fiscal quarterly basis.

As of May 29, 2021, the interest rates applicable to the Company’s borrowings under the 2021 Credit Agreement would be calculated as LIBOR plus 1.00 % at the time of the respective borrowing.

As of May 29, 2021, the Company had no outstanding borrowings and had outstanding letters of credit amounting to $ 67.5 million, leaving $ 107.5 million available for borrowing under the 2021 Credit Agreement.

As of May 29, 2021, the Company was in compliance with all covenants under the 2021 Credit Agreement.

Prior to March 26, 2021, the Company had a $ 250 million unsecured revolving credit agreement (the “Credit Agreement”) with a syndicate of banks, which was scheduled to mature on April 11, 2021 .

Under the Credit Agreement, the Company was 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 required 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.

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 29, 2021 and May 30, 2020 were as follows (in thousands):

Thirteen weeks ended May 29, 2021

Instruments (1)

Comprehensive

Balance as of February 27, 2021

Other comprehensive income (loss) before reclassification

Amounts reclassified from accumulated other

comprehensive loss

Net current period other comprehensive (loss) income

Balance as of May 29, 2021

As of November 27, 2021, the interest rates applicable to the Company’s borrowings under the 2021 Credit Agreement would be calculated as LIBOR plus 1.00 % at the time of the respective borrowing.

As of November 27, 2021, the Company had no outstanding borrowings and had outstanding letters of credit amounting to $ 67.5 million, leaving $ 107.5 million available for borrowing under the 2021 Credit Agreement.

As of November 27, 2021, the Company was in compliance with all covenants under the 2021 Credit Agreement.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Thirty-nine weeks ended May 29, 2021

Accumulated Other Comprehensive Loss

The changes in each component of accumulated other comprehensive loss, net of tax, for the thirteen weeks ended November 27, 2021 and November 28, 2020 were as follows (in thousands):

Thirteen weeks ended November 27, 2021

Instruments (1)

5 unchanged sentences

Net current period other comprehensive (loss) income

Balance as of May 29, 2021

Thirteen weeks ended May 30, 2020

Instruments (1)

Comprehensive

Balance as of February 29, 2020

Other comprehensive (loss) income before reclassification

Amounts reclassified from accumulated other

comprehensive loss

Net current period other comprehensive (loss) income

Balance as of May 30, 2020

Thirty-nine weeks ended May 30, 2020

Balance as of November 27, 2021

Thirteen weeks ended November 28, 2020

Instruments (1)

5 unchanged sentences

Net current period other comprehensive (loss) income

Balance as of May 30, 2020

Balance as of November 28, 2020

Amounts are shown net of tax

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the thirteen and thirty-nine weeks ended May 29, 2021 and May 30, 2020 were as follows (in thousands):

Amounts reclassified from accumulated other comprehensive loss, net of tax, for the thirteen weeks ended November 27, 2021 and November 28, 2020 were as follows (in thousands):

Thirteen weeks ended

Thirty-nine weeks ended

Pension benefit liabilities (net):

Reclassification to income statement (a)

Total, net of tax

November 27, 2021

November 28, 2020

Derivative financial instruments, net:

2 unchanged sentences

Total amounts reclassified, net of tax

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

Amounts included in revenues in the accompanying Consolidated Statements of Income.

Amounts included in selling and administrative expenses in the consolidated statements of income.

Amounts included in revenues in the consolidated statements of income.

Segment Reporting

3 unchanged sentences

Rental and Cleaning, Canadian Rental and Cleaning, Manufacturing (“MFG”), Corporate, Specialty Garments and First Aid.

Rental and Cleaning and Canadian Rental and Cleaning operating segments have been combined to form the U.S.

Rental and Cleaning and Canadian Rental

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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.

14 unchanged sentences

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.

No assets or capital expenditures 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.

3 unchanged sentences

and Canadian Rental and Cleaning segment, with the remainder of the costs relating to the Specialty Garment and First Aid segments.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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.

3 unchanged sentences

Thirteen weeks ended

Operating income (loss)

Interest income, net

Income (loss) before taxes

Operating income (loss)

Interest income, net

Income (loss) before taxes

Thirty-nine weeks ended

November 27, 2021

Operating income (loss)

Interest income, net

Interest (income) expense, net

Income (loss) before taxes

November 28, 2020

Operating income (loss)

Interest income, net

Interest (income) expense, net

Income (loss) before taxes

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Shares Repurchased and Dividends

On October 23, 2019, the Company announced that it would be raising its quarterly dividend to $ 0.25 per share of Common Stock and to $ 0.20 per share of 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.

On October 20, 2021, the Company announced that it would be raising its quarterly dividend to $ 0.30 per share for Common Stock and to $ 0.24 per share for Class B Common Stock, up from $ 0.25 and $ 0.20 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, the Company’s Board of Directors approved a share repurchase program (the “2019 Share Repurchase Program”) authorizing the Company to repurchase from time to time up to $ 100.0 million of its outstanding shares of Common Stock.

On October 18, 2021, the Company’s Board of Directors authorized a new share repurchase program (the “2021 Share Repurchase Program” and, together with the 2019 Share Repurchase Program, the “Share Repurchase Programs”) to repurchase from time to time up to $ 100.0 million of our outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved on January 2, 2019.

Repurchases made under the new 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 2021 Credit Agreement and may be suspended or discontinued at any time.

As of May 29, 2021, the Company had repurchased a total of 368,117 shares for an average price per share of $ 167.87 under the share repurchase program using cash on hand.

The Company did no t repurchase any shares during the thirteen weeks ended May 29, 2021.

During the thirty-nine weeks ended May 29, 2021, the Company repurchased 53,200 shares for an average price per share of $ 179.21 .

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 weeks ended November 27, 2021, the Company repurchased 22,750 shares for an average price per share of $ 209.73 under the Share Repurchase Programs.

During the thirteen weeks ended November 28, 2020, the Company repurchased 41,000 shares for an average price per share of $ 176.01 under the 2019 Share Repurchase Program.

As of November 27, 2021, the Company had $ 97.3 million remaining to repurchase under the 2021 Share Repurchase Program.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements