UniFirst
Annual Report 2019

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K (Mark One)☒Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the Fiscal Year Ended August 31, 2019☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Commission file number 001-08504 UNIFIRST CORPORATION(Exact Name of Registrant as Specified in Its Charter) Massachusetts04-2103460(State or Other Jurisdiction ofIncorporation or Organization)(IRS EmployerIdentification No.)68 Jonspin RoadWilmington, Massachusetts 01887(Address of Principal Executive Offices)(Zip Code)Registrant’s telephone number, including area code: (978) 658-8888Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Each Exchange on Which RegisteredCommon Stock, $0.10 par value per share UNF New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of thischapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See thedefinitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller Reporting Company☐ Emerging Growth Company☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accountingstandards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The number of outstanding shares of the Registrant’s Common Stock and Class B Common Stock as of October 25, 2019 were 15,294,444 and 3,643,009, respectively. The aggregate marketvalue of the voting stock of the Registrant held by non-affiliates as of February 22, 2019 (the last business day of the Registrant’s most recently completed second fiscal quarter), computed byreference to the closing sale price of such shares on such date, was approximately $2,229,068,691.Documents Incorporated By ReferenceThe Registrant intends to file a Definitive Proxy Statement pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended, for its 2020 Annual Meeting ofShareholders within 120 days of the end of the fiscal year ended August 31, 2019. Portions of such Proxy Statement are incorporated by reference in Part III of this Annual Report on Form 10-K. UniFirst CorporationAnnual Report on Form 10-KFor the Fiscal Year Ended August 31, 2019 Table of Contents PART I 1Item 1. Business 1Item 1A. Risk Factors 5Item 1B. Unresolved Staff Comments 13Item 2. Properties 13Item 3. Legal Proceedings 13Item 4. Mine Safety Disclosures 13PART II 14Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 14Item 6. Selected Financial Data 16Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18Item 7A. Quantitative and Qualitative Disclosures About Market Risk 35Item 8. Financial Statements and Supplementary Data 36 Consolidated statements of income for each of the three years in the period ended August 31, 2019 36 Consolidated statements of comprehensive income for each of the three years in the period ended August 31, 2019 37 Consolidated balance sheets as of August 31, 2019 and August 25, 2018 38 Consolidated statements of shareholders’ equity for each of the three years in the period ended August 31, 2019 39 Consolidated statements of cash flows for each of the three years in the period ended August 31, 2019 40 Notes to Consolidated Financial Statements 41 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm 69Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 73Item 9A. Controls and Procedures 73 Management’s Report on Internal Control Over Financial Reporting 73 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm 74Item 9B. Other Information 75PART III 75Item 10. Directors, Executive Officers and Corporate Governance 75Item 11. Executive Compensation 75Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 75Item 13. Certain Relationships and Related Transactions, and Director Independence 75Item 14. Principal Accounting Fees and Services 75PART IV 76Item 15. Exhibits, Financial Statement Schedules 76Item 16. Form 10-K Summary 79 Ex-21 List of Subsidiaries Ex-23.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm Ex-31.1 Section 302 Certification of CEO Ex-31.2 Section 302 Certification of CFO Ex-32.1 Section 906 Certification of CEO Ex-32.2 Section 906 Certification of CFO  PART IThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended. Our actual results could differ materially from those set forth in the forward-looking statements.Certain factors that might cause such a difference are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;“Safe Harbor for Forward-Looking Statements” and “Risk Factors” included elsewhere in this Annual Report on Form 10-K.ITEM 1. BUSINESSGENERALUniFirst Corporation, a corporation organized under the laws of the Commonwealth of Massachusetts in 1950, together with its subsidiaries, hereunder referred toas “we”, “our”, the “Company”, or “UniFirst”, is one of the largest providers of workplace uniforms and protective work wear clothing in the United States. Wedesign, manufacture, personalize, rent, clean, deliver, and sell a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats,smocks, aprons and specialized protective wear, such as flame resistant and high visibility garments. We also rent and sell industrial wiping products, floor mats,facility service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies, to avariety of manufacturers, retailers and service companies. We serve businesses of all sizes in numerous industry categories. At certain specialized facilities, we alsodecontaminate and clean work clothes and other items that may have been exposed to radioactive materials and service special cleanroom protective wear andfacilities.Our principal services include providing customers with uniforms and other non-garment items, picking up soiled uniforms or other items on a periodic basis(usually weekly), and delivering, at the same time, cleaned and processed items. We offer uniforms in a wide variety of styles, colors, sizes and fabrics and withpersonalized emblems selected by the customer. Our centralized services, specialized equipment and economies of scale generally allow us to be more costeffective in providing garment services than customers could be themselves, particularly those customers with high employee turnover rates. During the fiscal yearended August 31, 2019 (“fiscal 2019”), we manufactured approximately 67% of the garments we placed in service. These were primarily work pants and shirtsmanufactured at three of our plants located in San Luis Potosi, Mexico, one plant located in Managua, Nicaragua, as well as at subcontract manufacturers that weutilize to supplement our manufacturing capacity in periods of high demand. Because we design and manufacture a majority of our own uniforms and protectiveclothes, we can produce custom garment programs for our larger customers, offer a diverse range of such designs within our standard line of garments and bettercontrol the quality, price and speed at which we produce such garments. In addition, among our competitors, we believe we have the largest in-house digital imageprocessing capability, allowing us to convert an image provided by a customer into customized, mass producible embroidered emblems, typically within two days.PRODUCTS AND SERVICESWe provide our customers with personalized workplace uniforms and protective work clothing in a broad range of styles, colors, sizes and fabrics. Our uniformproducts include shirts, pants, jackets, coveralls, lab coats, smocks, aprons and specialized protective wear, such as flame resistant and high visibility garments. Atcertain specialized facilities, we also decontaminate and clean clothes and other items which may have been exposed to radioactive materials and service specialcleanroom protective wear and facilities. We also offer non-garment items and services, such as industrial wiping products, floor mats, dry and wet mops, restroomand cleaning supplies and other textile products.We offer our customers a range of garment service options, including full-service rental programs in which garments are cleaned and serviced by us, leaseprograms in which garments are cleaned and maintained by individual employees and purchase programs to buy garments and related items directly. As part of ourrental business, we pick up a customer’s soiled uniforms and/or other items on a periodic basis (usually weekly) and deliver back cleaned and processedreplacement items. We believe our centralized services, specialized equipment and economies of scale generally allow us to be more cost effective in providinggarment and related services than customers would be themselves, particularly those customers with high employee turnover rates. Our uniform program isintended not only to help our customers foster greater company identity, but to enhance their corporate image and improve employee safety, productivity andmorale. We primarily serve our customers pursuant to written service contracts that range in duration from three to five years.1 Historically, our revenues and operating results have varied from quarter to quarter and are expected to continue to fluctuate in the future. These fluctuations havebeen due to a number of factors, including: general economic conditions in our markets; the timing of acquisitions and of commencing start-up operations andrelated costs; our effectiveness in integrating acquired businesses and start-up operations; the timing of nuclear plant outages; capital expenditures; seasonal rentaland purchasing patterns of our customers; and price changes in response to competitive factors. In addition, our operating results historically have been lowerduring the second and fourth fiscal quarters than during the other quarters of the fiscal year. The operating results for any historical quarter are not necessarilyindicative of the results to be expected for an entire fiscal year or any other interim periods.CUSTOMERSWe serve businesses of all sizes in numerous industry categories. During each of the past three years, no single customer in our Core Laundry Operations segmentaccounted for more than 10% of our revenues. Our typical customers include automobile service centers and dealers, delivery services, food and generalmerchandise retailers, food processors and service operations, light manufacturers, maintenance facilities, restaurants, service companies, soft and durable goodswholesalers, transportation companies, and others who require employee clothing for image, identification, protection or utility purposes. Among our largestcustomers of our conventional uniform rental business are divisions, units, regional operations or franchised agencies of major, nationally recognizedorganizations. With respect to our Specialty Garment segment, typical customers include government agencies, research and development laboratories, hightechnology companies and utilities operating nuclear reactors. We currently service over 300,000 customer locations in the United States, Canada and Europe fromover 260 customer service, distribution and manufacturing facilities.MARKETING, SALES, AND CUSTOMER SERVICEWe market our products and services to a diverse customer base and to prospects that range across virtually all industry segments. Marketing contact is madethrough print advertising, direct mail, publicity, trade shows, catalogs, telemarketing, multiple web sites and direct field sales representation. We have built andmaintain an extensive, proprietary database of prescreened and qualified business prospects that have been sourced from our various promotional initiatives,including mailers, web site contacts, advertising responses, sales calls and lists purchased from third-party providers. These prospect records serve as a primarytargeting resource for our professional sales organization and are constantly updated, expanded and maintained by an in-house team of specialist databasequalifiers and managers. To aid in the effective marketing of products and services, we supply sales representatives with an extensive selection of sales aids,brochures, presentation materials and vertical market communications tools. We also provide representatives with detailed on-line profiles of high opportunitymarkets to educate them to the typical issues, needs and concerns of those markets. This helps establish credibility and aids their ability to deliver value-basedsolutions.We employ a large team of trained professional sales representatives whose sole function is to market our services to potential customers and develop newaccounts. While most of our sales representatives are capable of presenting a full range of service solutions, some are dedicated to developing business for a limitedrange of products and services or have a specific market focus.For example, in select geographic markets we employ teams of dedicated facility services sales representatives who focus exclusively on developing business forour floor care, restroom and related service programs. We employ specialist executive-level salespeople in our National Account Organization—some whospecialize in rental programs and some who specialize in direct sale programs—to target the very largest national companies with known uniform and/or facilityservices program needs. We believe that effective customer service is the most important element in developing and maintaining our market position. Ourcommitment to service excellence is reflected throughout our organization. Our route sales representatives are the first line of continuing customer contact, who aresupported by local customer service representatives, local service management staff and local operations management leaders, all of whom are focused onaddressing the ongoing needs of customers, constantly delivering high-value service and pursuing total customer satisfaction. Our proprietary information systemsand our support service center enable us to respond to customer inquiries or issues within 24 hours, and our service personnel are specially trained to handle thedaily contact work necessary to effectively manage customer relations.We measure the speed and accuracy of our customer service efforts on a weekly basis and, through our “Customers for Life’’ program, we continuously survey,record and report satisfaction levels as a means of evaluating current performance and highlighting areas for improvement.2 COMPETITIONThe uniform rental and sales industry is highly competitive. The principal methods of competition in the industry are the quality of products, the quality of serviceand price. Our principal competitors include Cintas Corporation and Aramark Corporation. The remainder of the market, however, is divided among more than 600smaller businesses, many of which serve one or a limited number of markets or geographic service areas. In addition to our traditional rental competitors, we mayincreasingly compete in the future with businesses that focus on selling uniforms and other related items. We also compete with industry competitors foracquisitions.MANUFACTURING AND SOURCINGWe manufactured approximately 67% of all garments which we placed in service during fiscal 2019. These garments were primarily work pants and shirtsmanufactured at three of our plants located in San Luis Potosi, Mexico, one plant located in Managua, Nicaragua, as well as at subcontract manufacturers that weutilize to supplement our manufacturing capacity in periods of high demand. The balance of the garments used in our programs are purchased from a variety ofindustry suppliers. While we currently acquire the raw materials with which we produce our garments from a limited number of suppliers, we believe that suchmaterials are readily available from other sources. To date, we have experienced no significant difficulty in obtaining any of our raw materials or supplies.Currently, we also manufacture approximately 97% of the mats we place in service at our plant in Cave City, Arkansas.EMPLOYEESAs of August 31, 2019, we employed approximately 14,000 persons, and approximately 1% of our United States employees are represented by a union pursuant toa collective bargaining agreement. We consider our employee relations to be good.EXECUTIVE OFFICERSOur executive officers are as follows: NAME AGE POSITIONSteven S. Sintros 46 President and Chief Executive OfficerShane O’Connor 45 Senior Vice President and Chief Financial OfficerCynthia Croatti 64 Executive Vice President and TreasurerDavid A. DiFillippo 62 Senior Vice President, OperationsDavid M. Katz 56 Senior Vice President, Sales and MarketingMichael A. Croatti 50 Senior Vice President, OperationsWilliam M. Ross 58 Senior Vice President, Operations The principal occupation and positions for the past five years of our executive officers named above are as follows:Steven S. Sintros joined our Company in 2004. Mr. Sintros has served as our President and Chief Executive Officer and a Director since July 2017. He has overallresponsibility for management of our Company. He previously served as our Chief Financial Officer from January 2009 until January 2018. Mr. Sintros served asa Finance Manager in 2004 and Corporate Controller from 2005 until January 2009.Shane O’Connor joined our Company in 2005. Mr. O’Connor has served as our Senior Vice President and Chief Financial Officer since January 2018. He hasprimary responsibility for overseeing the financial functions of our Company, as well as our information systems department. Mr. O’Connor previously served asour Corporate Controller from 2009 to 2016. In 2016, he left the Company to take the role of Senior Vice President and Chief Financial Officer at UnidineCorporation, a leader in dining management services, and he then rejoined our Company in January 2018.Cynthia Croatti joined our Company in 1980. Ms. Croatti has served as Director since 1995, Treasurer since 1982 and Executive Vice President since 2001. Inaddition, she has primary responsibility for overseeing the human resources and purchasing functions of our Company.3 David A. DiFillippo joined our Company in 1979. Mr. DiFillippo has served as Senior Vice President, Operations since 2002 and has primary responsibility foroverseeing the operations of certain regions in the United States and Canada. From 2000 through 2002, Mr. DiFillippo served as Vice President, Central RentalGroup and, prior to 2000, he served as a Regional General Manager.David M. Katz joined our Company in 2009. Mr. Katz is a Senior Vice President and has primary responsibility for overseeing the sales and marketing functionsof our Company. Prior to joining our Company, Mr. Katz worked for DHL Express where he served as the Northeast Vice President of Field Sales from 2003 to2007, the Northeast Vice President of National Account Sales from 2007 to 2008 and the Senior Vice President and General Manager of the Northeast from 2008until 2009.Michael A. Croatti joined our Company in 1987. Mr. Croatti became Senior Vice President, Operations in 2015 and has primary responsibility for overseeingspecified regions in the United States and the Company’s overall service operations. From 2012 through 2015, he served as Senior Vice President, Service; from2002 through 2012, he served as Vice President, Central Rental Group; and prior to 2002, he held various operating positions within the Company. Michael A.Croatti is the nephew of Cynthia Croatti.William M. Ross joined our Company in 1989. Mr. Ross became Senior Vice President, Operations in 2016 and has primary responsibility for overseeingspecified regions in the United States. From 2002 to 2016, Mr. Ross served as Regional Vice President of the Company. Prior to 2002, Mr. Ross held several salesand operations management positions at the Company.ENVIRONMENTAL MATTERSWe, like our competitors, are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges,and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundries currentlyuse and must dispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. We are attentive to theenvironmental concerns surrounding the disposal of these materials and have through the years taken measures to avoid their improper disposal. Over the years, wehave settled, or contributed to the settlement of, actions or claims brought against us relating to the disposal of hazardous materials and there can be no assurancethat we will not have to expend material amounts to remediate the consequences of any such disposal in the future. Further, under environmental laws, an owner orlessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on, or in, or emanating from suchproperty, as well as related costs of investigation and property damage. Such laws often impose liability without regard to whether the owner or lessee knew of, orwas responsible for the presence of such hazardous or toxic substances. There can be no assurance that acquired or leased locations have been operated incompliance with environmental laws and regulations or that future uses or conditions will not result in the imposition of liability upon us under such laws or exposeus to third-party actions such as tort suits. We continue to address environmental conditions under terms of consent orders negotiated with the applicableenvironmental authorities or otherwise with respect to sites located in, or related to, Woburn, Massachusetts, Somerville, Massachusetts, Springfield,Massachusetts, Uvalde, Texas, Stockton, California, two sites related to former operations in Williamstown, Vermont, as well as sites located in Goldsboro, NorthCarolina and Wilmington, North Carolina. For additional discussion refer to “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and the risk factors set forth in this Annual Report on Form 10-K.Our nuclear garment decontamination facilities in the United States are licensed by the Nuclear Regulatory Commission, or in certain cases, by the applicable stateagency, and are subject to regulation by federal, state and local authorities. We also have nuclear garment decontamination facilities in the United Kingdom and theNetherlands. These facilities are licensed and regulated by the respective country’s applicable federal agency. In the past, scrutiny and regulation of nuclearfacilities and related services have resulted in the suspension of operations at certain nuclear facilities served by us or disruptions in our ability to service suchfacilities. There can be no assurance that such scrutiny and regulation will not lead to the shut-down of such facilities or otherwise cause material disruptions in ourgarment decontamination business.AVAILABLE INFORMATIONWe make available free of charge our Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,including exhibits and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, theSecurities and Exchange Commission. These reports are available on our website at www.unifirst.com. In addition, you may request a copy of our filings,excluding exhibits, by contacting our Investor Relations group at (978) 658-8888 or at UniFirst Corporation, 68 Jonspin Road, Wilmington, MA 01887.Information included on our website is not deemed to be incorporated into this Annual Report on Form 10-K or the documents incorporated by reference into thisAnnual Report on Form 10-K.4 ITEM 1A. RISK FACTORSThe statements in this section, as well as statements described elsewhere in this Annual Report on Form 10-K, or in other SEC filings, describe risks that couldmaterially and adversely affect our business, financial condition and results of operations and the trading price of our securities. These risks are not the only risksthat we face. Our business, financial condition and results of operations could also be materially affected by additional factors that are not presently known to us orthat we currently consider to be immaterial to our operations.SAFE HARBOR FOR FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K and any documents incorporated by reference may contain forward-looking statements within the meaning of the federalsecurities laws. Forward-looking statements contained in this Annual Report on Form 10-K and any documents incorporated by reference are subject to the safeharbor created by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “estimates,” “anticipates,”“projects,” “plans,” “expects,” “intends,” “believes,” “seeks,” “could,” “should,” “may,” “will,” “strategy,” “objective,” “assume,” or the negative versions thereof,and similar expressions and by the context in which they are used. Such forward-looking statements are based upon our current expectations and speak only as ofthe date made. Such statements are highly dependent upon a variety of risks, uncertainties and other important factors that could cause actual results to differmaterially from those reflected in such forward-looking statements. Such factors include, but are not limited to, uncertainties caused by adverse economicconditions and their impact on our customers’ businesses and workforce levels, uncertainties regarding our ability to consummate and successfully integrateacquired businesses, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, anyadverse outcome of pending or future contingencies or claims, our ability to compete successfully without any significant degradation in our margin rates, seasonaland quarterly fluctuations in business levels, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionizationcampaigns that could disrupt our business, the effect of currency fluctuations on our results of operations and financial condition, our dependence on third partiesto supply us with raw materials, any loss of key management or other personnel, increased costs as a result of any changes in federal or state laws, rules andregulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, thenegative effect on our business from sharply depressed oil and natural gas prices, the continuing increase in domestic healthcare costs, our ability to retain andgrow our customer base, demand and prices for our products and services, fluctuations in our Specialty Garments business, instability in Mexico and Nicaraguawhere our principal garment manufacturing plants are located, our ability to properly and efficiently design, construct, implement and operate a new customerrelationship management (“CRM”) computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks,additional professional and internal costs necessary for compliance with any changes in Securities and Exchange Commission, New York Stock Exchange andaccounting rules, strikes and unemployment levels, our efforts to evaluate and potentially reduce internal costs, economic and other developments associated withthe war on terrorism and its impact on the economy, the impact of foreign trade policies and tariffs or other impositions on imported goods on our business, resultsof operations and financial condition, general economic conditions, our ability to successfully implement our business strategies and processes, including ourcapital allocation strategies and other factors described in this “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K. We undertake noobligation to update any forward-looking statements to reflect events or circumstances arising after the date on which they are made.RISKS RELATING TO OUR BUSINESS AND INDUSTRYWe face intense competition within our industry, which may adversely affect our results of operations and financial condition.The uniform rental and sales industry is highly competitive. The principal methods of competition in the industry are quality of products, quality of service andprice. Our leading competitors include Cintas Corporation and Aramark Corporation. The remainder of the market, however, is divided among more than 600smaller businesses, many of which serve one or a limited number of markets or geographic service areas. In addition to our traditional rental competitors, we mayincreasingly compete in the future with businesses that focus on selling uniforms and other related items, including single-use disposable garments for use in thenuclear industry. Increased competition may result in price reductions, reduced gross margins and loss of market share, any of which could have a material effecton our results of operations and financial condition. We also compete with industry competitors for acquisitions, which has the effect of increasing the price foracquisitions and reducing the number of acquisition candidates available to us. If we pay higher prices for businesses we acquire, our returns on investment andprofitability may be reduced.5 Adverse economic and business conditions or geopolitical events may affect our customer base and negatively impact our sales and operating results.We supply uniform services to many industries that have been in the past, and may be in the future, subject to adverse economic and business conditions resultingin shifting employment levels, workforce reductions, changes in worker productivity, uncertainty regarding the impacts of rehiring and shifts to offshoremanufacturing. In addition, geopolitical conflicts, calamities or other events may disrupt domestic and global business and financial markets and conditions. Anyconditions or events that adversely affect our current customers or sales prospects may cause such customers or prospects to restrict expenditures, reduceworkforces or even to cease to conduct their businesses. Any of these circumstances would have the effect of reducing the number of employees utilizing ouruniform services, which adversely affects our sales and results of operations.The expenses we incur to comply with environmental regulations, including costs associated with potential environmental remediation, may prove to besignificant and could have a material adverse effect on our results of operations and financial condition.We, like our competitors, are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges,and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundries currentlyuse and must dispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. We are attentive to theenvironmental concerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal. Over the years,we have settled, or contributed to the settlement of, actions or claims brought against us relating to the disposal of hazardous materials and there can be noassurance that we will not have to expend material amounts to remediate the consequences of any such disposal in the future. Further, under environmental laws,an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on, or in, or emanating fromsuch property, as well as related costs of investigation and property damage. Such laws often impose liability without regard to whether the owner or lessee knewof, or was responsible for, the presence of such hazardous or toxic substances. There can be no assurance that acquired or leased locations have been operated incompliance with environmental laws and regulations or that future uses or conditions will not result in the imposition of liability upon us under such laws or exposeus to third-party actions such as tort suits.We continue to address environmental conditions under terms of consent orders negotiated with the applicable environmental authorities or otherwise with respectto sites located in or related to Woburn, Massachusetts, Somerville, Massachusetts, Springfield, Massachusetts, Uvalde, Texas, Stockton, California, two sitesrelated to former operations in Williamstown, Vermont, as well as sites located in Goldsboro, North Carolina and Wilmington, North Carolina.We have accrued certain costs related to the sites described above as it has been determined that the costs are probable and can be reasonably estimated. We havepotential exposure related to a parcel of land (the “Central Area”) related to the Woburn, Massachusetts site cited above. Currently, the consent decree for theWoburn site does not define or require any remediation work in the Central Area. The United States Environmental Protection Agency (the “EPA”) has providedus and other signatories to the consent decree with comments on the design and implementation of groundwater and soil remedies at the Woburn site andinvestigation of environmental conditions in the Central Area. We, and other signatories, have implemented and proposed to do additional work at the Woburn sitebut many of the EPA’s comments remain to be resolved. We have accrued costs to perform certain work responsive to the EPA’s comments. Additionally, we haveimplemented mitigation measures and continue to monitor environmental conditions at the Somerville, Massachusetts site. We have received a notice of auditfindings from the Massachusetts Department of Environmental Protection concerning a regulatory submittal that we made in 2009 for a portion of the site. We arein the process of responding to that notice. We have received demands from the local transit authority for reimbursement of certain costs associated with itsconstruction of a new municipal transit station in the area of the Somerville site. This station is part of an ongoing extension of the transit system. We havereserved for costs in connection with this matter; however, in light of the uncertainties associated with this matter, these costs and the related reserve may change.On a quarterly basis, we assess each of our environmental sites to determine whether the costs of investigation and remediation of environmental conditions areprobable and can be reasonably estimated as well as the adequacy of our accruals with respect to such costs. There can be no assurance that our accruals withrespect to our environmental sites will be sufficient or that the costs of remediation and investigation will not substantially exceed our accruals as new facts,circumstances or estimates arise.6 Our nuclear garment decontamination facilities are licensed by the Nuclear Regulatory Commission, or in certain cases, by the applicable state agency, and aresubject to regulation by federal, state and local authorities. We also have nuclear garment decontamination facilities in the United Kingdom and the Netherlands.These facilities are licensed and regulated by the respective country’s applicable federal agency. In the past, scrutiny and regulation of nuclear facilities and relatedservices have resulted in the suspension of operations at certain nuclear facilities served by us or disruptions in our ability to service such facilities. There can be noassurance that such scrutiny and regulation will not lead to the shut-down of such facilities or otherwise cause material disruptions in our garment decontaminationbusiness.In addition, our nuclear garment decontamination operations are subject to asset retirement obligations related to the decommissioning of our nuclear laundryfacilities. We recognize as a liability the present value of the estimated future costs to decommission these facilities. The estimated liability is based on historicalexperience in decommissioning nuclear laundry facilities, estimated useful lives of the underlying assets, external vendor estimates as to the cost to decommissionthese assets in the future, and federal and state regulatory requirements. No assurances can be given that these accruals will be sufficient or that the costs of suchdecommissioning will not substantially exceed such accruals, as our facts, circumstances or estimates change, including changes in the Company’s estimateduseful lives of the underlying assets, estimated dates of decommissioning, changes in decommissioning costs, changes in federal or state regulatory guidance on thedecommissioning of such facilities, or other changes in estimates.In addition to contingencies and claims relating to environmental compliance matters, we may from time to time be subject to legal proceedings and claimsrelated to our business operations which may adversely affect our financial condition and operating results.In addition to contingencies and claims relating to environmental compliance matters, we are subject from time to time to legal proceedings, claims and disputesarising from the conduct of our business operations, including personal injury claims, customer contract matters and employment claims. Certain of these claimsare typically not covered by our available insurance. In addition, claims occasionally result in significant investigation and litigation expenses and, if successful,may result in material losses to us. Certain claims may also result in significant adverse publicity against us. As a consequence, successful claims against us notcovered by our available insurance coverage, or the impact of adverse publicity against us, could have a material adverse effect on our business, financial conditionand results of operation.Our failure to implement successfully our acquisition strategy and to grow our business could adversely affect our ability to increase our revenues and couldnegatively impact our profitability.As part of our growth strategy, we intend to continue to actively pursue additional acquisition opportunities. However, as discussed above, we compete with otherswithin our industry for suitable acquisition candidates. This competition may increase the price for acquisitions and reduce the number of acquisition candidatesavailable to us. As a result, our ability to acquire businesses in the future, and to acquire such businesses on favorable terms, may be limited. Even if we are able toacquire businesses on favorable terms, managing growth through acquisition is a difficult process that includes integration and training of personnel, combiningplant and operating procedures and additional matters related to the integration of acquired businesses within our existing organization. Unanticipated issues relatedto integration may result in additional expense or in disruption to our operations, either of which could negatively impact our ability to achieve anticipated benefits.While we believe we will be able to fully integrate acquired businesses, we can give no assurance that we will be successful in this regard.Growth of our business will likely require us to increase our work force, the scope of our operating and financial systems and the geographic area of ouroperations. We believe this growth will increase our operating complexity and the level of responsibility for both existing and new management personnel.Managing and sustaining our growth and expansion may require substantial enhancements to our operational and financial systems and controls, as well asadditional administrative, operational and financial resources. There can be no assurance that we will be able to manage our expanding operations successfully,that any acquired business will perform as we expect, or that we will be able to maintain or accelerate our growth, and any failure to do so could have an adverseeffect on our results of operations and financial condition.In order to finance such acquisitions, we may need to obtain additional funds either through public or private financings, including bank and other secured andunsecured borrowings and the issuance of debt or equity securities. There can be no assurance that such financings would be available to us on reasonable terms orthat any future issuances of securities in connection with acquisitions will not be dilutive to our shareholders.7 If we are unable to preserve positive labor relationships or become the target of corporate labor unionization campaigns, the resulting labor unrest coulddisrupt our business by impairing our ability to produce and deliver our products.As of August 31, 2019, we employ approximately 14,000 persons and approximately 1% of our United States employees are represented by a union pursuant to acollective bargaining agreement. Competitors within our industry have been the target of corporate unionization campaigns by multiple labor unions. While ourmanagement believes that our employee relations are good, we cannot assure you that we will not become the target of campaigns similar to those faced by ourcompetitors. The potential for unionization could increase if the United States Congress passes federal “card check” legislation in the future. If we do encounterpressure from any labor unions in connection with our acquisitions of other businesses, any resulting labor unrest could disrupt our business by impairing ourability to produce and deliver our products. In addition, significant union representation would require us to negotiate wages, salaries, benefits and other terms withmany of our employees collectively and could adversely affect our results of operations by increasing our labor costs or otherwise restricting our ability tomaximize the efficiency of our operations.We may incur unexpected cost increases due to rising healthcare costs, the Affordable Care Act and other labor costs.The cost of healthcare that we provide to our employees has grown over the last few years at a rate in excess of our revenue growth and, as a result, has negativelyimpacted our operating results. Moreover, it is generally expected that healthcare costs in the United States will increase over the coming years at rates in excess ofinflation. As a result of these factors, and depending on the effect of any modifications we have made and may make in the future to our employee healthcare plansand enrollment levels in those plans, including as a result of the Affordable Care Act or any future legislation or regulation affecting the healthcare industry, weexpect that our future operating results will continue to be further adversely impacted by increasing healthcare costs.Federal, state and municipal governments are mandating increases to minimum wage and other employee benefits. In addition, we face wage pressure as the resultof a low unemployment environment. We have raised, and expect to continue to raise, our wage rates and benefits to reflect these changes, which has the effect ofincreasing our labor costs, which in turn adversely affects our results of operation and financial condition. Our failure to comply with these regulatory requirementswould expose us to applicable penalties and increase the likelihood that we would be subject to unionization campaigns. Further mandates would require additionalincreases to our labor costs and adversely affect our operating margin.Our failure to retain our current customers, renew our existing customer contracts and enter into customer contracts with new customers could adverselyaffect our business, results of operations and financial condition.Our success depends on our ability to retain our current customers, renew our existing customer contracts and obtain new customers. Our ability to do so generallydepends on a variety of factors, including the quality, price and responsiveness of our services, as well as our ability to market these services effectively and todifferentiate ourselves from our competitors. In addition, renewal rates and our ability to obtain new customers are generally adversely affected by difficulteconomic and business conditions. We cannot assure you that we will be able to obtain new customers, renew existing customer contracts at the same or higherrates or that our current customers will not turn to competitors, cease operations or terminate contracts with us. Our failure to renew a significant number of ourexisting contracts would have an adverse effect on our results of operations and financial condition and failure to obtain new customers could have an adverseeffect on our growth and results of operations.Increases in fuel and energy costs could adversely affect our operating costs.The price of fuel and energy needed to run our vehicles and equipment is unpredictable and fluctuates based on events outside our control, including geopoliticaldevelopments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers,war and unrest in oil producing countries, regional production patterns, limits on refining capacities, natural disasters and environmental concerns. Any increase infuel and energy costs could adversely affect our operating costs.8 As a result of our significant presence in energy producing regions, a prolonged drop in energy prices has in the past, and may in the future, negatively impactour financial results.We have a substantial number of plants and conduct a significant portion of our business in energy producing regions in the U.S. and Canada. In general, we arerelatively more dependent on business in these regions than are many of our competitors. In the past, dramatic declines in energy prices adversely affected ourcustomers in the energy producing industry, which had a corresponding adverse effect on our customers in the businesses which service or supply the energyproducing industry as well as other customers that benefitted from the success of our customers in the energy producing industry. Such conditions caused in thepast, and may cause in the future, elevated headcount reductions at our customers and reduced margins for these accounts. This in turn caused in the past and maycause in the future an adverse impact on our organic growth. Recent trends indicate that increased energy prices have resulted in stabilized or improved wearerlevels at existing customers in our North American energy-dependent markets. Our operating results are also directly impacted by the costs of the gasoline used tofuel our vehicles and the natural gas used to operate our plants. While it is difficult to quantify the positive and negative impacts on our future financial resultsfrom changes in energy prices, in general, we believe that significant decreases in oil and natural gas prices would have an overall negative impact on our resultsdue to cutbacks by our customers both in, and dependent upon, the oil and natural gas industries, which would outweigh the benefits in our operating costs fromlower energy costs.Fluctuations in the nuclear portion of our Specialty Garments segment, including the loss of key customers or a significant reduction in our business derivedfrom key customers, could disproportionately impact our revenue and net income and create volatility in the price of our Common Stock.Our nuclear decontamination business is affected by shut-downs, outages and clean-ups of the nuclear facilities we service. We are not able to control or predictwith certainty when such shut-downs, outages and clean-ups will occur. In addition, our nuclear decontamination business tends to generate more revenue in thefirst and third fiscal quarters, which is when nuclear power plants typically schedule their plant outages and refuelings and thereby increase nuclear garmentutilization. Moreover, a significant percentage of this segment’s revenues are generated from a limited number of nuclear power plant operator customers. Thisconcentration subjects this business to significant risks and may result in greater volatility in this segment’s results of operations. Fluctuations in our nucleardecontamination business, including the loss of key customers of our Specialty Garments business, or a significant reduction in our business derived from such keycustomers, could materially adversely affect our results of operations and financial condition.Our international business results are influenced by currency fluctuations and other risks that could have an adverse effect on our results of operations andfinancial condition.A portion of our sales is derived from international markets. Revenue denominated in currencies other than the U.S. dollar represented approximately 7.0%, 8.1%and 7.4% of total consolidated revenues for fiscal 2019, the fiscal year ended August 25, 2018 (“fiscal 2018”) and the fiscal year ended August 26, 2017 (“fiscal2017”), respectively. The operating results of our international subsidiaries are translated into U.S. dollars and such results are affected by movements in foreigncurrencies relative to the U.S. dollar. The strength of the U.S. dollar has generally increased recently as compared to other currencies, which has had, and maycontinue to have, an adverse effect on our operating results as reported in U.S. dollars. In addition, a weaker Canadian dollar increases the costs to our Canadianoperations of merchandise and other operational inputs that are sourced from outside Canada, which has the effect of reducing the operating margins of ourCanadian business if we are unable to recover these additional costs through price adjustments with our Canadian customers. Our international operations are alsosubject to other risks, including the requirement to comply with changing and conflicting national and local regulatory requirements; potential difficulties instaffing and labor disputes; managing and obtaining support and distribution for local operations; credit risk or financial condition of local customers; potentialimposition of restrictions on investments; potentially adverse tax consequences, including imposition or increase of withholding and other taxes on remittances andother payments by subsidiaries; foreign exchange controls; and local political and social conditions. In addition, U.S. and foreign trade policies and tariffs andother impositions on imported goods may have a negative impact on our business. There can be no assurance that the foregoing factors will not have an adverseeffect on our international operations or on our consolidated financial condition and results of operations.9 We own and operate manufacturing facilities in Mexico. Violence, crime and instability in Mexico has had, and may continue to have, an adverse effect on ouroperations, including the hijacking of our trucks and the implementation of security measures to protect our employees. We are not insured against such criminalattacks and there can be no assurance that losses that could result from an attack on our trucks or our personnel would not have a material adverse effect on ourbusiness, results of operations and financial condition. Operations in developing nations present several additional risks, including greater fluctuation in currenciesrelative to the U.S. dollar, economic and governmental instability, civil disturbances, volatility in gross domestic production, Foreign Corrupt Practice Actcompliance issues and nationalization and expropriation of private assets, which could have a material adverse effect on our business, results of operations andfinancial condition.Adverse global financial and economic conditions may result in impairment of our goodwill and intangibles.Our market capitalization, from time to time, has experienced volatility due in part to turbulent economic conditions and disruption in the global equity and creditmarkets. Under accounting principles generally accepted in the United States (“U.S. GAAP”), we may be required to record an impairment charge if changes incircumstances or events indicate that the carrying values of our goodwill and intangible assets exceed their fair value and are not recoverable. Any significant andother-than-temporary decrease in our market capitalization could be an indicator, when considered together with other factors, that the carrying values of ourgoodwill and intangible assets exceed their fair value, which may result in our recording an impairment charge. We are unable to predict economic trends, but wecontinue to monitor the impact of changes in economic and financial conditions on our operations and on the carrying value of our goodwill and intangible assets.Should the value of our acquired goodwill or one or more of our acquired intangibles become impaired, our consolidated earnings and net worth may be materiallyadversely affected.Our failure to properly and efficiently design, construct, implement and operate a new customer relationship management (CRM) computer system couldmaterially disrupt our operations, adversely impact the servicing of our customers and have a material adverse effect on our financial performance.In the fourth quarter of fiscal 2018, we initiated a multiyear CRM project to further develop, implement and deploy a third-party application we licensed. This newsolution is intended to improve functionality, capability and information flow as well as increase automation in servicing our customers. The new system is alsointended to improve functionality and information flow and increase automation in servicing our customers.Our previous CRM systems project, which we terminated in 2018, did not result in the successful implementation of a CRM system. The failure to properly,efficiently and economically complete and operate a new system on a timely basis or at all could materially disrupt our operations, adversely impact the servicingof our customers and have a material adverse effect on our financial results.If our information technology systems suffer interruptions or failures, including as a result of cyber-attacks, our business operations could be disrupted.Our information technology systems serve an important role in the efficient operation of our business. The failure of these information technology systems toperform as we anticipate could disrupt our business and negatively impact our results of operations. In addition, our information technology systems could bedamaged or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, computer viruses or cyber-basedattacks. While we have contingency plans in place to prevent or mitigate the impact of these events, if such events were to occur and our disaster recovery plans donot effectively address the issues on a timely basis, we could suffer interruptions in our ability to manage our operations and service our customers, and we may berequired to make a significant investment to fix or replace our information technology systems, each of which may have a material adverse effect on our businessand financial results. In addition, if customer or our proprietary information is compromised by a security breach or cyber-attack, it could have a material adverseeffect on our business. We are subject to numerous laws and regulations in the United States and internationally designed to protect the information of clients,customers, employees, and other third parties that we collect and maintain. These laws and regulations are increasing in complexity and number. If we fail tocomply with such laws or regulations, it could have an adverse effect on our business.10 Failure to comply with state and federal regulations to which we are subject may result in penalties or costs that could have a material adverse effect on ourbusiness.Our business is subject to various state and federal regulations, including employment laws and regulations, minimum wage requirements, overtime requirements,working condition requirements, citizenship requirements, healthcare insurance mandates, data protection requirements and other laws and regulations. We haveincurred, and will continue to incur, capital and operating expenditures and other costs in the ordinary course of our business in complying with the laws andregulations to which we are subject. Any appreciable increase in the statutory minimum wage rate, income or overtime pay, costs of complying with healthcareinsurance mandates, changes in the requirements under the Occupational Safety and Health Act of 1970, as amended, changes in environmental compliancerequirements, or changes to immigration laws and citizenship requirements would likely result in an increase in our labor costs and/or contribute to a shortage ofavailable labor and such cost increase or labor shortage, or the penalties for failing to comply with such statutory minimums or regulations, could have an adverseeffect on our business, liquidity and results of operations. The impact of any new laws and regulations cannot be predicted. Any failure to comply with applicablelaws and regulations could result in substantial fines by government authorities, payment of damages to private litigants or possible revocation of our authority toconduct our operations, which could adversely affect our ability to service customers and our results of operations.Our business may be subject to seasonal and quarterly fluctuations.Historically, our revenues and operating results have varied from quarter to quarter and are expected to continue to fluctuate in the future. In addition, ouroperating results historically have been seasonally lower during the second and fourth fiscal quarters than during the other quarters of the fiscal year. We incurvarious costs in integrating or establishing newly acquired businesses or start-up operations, and the profitability of a new location is generally expected to belower in the initial period of its operation than in subsequent periods. Start-up operations in particular lack the support of an existing customer base and require asignificantly longer period to develop sales opportunities and meet targeted operating results.These factors, among others, may cause our results of operations in some future quarters to be below the expectations of securities analysts and investors, whichcould have an adverse effect on the market price of our Common Stock.Loss of our key management or other personnel could adversely impact our business.Our success is largely dependent on the skills, experience and efforts of our senior management, including our President and Chief Executive Officer, and certainother key personnel. If, for any reason, one or more senior executives or key personnel were not to remain active in our Company, our results of operations couldbe adversely affected. Our future success also depends upon our ability to attract and retain key employees. There is competition in the market for the services ofsuch qualified personnel and hourly workers and our failure to attract and retain such personnel or workers could adversely affect our results of operations.We depend on third parties to supply us with raw materials and our results of operations could be adversely affected if we are unable to obtain adequate rawmaterials in a timely manner.We manufactured approximately 67% of all garments which we placed in service during fiscal 2019. These were primarily work pants and shirts manufactured atthree of our plants located in San Luis Potosi, Mexico, one plant located in Managua, Nicaragua, as well as at subcontract manufacturers that we utilize tosupplement our manufacturing capacity in periods of high demand. The balance of the garments used in our programs are purchased from a variety of industrysuppliers. While we currently acquire the raw materials with which we produce our garments from a limited number of suppliers, we believe that such materials arereadily available from other sources. To date, we have experienced no significant difficulty in obtaining any of our raw materials or supplies. However, if we wereto experience difficulty obtaining any of our raw materials from such suppliers and were unable to obtain new materials or supplies from other industry suppliers,or if the cost of obtaining such materials or supplies were to increase, it could adversely affect our results of operations.Unexpected events could disrupt our operations and adversely affect our operating results.Unexpected events, including, without limitation, fires at facilities, natural disasters, such as hurricanes, earthquakes and tornados, public health emergencies, waror terrorist activities, unplanned utility outages, supply disruptions, failure of equipment or information systems, temporary or long-term disruption of ourcomputer systems, or changes in laws and/or regulations impacting our business, could adversely affect our operating results. These events could result indisruption of customer service, physical damage to one or more key operating facilities, the temporary closure of one or more key operating facilities or thetemporary disruption of information systems. In addition, the destruction or temporary loss of our distribution facility in Owensboro, Kentucky would have amaterial adverse effect on our operations and financial results.11 Changes in or new interpretations of the governmental regulatory framework may affect our contract terms and may reduce our sales or profits.A portion of our total consolidated revenues is derived from business with U.S. federal, state and local governments and agencies. Changes or new interpretationsin, or changes in the enforcement of, the statutory or regulatory framework applicable to services provided under governmental contracts or bidding procedurescould result in fewer new contracts or contract renewals, modifications to the methods we apply to price government contracts or in contract terms of shorterduration than we have historically experienced, any of which could result in lower sales or profits than we have historically achieved, which could have an adverseeffect on our results of operations.The price of our Common Stock may be highly volatile, which could result in significant price declines.The price of our Common Stock may experience significant volatility. Such volatility may be caused by fluctuations in our operating results, changes in earningsestimated by investment analysts, the number of shares of our Common Stock traded each day, the degree of success we achieve in implementing our business andgrowth strategies, changes in business or regulatory conditions affecting us, our customers or our competitors and other factors. In addition, the New York StockExchange historically has experienced extreme price and volume fluctuations that often have been unrelated to, or disproportionate to, the operating performanceof its listed companies. These fluctuations, as well as general economic, political and market conditions, may adversely affect the market price of our CommonStock.We are controlled by our principal shareholders, and our other shareholders may be unable to affect the outcome of shareholder voting.As of October 17, 2019, to the Company’s knowledge, the members of the Croatti family owned, directly or indirectly, in the aggregate approximately 184,959shares of our Common Stock and approximately 3,643,009 shares of our Class B Common Stock, which represents approximately 20.2% of the aggregate numberof outstanding shares of our Common Stock and Class B Common Stock, but approximately 70.8% of the combined voting power of the outstanding shares of ourCommon Stock and Class B Common Stock. As a result, the members of the Croatti family, acting with other family members, could effectively control mostmatters requiring approval by our shareholders, including the election of a majority of the directors. While historically the members of the Croatti family haveindividually voted their respective shares of Class B Common Stock in the same manner, there is no contractual understanding requiring this and there is noassurance that the family members will continue to individually vote their shares of Class B Common Stock in the same manner. This voting control by themembers of the Croatti family, together with certain provisions of our by-laws and articles of organization, could have the effect of delaying, deferring orpreventing a change in control of our Company that would otherwise be beneficial to our public shareholders.Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal controls over financial reporting.The design and effectiveness of our disclosure controls and procedures and internal controls over financial reporting may not prevent all errors, misstatements ormisrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal controls over financialreporting, there can be no guarantee that our internal controls over financial reporting will be effective in accomplishing all control objectives all of the time.Deficiencies, including any material weakness, in our internal controls over financial reporting which may occur in the future could result in misstatements of ourresults of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, resultsof operations, financial condition or liquidity.If we are unable to accurately predict our future tax liabilities or become subject to increased levels of taxation or our tax contingencies are unfavorablyresolved, our results of operations and financial condition could be adversely affected.Tax legislation commonly known as the “Tax Cuts and Jobs Act” (the “Act”), signed into law on December 22, 2017, made significant changes to U.S. federalincome tax laws, including a reduction of the corporate income tax rate from a top marginal rate of 35% to a flat rate of 21%. Certain provisions of the Act include,without limitation, new taxes on certain foreign sourced earnings and limitations on the deductibility of interest expense and executive compensation. The Act alsoimposed new limitations on the deduction of net operating losses and modified or repealed other business deductions and credits. The overall impact of the Act onour business and financial condition remains uncertain and may not become evident for some time. The interpretations of many provisions of the Act remainunclear. We cannot predict when or to what extent any U.S. federal tax laws, regulations, interpretations, or rulings clarifying the Act will be issued or the impactof any such guidance on the Company. Any such tax laws, regulations, interpretations, or rulings could have an adverse effect on our12 financial condition and results of operations. Certain key provisions of the Act that could impact us include, but are not limited to, international tax provisions thataffect the overall tax rate applicable to income earned from non-U.S. operations and limitations on the deductibility of executive compensation. Other changes intax laws or regulations in the jurisdictions in which we do business, including the United States or various states, could further increase our effective tax rate orimpose new restrictions, costs or prohibitions on our current practices, reduce our net income and adversely affect our cash flows. During the second quarter offiscal 2019, the Company completed its accounting for the tax effects of enactment of the Act as required by the SEC’s Staff Accounting Bulletin No. 118, IncomeTax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”). There were no changes from the provisional calculation as recorded through August 25,2018 to the final calculation.In addition, we are also subject to tax audits in the United States and other jurisdictions in which we do business, including, but not limited to, various states, aswell as Canada and the Canadian provinces of Alberta, British Columbia, Ontario, Saskatchewan, Quebec and New Brunswick. These audits can be complicatedand can require several years to resolve. The final resolution of any such tax audit could result in an increase in our income tax liabilities. Although we believe thatour current tax provisions are reasonable and appropriate, there can be no assurance that these items will be settled for the amounts accrued, that additional taxexposures will not be identified in the future or that additional tax reserves will not be necessary for any such exposures. Any increase in the amount of taxes weowe as a result of challenges to our tax filing positions could result in a material adverse effect on our business, results of operations and financial condition.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESAs of August 31, 2019, we owned or leased approximately 270 facilities containing an aggregate of approximately 7.7 million square feet located in the UnitedStates, Canada, Mexico, Europe and Nicaragua. We owned 132 of these facilities, containing approximately 5.8 million square feet. These facilities include our360,000 square foot Owensboro, Kentucky distribution center and almost all of our industrial laundry processing plants. We believe our industrial laundry facilitiesare among the most modern in the industry.We own substantially all of the machinery and equipment used in our operations. We believe that our facilities and our production, cleaning and decontaminationequipment have been well maintained and are adequate for our present needs. We also own a fleet of approximately 3,900 delivery vans, trucks and other vehicles.ITEM 3. LEGAL PROCEEDINGSFrom time to time, we are subject to legal proceedings and claims arising from the current conduct of our business operations, including personal injury, customercontract, employment claims and environmental matters as described in our Consolidated Financial Statements. We maintain insurance coverage providingindemnification against many of such claims, and we do not expect that we will sustain any material loss as a result thereof.In addition, we, like our competitors, are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewaterdischarges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundriescurrently use and must dispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. Over theyears, we have settled, or contributed to the settlement of, actions or claims brought against us relating to the disposal of hazardous materials and there can be noassurance that we will not have to expend material amounts to remediate the consequences of any such disposal in the future. Further, under environmental laws,an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances located on or in or emanating fromsuch property, as well as related costs of investigation and property damage. Such laws often impose liability without regard to whether the owner or lessee knewof, or was responsible for, the presence of such hazardous or toxic substances. There can be no assurance that acquired or leased locations have been operated incompliance with environmental laws and regulations or that future uses or conditions will not result in the imposition of liability upon us under such laws or exposeus to third-party actions such as tort suits. Refer to Note 11, “Commitments and Contingencies”, of our Consolidated Financial Statements for further discussion.ITEM 4. MINE SAFETY DISCLOSURESNot Applicable.13 PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESCOMMON STOCK INFORMATIONOur Common Stock trades on the New York Stock Exchange under the symbol “UNF”, while our Class B Common Stock is not publicly traded. The approximate number of shareholders of record of our Common Stock and Class B Common Stock as of October 25, 2019 was 46 and 32, respectively. Webelieve that the number of beneficial owners of our Common Stock is substantially greater than the number of record holders because a large portion of ourCommon Stock is held of record in broker “street names”. The following table provides information about repurchases of our Common Stock during the fourth quarter of fiscal 2019: (a) TotalNumber ofSharesPurchased(1) (b) AveragePrice Paid perShare(1) (c) Total Numberof SharesPurchased asPart of PubliclyAnnounced Plansor Programs(1) (d) MaximumNumber (orApproximateDollar Value) ofShares that MayYet be PurchasedUnder the Plansor Programs(1) May 26, 2019 - June 29, 2019 22,400 $163.94 22,400 $75,373,860 June 30, 2019 - July 27, 2019 9,250 $189.55 9,250 $73,620,564 July 28, 2019 - August 31, 2019 21,000 $196.96 21,000 $69,484,398 52,650 52,650 (1)On January 2, 2019, our Board of Directors approved a share repurchase program authorizing the Company to repurchase from time to time up to$100.0 million of our outstanding shares of common stock. Repurchases made under the program, if any, will be made in either the open market or inprivately negotiated transactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic andmarket conditions, the Company stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The sharerepurchase program will be funded using our available cash or capacity under our Credit Agreement (as defined below) and may be suspended ordiscontinued at any time. In the year ended August 31, 2019, we repurchased 197,150 shares for an average price per share of $154.78.The following table sets forth information concerning our equity compensation plans as of August 31, 2019: Equity Compensation Plan Information Plan category Number of securitiesto be issued uponexercise ofoutstandingoptions, warrantsand rights (1) Weighted averageexercise priceof outstandingoptions, warrantsand rights (2) Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreferenced incolumn (a)) (a) (b) (c) Equity compensation plans approved by security holders 598,783 $122.03 364,060 Equity compensation plans not approved by security holders — N/A — Total 598,783 $122.03 364,060 (1)Includes shares of Common Stock issuable upon vesting of restricted stock units.(2)Restricted stock units are not included in the weighted-average exercise price calculation because there is no exercise price associated with restricted stockunits.14 Stock Performance Graph Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on our Common Stock, based on the market priceof our Common Stock, with the cumulative total shareholder return of a customized peer group consisting of one company, Cintas Corporation, the Russell 2000index and the Standard & Poor’s 500 Stock Index, in each case assuming reinvestment of dividends. The calculation of cumulative total shareholder return assumesa $100 investment in our Common Stock, Cintas Corporation, the Russel 2000 Index and the S&P 500 Stock Index on August 31, 2014. 15 ITEM 6. SELECTED FINANCIAL DATAThe following selected consolidated financial data should be read in conjunction with our Consolidated Financial Statements and Notes to Consolidated FinancialStatements included in Item 8.The selected consolidated balance sheet data set forth below as of August 31, 2019 and August 25, 2018 and the selected consolidated income statement data foreach of the three years in the period ended August 31, 2019 are derived from our audited Consolidated Financial Statements included in this Annual Report onForm 10-K. All other selected consolidated financial data set forth below are derived from our audited financial statements not included in this Annual Report onForm 10-K. Current accounting guidance requires the income per share for each class of common stock to be calculated assuming 100% of our earnings aredistributed as dividends to each class of common stock based on their respective dividend rights. Our Common Stock has a 25% dividend preference to ourClass B Common Stock. The Class B Common Stock, which has ten votes per share as opposed to one vote per share for the Common Stock, is not freelytransferable but may be converted at any time on a one-for-one basis into Common Stock at the option of the holder of the Class B Common Stock.Five Year Financial SummaryUniFirst Corporation and Subsidiaries Fiscal Year Ended August(In thousands, except per share data) 2019 (1) 2018 (2) 2017 (3) 2016 (4) 2015 Selected Balance Sheet Data: Total assets $2,047,320 $1,843,386 $1,819,128 $1,702,007 $1,533,237 Notes payable and long-term debt $— $— $— $— $1,385 Shareholders’ equity $1,641,230 $1,464,967 $1,453,192 $1,364,781 $1,242,208 Selected Income Statement Data: Revenues $1,809,376 $1,696,489 $1,590,958 $1,468,046 $1,456,605 Depreciation and amortization $103,333 $96,662 $88,879 $81,612 $77,113 Operating income $232,008 $182,376 $110,283 $201,160 $200,384 Other income, net $(5,916) $(4,870) $(4,840) $(2,211) $(884)Provision for income taxes $58,790 $23,351 $44,927 $78,345 $76,969 Net income $179,134 $163,895 $70,196 $125,026 $124,299 Income per share: Basic—Common stock $9.77 $8.66 $3.63 $6.51 $6.50 Basic—Class B Common Stock $7.81 $6.91 $2.91 $5.21 $5.20 Diluted—Common stock $9.33 $8.21 $3.44 $6.17 $6.15 Dividends per share: Common stock $0.45 $0.30 $0.15 $0.15 $0.15 Class B Common Stock $0.36 $0.24 $0.12 $0.12 $0.12 (1)During fiscal 2019, we purchased 0.2 million shares pursuant to a share repurchase program authorized by the Company’s Board of Directors. Thisbenefitted the Company’s diluted income per share by $0.05 in fiscal 2019. During fiscal 2017, we recorded a pre-tax non-cash impairment charge of $55.8 million once it was determined that it was not probable that the version ofthe CRM system that was being developed would be completed and placed into service. During fiscal 2019, we entered into a settlement agreement withour lead contractor for the version of the CRM system with respect to which we recorded the impairment charge. As part of the settlement agreement, werecorded a total gain of $21.1 million as a reduction of selling and administrative expenses, which includes our receipt of a one-time cash payment in theamount of $13.0 million as well as the forgiveness of amounts previously due the contractor. We also received hardware and related maintenance servicewith a fair value of $0.8 million as part of the settlement. This gain, net of tax, benefitted the Company’s diluted income per share by $0.81 in fiscal 2019. 16 (2)Our fiscal 2018 results include the impact of the Tax Cuts and Jobs Act enacted on December 22, 2017, which resulted in a benefit to the Company’sprovision for income taxes of $20.1 million ($1.01 per diluted share) from the remeasurement of deferred tax balances and the one-time transition tax. Ourfiscal 2018 results also included a $7.2 million pre-tax one-time cash bonus to our employees to share with them the benefits received from recent U.S. taxreform. Such bonus expense, net of tax, reduced the Company’s diluted earnings per share by $0.25 in fiscal 2018.On March 27, 2018, we repurchased 1.105 million shares of Class B Common Stock and 0.073 million shares of Common Stock for a combined$146.0 million in a private transaction with the Croatti family at a per share price of $124.00, which benefited the Company’s diluted income per share by$0.20 in fiscal 2018.(3)Our fiscal 2017 results included an impairment charge of capitalized costs as part of our ongoing CRM systems project totaling $55.8 million before tax.This loss, net of tax reduced the Company’s diluted earnings per share by $1.68 in fiscal 2017. Our fiscal 2017 results also include a $5.4 million pre-taxcompensation expense as a result of the accelerated vesting of certain shares of restricted stock upon the death of the Company’s former Chief ExecutiveOfficer, Ronald Croatti, during the third quarter of fiscal 2017. This expense, net of tax, reduced the Company’s diluted earnings per share by $0.16.(4)In the fourth fiscal quarter of 2016, operating results benefited from a settlement of environmental litigation that resulted in the Company recording a$15.9 million pre-tax gain. This gain, net of tax, increased the Company’s diluted earnings per share by $0.48.The Company’s fiscal year ends on the last Saturday in August. For financial reporting purposes, fiscal 2019 consists of 53 weeks and fiscal 2018, 2017, 2016 and2015 consisted of 52 weeks each.17 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSBusiness OverviewUniFirst Corporation, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, is one of the largest providers ofworkplace uniforms and protective work wear clothing in the United States. We design, manufacture, personalize, rent, clean, deliver, and sell a wide range ofuniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks, aprons and specialized protective wear, such as flame resistant andhigh visibility garments. We also rent and sell industrial wiping products, floor mats, facility service products and other non-garment items, and provide restroomand cleaning supplies and first aid cabinet services and other safety supplies, to a variety of manufacturers, retailers and service companies.We serve businesses of all sizes in numerous industry categories. Typical customers include automobile service centers and dealers, delivery services, food andgeneral merchandise retailers, food processors and service operations, light manufacturers, maintenance facilities, restaurants, service companies, soft and durablegoods wholesalers, transportation companies, and others who require employee clothing for image, identification, protection or utility purposes. We also provideour customers with restroom and cleaning supplies, including air fresheners, paper products and hand soaps.At certain specialized facilities, we also decontaminate and clean work clothes and other items that may have been exposed to radioactive materials and servicespecial cleanroom protective wear and facilities. Typical customers for these specialized services include government agencies, research and developmentlaboratories, high technology companies and utilities operating nuclear reactors.We continue to expand into additional geographic markets through acquisitions and organic growth. We currently service over 300,000 customer locations in theUnited States, Canada and Europe from over 260 customer service, distribution and manufacturing facilities.U.S. GAAP establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of thosesegments to be presented in interim financial reports issued to shareholders. Operating segments are identified as components of an enterprise for which separatediscrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocateresources and assess performance. Our chief operating decision-maker is our Chief Executive Officer. We have six operating segments based on the informationreviewed by our Chief Executive Officer: U.S. Rental and Cleaning, Canadian Rental and Cleaning, Manufacturing (“MFG”), Specialty Garments Rental andCleaning (“Specialty Garments”), First Aid and Corporate. The U.S. Rental and Cleaning and Canadian Rental and Cleaning operating segments have beencombined to form the U.S. and Canadian Rental and Cleaning reporting segment. Refer to Note 15, “Segment Reporting”, of our Consolidated FinancialStatements for our disclosure of segment information.The U.S. and Canadian Rental and Cleaning reporting segment purchases, rents, cleans, delivers and sells, uniforms and protective clothing and non-garment itemsin the United States and Canada. The operations of the U.S. and Canadian Rental and Cleaning reporting segment are referred to by us as our ‘industrial laundryoperations’ and we refer to the locations related to this reporting segment as our ‘industrial laundries’.The MFG operating segment designs and manufactures uniforms and non-garment items primarily for the purpose of providing these goods to the U.S. andCanadian Rental and Cleaning reporting segment. The amounts reflected as revenues of MFG are primarily generated when goods are shipped from ourmanufacturing facilities, or subcontract manufacturers, to our other locations. These intercompany revenues are recorded at a transfer price which is typically inexcess of the actual manufacturing cost. Products are carried in inventory and subsequently placed in service and amortized at this transfer price. On a consolidatedbasis, intercompany MFG revenues and MFG income are eliminated and the carrying value of inventories and rental merchandise in service is reduced to themanufacturing cost. Income before income taxes from MFG, net of the intercompany MFG elimination, offsets the merchandise amortization costs incurred by theU.S. and Canadian Rental and Cleaning reporting segment as the merchandise costs of this reporting segment are amortized and recognized based on inventoriespurchased from MFG at the transfer price which is above our manufacturing cost.The Corporate operating segment consists of costs associated with our distribution center, sales and marketing, information systems, engineering, materialsmanagement, manufacturing planning, finance, budgeting, human resources, other general and administrative costs and interest expense. The revenues generatedfrom the Corporate operating segment represent certain direct sales made directly from our distribution center. The products sold by this operating segment are thesame products rented and sold by the U.S. and Canadian Rental and Cleaning reporting segment. In the segment disclosures in18 Note 15, “Segment Reporting”, of our Consolidated Financial Statements, no assets or capital expenditures are presented for the Corporate operating segment asno assets are allocated to this operating segment in the information reviewed by our chief executive officer. However, depreciation and amortization expenserelated to certain assets are reflected in income from operations and income before income taxes for the Corporate operating segment. The assets that give rise tothis depreciation and amortization are included in the total assets of the U.S. and Canadian Rental and Cleaning reporting segment as this is how they are trackedand reviewed by us.We refer to our U.S. and Canadian Rental and Cleaning, MFG, and Corporate segments combined as our “Core Laundry Operations”.The Specialty Garments operating segment purchases, rents, cleans, delivers and sells, specialty garments and non-garment items primarily for nuclear andcleanroom applications and provides cleanroom cleaning services at limited customer locations. The First Aid operating segment sells first aid cabinet services andother safety supplies as well as maintains wholesale distribution and pill packaging operations.Approximately 89% of our revenues in fiscal 2019 were derived from U.S. and Canadian Rental and Cleaning and Corporate. A key driver of this business is thenumber of workers employed by our customers. Our revenues are directly impacted by fluctuations in these employment levels. Revenues from SpecialtyGarments, which accounted for approximately 7% of our 2019 revenues, increase during outages and refueling by nuclear power plants, as garment usageincreases at these times. First Aid represented approximately 4% of our total revenue in fiscal 2019.Critical Accounting Policies and EstimatesWe believe the following critical accounting policies reflect our more significant judgments and estimates used in the preparation of our Consolidated FinancialStatements.Use of EstimatesWe prepare our financial statements in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reportedamounts in the financial statements and accompanying notes. These estimates are based on historical information, current trends, and information available fromother sources. The actual results could differ from our estimates. Revenue Recognition and Allowance for Doubtful AccountsWe recognize revenue from rental operations and related services in the period in which the services are provided. Direct sale revenue is recognized in the period inwhich the services are performed or when the product is shipped. Our judgment and estimates are used in determining the collectability of accounts receivable andevaluating the adequacy of the allowance for doubtful accounts as well as our sales credits reserve. We consider specific accounts receivable and historical baddebt experience, customer credit worthiness, current economic trends and the age of outstanding balances as part of our evaluation in assessing the allowance fordoubtful accounts. We consider our historical credit experience in assessing the sales credits reserve. Changes in our estimates are reflected in the period theybecome known. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowancesmay be required. Material changes in our estimates may result in significant differences in the amount and timing of bad debt expense recognition for any givenperiod. Our revenues do not include taxes we collect from our customers and remit to governmental authorities.Costs to Obtain a ContractWe defer commission expenses paid to employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract.The deferred commissions are amortized on a straight-line basis over the expected period of benefit, which is generally the estimated life of the customerrelationship. We review the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent basedon the timing of when we expect to recognize the expense. The current portion is included in prepaid expenses and other current assets and the non-current portionis included in other assets on our consolidated balance sheets. As of August 31, 2019, the current and non-current assets related to deferred commissions totaled$12.4 million and $50.3 million, respectively. During fiscal 2019, we recorded $11.8 million of amortization expense related to deferred commissions. Thisexpense is classified in selling and administrative expenses on the consolidated statements of income.19 Inventories and Rental Merchandise in ServiceOur inventories are stated at the lower of cost or market value, net of any reserve for excess and obsolete inventory. Judgments and estimates are used indetermining the likelihood that new goods on hand can be sold to our customers or used in our rental operations. Historical inventory usage and current revenuetrends are considered in estimating both excess and obsolete inventories. If actual product demand and market conditions are less favorable than the amount weprojected, additional inventory write-downs may be required. We use the first-in, first-out method to value our inventories, which primarily consist of finishedgoods. Rental merchandise in service is being amortized on a straight-line basis over the estimated service lives of the merchandise, which range from six to thirty-six months. In establishing estimated lives for merchandise in service, our management considers historical experience and the intended use of the merchandise.Material differences may result in the amount and timing of operating profit for any period if we make significant changes to our estimates.Goodwill, Intangibles and Other Long-Lived AssetsIn accordance with U.S. GAAP, we do not amortize goodwill. Instead, we test goodwill at the reporting unit level for impairment on an annual basis and betweenannual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value. Our evaluationconsiders changes in the operating environment, competitive information, market trends, operating performance and cash flow modeling.We complete our annual goodwill impairment test as of the last day of the fourth quarter of each fiscal year and there have been no impairments of goodwill orother intangible assets in fiscal 2019, 2018 or 2017.We cannot predict future economic conditions and their impact on the Company or the future market value of our stock. A decline in our market capitalizationand/or deterioration in general economic conditions could negatively and materially impact our assumptions and assessment of the fair value of our business. Ifgeneral economic conditions or our financial performance deteriorate, we may be required to record a goodwill impairment charge in the future which could have amaterial impact on our financial condition and results of operations.Property, plant and equipment, and definite-lived intangible assets are depreciated or amortized over their useful lives. Useful lives are based on our estimates ofthe period that the assets will generate economic benefits. Long-lived assets are evaluated for impairment whenever events or circumstances indicate an asset maybe impaired. There were no material impairments of long-lived assets in fiscal 2019 and 2018. During the fourth quarter of fiscal 2017, the Company recognized anon-cash impairment charge in its U.S. and Canadian Rental and Cleaning segment of $55.8 million on its ongoing CRM systems project, as the Company haddetermined that it was no longer probable that the then current version of the CRM system that was being developed would be completed and placed into service.InsuranceWe self-insure for certain obligations related to health, workers’ compensation, vehicles and general liability programs. We also purchase stop-loss insurancepolicies for workers’ compensation, vehicles and general liability programs to protect ourselves from catastrophic losses. Judgments and estimates are used indetermining the potential value associated with reported claims and for events that have occurred, but have not been reported. Our estimates consider historicalclaim experience and other factors. Our liabilities are based on our estimates, and, while we believe that our accruals are adequate, the ultimate liability may besignificantly different from the amounts recorded. In certain cases where partial insurance coverage exists, we must estimate the portion of the liability that will becovered by existing insurance policies to arrive at our net expected liability. Receivables for insurance recoveries are recorded as assets, on an undiscounted basis.Changes in our claim experience, our ability to settle claims or other estimates and judgments we use could have a material impact on the amount and timing ofexpense for any given period.Environmental and Other ContingenciesWe are subject to legal proceedings and claims arising from the conduct of our business operations, including environmental matters, personal injury, customercontract matters and employment claims. U.S. GAAP requires that a liability for contingencies be recorded when it is probable that a liability has occurred, and theamount of the liability can be reasonably estimated. Significant judgment is required to determine the existence of a liability, as well as the amount to be recorded.We regularly consult with our attorneys and outside consultants, in our consideration of the relevant facts and circumstances, before recording a contingentliability. We record accruals for environmental and other contingencies based on enacted laws, regulatory orders or decrees, our estimates of costs, insuranceproceeds, participation by other parties, the timing of payments, and the input of our attorneys and outside consultants.20 The estimated liability for environmental contingencies has been discounted as of August 31, 2019 using risk-free interest rates ranging from 1.5% to 2.0% overperiods ranging from ten to thirty years. The estimated current costs, net of legal settlements with insurance carriers, have been adjusted for the estimated impact ofinflation at 3.0% per year. Changes in enacted laws, regulatory orders or decrees, our estimates of costs, risk-free interest rates, insurance proceeds, participationby other parties, the timing of payments, the input of our attorneys and outside consultants or other factual circumstances could have a material impact on theamounts recorded for our environmental and other contingent liabilities. Refer to Note 11, “Commitments and Contingencies”, of our Consolidated FinancialStatements for additional discussion and analysis.Asset Retirement ObligationsUnder U.S. GAAP, asset retirement obligations generally apply to legal obligations associated with the retirement of long-lived assets that result from theacquisition, construction, development and/or the normal operation of a long-lived asset. Current accounting guidance requires that we recognize asset retirementobligations in the period in which they are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as partof the carrying amount of the long-lived asset.We have recognized as a liability the present value of the estimated future costs to decommission our nuclear laundry facilities in accordance with U.S. GAAP. Wedepreciate, on a straight-line basis, the amount added to property, plant and equipment and recognize accretion expense in connection with the discounted liabilityover the various remaining lives which range from approximately one to twenty-five years.Our estimated liability has been based on historical experience in decommissioning nuclear laundry facilities, estimated useful lives of the underlying assets,external vendor estimates as to the cost to decommission these assets in the future, and federal and state regulatory requirements. The estimated current costs havebeen adjusted for the estimated impact of inflation at 3% per year. The liability has been discounted using credit-adjusted risk-free rates that range fromapproximately 7.0% to 7.5%. Revisions to the liability could occur due to changes in the estimated useful lives of the underlying assets, estimated dates ofdecommissioning, changes in decommissioning costs, changes in federal or state regulatory guidance on the decommissioning of such facilities, or other changes inestimates. Changes due to revisions in our estimates will be recognized by adjusting the carrying amount of the liability and the related long-lived asset if theassets are still in service, or charged to expense in the period if the assets are no longer in service. Supplemental Executive Retirement Plan and other Pension PlansWe recognize pension expense on an accrual basis over our employees’ estimated service periods. Pension expense is generally independent of funding decisionsor requirements.The calculation of pension expense and the corresponding liability requires us to use a number of critical assumptions, including the expected long-term rates ofreturn on plan assets, the assumed discount rate, the assumed rate of compensation increases and life expectancy of participants. Changes in our assumptions canresult in different expense and liability amounts, and future actual expense can differ from these assumptions. Pension expense increases as the expected rate ofreturn on pension plan assets decreases. Future changes in plan asset returns, assumed discount rates and various other factors related to the participants in ourpension plans will impact our future pension expense and liabilities. We cannot predict with certainty what these factors will be in the future.Income TaxesWe compute income tax expense by jurisdiction based on our operations in each jurisdiction. Our effective tax rate differs from the statutory U.S. income tax ratedue to the effect of varying state and local income taxes, tax rates in foreign jurisdictions, tax credits, and certain nondeductible expenses. Deferred income taxes are provided for temporary differences between the amounts recognized for income tax and financial reporting purposes at currentlyenacted tax rates. Deferred income taxes are classified as assets or liabilities based on the classification of the related asset or liability for financial reportingpurposes. We review deferred tax assets for recoverability based upon projected future taxable income and the expected timing of the reversals of existingtemporary differences. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets will be realized. 21 We are periodically reviewed by U.S. domestic and foreign tax authorities regarding the amount of taxes due. These reviews typically include inquiries regardingthe timing and amount of deductions and the allocation of income among various tax jurisdictions. Tax authorities may disagree with certain positions we havetaken. In evaluating our exposure associated with various filing positions, we have recorded estimated reserves. Refer to Note 4, “Income Taxes”, of ourConsolidated Financial Statements for further discussion regarding our accounting for income taxes and uncertain tax positions for financial accounting purposes.Results of OperationsThe following table presents certain selected financial data, including the percentage of revenues represented by each item, for fiscal years 2019, 2018 and 2017. % Change (In thousands, except for percentages) Fiscal2019 % ofRevenues Fiscal2018 % ofRevenues Fiscal2017 % ofRevenues Fiscal 2019vs.Fiscal 2018 Fiscal 2018vs.Fiscal 2017 Revenues $1,809,376 100% $1,696,489 100.0% $1,590,958 100.0% 6.7% 6.6% Costs and expenses: Cost of revenue (1) 1,139,195 63.0 1,056,724 62.3 993,589 62.5 7.8 6.4 Selling and administrative expenses (1) 334,840 18.5 360,727 21.3 342,407 21.5 (7.2) 5.4 Impairment charge — — — — 55,800 3.5 — (100.0)Depreciation and amortization 103,333 5.7 96,662 5.7 88,879 5.6 6.9 8.8 1,577,368 87.2 1,514,113 89.2 1,480,675 93.1 4.2 2.3 Operating income 232,008 12.8 182,376 10.8 110,283 6.9 27.2 65.4 Other income, net (5,916) (0.3) (4,870) (0.3) (4,840) (0.3) 21.5 0.6 Income before income taxes 237,924 13 187,246 11.0 115,123 7.2 27.1 62.6 Provision for income taxes 58,790 3.2 23,351 1.4 44,927 2.8 151.8 (48.0) Net income $179,134 9.9% $163,895 9.7% $70,196 4.4% 9.3% 133.5% (1)Exclusive of depreciation on our property, plant and equipment and amortization of our intangible assets.22 Revenues and income (loss) from operations by reporting segment for fiscal 2019, 2018, and 2017 are presented in the following table. Refer to Note 15,“Segment Reporting”, of our Consolidated Financial Statements for discussion of our reporting segments. Fiscal Fiscal Fiscal (In thousands) 2019 2018 2017 Segment Information Revenues US and Canadian Rental and Cleaning $1,582,416 $1,485,548 $1,415,423 MFG 254,218 247,530 206,572 Net intercompany MFG elimination (254,111) (247,424) (206,316)Corporate 33,682 37,994 26,470 Subtotal: Core Laundry Operations 1,616,205 1,523,648 1,442,149 Specialty Garments 132,767 118,477 98,024 First Aid 60,404 54,364 50,785 Total consolidated revenues $1,809,376 $1,696,489 $1,590,958 Operating income (loss) US and Canadian Rental and Cleaning $235,046 $213,322 $200,585 MFG 84,248 89,035 76,115 Net intercompany MFG elimination 1,128 (9,658) (3,415)Corporate (107,468) (129,111) (176,978)Subtotal: Core Laundry Operations 212,954 163,588 96,307 Specialty Garments 14,145 14,070 9,018 First Aid 4,909 4,718 4,958 Total operating income $232,008 $182,376 $110,283 GeneralWe derive our revenues through the design, manufacture, personalization, rental, cleaning, delivering, and selling of a wide range of uniforms and protectiveclothing, including shirts, pants, jackets, coveralls, lab coats, smocks and aprons and specialized protective wear, such as flame resistant and high visibilitygarments. We also rent industrial wiping products, floor mats, facility service products, other non-garment items, and provide restroom and cleaning supplies andfirst aid cabinet services and other safety supplies, to a variety of manufacturers, retailers and service companies. We have five reporting segments, U.S. andCanadian Rental and Cleaning, MFG, Specialty Garments, First Aid and Corporate. We refer to the U.S. and Canadian Rental and Cleaning, MFG, and Corporatereporting segments combined as our “Core Laundry Operations.”Cost of revenues include the amortization of rental merchandise in service and merchandise costs related to direct sales as well as labor and other production,service and delivery costs, and distribution costs associated with operating our Core Laundry Operations, Specialty Garments facilities, and First Aid locations.Selling and administrative costs include costs related to our sales and marketing functions as well as general and administrative costs associated with our corporateoffices, non-operating environmental sites and operating locations including information systems, engineering, materials management, manufacturing planning,finance, budgeting, and human resources.We have a substantial number of plants and conduct a significant portion of our business in energy producing regions in the U.S. and Canada. In general, we arerelatively more dependent on business in these regions than are many of our competitors. Our operating results are also directly impacted by the costs of thegasoline used to fuel our vehicles and the natural gas used to operate our plants. While it is difficult to quantify the positive and negative impacts on our futurefinancial results from changes in energy prices, in general, we believe that significant decreases in oil and natural gas prices would have an overall negative impacton our results due to cutbacks by our customers both in, and dependent upon, the oil and natural gas industries, which would outweigh the benefits in our operatingcosts from lower energy costs.Our business is subject to various state and federal regulations, including employment laws and regulations, minimum wage requirements, overtime requirements,working condition requirements, citizenship requirements, healthcare insurance mandates and other laws and regulations that impact our labor costs. We expectthat our labor costs will rise in fiscal 2020 as a result of increases in state and local minimum wage levels as well as the overall impact of wage pressure as theresult of a low unemployment environment.On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted into law, which, among other provisions, reduced the U.S. federal corporate income taxrate effective January 1, 2018 from a 35% rate to a new 21% corporate rate and23 imposed a one-time transition tax on the deemed repatriation of certain deferred foreign income. We have made reasonable estimates of the effects of the Act andthese estimates could change in future periods as we continue to analyze the effects of the Act (see Note 4, “Income Taxes” to our Consolidated FinancialStatements included in this Annual Report on Form 10-K). As a result of the Act, U.S. corporations are subject to lower income tax rates, and we were required toremeasure our U.S. net deferred tax liabilities at a lower rate, resulting in a net benefit of $22.6 million recorded in the provision for income taxes as of August 25,2018. Partially offsetting this benefit, we recorded a charge of $2.5 million for transition taxes related to the deemed repatriation of foreign earnings as ofAugust 31, 2019. A portion of our sales is derived from international markets, including Canada. Revenues denominated in currencies other than the U.S. dollarrepresented approximately 7.0%, 8.1% and 7.4% of total consolidated revenues for fiscal years 2019, 2018 and 2017, respectively. The operating results of ourinternational subsidiaries are translated into U.S. dollars and such results are affected by movements in foreign currencies relative to the U.S. dollar. In addition, aweaker Canadian dollar increases the costs to our Canadian operations of merchandise and other operational inputs that are sourced from outside Canada, whichhas the effect of reducing the operating margins of our Canadian business if we are unable to recover these additional costs through price adjustments with ourCanadian customers. In fiscal 2019 and 2018, foreign currency fluctuations impacted our consolidated revenues negatively by 0.3% and positively by 0.3%,respectively. In fiscal 2017, foreign currency fluctuations negligibly impacted our consolidated revenues. These impacts were primarily driven by fluctuations inthe Canadian dollar. Our operating results in future years could be negatively impacted by any further devaluation, as compared to the U.S. dollar, of the Canadiandollar or any of the currencies of the other countries in which we operate.On March 27, 2018, we repurchased 1.105 million shares of Class B Common Stock and 0.073 million shares of Common Stock for a combined $146.0 million ina private transaction with the Croatti family at a per share price of $124.00. This opportunity to repurchase shares from the Croatti family was evaluated by anindependent special committee of the Board of Directors (the “Special Committee”). The sale of shares by the Croatti family was executed to provide liquidity aswell as for estate and family financial planning following the passing of our former Chief Executive Officer, Ronald D. Croatti. The Special Committeedetermined that a repurchase of Croatti family Class B Common Stock at a discount to market was in our best interests as it is accretive to income per share andaddresses uncertainties that may have been created if the Croatti family had pursued other liquidity options.The Special Committee undertook its evaluation with the assistance of Stifel Financial Corp. (“Stifel”) and received an opinion from Stifel to the effect that, as ofMarch 27, 2018, the $124.00 per share in cash to be paid was fair to us, from a financial point of view. The entire Board of Directors other than Cynthia Croatti,who is affiliated with the selling shareholders and therefore abstained, approved the transaction upon the recommendation of the Special Committee. On March 28, 2018, we announced that we would be raising our quarterly dividend to $0.1125 per share for Common Stock and to $0.09 per share for Class BCommon Stock, up from $0.0375 and $0.03 per share, respectively. On October 23, 2019, we announced that we would be raising our quarterly dividend to $0.25 per share for Common Stock and to $0.20 per share for Class BCommon Stock, up from $0.1125 and $0.09 per share, respectively. The amount and timing of any future dividend payment is subject to the approval of the Boardof Directors each quarter. On January 2, 2019, our Board of Directors approved a share repurchase program authorizing the Company to repurchase from time to time up to $100.0 millionof its outstanding shares of Common Stock. Repurchases made under the program, if any, will be made in either the open market or in privately negotiatedtransactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, theCompany stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program will be fundedusing the Company’s available cash or capacity under its Credit Agreement (as defined below) and may be suspended or discontinued at any time. During fiscal2019, the Company repurchased 0.2 million shares for an average price per share of $154.78.During fiscal 2017, we recorded a pre-tax non-cash impairment charge of $55.8 million once it was determined that it was not probable that the version of theCRM system that was being developed would be completed and placed into service. On December 28, 2018, we entered into a settlement agreement with ourlead contractor for the version of the CRM system with respect to which we recorded the impairment charge. As part of the settlement agreement, we recorded inthe second quarter ended February 23, 2019 a total gain of $21.1 million as a reduction of selling and administrative expenses, which includes our receipt of a one-time cash payment in the amount of $13.0 million as well as the forgiveness of amounts previously due the contractor. We also received hardware and relatedmaintenance service with a fair value of $0.8 million as part of the settlement.24 In our fourth fiscal quarter of 2018, we initiated a multiyear CRM project to further develop, implement and deploy a third-party application we licensed. This newsolution is intended to improve functionality, capability and information flow as well as increase automation in servicing our customers. As of August 31, 2019,we have capitalized $10.7 million related to our new CRM project.Fiscal Year Ended August 31, 2019 Compared with Fiscal Year Ended August 26, 2018Revenues Fiscal2019 Fiscal2018 DollarChange PercentChange (In thousands, except percentages) Core Laundry Operations $1,616,205 $1,523,648 $92,557 6.1%Specialty Garments 132,767 118,477 14,290 12.1%First Aid 60,404 54,364 6,040 11.1%Total consolidated revenues $1,809,376 $1,696,489 $112,887 6.7% The increase of our consolidated revenues in fiscal 2019 compared to the prior fiscal year was due primarily to growth in our Core Laundry Operations. Thegrowth in our Core Laundry Operations was comprised of 3.8% of organic growth, 2.0% growth from the extra week in fiscal 2019 and 0.3% growth fromacquisitions. Organic growth consists primarily of new sales, price increases, and net changes in the wearer levels at our existing customers, offset by lostaccounts. Core Laundry Operations’ organic growth in 2019 benefitted from strong new accounts sales as well as reduced lost accounts.The Specialty Garments segment’s results are often affected by seasonality and the timing and length of its customers’ power reactor outages as well as its project-based activities. The improvement in revenues in fiscal 2019 compared to fiscal 2018 was primarily comprised of 7.4% growth from acquisitions, 2.7% of organicgrowth from increased outages and project-based activity at the segment’s Canadian and European nuclear customers, and 2.0% growth from the extra week infiscal 2019. The increase of our First Aid revenues in fiscal 2019 compared to fiscal 2018 was comprised of 7.8% of organic growth, 1.9% growth from the extra week in fiscal2019 and 1.5% growth from acquisitions.Cost of revenues (In thousands, except percentages) Fiscal 2019 Fiscal 2018 DollarChange PercentChange Cost of revenues Core Laundry Operations $1,009,321 $942,374 $66,947 7.1%Specialty Garments 89,138 77,317 11,821 15.3%First Aid 40,736 37,033 3,703 10.0%Consolidated total $1,139,195 $1,056,724 $82,471 7.8% Cost of revenues as a percentage of revenues was 63.0% for fiscal 2019 as compared to 62.3% in fiscal 2018.Our Core Laundry Operations cost of revenues as a percentage of revenues increased to 62.5% for fiscal 2019 from 61.8% for fiscal 2018. This increase was dueprimarily to higher merchandise and service and delivery payroll costs, which were partially offset by lower healthcare claims.Our Specialty Garments cost of revenues as a percentage of revenues was 67.1% for fiscal 2019 as compared to 65.3% for fiscal 2018. The increase was dueprimarily to higher merchandise costs related to acquisitions in the second half of fiscal 2018 as well as higher expenses related to workers’ compensation and autoclaims. These increases were partially offset by lower healthcare claims.Our First Aid costs of revenues as a percentage of revenues was 67.4% for fiscal 2019 as compared to 68.1% for fiscal 2018. The decrease was due primarily tolower merchandise and production costs in our wholesale distribution business in fiscal 2019.25 Selling and administrative expenses (In thousands, except percentages) Fiscal 2019 Fiscal 2018 DollarChange PercentChange Selling and administrative expenses $334,840 $360,727 $(25,887) (7.2)%% of Revenues 18.5% 21.3% The decrease in our selling and administrative expenses as a percentage of revenues in fiscal 2019 compared to fiscal 2018 was due primarily to a gain of$21.1 million in fiscal 2019 related to the settlement agreement with the lead contractor for the version of the CRM system with respect to which we recorded a$55.8 million impairment charge in fiscal 2017. Also contributing to the decrease was a $7.2 million one-time cash bonus in fiscal 2018 to our employees so thatthey could share in the benefits received by the Company from U.S. tax reform, a gain of $3.0 million from the settlement of environmental litigation in the firstquarter of fiscal 2019, lower healthcare claims, the capitalization of internal labor costs beginning in the fourth quarter of fiscal 2018 related to the development ofthe new CRM project we initiated in fiscal 2018, and the capitalization of sales commission costs upon the adoption of new revenue accounting guidance in fiscal2019.Depreciation and amortization (In thousands, except percentages) Fiscal 2019 Fiscal 2018 DollarChange PercentChange Depreciation and amortization $103,333 $96,662 $6,671 6.9%% of Revenues 5.7% 5.7% The increase in depreciation and amortization reflects the Company’s continued capital investments in the business. However, in fiscal 2019, depreciation andamortization remained consistent with fiscal 2018 as a percentage of revenue.Income from operationsFor fiscal 2019, the changes in revenues in our Core Laundry Operations, Specialty Garments and First Aid segments, as well as the changes in our costs discussedabove, resulted in the following changes in our income from operations: Fiscal2019 Fiscal2018 DollarChange PercentChange (In thousands, except percentages) Core Laundry Operations $212,954 $163,588 $49,366 30.2%Specialty Garments 14,145 14,070 75 0.5%First Aid 4,909 4,718 191 4.0%Total consolidated income from operations $232,008 $182,376 $49,632 27.2%Percentage of total revenues 12.8% 10.8% Other income, net (In thousands, except percentages) Fiscal 2019 Fiscal 2018 DollarChange PercentChange Interest income, net $(9,082) $(5,543) $(3,539) 63.8%Other expense, net 3,166 673 2,493 370.4%Total other income, net $(5,916) $(4,870) $(1,046) 21.5% Other income, net, which includes interest income and other expense, increased by $1.0 million or 21.5% in fiscal 2019 as compared to fiscal 2018. This changewas due primarily to higher interest income from higher interest rates as well as greater amounts of cash invested. This increase was partially offset by an increasein other expense from the adoption of new accounting guidance that resulted in the presentation of periodic pension costs amounting to $2.1 million in otherincome, net in fiscal 2019 that was presented in selling and administrative expenses in the prior fiscal year.26 Provision for income taxes (In thousands, except percentages) Fiscal 2019 Fiscal 2018 DollarChange PercentChange Provision for income taxes $58,790 $23,351 $35,439 151.8%Effective income tax rate 24.7% 12.5% The increase in our effective income tax rate for fiscal 2019 as compared to fiscal 2018 was due primarily to the impact of the Act, which lowered the U.S. federalcorporate income tax rates as of January 1, 2018 to 21.0% from 35.0%. These new rates required us to remeasure our U.S. net deferred income tax liabilities infiscal 2018. Also, we were subject to a one-time transition tax for the deemed repatriation of our deferred foreign income. The remeasurement of our U.S. netdeferred tax liabilities and the one-time transition tax resulted in a $20.1 million net benefit to our provision for income taxes in the second quarter of fiscal 2018.For additional information pertaining to income taxes and the Act, please refer to Note 4, “Income Taxes” to our Consolidated Financial Statements included inthis Annual Report on Form 10-K.Fiscal Year Ended August 25, 2018 Compared with Fiscal Year Ended August 26, 2017Revenues Fiscal2018 Fiscal2017 DollarChange PercentChange (In thousands, except percentages) Core Laundry Operations $1,523,648 $1,442,149 $81,499 5.7%Specialty Garments 118,477 98,024 20,453 20.9%First Aid 54,364 50,785 3,579 7.0%Total consolidated revenues $1,696,489 $1,590,958 $105,531 6.6% In fiscal 2018, our consolidated revenues increased by $105.5 million from the comparable period in fiscal 2017, or 6.6%. The increase in our consolidatedrevenues was primarily driven by the growth in our Core Laundry Operations, with revenues increasing to $1.524 billion in fiscal 2018 from $1.442 billion in fiscal2017, or 5.7%. Excluding the positive effect of acquisitions, which we estimate increased our revenues by approximately 1.0% during fiscal 2018, as well as aslightly stronger Canadian dollar, which favorably impacted our growth by approximately 0.2%, organic growth for our Core Laundry Operations wasapproximately 4.5%. Organic growth consists primarily of new sales, price increases, and net changes in the wearer levels at our existing customers, offset by lostaccounts.Specialty Garments’ revenue increased from $98.0 million in fiscal 2017 to $118.5 million in fiscal 2018, or 20.9%. This segment’s results are often affected byseasonality and the timing and length of its customers’ power reactor outages as well as its project-based activities. The improvement in results in fiscal 2018compared to fiscal 2017 was primarily due to increased outages and project-based activity at the segment’s Canadian and European nuclear customers, as well assolid growth from the cleanroom business.First Aid revenues increased 7.0%, from $50.8 million in fiscal 2017 to $54.4 million in fiscal 2018. The improvement in results was due to a strong performancefrom this segment’s wholesale distribution business as well as a small acquisition that closed in the third quarter of fiscal 2017.Cost of revenuesCost of revenues was 62.3% and 62.5% of revenues in fiscal 2018 and fiscal 2017, respectively. The decrease was due primarily to lower worker’s compensationexpense as a percentage of revenues, as well as lower merchandise costs in our Core Laundry Operations and Specialty Garments segments. These costimprovements were partially offset by higher production and service and delivery payroll costs as well as higher energy costs as percentages of revenues in ourCore Laundry Operations.Selling and administrative expenseOur selling and administrative expenses were 21.3% and 21.5% of revenues in fiscal 2018 and fiscal 2017, respectively. Our results in fiscal 2018 include a$7.2 million one-time cash bonus to our employees so that they may share in the benefits received from the recent U.S. tax reform. Our results in fiscal 2017include $5.4 million of stock compensation expense related to the accelerated vesting of restricted stock for our former Chief Executive Officer, Ronald Croatti,upon his death. Excluding the effect of the one-time bonus in fiscal 2018 and the accelerated vesting in fiscal 2017, our selling and administrative expenses, as apercentage of revenues for fiscal 2018 as compared to fiscal 2017, decreased due primarily to lower expenses from claims related to healthcare for our employeesand worker’s compensation.27 Impairment chargeOur fiscal 2017 fourth quarter results included a $55.8 million impairment charge related to our CRM systems project. We determined that, as of August 26, 2017,it was not probable that the then current version of the CRM system that was being developed would be completed and placed into service and as a result, animpairment of most capitalized costs was required. During fiscal 2018, the previous version of the CRM system being developed was abandoned, and theCompany is now working on a new CRM system.Depreciation and amortizationOur depreciation and amortization expense was $96.7 million, or 5.7% of revenues, in fiscal 2018 compared to $88.9 million, or 5.6% of revenues, in fiscal 2017.Depreciation and amortization expense increased due primarily to an increase in depreciation resulting from higher capital expenditures placed in service in recentfiscal years.Income from operationsFor fiscal 2018, the changes in revenues in our Core Laundry Operations, Specialty Garments and First Aid segments, as well as the changes in our costs discussedabove, resulted in the following changes in our income from operations: Fiscal2018 Fiscal2017 DollarChange PercentChange (In thousands, except percentages) Core Laundry Operations $163,588 $96,307 $67,281 69.9%Specialty Garments 14,070 9,018 $5,052 56.0%First Aid 4,718 4,958 $(240) (4.8)%Total consolidated income from operations $182,376 $110,283 $72,093 65.4%Percentage of total revenues 10.8% 6.9% Other income, netOther income, net, which includes interest expense, interest income and other income and expense, increased by 0.6% in fiscal 2018 as compared to fiscal 2017.This change was primarily due to net interest income of $5.5 million during fiscal 2018 compared to interest income of $4.3 million during fiscal 2017. Theincrease was offset by a decrease in other expense (income), net, of $1.2 million in fiscal 2018 compared to fiscal 2017 due to a $0.5 million insurance policy gainin the fourth quarter of fiscal 2017 and foreign currency exchange gains.Provision for income taxesOur effective income tax rate for fiscal 2018 was 12.5% compared to 39.0% for fiscal 2017. The decrease in our effective tax rate was due primarily to the impactof the Act, which lowered the U.S. federal corporate income tax rates as of January 1, 2018. These new rates required us to remeasure our U.S. net deferredincome tax liabilities for fiscal 2018. Also, we will be subject to a one-time transition tax for the deemed repatriation of our foreign earnings. The remeasurementof our U.S. net deferred tax liabilities and the one-time transition tax resulted in a $20.1 million net benefit to our provision for income taxes in fiscal 2018. Oureffective tax rate for fiscal 2018 also benefited from the effect of the lower U.S. federal corporate income tax rates on our earnings. In addition to the impact of theAct, our effective tax rate for fiscal 2018 was lower due to a discrete tax benefit of $3.1 million from the adoption of new accounting guidance during the firstquarter of fiscal 2018 that requires tax effects of exercised or vested awards to be treated as discrete items as a reduction of income tax expense in the reportingperiod in which they occur.Liquidity and Capital ResourcesGeneralCash, cash equivalents and short-term investments totaled $385.3 million as of August 31, 2019, an increase of $114.8 million from $270.5 million as ofAugust 25, 2018. We generated $282.1 million and $230.1 million in cash from operating activities in the fiscal years ended August 31, 2019 and August 25, 2018,respectively.Pursuant to a share repurchase program approved by the Board of Directors on January 2, 2019, we repurchased 0.2 million shares of our Common Stock for acombined $30.5 million during fiscal 2019. On March 27, 2018, we repurchased28 1.105 million shares of Class B Common Stock and 0.073 million shares of Common Stock for a combined $146.0 million in a private transaction with the Croattifamily at a per share price of $124.00. We believe that our current cash, cash equivalents and short-term investments balances, our cash generated from futureoperations and amounts available under our Credit Agreement (defined below) will be sufficient to meet our current anticipated working capital and capitalexpenditure requirements for at least the next 12 months.Cash flows provided by operating activities have historically been the primary source of our liquidity. We generally use these cash flows to fund most, if not all, ofour operations, capital expenditure and acquisition activities as well as dividends on our common stock. We may also use cash flows provided by operatingactivities, as well as proceeds from loans payable and long-term debt, to fund growth and acquisition opportunities, as well as other cash requirements. (In thousands, except percentages) Fiscal2019 Fiscal2018 PercentChange Net cash provided by operating activities $282,142 $230,073 22.6%Net cash used in investing activities (124,329) (153,898) (19.2)%Net cash used in financing activities (41,491) (152,948) (72.9)%Effect of exchange rate changes (1,493) (2,467) (39.5)%Net increase (decrease) in cash, cash equivalents and short-term investments $114,829 $(79,240) (244.9)% Cash Provided by Operating ActivitiesThis net increase in cash provided by operating activities in fiscal 2019 compared to fiscal 2018 was due primarily to cash received of $13.0 million in the secondquarter of fiscal 2019 from the settlement agreement with the lead contractor for the version of the CRM system with respect to which we recorded a $55.8 millionimpairment charge in fiscal 2017. Also contributing to the increase was $3.0 million from the settlement of environmental litigation in the first quarter of fiscal2019, lower inventory purchases and rental merchandise placed in service and improved collections of trade receivables. This increase was partially offset by theone-time bonus of $7.2 million paid to our employees during the first quarter of fiscal 2019 and the timing of income tax payments. Cash Used in Investing ActivitiesThe net decrease in cash used in investing activities in fiscal 2019 compared to fiscal 2018 was due primarily to a lower level of acquisition activity in fiscal 2019as compared to fiscal 2018, partially offset by increased capital expenditures and capitalized software costs.Cash Used in Financing ActivitiesThis decrease in cash used in financing activities in fiscal 2019 compared to fiscal 2018 was primarily the result of the repurchase of 1.105 million shares ofClass B Common Stock and 0.073 million shares of Common Stock from the Croatti family for $146.0 million in fiscal 2018. This decrease was partially offset byrepurchases of 0.2 million shares of Common Stock for $30.5 million in fiscal 2019.Long-term debt and borrowing capacityWe have a $250.0 million unsecured revolving credit agreement (the “Credit Agreement”) with a syndicate of banks, which matures on April 11, 2021. Under theCredit Agreement, we are able to borrow funds at variable interest rates based on, at our election, the Eurodollar rate or a base rate, plus in each case a spreadbased on our consolidated funded debt ratio. Availability of credit requires compliance with certain financial and other covenants, including a maximumconsolidated funded debt ratio and minimum consolidated interest coverage ratio as defined in the Credit Agreement. We test our compliance with these financialcovenants on a fiscal quarterly basis. As of August 31, 2019, the interest rates applicable to our borrowings under the Credit Agreement would be calculated asLIBOR plus 75 basis points at the time of the respective borrowing. As of August 31, 2019, we had no outstanding borrowings and had outstanding letters of creditamounting to $71.8 million, leaving $178.2 million available for borrowing under the Credit Agreement.As of August 31, 2019, we were in compliance with all covenants under the Credit Agreement.29 Derivative Instruments and Hedging ActivitiesIn January 2015, we entered into sixteen forward contracts to exchange Canadian dollars (“CAD”) for U.S. dollars at fixed exchange rates in order to manage ourexposure related to certain forecasted CAD denominated sales of one of our subsidiaries. The hedged transactions are specified as the first amount of CADdenominated revenues invoiced by one of our domestic subsidiaries each fiscal quarter, beginning in the third fiscal quarter of fiscal 2015 and continuing throughthe second fiscal quarter of the fiscal 2019. In total, we sold approximately 31.0 million CAD at an average Canadian-dollar exchange rate of 0.7825 over thesequarterly periods. We concluded that the forward contracts met the criteria to qualify as a cash flow hedge under U.S. GAAP. Accordingly, we have reflected allchanges in the fair value of the forward contracts in accumulated other comprehensive loss, a component of shareholders’ equity. Upon the maturity of each foreignexchange forward contract, the gain or loss on the contract was recorded as an adjustment to revenues.In June 2018, we entered into twelve forward contracts to exchange CAD for U.S. dollars at fixed exchange rates in order to manage our exposure related to certainforecasted CAD denominated sales of one of our subsidiaries. The hedged transactions are specified as the first amount of CAD denominated revenues invoiced byone of our domestic subsidiaries each fiscal quarter, beginning in the third fiscal quarter of 2019 and continuing through the second fiscal quarter of 2022. In total,we will sell approximately 12.1 million CAD at an average Canadian-dollar exchange rate of 0.7814 over these quarterly periods. We concluded that the forwardcontracts met the criteria to qualify as a cash flow hedge under U.S. GAAP.As of August 31, 2019, we had forward contracts with a notional value of approximately $9.5 million CAD outstanding and recorded the fair value of the contractsof $0.1 million in other long-term assets and $0.1 million in prepaid expenses and other current assets with a corresponding $0.2 million gain in accumulated othercomprehensive loss, which was recorded net of tax. During fiscal 2019, we reclassified $0.2 million from accumulated other comprehensive loss to revenue,related to the derivative financial instruments. The gain on these forward contracts that results in decrease to accumulated other comprehensive loss as ofAugust 31, 2019 is expected to be reclassified to revenues prior to its maturity on February 25, 2022.Environmental and Legal ContingenciesWe are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges, and the generation,handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundries currently use and mustdispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. We are attentive to the environmentalconcerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal. Over the years, we have settled,or contributed to the settlement of, actions or claims brought against us relating to the disposal of hazardous materials and there can be no assurance that we willnot have to expend material amounts to remediate the consequences of any such disposal in the future.U.S. GAAP requires that a liability for contingencies be recorded when it is probable that a liability has been incurred and the amount of the liability can bereasonably estimated. Significant judgment is required to determine the existence of a liability, as well as the amount to be recorded. We regularly consult withattorneys and outside consultants in our consideration of the relevant facts and circumstances before recording a contingent liability. Changes in enacted laws,regulatory orders or decrees, our estimates of costs, risk-free interest rates, insurance proceeds, participation by other parties, the timing of payments, the input ofour attorneys and outside consultants or other factual circumstances could have a material impact on the amounts recorded for our environmental and othercontingent liabilities.Under environmental laws, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances locatedon, or in, or emanating from such property, as well as related costs of investigation and property damage. Such laws often impose liability without regard towhether the owner or lessee knew of, or was responsible for, the presence of such hazardous or toxic substances. There can be no assurances that acquired orleased locations have been operated in compliance with environmental laws and regulations or that future uses or conditions will not result in the imposition ofliability upon our Company under such laws or expose our Company to third party actions such as tort suits. We continue to address environmental conditionsunder terms of consent orders negotiated with the applicable environmental authorities or otherwise with respect to sites located in or related to Woburn,Massachusetts, Somerville, Massachusetts, Springfield, Massachusetts, Uvalde, Texas, Stockton, California, two sites related to former operations inWilliamstown, Vermont, as well as sites located in Goldsboro, North Carolina and Wilmington, North Carolina.We have accrued certain costs related to the sites described above as it has been determined that the costs are probable and can be reasonably estimated. We havepotential exposure related to a parcel of land (the “Central Area”) related to the Woburn, Massachusetts site mentioned above. Currently, the consent decree for theWoburn site does not define or require any remediation work in the Central Area. The United States Environmental Protection Agency (the “EPA”) has providedus and other signatories to the consent decree with comments on the design and implementation of groundwater and soil30 remedies at the Woburn site and investigation of environmental conditions in the Central Area. We, and other signatories, have implemented and proposed to doadditional work at the Woburn site but many of the EPA’s comments remain to be resolved. We have accrued costs to perform certain work responsive to theEPA’s comments. Additionally, we have implemented mitigation measures and continue to monitor environmental conditions at the Somerville, Massachusettssite. We have received a notice of audit findings from the Massachusetts Department of Environmental Protection concerning a regulatory submittal that we madein 2009 for a portion of the site. We are in the process of responding to that notice. We have received demands from the local transit authority for reimbursementof certain costs associated with its construction of a new municipal transit station in the area of the Somerville site. This station is part of an ongoing extension ofthe transit system. We have reserved for costs in connection with this matter; however, in light of the uncertainties associated with this matter, these costs and therelated reserve may change.We routinely review and evaluate sites that may require remediation and monitoring and determine our estimated costs based on various estimates andassumptions. These estimates are developed using our internal sources or by third-party environmental engineers or other service providers. Internally developedestimates are based on:•Management’s judgment and experience in remediating and monitoring our sites;•Information available from regulatory agencies as to costs of remediation and monitoring;•The number, financial resources and relative degree of responsibility of other potentially responsible parties (PRPs) who may be liable for remediation andmonitoring of a specific site; and•The typical allocation of costs among PRPs.There is usually a range of reasonable estimates of the costs associated with each site. In accordance with U.S. GAAP, our accruals represent the amount within therange that we believe is the best estimate or the low end of a range of estimates if no point within the range is a better estimate. When we believe that both theamount of a particular liability and the timing of the payments are reliably determinable, we adjust the cost in current dollars using a rate of 3% for inflation untilthe time of expected payment and discount the cost to present value using current risk-free interest rates. As of August 31, 2019, the risk-free interest rates weutilized ranged from 1.5% to 2.0%.For environmental liabilities that have been discounted, we include interest accretion, based on the effective interest method, in selling and administrative expenseson the Consolidated Statements of Income. The changes to the amounts of our environmental liabilities for the years ended August 31, 2019 and August 25, 2018are as follows (in thousands): Year ended August 31,2019 August 25,2018 Beginning balance $25,486 $25,419 Costs incurred for which reserves have been provided (1,079) (1,016)Insurance proceeds 143 140 Interest accretion 755 692 Changes in discount rates 2,239 (494)Revisions in estimates 174 745 Ending balance $27,718 $25,486 Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of August 31, 2019 for the next five fiscal years andthereafter, as measured in current dollars, are reflected below (in thousands). Fiscal year ended August 2020 2021 2022 2023 2024 Thereafter Total Estimated costs—current dollars $9,944 $2,186 $1,353 $1,091 $1,058 $12,032 $27,664 Estimated insurance proceeds (159) (173) (159) (173) (159) (693) (1,516)Net anticipated costs $9,785 $2,013 $1,194 $918 $899 $11,339 $26,148 Effect of inflation 7,254 Effect of discounting (5,684)Balance as of August 31, 2019 $27,718 31 Estimated insurance proceeds are primarily received from an annuity received as part of our legal settlement with an insurance company. Annual proceeds ofapproximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to our former operations inWilliamstown, Vermont. Annual proceeds received but not expended in the current year accumulate in this account and may be used in future years for costsrelated to this site through the year 2027. As of August 31, 2019, the balance in this escrow account, which is held in a trust and is not recorded in ourConsolidated Balance Sheet, was approximately $4.2 million. Also included in estimated insurance proceeds are amounts we are entitled to receive pursuant tolegal settlements as reimbursements from three insurance companies for estimated costs at the site in Uvalde, Texas.Our nuclear garment decontamination facilities are licensed by the Nuclear Regulatory Commission, or, in certain cases, by the applicable state agency, and aresubject to regulation by federal, state and local authorities. We also have nuclear garment decontamination facilities in the United Kingdom and the Netherlands.These facilities are licensed and regulated by the respective country’s applicable federal agency. There can be no assurance that such regulation will not lead tomaterial disruptions in our garment decontamination business.From time to time, we are also subject to legal proceedings and claims arising from the conduct of our business operations, including personal injury claims,customer contract matters, employment claims and environmental matters as described above.While it is impossible for us to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits and environmentalcontingencies, we believe that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance have been properly accrued in accordancewith accounting principles generally accepted in the United States. It is possible, however, that the future financial position and/or results of operations for anyparticular future period could be materially affected by changes in our assumptions or strategies related to these contingencies or changes out of our control.AcquisitionsAs part of our business, we regularly evaluate opportunities to acquire other garment service companies. In recent years, we have typically paid for acquisitionswith cash and may continue to do so in the future. To pay for an acquisition, we may use cash on hand, cash generated from operations or borrowings under ourCredit Agreement, or we may pursue other forms of debt financing. Our ability to secure short-term and long-term debt financing in the future will depend onseveral factors, including our future profitability, our levels of debt and equity, and the overall credit and equity market environments.Contractual Obligations and Other Commercial CommitmentsThe following information is presented as of August 31, 2019 (in thousands). Payments Due by Fiscal Period Contractual Obligations Total Less than1 year 1 – 3 years 3 – 5 years More than5 years Retirement plan benefit payments $41,533 $2,085 $2,904 $3,475 $33,069 Asset retirement obligations 12,727 112 1,427 1,683 9,505 Operating leases 43,813 13,560 18,193 9,435 2,625 Forward contracts 9,470 4,520 4,950 — — Total contractual cash obligations $107,543 $20,277 $27,474 $14,593 $45,199 We have uncertain tax positions that are reserved totaling $7.7 million as of August 31, 2019 that are excluded from the above table as we cannot make areasonably reliable estimate of the period of cash settlement with the respective taxing authority.We have accrued $27.7 million in costs related to certain environmental obligations we have to address under terms of consent orders negotiated with theapplicable environmental authorities or otherwise. Refer to “Environmental and Legal Contingencies”, above for additional discussion on our environmentalobligations.As discussed above under “Long-Term Debt and Borrowing Capacity”, as of August 31, 2019, we had borrowing capacity of $250.0 million under our CreditAgreement, of which approximately $178.2 million was available for borrowing. Also, as of such date, we had no outstanding borrowings and letters of creditoutstanding of $71.8 million. All letters of credit expire in less than one year. We expect to replace the Credit Agreement prior to its maturity with a new revolvingline of credit on appropriate terms.32 As discussed above under “Derivative Instruments and Hedging Activities”, as of August 31, 2019, we had forward contracts with a notional value ofapproximately $9.5 million CAD outstanding and recorded the fair value of the contracts of $0.1 million in other long-term assets and $0.1 million in prepaidexpenses and other current assets with a corresponding $0.2 million gain in accumulated other comprehensive loss, which was recorded net of tax. During fiscal2019, we reclassified $0.2 million from accumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on theseforward contracts that results in decrease to accumulated other comprehensive loss as of August 31, 2019 is expected to be reclassified to revenues prior to itsmaturity on February 25, 2022.Off Balance Sheet ArrangementsAs of August 31, 2019, we did not have any off balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Securities and Exchange Commission Regulation S-K.Effects of InflationIn general, we believe that our results of operations are not dependent on moderate changes in the inflation rate. Historically, we have been able to manage theimpacts of more significant changes in inflation rates through our customer relationships, customer agreements that generally provide for price increases consistentwith the rate of inflation, and continued focus on improvements of operational productivity.Energy CostsSignificant increases in energy costs, specifically with respect to natural gas and gasoline, can materially affect our operating costs. During fiscal 2019, our energycosts, which include fuel, natural gas, and electricity, represented approximately 4.1% of our total revenue.Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance for revenue recognition, which it has subsequentlymodified. This modified update provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transferof goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The standardincludes cost guidance, whereby all direct and incremental costs to obtain or fulfill a contract will be capitalized and amortized over the corresponding period ofbenefit, determined on a contract by contract basis. This guidance is also intended to improve disclosure requirements and enhance the comparability of revenuerecognition practices. Improved disclosures under the amended guidance relate to the nature, amount, timing and uncertainty of revenue that is recognized fromcontracts with customers. We adopted the standard on August 26, 2018 using the modified retrospective adoption method. Upon adoption of this guidance, werecorded an adjustment to the opening balance of retained earnings as of August 26, 2018. The adoption of the standard did not have any material impact to thetiming or measurement of revenues. The adjustment to retained earnings relates to the capitalization of certain direct and incremental contract costs required by thenew guidance, net of the related income tax effect. Capitalized costs are amortized ratably over the anticipated period of benefit. We applied the new guidance toall contracts as of August 26, 2018. Results for reporting periods beginning after August 25, 2018 are presented under the new guidance, while comparative priorperiod amounts have not been restated and continue to be presented under accounting standards in effect in those periods.Capitalization of Contract Costs. We elected to apply the guidance, as a practical expedient, to a portfolio of contracts (or performance obligations) with similarcharacteristics because we reasonably expect that the effects on the Consolidated Financial Statements of applying this guidance to the portfolio would not differmaterially from applying this guidance to the individual contracts within the portfolio. We also continue to expense certain costs to obtain a contract if those costsdo not meet the criteria of the new standard or the amortization period of the asset would have been one year or less.The cumulative effect of applying the new guidance was recorded as an adjustment to retained earnings as of the adoption date. The adoption of this standard hadno impact on our fiscal 2019 operating cash flow with the exception of the impact to net income as mentioned in Note 1, “Recent Accounting Pronouncements” toour Consolidated Financial Statements included in this Annual Report on Form 10-K.33 In January 2016, the FASB issued updated guidance for the recognition, measurement, presentation, and disclosure of certain financial assets and liabilities. Thisguidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted.Accordingly, we adopted this guidance on August 26, 2018. The adoption of this standard did not have a material impact on our financial statements.In February 2016, the FASB issued updated guidance which sets out the principles for the recognition, measurement, presentation and disclosure of leases for bothparties to a contract (i.e., lessees and lessors). The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leasesbased on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense isrecognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-useasset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will beaccounted for similar to existing guidance for operating leases. This new guidance is effective for reporting periods beginning after December 15, 2018. Entitiesare required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in their financialstatements. We adopted the new guidance on September 1, 2019. In accordance with Topic 842, a registrant can elect not to present comparative financialinformation under Topic 842 if it recognizes a cumulative-effect adjustment to retained earnings upon adoption. We intend to make this transition election. Themajority of our lease spend relates to certain real estate with the remaining lease spend primarily related to vehicles and equipment. In addition to the newqualitative and quantitative disclosures that will be required upon adoption of this standard, we anticipate recognizing lease assets and liabilities on the balancesheet in the range of approximately $40.0 million to $50.0 million, based on our portfolio of leases at August 31, 2019. We do not expect a material impact on itsconsolidated statements of income or consolidated statements of cash flows. We are substantially complete with our implementation efforts.In August 2016, the FASB issued updated guidance that reduces diversity in how certain cash receipts and cash payments are presented and classified in theConsolidated Statements of Cash Flows. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that beginafter December 15, 2017 and is required to be applied retrospectively, with early adoption permitted. Accordingly, we adopted this guidance on August 26, 2018.The adoption of this guidance did not have a material impact on our financial statements.In June 2016, the FASB issued updated guidance that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certaintypes of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, currentinformation and reasonable and supportable forecasts. This guidance also expands the disclosure requirements to enable users of financial statements to understandthe entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for annual reporting periods, and any interim periodswithin those annual periods, that begin after December 15, 2019 with early adoption permitted. Accordingly, the guidance will be effective for the Company onAugust 30, 2020. We are currently evaluating the impact that this guidance will have on our financial statements and related disclosures.In October 2016, the FASB issued updated guidance to improve the accounting for the income tax consequences of intra-entity transfers of assets other thaninventory. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2017 and isrequired to be applied on a modified retrospective basis, with early adoption permitted. Accordingly, we adopted this standard us on August 26, 2018. The adoptionof this guidance did not have a material impact on our financial statements.In March 2017, the FASB issued updated guidance that requires a change in the presentation of net periodic benefit cost on the consolidated statements ofoperations. Specifically, entities must present the service cost component of net periodic benefit cost in the same financial statement line items as othercompensation costs arising from services rendered by the related employees during the period, whereas the non-service components of net periodic benefit costmust be presented separately from the financial statement line items that include service cost and outside of operating income. Our adoption of this guidance onAugust 26, 2018 did not have a material impact on our financial statements.In August 2017, the FASB issued guidance that expands component and fair value hedging, specifies the presentation of the effects of hedging instruments, andeliminates the separate measurement and presentation of hedge ineffectiveness. The accounting update is effective for annual and interim periods beginning afterDecember 15, 2018, with early adoption permitted, and is to be applied on a modified retrospective basis. We elected to early adopt this guidance in the firstquarter of fiscal 2019. The adoption of this guidance did not have a material impact on our financial statements.In August 2018, the FASB issued updated guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or otherpostretirement plans. This guidance will be effective for annual reporting periods, and any interim periods within those annual 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 us on August 29,2021. We are currently evaluating the impact that this guidance will have on our financial statements and related disclosures.34 In August 2018, the FASB issued guidance that addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is aservice contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computingarrangements. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with therequirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-usesoftware license). This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019with early adoption permitted. The amendments in this update can be applied either retrospectively or prospectively to all implementation costs incurred after thedate of adoption. Accordingly, the guidance will be effective for us on August 30, 2020. We are currently evaluating the impact that this guidance will have on itsfinancial statements and related disclosures. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKForeign Currency Exchange RiskWe have determined that all of our foreign subsidiaries operate primarily in local currencies that represent the functional currencies of such subsidiaries. All assetsand liabilities of our foreign subsidiaries are translated into U.S. dollars using the exchange rate prevailing at the balance sheet date. The effects of exchange ratefluctuations on the translation of assets and liabilities are recorded as a component of shareholders’ equity. Revenues and expenses are translated at the averageexchange rates in effect during each month of the fiscal year. As such, our financial condition and operating results are affected by fluctuations in the value of theU.S. dollar as compared to currencies in foreign countries. Revenues denominated in currencies other than the U.S. dollar represented approximately 7.0%, 8.1%and 7.4% of our total consolidated revenues for fiscal 2019, 2018 and 2017, respectively. Total assets denominated in currencies other than the U.S. dollarrepresented approximately 6.9% and 8.0% of our total consolidated assets at August 31, 2019 and August 25, 2018, respectively. If exchange rates had increased ordecreased by 10% from the actual rates in effect during the fiscal year ended August 31, 2019, our revenues and assets for the year ended and as of August 31,2019 would have increased or decreased by approximately $12.6 million and $14.1 million, respectively.In January 2015, we entered into sixteen forward contracts to exchange Canadian dollars (“CAD”) for U.S. dollars at fixed exchange rates in order to manage ourexposure related to certain forecasted CAD denominated sales of one of our subsidiaries. The hedged transactions are specified as the first amount of CADdenominated revenues invoiced by one of our domestic subsidiaries each fiscal quarter, beginning in the third quarter of fiscal 2015 and continuing through thesecond quarter of fiscal 2019. In total, we sold approximately 31.0 million CAD at an average Canadian-dollar exchange rate of 0.7825 over these quarterlyperiods. We concluded that the forward contracts met the criteria to qualify as a cash flow hedge under U.S. GAAP. Accordingly, we reflected all changes in thefair value of the forward contracts in accumulated other comprehensive loss, a component of shareholders’ equity. Upon the maturity of each foreign exchangeforward contract, the gain or loss on the contract was recorded as an adjustment to revenues.In June 2018, we entered into twelve forward contracts to exchange CAD for U.S. dollars at fixed exchange rates in order to manage our exposure related to certainforecasted CAD denominated sales of one of our subsidiaries. The hedged transactions are specified as the first amount of CAD denominated revenues invoiced byone of our domestic subsidiaries each fiscal quarter, beginning in the third fiscal quarter of 2019 and continuing through the second fiscal quarter of 2022. In total,we will sell approximately 12.1 million CAD at an average Canadian-dollar exchange rate of 0.7814 over these quarterly periods. We concluded that the forwardcontracts met the criteria to qualify as a cash flow hedge under U.S. GAAP.As of August 31, 2019, we had forward contracts with a notional value of approximately $9.5 million CAD outstanding and recorded the fair value of the contractsof $0.1 million in other long-term assets and $0.1 million in prepaid expenses and other current assets with a corresponding $0.2 million gain in accumulated othercomprehensive loss, which was recorded net of tax. During fiscal 2019, we reclassified $0.2 million from accumulated other comprehensive loss to revenue,related to the derivative financial instruments. The gain on these forward contracts that results in decrease to accumulated other comprehensive loss as ofAugust 31, 2019 is expected to be reclassified to revenues prior to its maturity on February 25, 2022.Other than the forward contracts discussed above, we do not operate a hedging program to mitigate the effect of a significant change in the value of the functionalcurrencies of our foreign subsidiaries, which include the Canadian dollar, euro, British pound, Mexican peso and Nicaraguan cordoba, as compared to the U.S.dollar. Any losses or gains resulting from unhedged foreign currency transactions, including exchange rate fluctuations on intercompany accounts are reported astransaction losses (gains) in our other (income) expense, net. The intercompany payables and receivables are denominated in Canadian dollars, euros, Britishpounds, Mexican pesos and Nicaraguan cordobas. During the fiscal year ended August 31, 2019, transaction losses included in other expense (income), net, was$1.1 million. If exchange rates had changed by 10% during fiscal 2019, we would have recognized exchange gains or losses of approximately $0.9 million. 35 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAConsolidated Statements of IncomeUniFirst Corporation and Subsidiaries Year ended(In thousands, except per share data) August 31,2019 August 25,2018 August 26,2017 Revenues $1,809,376 $1,696,489 $1,590,958 Operating expenses: Cost of revenues (1) 1,139,195 1,056,724 993,589 Selling and administrative expenses (1) 334,840 360,727 342,407 Impairment charge — — 55,800 Depreciation and amortization 103,333 96,662 88,879 Total operating expenses 1,577,368 1,514,113 1,480,675 Operating income 232,008 182,376 110,283 Other (income) expense: Interest income, net (9,082) (5,543) (4,269)Other expense (income), net 3,166 673 (571)Total other income, net (5,916) (4,870) (4,840) Income before income taxes 237,924 187,246 115,123 Provision for income taxes 58,790 23,351 44,927 Net income $179,134 $163,895 $70,196 Income per share—Basic: Common Stock $9.77 $8.66 $3.63 Class B Common Stock $7.81 $6.91 $2.91 Income per share—Diluted: Common Stock $9.33 $8.21 $3.44 Income allocated to—Basic: Common Stock $150,247 $133,802 $55,903 Class B Common Stock $28,887 $30,093 $13,915 Income allocated to—Diluted: Common Stock $179,134 $163,895 $69,837 Weighted average number of shares outstanding—Basic: Common Stock 15,385 15,454 15,382 Class B Common Stock 3,697 4,357 4,786 Weighted average number of shares outstanding—Diluted: Common Stock 19,196 19,963 20,276 (1)Exclusive of depreciation on the Company’s property, plant and equipment and amortization of its intangible assets.The accompanying notes are an integral part of these Consolidated Financial Statements.36 Consolidated Statements of Comprehensive IncomeUniFirst Corporation and Subsidiaries Year ended(In thousands) August 31,2019 August 25,2018 August 26,2017 Net income $179,134 $163,895 $70,196 Other comprehensive (loss) income: Foreign currency translation adjustments (3,524) (5,184) 4,882 Pension benefit liabilities, net of income taxes (5,104) 1,342 2,774 Change in fair value of derivatives, net of income taxes 252 247 (45)Derivative financial instruments reclassified to earnings (153) (46) (180) Other comprehensive (loss) income (8,529) (3,641) 7,431 Comprehensive income $170,605 $160,254 $77,627 The accompanying notes are an integral part of these Consolidated Financial Statements.37 Consolidated Balance SheetsUniFirst Corporation and Subsidiaries (In thousands, except share and par value data) August 31,2019 August 25,2018 Assets Current assets: Cash, cash equivalents and short-term investments $385,341 $270,512 Receivables, less reserves of $9,935 and $9,237, respectively 203,457 200,797 Inventories 100,916 90,176 Rental merchandise in service 184,318 174,392 Prepaid taxes 4,060 27,024 Prepaid expenses and other current assets 35,699 21,899 Total current assets 913,791 784,800 Property, plant and equipment, net 574,509 547,996 Goodwill 401,178 397,422 Customer contracts, net 56,588 67,318 Other intangible assets, net 16,132 15,166 Deferred income taxes 448 425 Other assets 84,674 30,259 Total assets $2,047,320 $1,843,386 Liabilities and shareholders’ equity Current liabilities: Accounts payable $77,918 $73,500 Accrued liabilities 111,721 124,225 Accrued taxes 205 736 Total current liabilities 189,844 198,461 Accrued liabilities 117,074 105,888 Accrued and deferred income taxes 99,172 74,070 Total liabilities 406,090 378,419 Commitments and contingencies (Note 11) Shareholders’ equity: Preferred Stock, $1.00 par value; 2,000,000 shares authorized; no shares issued and outstanding — — Common Stock, $0.10 par value; 30,000,000 shares authorized; 15,332,759 and 15,431,209 shares issued and outstanding in 2019 and 2018, respectively 1,533 1,543 Class B Common Stock, $0.10 par value; 20,000,000 shares authorized; 3,643,009 and 3,710,009 shares issued and outstanding in 2019 and 2018, respectively 364 371 Capital surplus 84,946 82,973 Retained earnings 1,588,075 1,405,239 Accumulated other comprehensive loss (33,688) (25,159)Total shareholders’ equity 1,641,230 1,464,967 Total liabilities and shareholders’ equity $2,047,320 $1,843,386 The accompanying notes are an integral part of these Consolidated Financial Statements.38 Consolidated Statements of Shareholders’ EquityUniFirst Corporation and Subsidiaries (In thousands) CommonShares Class BCommonShares CommonStock Class BCommonStock CapitalSurplus RetainedEarnings AccumulatedOtherComprehensiveLoss TotalEquity Balance, August 27, 2016 15,415 4,849 $1,542 $485 $72,561 $1,319,142 $(28,949) $1,364,781 Net income — — — — — 70,196 — 70,196 Pension benefit liabilities, net (1) — — — — — — 2,774 2,774 Change in fair value of derivatives — — — — — — (225) (225)Foreign currency translation — — — — — — 4,882 4,882 Dividends declared — — — — — (2,900) — (2,900)Shares converted 34 (34) 3 (3) — — — — Share-based compensation, net (2) (47) — (5) — 10,072 — — 10,067 Share-based awards exercised, net (1) (3) 51 — 5 — 3,612 — — 3,617 Balance, August 26, 2017 15,453 4,815 $1,545 $482 $86,245 $1,386,438 $(21,518) $1,453,192 Net income — — — — — 163,895 — 163,895 Pension benefit liabilities, net (1) — — — — — 1,192 1,342 2,534 Change in fair value of derivatives — — — — — — 201 201 Foreign currency translation — — — — — — (5,184) (5,184)Dividends declared — — — — — (5,586) — (5,586)Share-based compensation, net (2) — — — — 2,204 (738) — 1,466 Share-based awards exercised, net (1) 51 — 5 — 456 — — 461 Repurchase of Common Stock (73) (1,105) (7) (111) (5,932) (139,962) — (146,012)Balance, August 25, 2018 15,431 3,710 $1,543 $371 $82,973 $1,405,239 $(25,159) $1,464,967 Net income — — — — — 179,134 — 179,134 Pension benefit liabilities, net (1) — — — — — — (5,104) (5,104)Change in fair value of derivatives — — — — — — 99 99 Foreign currency translation — — — — — — (3,524) (3,524)Dividends declared — — — — — (8,243) — (8,243)Shares converted 67 (67) 7 (7) — — — Share-based compensation, net (2) — — — — 2,997 — — 2,997 Share-based awards exercised, net (1) 32 — 3 — 48 — — 51 Repurchase of Common Stock (197) — (20) — (1,072) (29,423) — (30,515)Cumulative effect of change in accountingprinciple — — — — — 41,368 — 41,368 Balance, August 31, 2019 15,333 3,643 $1,533 $364 $84,946 $1,588,075 $(33,688) $1,641,230 (1)These amounts are shown net of the effect of income taxes.(2)These amounts are shown net of any shares withheld by the Company to satisfy certain tax withholdings obligations in connection with the vesting ofcertain shares of restricted stock.(3)These amounts include excess tax benefits that the Company realized as part of the exercise of share-based awards. The accompanying notes are an integral part of these Consolidated Financial Statements.39 Consolidated Statements of Cash FlowsUniFirst Corporation and Subsidiaries Year ended(In thousands) August 31,2019 August 25,2018 August 26,2017 Cash flows from operating activities: Net income $179,134 $163,895 $70,196 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 103,333 96,662 88,879 Amortization of deferred financing costs 112 112 112 Forgiveness of a liability (7,346) — — Other (283) (232) (567)Share-based compensation 5,761 4,638 12,462 Accretion on environmental contingencies 755 692 600 Accretion on asset retirement obligations 865 935 853 Impairment charge — — 55,800 Deferred income taxes 8,896 (7,861) 955 Changes in assets and liabilities, net of acquisitions: Receivables, less reserves (3,189) (12,420) (22,232)Inventories (10,736) (11,051) 1,865 Rental merchandise in service (10,324) (21,572) (5,384)Prepaid expenses and other current assets and Other assets (8,011) (5,643) 12,903 Accounts payable 3,365 4,573 9,594 Accrued liabilities (1,027) 12,233 11,728 Prepaid and accrued income taxes 20,837 5,112 (19,490)Net cash provided by operating activities 282,142 230,073 218,274 Cash flows from investing activities: Acquisition of businesses, net of cash acquired (4,919) (42,665) (125,457)Capital expenditures, including capitalization of software costs (119,815) (112,747) (108,554)Proceeds from sale of assets 405 1,777 876 Other — (263) 98 Net cash used in investing activities (124,329) (153,898) (233,037) Cash flows from financing activities: Proceeds from exercise of share-based awards, including excess tax benefits in fiscal 2017 51 461 3,102 Taxes withheld and paid related to net share settlement of equity awards (2,767) (3,180) (2,386)Repurchase of Common Stock (30,515) (146,011) — Payment of cash dividends (8,260) (4,218) (2,898)Net cash used in financing activities (41,491) (152,948) (2,182) Effect of exchange rate changes (1,493) (2,467) 2,902 Net (decrease) increase in cash, cash equivalents and short-term investments 114,829 (79,240) (14,043)Cash, cash equivalents and short-term investments at beginning of period 270,512 349,752 363,795 Cash, cash equivalents and short-term investments at end of period $385,341 $270,512 $349,752 Supplemental disclosure of cash flow information: Non-cash capital expenditures $16,244 $15,050 $10,625 Interest paid $750 $538 $801 Income taxes paid, net of refunds received $28,354 $28,355 $62,165 The accompanying notes are an integral part of these Consolidated Financial Statements.40 Notes to Consolidated Financial StatementsUniFirst Corporation and Subsidiaries1. Summary of Significant Accounting PoliciesBusiness DescriptionUniFirst Corporation (the “Company”) is one of the largest providers of workplace uniforms and protective clothing in the United States. The Company designs,manufactures, personalizes, rents, cleans, delivers, and sells a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats,smocks, aprons and specialized protective wear, such as flame resistant and high visibility garments. The Company also rents and sells industrial wiping products,floor mats, facility service products and other non-garment items, and provides restroom and cleaning supplies and first aid cabinet services and other safetysupplies, to a variety of manufacturers, retailers and service companies.The Company serves businesses of all sizes in numerous industry categories. Typical customers include automobile service centers and dealers, delivery services,food and general merchandise retailers, food processors and service operations, light manufacturers, maintenance facilities, restaurants, service companies, soft anddurable goods wholesalers, transportation companies, and others who require employee clothing for image, identification, protection or utility purposes. TheCompany also provides its customers with restroom and cleaning supplies, including air fresheners, paper products and hand soaps.At certain specialized facilities, the Company decontaminates and cleans work clothes and other items that may have been exposed to radioactive materials andservices special cleanroom protective wear. Typical customers for these specialized services include government agencies, research and development laboratories,high technology companies and utility providers operating nuclear reactors.As discussed and described in Note 15, “Segment Reporting”, to these Consolidated Financial Statements, the Company has five reporting segments: U.S. andCanadian Rental and Cleaning, Manufacturing (“MFG”), Specialty Garments Rental and Cleaning (“Specialty Garments”), First Aid and Corporate. The operationsof the U.S. and Canadian Rental and Cleaning reporting segment are referred to by the Company as its “industrial laundry operations” and the locations related tothis reporting segment are referred to as “industrial laundries”. The Company refers to its U.S. and Canadian Rental and Cleaning, MFG, and Corporate segmentscombined as its “Core Laundry Operations”.Principles of ConsolidationThe Consolidated Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. Intercompany balances andtransactions are eliminated in consolidation.Basis of PresentationThe Consolidated Financial Statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.There have been no material changes in the accounting policies followed by the Company during the current fiscal year other than the adoption of recentaccounting pronouncements as discussed in greater detail in the Recent Accounting Pronouncements sub-section of this Note.Certain prior year amounts have been reclassified to conform to current year presentation. The Company has reclassified $11.6 million of software from property,plant, and equipment, net to intangible assets as of August 25, 2018. This reclassification did not impact current or historical net income or shareholder’s equity.Use of EstimatesThe preparation of these Consolidated Financial Statements is in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”)which requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Theseestimates are based on historical information, current trends, and information available from other sources. Actual results could differ from these estimates.41 Fiscal YearThe Company’s fiscal year ends on the last Saturday in August. For financial reporting purposes, fiscal 2019 consisted of 53 weeks, and fiscal 2018 and fiscal 2017both consisted of 52 weeks. The additional week was included in the fourth quarter of fiscal 2019.Cash, Cash Equivalents and Short-Term InvestmentsCash, cash equivalents and short-term investments include cash in banks, money market securities, and bank short-term investments having original maturities oftwelve months or less. As of August 31, 2019, short-term investments consist of certificates of deposits totaling $4.9 million having original maturities of six andtwelve months. As of August 25, 2018, short-term investments consist of certificates of deposits totaling $67.6 million having original maturities of three, six andtwelve months.Accounts receivableAccounts receivable represents amounts due from customers and is presented net of an allowance for doubtful accounts. The Company utilizes its judgment andestimates are used in determining the collectability of accounts receivable and evaluating the adequacy of the allowance for doubtful accounts. The Companyconsiders specific accounts receivable and historical bad debt experience, customer credit worthiness, current economic trends and the age of outstanding balancesas part of its evaluation. When an account is considered uncollectible, it is written off against the allowance for doubtful accounts.Financial InstrumentsThe Company’s financial instruments, which may expose the Company to concentrations of credit risk, include cash, cash equivalents and short-term investments,receivables and accounts payable. Each of these financial instruments is recorded at cost, which approximates its fair value given the short maturity of eachfinancial instrument.Revenue RecognitionAs discussed and described in greater detail in the Recent Accounting Pronouncements sub-section of this Note, the Company adopted the new revenue recognitionguidance on August 26, 2018. As accounted for under the new guidance, approximately 91.6% of the Company’s revenues are derived from fees for routeservicing of Core Laundry Operations, Specialty Garments and First Aid services 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 asservices are performed based on the nature of services provided and contractual rates (input method). Certain of the Company’s customer contracts, primarilywithin the Company’s Core Laundry Operations, include pricing terms and conditions that include components of variable consideration. The variableconsideration is typically in the form of consideration due to a customer based on performance metrics specified within the contract. Specifically, some contractscontain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earnedbased on the Company’s actual performance during the measurement period specified within the contract. To determine the transaction price, the Companyestimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during therelevant measurement period. When determining if variable consideration should be constrained, the Company considers whether factors outside its control couldresult in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. TheCompany’s performance period generally corresponds with the monthly invoice period. No significant constraints on the Company’s revenue recognition wereapplied during fiscal 2019. The Company reassesses these estimates during each reporting period. The Company maintains a liability for these discounts andrebates within accrued liabilities on the consolidated balance sheets. Variable consideration also includes consideration paid to a customer at the beginning of acontract. The Company capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue in accordance with the updatedaccounting guidance for revenue recognition. These assets are included in other assets on the consolidated balance sheets.42 The following table presents the Company’s revenues for fiscal 2019, disaggregated by service type: Years ended August 31, 2019 August 25, 2018 August 26, 2017 (In thousands, except percentages) Revenues % ofRevenues Revenues % ofRevenues Revenues % ofRevenues Core Laundry Operations 1,616,205 89.3% $1,523,648 89.8% $1,442,149 90.6%Specialty Garments 132,767 7.3% 118,477 7.0% 98,024 6.2%First Aid 60,404 3.4% 54,364 3.2% 50,785 3.2%Total Revenues $1,809,376 100.0% $1,696,489 100.0% $1,590,958 100.0% During fiscal 2019, the percentage of revenues recognized over time as the services are performed was 95.8% of Core Laundry Operations revenues and 82.7% ofSpecialty Garments revenues. During fiscal 2019, 4.2% of Core Laundry Operations revenues, 17.3% of Specialty Garments revenues and 100% of First Aidrevenues were recognized at a point in time, which generally occurs when the goods are transferred to the customer.Costs to Obtain a ContractThe Company defers commission expenses paid to its employee-partners when the commissions are deemed to be incremental for obtaining the route servicingcustomer contract. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. The Company reviews the deferredcommission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when the Companyexpects to recognize the expense. The current portion is included in prepaid expenses and other current assets and the non-current portion is included in otherassets on the Company’s consolidated balance sheets. As of August 31, 2019, the current and non-current assets related to deferred commissions totaled$12.4 million and $50.3 million, respectively. During fiscal 2019, the Company recorded $11.8 million of amortization expense related to deferred commissions.This expense is classified in selling and administrative expenses on the consolidated statements of income.Inventories and Rental Merchandise in ServiceInventories are stated at the lower of cost or net realizable value, net of any reserve for excess and obsolete inventory. Work-in-process and finished goodsinventories consist of materials, labor and manufacturing overhead. Judgments and estimates are used in determining the likelihood that new goods on hand can besold to customers or used in rental operations. Historical inventory usage and current revenue trends are considered in estimating both excess and obsoleteinventories. If actual product demand and market conditions are less favorable than those projected by management, additional inventory write-downs may berequired. The Company uses the first-in, first-out (“FIFO”) method to value its inventories.The components of inventory as of August 31, 2019 and August 25, 2018 were as follows (in thousands): August 31,2019 August 25,2018 Raw materials $23,000 $18,508 Work in process 2,864 3,271 Finished goods 75,052 68,397 Total inventory $100,916 $90,176 Rental merchandise in service is amortized, primarily on a straight-line basis, over the estimated service lives of the merchandise, which range from six to thirty-sixmonths. The amortization expense is included in the cost of revenues on the Company’s Consolidated Statements of Income. In establishing estimated lives formerchandise in service, management considers historical experience and the intended use of the merchandise. Material differences may result in the amount andtiming of operating profit for any period if management makes significant changes to these estimates.Property, plant and equipmentProperty, plant and equipment are recorded at cost. Expenditures for maintenance and repairs are expensed as incurred, while expenditures for renewals andbetterments are capitalized.43 The components of property, plant and equipment as of August 31, 2019 and August 25, 2018 were as follows (in thousands): August 31,2019 August 25,2018 Land, buildings and leasehold equipment $527,419 $496,966 Machinery and equipment 565,319 534,469 Motor vehicles 253,841 238,087 1,346,579 1,269,522 Less: accumulated depreciation 772,070 721,526 Total property, plant and equipment $574,509 $547,996 The Company provides for depreciation on the straight-line method based on the date the asset is placed in service using the following estimated useful lives: Buildings (in years) 30 — 40Building components (in years) 10 — 20Leasehold improvements Shorter of usefullife or term of leaseMachinery and equipment (in years) 3 — 10Motor vehicles (in years) 3 — 5 Long-lived assets, including property, plant and equipment, are evaluated for impairment whenever events or circumstances indicate an asset may be impaired.There were no material impairments of long-lived assets in fiscal 2019 and 2018. During the fourth quarter of fiscal 2017, the Company recognized a non-cashimpairment charge in its U.S. and Canadian Rental and Cleaning segment of $55.8 million on its ongoing customer relationship management (“CRM”) systemsproject as the Company determined that it was no longer probable that the version being developed at the end of fiscal 2017 would be placed into service. Duringfiscal 2018, the previous version of the CRM system being developed was abandoned, and the Company is now working on a new CRM system. Expenditures notimpaired for computer software, including amounts capitalized related to the Company’s CRM systems project, are included within other intangible assets, net.Goodwill and Other Intangible AssetsIn accordance with U.S. GAAP, the Company does not amortize goodwill. Instead, the Company tests goodwill for impairment on an annual basis. Managementcompletes its annual goodwill impairment test in the fourth quarter of each fiscal year. In addition, U.S. GAAP requires that companies test goodwill if eventsoccur or circumstances change that would more likely than not reduce the fair value of a reporting unit to which goodwill is assigned below its carrying amount.The Company used the qualitative assessment option for our impairment testing in fiscal 2019 for goodwill and determined that the fair values of the reportingunits more likely than not exceeded their carrying values and that there was no evidence of impairment as of August 31, 2019.The Company cannot predict future economic conditions and their impact on the Company or the future market value of the Company’s stock. A decline in theCompany’s market capitalization and/or deterioration in general economic conditions could negatively and materially impact the Company’s assumptions andassessment of the fair value of the Company’s business. If general economic conditions or the Company’s financial performance deteriorate, the Company may berequired to record a goodwill impairment charge in the future which could have a material impact on the Company’s financial condition and results of operations.Definite-lived intangible assets are amortized over their estimated useful lives, which are based on management’s estimates of the period that the assets willgenerate economic benefits. Definite-lived intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carryingamount of the assets may not be recoverable in accordance with U.S. GAAP. There were no impairments of goodwill or indicators of impairment for definite-livedintangible assets in fiscal 2019, 2018 or 2017.As of August 31, 2019, definite-lived intangible assets have a weighted average useful life of approximately 11.3 years. Customer contracts have a weightedaverage useful life of approximately 13.6 years and other intangible assets, net, which consist of primarily, restrictive covenants, deferred financing costs, softwareand trademarks, have a weighted average useful life of approximately 3.3 years.44 Environmental and Other ContingenciesThe Company is subject to legal proceedings and claims arising from the conduct of its business operations, including environmental matters, personal injury,customer contract matters and employment claims. Accounting principles generally accepted in the United States require that a liability for contingencies berecorded when it is probable that a liability has occurred and the amount of the liability can be reasonably estimated. Significant judgment is required to determinethe existence of a liability, as well as the amount to be recorded. The Company regularly consults with attorneys and outside consultants in its consideration of therelevant facts and circumstances before recording a contingent liability. The Company records accruals for environmental and other contingencies based onenacted laws, regulatory orders or decrees, the Company’s estimates of costs, insurance proceeds, participation by other parties, the timing of payments, and theinput of outside consultants and attorneys.The estimated liability for environmental contingencies has been discounted as of August 31, 2019 using risk-free interest rates ranging from 1.5% to 2.0% overperiods ranging from ten to thirty years. The estimated current costs, net of legal settlements with insurance carriers, have been adjusted for the estimated impact ofinflation at 3% per year. Changes in enacted laws, regulatory orders or decrees, management’s estimates of costs, risk-free interest rates, insurance proceeds,participation by other parties, the timing of payments, the input of the Company’s attorneys and outside consultants or other factual circumstances could have amaterial impact on the amounts recorded for environmental and other contingent liabilities. Refer to Note 11, “Commitments and Contingencies”, of theseConsolidated Financial Statements for additional discussion and analysis.Asset Retirement ObligationsUnder U.S. GAAP, asset retirement obligations generally apply to legal obligations associated with the retirement of long-lived assets that result from theacquisition, construction, development and/or the normal operation of a long-lived asset. The Company recognizes asset retirement obligations in the period inwhich they are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount ofthe long-lived asset.The Company has recognized as a liability the present value of the estimated future costs to decommission its nuclear laundry facilities. The Company depreciates,on a straight-line basis, the amount added to property, plant and equipment and recognizes accretion expense in connection with the discounted liability over thevarious remaining lives which range from approximately one to twenty-five years.The estimated liability has been based on historical experience in decommissioning nuclear laundry facilities, estimated useful lives of the underlying assets,external vendor estimates as to the cost to decommission these assets in the future, and federal and state regulatory requirements. The estimated current costs havebeen adjusted for the estimated impact of inflation at 3% per year. The liability has been discounted using credit-adjusted risk-free rates that range fromapproximately 7.0% to 7.5%. Revisions to the liability could occur due to changes in the Company’s estimated useful lives of the underlying assets, estimated datesof decommissioning, changes in decommissioning costs, changes in federal or state regulatory guidance on the decommissioning of such facilities, or other changesin estimates. Changes due to revised estimates will be recognized by adjusting the carrying amount of the liability and the related long-lived asset if the assets arestill in service, or charged to expense in the period if the assets are no longer in service.InsuranceThe Company is self-insured for certain obligations related to health, workers’ compensation, vehicles and general liability programs. The Company also purchasesstop-loss insurance policies for health, workers’ compensation, vehicles and general liability programs to protect itself from catastrophic losses. Judgments andestimates are used in determining the potential value associated with reported claims and for events that have occurred, but have not been reported. The Company’sestimates consider historical claims experience and other factors. In certain cases where partial insurance coverage exists, the Company estimates the portion of theliability that will be covered by existing insurance policies to arrive at its net expected liability. Receivables for insurance recoveries are recorded as assets, on anundiscounted basis. The Company’s liabilities are based on estimates, and, while the Company believes that its accruals are adequate, the ultimate liability may besignificantly different from the amounts recorded. Changes in claims experience, the Company’s ability to settle claims or other estimates and judgments used bymanagement could have a material impact on the amount and timing of expense for any period.45 Supplemental Executive Retirement Plan and other Pension PlansPension expense is recognized on an accrual basis over employees’ estimated service periods. Pension expense is generally independent of funding decisions orrequirements.The Company (1) recognizes in its statement of financial position the over-funded or under-funded status of its defined benefit postretirement plans measured asthe difference between the fair value of plan assets and the benefit obligation, (2) recognizes as a component of other comprehensive (loss) income, net of tax, theactuarial 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 additionalinformation in the notes to financial statements about certain effects on net periodic benefit cost in the upcoming fiscal year that arise from delayed recognition ofthe actuarial gains and losses and the prior service costs and credits. Refer to Note 7, “Employee Benefit Plans”, of these Consolidated Financial Statements forfurther discussion regarding the Company’s pension plans.The calculation of pension expense and the corresponding liability requires the use of a number of critical assumptions, including the expected long-term rates ofreturn on plan assets, the assumed discount rates, assumed rate of compensation increases and life expectancy of participants. Changes in these assumptions canresult in different expense and liability amounts, and future actual experience can differ from these assumptions. Pension expense increases as the expected rate ofreturn on pension plan assets decreases. Future changes in plan asset returns, assumed discount rates and various other factors related to the participants in theCompany’s pension plans will impact the Company’s future pension expense and liabilities. The Company cannot predict with certainty what these factors will bein the future.Income TaxesThe Company computes income tax expense by jurisdiction based on its operations in each jurisdiction. Deferred income taxes are provided for temporarydifferences between the amounts recognized for income tax and financial reporting purposes at currently enacted tax rates. The Tax Cuts and Jobs Act of 2017 (the“Act”) included a mandatory one-time transition tax on accumulated earnings of foreign subsidiaries and, as a result, previously unremitted earnings for which noU.S. deferred tax liability had been accrued have now been subject to U.S. tax. Deferred tax assets and liabilities are determined by the differences between theconsolidated financial statement carrying amounts and the tax basis of assets and liabilities. See Note 4, “Income Taxes” in these Consolidated FinancialStatements for the types of items that give rise to significant deferred income tax assets and liabilities. Deferred income taxes are classified as assets or liabilitiesbased on the classification of the related asset or liability for financial reporting purposes. The Company regularly reviews deferred tax assets for recoverabilitybased upon projected future taxable income and the expected timing of the reversals of existing temporary differences. Although realization is not assured,management believes it is more likely than not that the recorded deferred tax assets will be realized.The Company is periodically reviewed by U.S. domestic and foreign tax authorities regarding the amount of taxes due. These reviews typically include inquiriesregarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with variousfiling positions, the Company records estimated reserves. Refer to Note 4, “Income Taxes”, of these Consolidated Financial Statements for further discussionregarding the Company’s accounting for income taxes and its uncertain tax positions for financial accounting purposes.Advertising CostsAdvertising costs are expensed as incurred and are classified as selling and administrative expenses. The Company incurred advertising costs of $3.6 million,$2.8 million and $3.7 million, for fiscal 2019, 2018 and 2017, respectively.Share-Based Compensation Compensation expense for all stock options, stock appreciation rights, unrestricted stock and restricted stock units (collectively, “Share-Based Awards”) isrecognized ratably over the related vesting period, net of actual forfeitures. Certain Share-Based Awards in the form of stock appreciation rights and shares ofunrestricted stock were granted during fiscal 2019, 2018 and 2017 to non-employee Directors of the Company, which were fully vested upon grant and, withrespect to stock appreciation rights, expire eight years after the grant date. Accordingly, compensation expense related to these Share-Based Awards in fiscal 2019,2018 and 2017 were recognized on the date of grant.46 For performance-based restricted stock unit awards with revenue and adjusted operating margin targets, we evaluate the probability of meeting the performancecriteria at each balance sheet date and if probable, related compensation cost is amortized over the performance period on a straight-line basis because such awardsvest only at the end of the measurement period. Changes to the probability assessment and the estimate of shares expected to vest will result in adjustments to therelated share-based compensation expense that will be recorded in the period of the change. If the performance targets are not achieved, no compensation cost isrecognized and any previously recognized compensation cost is reversed.U.S. GAAP requires that share-based compensation cost be measured at the grant date based on the fair value of the award and be recognized as expense over therequisite service period, which is generally the vesting period. Determining the fair value of Share-Based Awards in the form of stock appreciation rights at thegrant date requires judgment, including estimating expected dividends and share price volatility. The fair value of each Share-Based Award in the form of stockappreciation rights is estimated on the date of grant using the Black-Scholes option pricing model.The Company recognizes compensation expense for restricted stock and restricted stock unit grants over the related vesting period. The fair value for eachrestricted stock, unrestricted stock and restricted stock unit grant is determined by using the closing price of the Company’s stock on the date of the grant. Refer toNote 12, “Share-Based Compensation”, of these Consolidated Financial Statements for further discussion regarding the Company’s share-based compensationplans.Income Per ShareThe Company calculates income per share by allocating income to its unvested participating securities as part of its income per share calculations.The Class B Common Stock may be converted at any time on a one-for-one basis into Common Stock at the option of the holder of the Class B Common Stock.Diluted income per share for the Company’s Common Stock assumes the conversion of all of the Company’s Class B Common Stock into Common Stock, fullvesting of outstanding restricted stock, and the exercise of Share-Based Awards under the Company’s stock incentive plans.The following table sets forth the computation of basic income per share using the two-class method for amounts attributable to the Company’s shares of CommonStock and Class B Common Stock (in thousands, except per share data): Year ended August 31,2019 August 25,2018 August 26,2017 Net income available to shareholders $179,134 $163,895 $70,196 Allocation of net income for Basic: Common Stock $150,247 $133,802 $55,903 Class B Common Stock 28,887 30,093 13,915 Unvested participating shares — — 378 $179,134 $163,895 $70,196 Weighted average number of shares for Basic: Common Stock 15,385 15,454 15,382 Class B Common Stock 3,697 4,357 4,786 Unvested participating shares — — 116 19,082 19,811 20,284 Income per share for Basic: Common Stock $9.77 $8.66 $3.63 Class B Common Stock $7.81 $6.91 $2.91 The Company is required to calculate the diluted income per share for Common Stock using the more dilutive of the following two methods:•The treasury stock method; or•The two-class method assuming a participating security is not exercised or converted.47 For the years ended August 31, 2019, August 25, 2018 and August 26, 2017, the Company’s diluted income per share assumes the conversion of all vested Class BCommon Stock into Common Stock and uses the two-class method for its unvested participating shares. The following table sets forth the computation of dilutedincome per share of Common Stock for the years ended August 31, 2019, August 25, 2018 and August 26, 2017 (in thousands, except per share data): Year Ended August 31, 2019 Year Ended August 25, 2018 Year Ended August 26, 2017 Earningsto Commonshareholders CommonShares IncomePer Share Earningsto Commonshareholders CommonShares IncomePer Share Earningsto Commonshareholders CommonShares IncomePer Share As reported—Basic $150,247 15,385 $9.77 $133,802 15,454 $8.66 $55,903 15,382 $3.63 Add: effect of dilutive potential common shares Share-Based Awards — 114 — 152 — 108 Class B Common Stock 28,887 3,697 30,093 4,357 13,915 4,786 Add: Undistributed earnings allocated to unvested participating shares — — — — 362 — Less: Undistributed earnings reallocated to unvested participating shares — — — — (343) — Diluted Income Per Share— Common Stock $179,134 19,196 $9.33 $163,895 19,963 $8.21 $69,837 20,276 $3.44 Share-Based Awards that would result in the issuance of 8,325, 4,972 and 16 shares, respectively, of Common Stock were excluded from the calculation of dilutedearnings per share for the fiscal 2019, 2018 and 2017 because they were anti-dilutive.Foreign Currency TranslationThe functional currency of our foreign operations is the local country’s currency. Transaction gains and losses, including gains and losses on our intercompanytransactions, are included in other (income) expense in the accompanying Consolidated Statements of Income. Assets and liabilities of operations outside theUnited States are translated into U.S. dollars using period-end exchange rates. Revenues and expenses are translated at the average exchange rates in effect duringeach month of the fiscal year. The effects of foreign currency translation adjustments are included in shareholders’ equity as a component of accumulated othercomprehensive loss in the accompanying Consolidated Balance Sheets.Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance for revenue recognition, which it has subsequentlymodified. This modified update provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transferof goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. The standardincludes cost guidance, whereby all direct and incremental costs to obtain or fulfill a contract will be capitalized and amortized over the corresponding period ofbenefit, determined on a contract by contract basis. This guidance is also intended to improve disclosure requirements and enhance the comparability of revenuerecognition practices. Improved disclosures under the amended guidance relate to the nature, amount, timing and uncertainty of revenue that is recognized fromcontracts with customers. The Company adopted the standard on August 26, 2018 using the modified retrospective adoption method. Upon adoption of thisguidance, the Company recorded an adjustment to the opening balance of retained earnings as of August 26, 2018. The adoption of the standard did not have anymaterial impact to the timing or measurement of revenues. The adjustment to retained earnings relates to the capitalization of certain direct and incrementalcontract costs required by the new guidance, net of the related income tax effect. Capitalized costs are amortized ratably over the anticipated period of benefit. TheCompany applied the new guidance to all contracts as of August 26, 2018. Results for reporting periods beginning after August 25, 2018 are presented under thenew guidance, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods.48 Capitalization of Contract Costs. The Company has elected to apply the guidance, as a practical expedient, to a portfolio of contracts (or performance obligations)with similar characteristics because the Company reasonably expects that the effects on the Consolidated Financial Statements of applying this guidance to theportfolio would not differ materially from applying this guidance to the individual contracts within the portfolio. The Company also continues to expense certaincosts to obtain a contract if those costs do not meet the criteria of the new standard or the amortization period of the asset would have been one year or less.The cumulative effect of applying the new guidance was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying themodified retrospective method to adopt the new revenue guidance, the adjustments set forth in the table below were made to accounts on the consolidated balancesheet as of August 26, 2018: Consolidated Balance Sheet(In thousands) August 25,2018 Capitalizationof ContractCosts August 26,2018 Assets Prepaid expenses and other current assets $21,899 $11,389 $33,288 Total current assets 784,800 11,389 796,189 Other assets 30,259 44,405 74,664 Total assets $1,843,386 $55,794 $1,899,180 Liabilities and shareholders’ equity Accrued and deferred income taxes $74,070 $14,427 $88,497 Total liabilities 378,419 14,427 392,846 Retained earnings 1,405,239 41,367 1,446,606 Total shareholders’ equity 1,464,967 41,367 1,506,334 Total liabilities and shareholders’ equity $1,843,386 $55,794 $1,899,180 The impacts of adopting this standard on the fiscal 2019 Consolidated Financial Statements are presented in the following tables: Year Ended August 31, 2019 Consolidated Statement of Income(In thousands, except per share data) AsReported UnderHistoricalGuidance Impact ofAdopting NewRevenueStandard Operating expenses: Selling and administrative expenses $334,840 $341,795 $(6,955)Total operating expenses 1,577,368 1,584,323 (6,955)Operating income 232,008 225,053 6,955 Income before income taxes 237,924 230,969 6,955 Provision for income taxes 58,790 57,010 1,780 Net income $179,134 $173,959 $5,175 Income per share – Diluted: $9.33 $9.06 $0.2749 Balance atAugust 31, 2019 Consolidated Balance Sheet(In thousands) AsReported UnderHistoricalGuidance Impact ofAdopting NewRevenueStandard Assets Prepaid expenses and other current assets $35,699 $23,285 $12,414 Total current assets 913,791 901,377 12,414 Other assets 84,674 34,339 50,335 Total assets $2,047,320 $1,984,571 $62,749 Liabilities and shareholders’ equity Accrued and deferred income taxes $99,172 $83,114 $16,058 Total liabilities 406,090 390,032 16,058 Retained earnings 1,588,075 1,541,384 46,691 Total shareholders’ equity 1,641,230 1,594,539 46,691 Total liabilities and shareholders’ equity $2,047,320 $1,984,571 $62,749 The adoption of this standard had no impact on the Company’s fiscal 2019 operating cash flow with the exception of the impact to net income as presented in thetables above.In January 2016, the FASB issued updated guidance for the recognition, measurement, presentation, and disclosure of certain financial assets and liabilities. Thisguidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted.Accordingly, the Company adopted this standard on August 26, 2018. The adoption of this guidance did not have a material impact on the Company’s financialstatements.In February 2016, the FASB issued updated guidance which sets out the principles for the recognition, measurement, presentation and disclosure of leases for bothparties to a contract (i.e., lessees and lessors). The new guidance requires lessees to apply a dual approach, classifying leases as either finance or operating leasesbased on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense isrecognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-useasset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will beaccounted for similar to existing guidance for operating leases. This new guidance is effective for reporting periods beginning after December 15, 2018. Entitiesare required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in their financialstatements. The Company adopted the new guidance on September 1, 2019. In accordance with Topic 842, a registrant can elect not to present comparativefinancial information under Topic 842 if it recognizes a cumulative-effect adjustment to retained earnings upon adoption. The Company intends to make thistransition election. The majority of the Company’s lease spend relates to certain real estate with the remaining lease spend primarily related to vehicles andequipment. In addition to the new qualitative and quantitative disclosures that will be required upon adoption of this standard, the Company anticipatesrecognizing lease assets and liabilities on the balance sheet in the range of approximately $40.0 million to $50.0 million, based on the Company's portfolio ofleases at August 31, 2019. The Company does not expect a material impact on its consolidated statements of income or consolidated statements of cash flows. TheCompany is substantially complete with its implementation efforts.In August 2016, the FASB issued updated guidance that reduces diversity in how certain cash receipts and cash payments are presented and classified in theConsolidated Statements of Cash Flows. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that beginafter December 15, 2017 and is required to be applied retrospectively, with early adoption permitted. Accordingly, the Company adopted this guidance onAugust 26, 2018. The adoption of this guidance did not have a material impact on its financial statements.In June 2016, the FASB issued updated guidance that introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certaintypes of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, currentinformation and reasonable and supportable forecasts. This guidance also expands the disclosure requirements to enable users of financial statements to understandthe entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for annual reporting periods, and any interim periodswithin those annual periods, that begin after December 15, 2019 with early adoption permitted. Accordingly, the guidance will be effective for the Company onAugust 30, 2020. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures.50 In October 2016, the FASB issued updated guidance to improve the accounting for the income tax consequences of intra-entity transfers of assets other thaninventory. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2017 and isrequired to be applied on a modified retrospective basis, with early adoption permitted. Accordingly, the Company adopted this standard on August 26, 2018. Theadoption of this guidance did not have a material impact on its financial statements.In March 2017, the FASB issued updated guidance that requires a change in the presentation of net periodic benefit cost on the consolidated statements ofoperations. Specifically, entities must present the service cost component of net periodic benefit cost in the same financial statement line items as othercompensation costs arising from services rendered by the related employees during the period, whereas the non-service components of net periodic benefit costmust be presented separately from the financial statement line items that include service cost and outside of operating income. The Company’s adoption of thisguidance on August 26, 2018 did not have a material impact on its financial statements.In August 2017, the FASB issued guidance that expands component and fair value hedging, specifies the presentation of the effects of hedging instruments, andeliminates the separate measurement and presentation of hedge ineffectiveness. The accounting update is effective for annual and interim periods beginning afterDecember 15, 2018, with early adoption permitted, and is to be applied on a modified retrospective basis. The Company elected to early adopt this guidance in thefirst quarter of fiscal 2019. The adoption of this guidance 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 otherpostretirement plans. This guidance will be effective for annual reporting periods, and any interim periods within those annual 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 onAugust 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 aservice contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computingarrangements. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with therequirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-usesoftware license). This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019with early adoption permitted. The amendments in this update can be applied either retrospectively or prospectively to all implementation costs incurred after thedate of adoption. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company is currently evaluating the impact that thisguidance will have on its financial statements and related disclosures.2. AcquisitionsDuring the fiscal year ended August 31, 2019, the Company completed six business acquisitions with an aggregate purchase price of approximately $5.7 million.The initial allocations of the purchase prices are incomplete with respect to certain assets acquired. The results of operations of these acquisitions have beenincluded in the Company’s consolidated financial results since their respective acquisition dates. These acquisitions were not significant in relation to theCompany’s consolidated financial results and, therefore, pro forma financial information has not been presented.Aggregate information relating to the acquisition of businesses which were accounted for as purchases is as follows (in thousands, except number of businessesacquired): Year ended August 31,2019 August 25,2018 August 26,2017 Number of businesses acquired 6 9 6 Tangible assets acquired $322 $7,743 $26,174 Intangible assets and goodwill acquired 5,391 34,110 101,530 Liabilities assumed — (95) (2,156)Acquisition of businesses $5,713 $41,758 $125,548 Tangible assets acquired primarily relate to accounts receivable, inventory, prepaid expenses and property, plant and equipment. Liabilities assumed primarilyrelate to accounts payable and accrued liabilities.51 The amount assigned to intangible assets acquired was based on their respective fair values determined as of the acquisition date. The excess of the purchase priceover the tangible and intangible assets was recorded as goodwill. In fiscal 2019, 2018 and 2017, the goodwill was primarily allocated to the U.S. and CanadianRental and Cleaning segment and is deductible for tax purposes.In September 2019, the Company completed an acquisition for approximately $38.2 million. The all-cash transaction was structured as an asset acquisition, withthe Company acquiring substantially all of the acquired company’s industrial laundry, industrial uniform rental and industrial direct sales assets.3. Fair Value MeasurementsU.S. GAAP establishes a framework for measuring fair value and establishes disclosure requirements about fair value measurements. Fair value is defined as theprice that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in anorderly transaction between market participants on the measurement date. We considered non-performance risk when determining fair value of our derivativefinancial instruments.The fair value hierarchy prescribed under U.S. GAAP contains three levels as follows:Level 1Quoted prices in active markets for identical assets or liabilities.Level 2Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices foridentical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includescertain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.All financial assets or liabilities that are measured at fair value on a recurring basis (at least annually) have been segregated into the most appropriate level withinthe fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The assets or liabilities measured at fair value on a recurringbasis are summarized in the tables below (in thousands): As of August 31, 2019 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents $214,038 $— $— $214,038 Pension plan assets 4,603 4,603 Foreign currency forward contracts — 254 — 254 Total assets at fair value $214,038 $4,857 $— $218,895 As of August 25, 2018 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents $103,190 $— $— $103,190 Pension plan assets — 6,325 — 6,325 Foreign currency forward contracts — 127 — 127 Total assets at fair value $103,190 $6,452 $— $109,642 The Company’s cash equivalents listed above represent money market securities and are classified within Level 1 of the fair value hierarchy because they arevalued using quoted market prices. The Company does not adjust the quoted market price for such financial instruments.The Company’s pension plan assets listed above represent guaranteed deposit accounts that are maintained and operated by Prudential Retirement Insurance andAnnuity Company (“PRIAC”). All assets are merged with the general assets of PRIAC and are invested predominantly in privately placed securities andmortgages. 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 theguaranteed deposit account during the next calendar year. In determining the interest rate to be applied, PRIAC considers the investment performance of theunderlying assets of the prior year; however, regardless of the investment performance the Company is contractually guaranteed a minimum rate of return. Assuch, the Company’s pension plan assets are included within Level 2 of the fair value hierarchy.52 The Company’s foreign currency forward contracts represent contracts the Company has entered into to exchange Canadian dollars for U.S. dollars at fixedexchange rates in order to manage its exposure related to certain forecasted Canadian dollar denominated sales of one of its subsidiaries. These contracts areincluded in prepaid expenses and other current assets and other long-term assets as of August 31, 2019 and August 25, 2018. The fair value of the forwardcontracts is based on similar exchange traded derivatives and are, therefore, included within Level 2 of the fair value hierarchy.4. Income TaxesThe provision / (benefit) for income taxes consists of the following (in thousands): Fiscal year 2019 2018 2017 Current: Federal $38,545 $23,815 $37,027 Foreign (200) 527 1,995 State 11,733 8,012 6,642 Total current $50,078 $32,354 $45,664 Deferred: Federal $7,289 $(11,517) $(520)Foreign 645 363 123 State 778 2,151 (340)Total deferred $8,712 $(9,003) $(737)Total $58,790 $23,351 $44,927 The following table reconciles the provision for income taxes using the statutory federal income tax rate to the actual provision for income taxes: Fiscal year 2019 2018 2017 Income taxes at the statutory federal income tax rate 21.0% 25.9% 35.0%State income taxes 4.3 4.1 3.5 Other (0.6) (2.8) 0.5 Deemed Repatriation of Non—U.S. Earnings, net foreign tax credits and other (collectively, Transition Tax) — 1.4 — Impact of U.S. tax reform federal tax rate reduction — (16.1) — Total 24.7% 12.5% 39.0% The components of deferred income taxes included on the consolidated balance sheets are as follows (in thousands): August 31,2019 August 25,2018 Deferred Tax Assets Payroll and benefit related $15,929 $14,718 Insurance related 11,948 10,880 Environmental 7,093 6,593 Accrued expenses 2,164 3,513 Other 7,301 7,440 Total deferred tax assets $44,435 $43,144 Deferred Tax Liabilities Payroll and benefit related $16,056 $— Tax in excess of book depreciation 42,691 39,877 Purchased intangible assets 29,633 27,206 Rental merchandise in service 46,649 44,508 Other 290 318 Total deferred tax liabilities 135,319 111,909 Net deferred tax liability $90,884 $68,765 53 The Company regularly reviews deferred tax assets for recoverability based upon projected future taxable income and the expected timing of the reversals ofexisting temporary differences. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets will berealized.U.S. Tax ReformThe Act enacted on December 22, 2017, among other matters, reduced the U.S. federal corporate income tax rate from 35.0% to 21.0%, required companies to paya one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign sourced earnings.On December 22, 2017, the Securities and Exchange Commission (the “SEC”) issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications ofthe Tax Cuts and Jobs Act (“SAB 118”) directing SEC registrants to consider the impact of the U.S. legislation as “provisional” when a registrant does not have thenecessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. Inaccordance with SAB 118, during fiscal 2018 the Company recorded its best estimates based on its interpretation of the U.S. legislation while it continued toaccumulate data to finalize the underlying calculations. This resulted in the Company recording a provisional net income tax benefit of $20.1 million for the fiscalyear ended August 25, 2018 related to remeasuring its U.S. net deferred tax liabilities at the lower tax rate and the one-time transition tax.As a result of the Act, U.S. corporations are subject to lower income tax rates. For the fiscal year ended August 31, 2019, the statutory tax rate for the period was21.0% compared to the applicable blended statutory tax rate of 25.9% for the corresponding period in the prior year.During the second quarter of fiscal 2019, the Company completed its accounting for the tax effects of enactment of the Act as required by SAB 118. There were nochanges from the provisional calculation as recorded through August 25, 2018 to the final calculation.Effective tax rateThe Company’s effective tax rate for the fiscal year ended August 31, 2019 was 24.7% as compared to 12.5% for the corresponding period in the prior year. Theincrease in the effective tax rate was primarily due to the impact of the Act, which required us to remeasure our U.S net deferred income tax liabilities in fiscal2018.Foreign tax effectsThe Act subjects a U.S. shareholder to tax on GILTI, defined below, earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accountingfor Global Intangible Low-Taxed Income (“GILTI”), states that an entity can make an accounting policy election to either recognize deferred taxes for temporarybasis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a current periodexpense only. The Company will account for GILTI in the year the tax is incurred as a current period expense.As of August 31, 2019, unremitted foreign earnings, have been retained by the Company’s foreign subsidiaries for indefinite reinvestment. Upon repatriation ofthose earnings, in the form of dividends or otherwise, the Company could be subject to immaterial withholding taxes payable to the various foreign countries.Uncertain tax positionsAs of August 31, 2019 and August 25, 2018, there was $7.7 million and $2.2 million, respectively, of unrecognized tax benefits, of which $7.0 million and $1.9million, respectively, would favorably impact the Company’s effective tax rate, if recognized. The Company recognized interest and penalties related to uncertaintax positions as a component of income tax expense which is consistent with the recognition of these items in prior reporting periods. As of August 31, 2019 andAugust 25, 2018, the Company had accrued a total of $0.2 million and $0.1 million, respectively, in interest and penalties, in its long-term accrued liabilities. Forthe years ended August 31, 2019, August 25, 2018 and August 26, 2017 the Company recognized a nominal expense in its Consolidated Statement of Incomerelated to interest and penalties.54 A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): Balance at August 26, 2017 $4,214 Additions based on tax positions related to the current year 487 Additions for tax positions of prior years — Reductions for tax positions of prior years (2,073)Statute expirations (430)Balance at August 25, 2018 2,198 Additions based on tax positions related to the current year 329 Additions for tax positions of prior years 5,535 Statute expirations (394)Balance at August 31, 2019 $7,668 The Company has a significant portion of its operations in the United States and Canada. It is required to file federal income tax returns as well as state income taxreturns in a majority of the U.S. states and also in the Canadian provinces of Alberta, British Columbia, Ontario, Saskatchewan, Quebec and New Brunswick. Attimes, the Company is subject to audits in these jurisdictions, which typically are complex and can require several years to resolve. The final resolution of any suchtax audits could result in either a reduction in the Company’s accruals or an increase in its income tax provision, both of which could have a material impact on theconsolidated results of operations in any given period.All U.S. and Canadian federal income tax statutes have lapsed for filings up to and including fiscal years 2014 and 2011, respectively. With a few exceptions, theCompany is no longer subject to state and local income tax examinations for periods prior to fiscal 2015. The Company is not aware of any tax positions for whichit is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.5. Loans Payable and Long-term DebtAs of August 31, 2019 and August 25, 2018, the Company had no outstanding loans payable.The Company has a $250.0 million unsecured revolving credit agreement (the “Credit Agreement”) with a syndicate of banks, which matures on April 11, 2021.Under the Credit Agreement, the Company is able to borrow funds at variable interest rates based on, at its election, the Eurodollar rate or a base rate, plus in eachcase a spread based on the Company’s consolidated funded debt ratio. Availability of credit requires 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. The Company tests itscompliance with these financial covenants on a fiscal quarterly basis. As of August 31, 2019, the interest rates applicable to the Company’s borrowings under theCredit Agreement would be calculated as LIBOR plus 75 basis points at the time of the respective borrowing. As of August 31, 2019, the Company had nooutstanding borrowings and had outstanding letters of credit amounting to $71.8 million, leaving $178.2 million available for borrowing under the CreditAgreement.As of August 31, 2019, the Company was in compliance with all covenants under the Credit Agreement. 6. Derivative Instruments and Hedging ActivitiesThe Company uses derivative financial instruments to mitigate its exposure to fluctuations in foreign currencies on certain forecasted transactions denominated inforeign currencies. U.S. GAAP requires that all of the Company’s derivative instruments be recorded on the balance sheet at fair value. All subsequent changes ina derivative’s fair value are recognized in income, unless specific hedge accounting criteria are met.Derivative instruments that qualify for hedge accounting are classified as a hedge of the variability of cash flows to be received or paid related to a recognizedasset, liability or forecasted transaction. Changes in the fair value of a derivative that is highly effective and designated as a cash flow hedge are recognized inaccumulated other comprehensive (loss) income until the hedged item or forecasted transaction is recognized in earnings. The Company performs an assessment atthe inception of the hedge and on a quarterly basis thereafter, to determine whether its derivatives are highly effective in offsetting changes in the value of thehedged items. Any changes in the fair value resulting from hedge ineffectiveness are immediately recognized as income or expense.55 In January 2015, the Company entered into sixteen forward contracts to exchange Canadian dollars (“CAD”) for U.S. dollars at fixed exchange rates in order tomanage its exposure related to certain forecasted CAD denominated sales of one of its subsidiaries. The hedged transactions are specified as the first amount ofCAD denominated revenues invoiced by one of the Company’s domestic subsidiaries each fiscal quarter, beginning in the third fiscal quarter of fiscal 2015 andcontinuing through the second fiscal quarter of the fiscal year ended August 31, 2019. In total, the Company sold approximately 31.0 million CAD at an averageCanadian-dollar exchange rate of 0.7825 over these quarterly periods. The Company concluded that the forward contracts met the criteria to qualify as a cash flowhedge under U.S. GAAP. Accordingly, the Company reflected all changes in the fair value of the forward contracts in accumulated other comprehensive loss, acomponent of shareholders’ equity. Upon the maturity of each foreign exchange forward contract, the gain or loss on the contract was recorded as an adjustment torevenues.In June 2018, the Company entered into twelve forward contracts to exchange CAD for U.S. dollars at fixed exchange rates in order to manage its exposure relatedto certain forecasted CAD denominated sales of one of its subsidiaries. The hedged transactions are specified as the first amount of CAD denominated revenuesinvoiced by one of the Company’s domestic subsidiaries each fiscal quarter, beginning in the third fiscal quarter of 2019 and continuing through the second fiscalquarter of 2022. In total, the Company will sell approximately 12.1 million CAD at an average Canadian-dollar exchange rate of 0.7814 over these quarterlyperiods. The Company concluded that the forward contracts met the criteria to qualify as a cash flow hedge under U.S. GAAP.As of August 31, 2019, the Company had forward contracts with a notional value of approximately $9.5 million CAD outstanding and recorded the fair value of thecontracts of $0.1 million in other long-term assets and $0.1 million in prepaid expenses and other current assets with a corresponding $0.2 million gain inaccumulated other comprehensive loss, which was recorded net of tax. For the fiscal year ended August 31, 2019, the Company reclassified $0.2 million fromaccumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in a decrease toaccumulated other comprehensive loss as of August 31, 2019 is expected to be reclassified to revenues prior to its maturity on February 25, 2022.7. Employee Benefit PlansDefined Contribution Retirement Savings PlanThe Company has a defined contribution retirement savings plan with a 401(k) feature for all eligible U.S. and Canadian employees not under collectivebargaining agreements. The Company matches a portion of the employee’s contribution and may make an additional contribution at its discretion. Contributionscharged to expense under the plan for fiscal 2019, 2018 and 2017 were $19.7 million, $18.1 million and $15.0 million, respectively.Pension Plans and Supplemental Executive Retirement PlansThe 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 onthe employee’s compensation upon retirement. The amount charged to expense related to this plan amounted to approximately $2.1 million, $2.1 million and$2.5 million for fiscal 2019, 2018 and 2017, respectively.The Company maintains a non-contributory defined benefit pension plan (“UniFirst Plan”) covering employees at one of its locations. The benefits are based onyears of service. The UniFirst Plan assets are invested in a Guaranteed Deposit Account (“GDA”) that is maintained and operated by Prudential RetirementInsurance and Annuity Company (“PRIAC”). All assets are merged with the general assets of PRIAC and are invested predominantly in privately placed securitiesand 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 theGuaranteed Deposit Account during the next calendar year. In determining the interest rate to be applied, PRIAC considers the investment performance of theunderlying assets of the prior year; however, regardless of the investment performance the annual interest rate applied per the contract must be a minimum of3.25%. The amount charged to expense related to this plan amounted to approximately $0.3 million, $0.3 million and $0.5 million for fiscal 2019, 2018 and 2017.56 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’sformer employees (“Textilease Plan”). The pension benefits are based on years of service and the employee’s compensation. The Textilease Plan assets are held ina 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 planamounted to approximately $0.5 million, $0.2 million and $0.2 million, respectively, for fiscal 2019, 2018 and 2017.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 2019, 2018 and 2017 were as follows (in thousands): Pension Plans SERP 2019 2018 2017 2019 2018 2017 Service cost $114 $115 $271 $725 $694 $785 Interest cost 260 257 244 1,148 1,027 1,003 Expected return on assets (199) (174) (189) — — — Amortization of prior service cost 66 66 83 — — 56 Amortization of unrecognized loss 51 102 149 247 362 653 Other events 503 96 125 — — — Net periodic benefit cost $795 $462 $683 $2,120 $2,083 $2,497 The Company’s obligations and funded status related to its Pension Plans and SERP as of August 31, 2019 and August 25, 2018 were as follows (in thousands): Pension Plans SERP 2019 2018 2019 2018 Change in benefit obligation: Projected benefit obligation, beginning of year $7,449 $8,382 $27,547 $28,801 Service cost 114 115 725 694 Interest cost 260 257 1,148 1,027 Actuarial loss (gain) 163 (673) 7,456 (2,129)Benefits paid (50) (84) (909) (846)Settlements (2,370) (548) — — Projected benefit obligation, end of year $5,566 $7,449 $35,967 $27,547 Change in plan assets: Fair value of plan assets, beginning of year $6,325 $5,097 $— $— Actual return on plan assets 170 72 — — Employer contributions 528 1,788 — — Benefits paid (50) (84) — — Settlements (2,370) (548) — — Fair value of plan assets, end of year $4,603 $6,325 $— $— Funded status (net amount recognized): $(963) $(1,124) $(35,967) $(27,547) As of August 31, 2019 and August 25, 2018, the accumulated benefit obligations for the Company’s Pension Plans were $5.6 million and $7.4 million,respectively. As of August 31, 2019 and August 25, 2018, the accumulated benefit obligations for the Company’s SERP were $27.4 million and $21.7 million,respectively.The amounts recorded on the Consolidated Balance Sheet for the Company’s Pension Plans and SERP as of August 31, 2019 and August 25, 2018 were as follows(in thousands): Pension Plans SERP 2019 2018 2019 2018 Deferred tax assets $254 $362 $2,912 $1,081 Accrued liabilities $963 $1,124 $35,967 $27,547 Accumulated other comprehensive loss $(741) $(1,037) $(8,509) $(3,098) 57 As of August 31, 2019 and August 25, 2018, the amounts recognized in accumulated other comprehensive loss for the Company’s Pension Plans and SERP were asfollows (in thousands): Pension Plans SERP 2019 2018 2019 2018 Net actuarial loss $(549) $(797) $(8,509) $(3,098)Unrecognized prior service cost (192) (240) — — Accumulated other comprehensive loss $(741) $(1,037) $(8,509) $(3,098) The weighted average assumptions used in calculating the Company’s projected benefit obligation as of August 31, 2019 and August 25, 2018, were as follows: Pension Plans SERP 2019 2018 2019 2018 Discount rate 2.7% 3.9% 2.9% 4.0%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 31, 2019, August 25, 2018 andAugust 26, 2017, were as follows: Pension Plans SERP 2019 2018 2017 2019 2018 2017 Discount rate 3.8% 3.2% 2.9% 4.0% 3.6% 3.3%Expected return on plan assets 3.5% 3.5% 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 31, 2019 andthereafter are as follows (in thousands): Pension Plans SERP 2020 $960 $1,125 2021 189 1,125 2022 250 1,340 2023 317 1,338 2024 307 1,513 Thereafter 3,543 29,526 Total benefit payments $5,566 $35,967 8. Goodwill and Other Intangible AssetsAs discussed in Note 2, “Acquisitions”, when the Company acquires a business the amount assigned to the tangible assets and liabilities and intangible assetsacquired is based on their respective fair values determined as of the acquisition date. The excess of the purchase price over the tangible assets and liabilities andintangible assets is recorded as goodwill. The following details the changes in the Company’s intangible assets and goodwill related to the Company’s acquisitionsfor the years ended August 31, 2019 and August 25, 2018 as well as the respective periods over which the assets will be amortized (in thousands, except weightedaverage life in years). These amounts include additional payments associated with prior year acquisitions as well as changes to acquisition purchase allocations thathad not been finalized as of the end of the prior fiscal year: Year ended August 31,2019 WeightedAverage Lifein Years August 25,2018 WeightedAverage Lifein Years Goodwill $3,885 N/A $21,500 N/A Customer contracts 1,070 10.0 11,707 14.9 Other intangible assets 118 3.0 906 6.1 Total intangible assets and goodwill acquired $5,073 $34,113 58 The Company does not amortize goodwill, but it is reviewed annually or more frequently if certain indicators arise, for impairment. There were no impairmentlosses related to goodwill or intangible assets during the years ended August 31, 2019, August 25, 2018 or August 26, 2017.The changes in the carrying amount of goodwill are as follows (in thousands): Balance as of August 26, 2017 $376,110 Goodwill recorded during the period 21,500 Other (188)Balance as of August 25, 2018 $397,422 Goodwill recorded during the period 3,885 Other (129)Balance as of August 31, 2019 $401,178 As of August 31, 2019, the Company has allocated $385.8 million, $11.0 million and $4.4 million of goodwill to its U.S. and Canadian Rental and Cleaning,Specialty Garments and First Aid segments, respectively.Intangible assets, net in the Company’s accompanying Consolidated Balance Sheets are as follows (in thousands): GrossCarryingAmount AccumulatedAmortization NetCarryingAmount August 31, 2019 Customer contracts $221,306 $164,718 $56,588 Software 48,838 34,813 14,025 Other intangible assets 35,063 32,956 2,107 $305,207 $232,487 $72,720 August 25, 2018 Customer contracts $220,303 $152,985 $67,318 Software 41,885 30,305 11,580 Other intangible assets 35,030 31,444 3,586 $297,218 $214,734 $82,484 Estimated amortization expense for the five fiscal years subsequent to August 31, 2019 and thereafter, based on intangible assets, net as of August 31, 2019 is asfollows (in thousands): 2020 15,723 2021 11,881 2022 8,231 2023 6,670 2024 5,613 Thereafter 24,602 Total estimated amortization expense $72,720 59 9. Accrued LiabilitiesAccrued liabilities in the accompanying Consolidated Balance Sheet consists of the following (in thousands): August 31,2019 August 25,2018 Current liabilities: Payroll and benefit related $36,634 $41,034 Bonuses 14,288 19,308 Insurance related 31,778 29,407 Environmental related 9,785 9,321 Other 19,236 25,155 Total current liabilities $111,721 $124,225 Long-term liabilities: Benefit related $35,883 $27,613 Environmental related 17,933 16,165 Asset retirement obligations 12,727 13,668 Insurance related 50,531 48,442 Total long-term liabilities $117,074 $105,888 Total accrued liabilities $228,795 $230,113 10. Asset Retirement ObligationsAsset retirement obligations generally result from legal obligations associated with the retirement of long-lived assets that result from the acquisition,construction, development and/or the normal operation of a long-lived asset. Accordingly, the Company recognizes asset retirement obligations in the period inwhich they are incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount ofthe long-lived asset. The Company continues to depreciate, on a straight-line basis, the amount added to property, plant and equipment and recognizes accretionexpense in connection with the discounted liability over the various remaining lives which range from approximately one to twenty-five years.The Company recognized as a liability the present value of the estimated future costs to decommission its nuclear laundry facilities. The estimated liability is basedon historical experience in decommissioning nuclear laundry facilities, estimated useful lives of the underlying assets, external vendor estimates as to the cost todecommission these assets in the future, and federal and state regulatory requirements. The estimated current costs have been adjusted for the estimated impact ofinflation at 3% per year. The liability has been discounted using credit-adjusted risk-free rates that range from approximately 7.0% to 7.5% over approximately oneto twenty-five years. Revisions to the liability could occur due to changes in the Company’s estimated useful lives of the underlying assets, estimated dates ofdecommissioning, changes in decommissioning costs, changes in federal or state regulatory guidance on the decommissioning of such facilities, or other changes inestimates. Changes due to revised estimates will be recognized by adjusting the carrying amount of the liability and the related long-lived asset if the assets are stillin service, or charged to expense in the period if the assets are no longer in service.A rollforward of the Company’s asset retirement liability is as follows for fiscal 2019 and 2018 (in thousands): August 31,2019 August 25,2018 Beginning balance $13,668 $13,400 Accretion expense 865 935 Effect of exchange rate changes (165) (108)Change in estimate (1,641) (559)Ending balance $12,727 $13,668 The Company’s asset retirement obligations are included in current and long-term accrued liabilities in the accompanying Consolidated Balance Sheet.60 11. Commitments and ContingenciesLease CommitmentsThe Company leases certain buildings and equipment from independent parties. Total rent expense on all leases was $16.5 million, $14.8 million and $13.6 millionfor the fiscal 2019, 2018 and 2017, respectively. Annual minimum lease commitments for the next five fiscal years and thereafter are as follows (in thousands): 2020 13,560 2021 10,728 2022 7,465 2023 5,907 2024 3,528 Thereafter 2,625 Total lease commitments $43,813 Environmental and Legal ContingenciesThe Company and its operations are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewaterdischarges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundriescurrently use and must dispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry-cleaning solvents. The Companyis attentive to the environmental concerns surrounding the disposal of these materials and has, through the years, taken measures to avoid their improper disposal.Over the years, the Company has settled, or contributed to the settlement of, actions or claims brought against the Company relating to the disposal of hazardousmaterials and there can be no assurance that the Company will not have to expend material amounts to remediate the consequences of any such disposal in thefuture.U.S. GAAP requires that a liability for contingencies be recorded when it is probable that a liability has been incurred and the amount of the liability can bereasonably estimated. Significant judgment is required to determine the existence of a liability, as well as the amount to be recorded. The Company regularlyconsults with attorneys and outside consultants in its consideration of the relevant facts and circumstances before recording a contingent liability. Changes inenacted laws, regulatory orders or decrees, management’s estimates of costs, risk-free interest rates, insurance proceeds, participation by other parties, the timing ofpayments, the input of the Company’s attorneys and outside consultants or other factual circumstances could have a material impact on the amounts recorded forenvironmental and other contingent liabilities.Under environmental laws, an owner or lessee of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances locatedon, or in, or emanating from, such property, as well as related costs of investigation and property damage. Such laws often impose liability without regard towhether the owner or lessee knew of, or was responsible for the presence of such hazardous or toxic substances. There can be no assurances that acquired or leasedlocations have been operated in compliance with environmental laws and regulations or that future uses or conditions will not result in the imposition of liabilityupon the Company under such laws or expose the Company to third-party actions such as tort suits. The Company continues to address environmental conditionsunder terms of consent orders negotiated with the applicable environmental authorities or otherwise with respect to sites located in or related to Woburn,Massachusetts, Somerville, Massachusetts, Springfield, Massachusetts, Uvalde, Texas, Stockton, California, two sites related to former operations inWilliamstown, Vermont, as well as sites located in Goldsboro, North Carolina and Wilmington, North Carolina.The Company has accrued certain costs related to the sites described above as it has been determined that the costs are probable and can be reasonably estimated.The Company has potential exposure related to a parcel of land (the “Central Area”) related to the Woburn, Massachusetts site mentioned above. Currently, theconsent decree for the Woburn site does not define or require any remediation work in the Central Area. 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 remediesat the Woburn site and investigation of environmental conditions in the Central Area. The Company, and other signatories, have implemented and proposed to doadditional work at the Woburn site but many of the EPA’s comments remain to be resolved. The Company has accrued costs to perform certain work responsive tothe EPA’s comments. Additionally, the Company has implemented mitigation measures and continues to monitor environmental conditions at the Somerville,Massachusetts site. The Company has received a notice of audit findings from the Massachusetts Department of Environmental Protection concerning a regulatorysubmittal that the Company made in 2009 for a portion of the site. The Company is in the process of responding to that notice. The Company has receiveddemands from the local transit authority for reimbursement of certain costs associated with its construction of a new municipal transit station in the area of theSomerville site. This station is part of an ongoing extension of the transit system. The Company has reserved for costs in connection with this matter; however, inlight of the uncertainties associated with this matter, these costs and the related reserve may change.61 The Company routinely reviews and evaluates sites that may require remediation and monitoring and determines its estimated costs based on various estimates andassumptions. These estimates are developed using its internal sources or by third party environmental engineers or other service providers. Internally developedestimates are based on:•Management’s judgment and experience in remediating and monitoring the Company’s sites;•Information available from regulatory agencies as to costs of remediation and monitoring;•The number, financial resources and relative degree of responsibility of other potentially responsible parties (“PRPs”) who may be liable for remediationand monitoring of a specific site; and•The typical allocation of costs among PRPs.There is usually a range of reasonable estimates of the costs associated with each site. In accordance with U.S. GAAP, the Company’s accruals reflect the amountwithin the range that it believes is the best estimate or the low end of a range of estimates if no point within the range is a better estimate. Where it believes thatboth 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 August 31, 2019, the risk-freeinterest rates utilized by the Company ranged from 1.5 to 2.0%.For environmental liabilities that have been discounted, the Company includes interest accretion, based on the effective interest method, in selling andadministrative expenses on the accompanying Consolidated Statements of Income. The changes to the Company’s environmental liabilities for fiscal 2019 and2018 were as follows (in thousands): Year ended August 31,2019 August 25,2018 Beginning balance $25,486 $25,419 Costs incurred for which reserves have been provided (1,079) (1,016)Insurance proceeds 143 140 Interest accretion 755 692 Changes in discount rates 2,239 (494)Revisions in estimates 174 745 Ending balance $27,718 $25,486 Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of August 31, 2019, for the next five fiscal years andthereafter, as measured in current dollars, are reflected below. (In thousands) 2020 2021 2022 2023 2024 Thereafter Total Estimated costs—current dollars $9,944 $2,186 $1,353 $1,091 $1,058 $12,032 $27,664 Estimated insurance proceeds (159) (173) (159) (173) (159) (693) (1,516)Net anticipated costs $9,785 $2,013 $1,194 $918 $899 $11,339 $26,148 Effect of inflation 7,254 Effect of discounting (5,684)Balance as of August 31, 2019 $27,718 Estimated insurance proceeds are primarily received from an annuity received as part of a legal settlement with an insurance company. Annual proceeds ofapproximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to former operations inWilliamstown, Vermont. Annual proceeds received but not expended in the current year accumulate in this account and may be used in future years for costsrelated to this site through the year 2027. As of August 31, 2019, the balance in this escrow account, which is held in a trust and is not recorded in the Company’saccompanying Consolidated Balance Sheet, was approximately $4.2 million . Also included in estimated insurance proceeds are amounts the Company is entitledto receive pursuant to legal settlements as reimbursements from three insurance companies for estimated costs at the site in Uvalde, Texas.The Company’s nuclear garment decontamination facilities are licensed by the Nuclear Regulatory Commission (“NRC”), or, in certain cases, by the applicablestate agency, and are subject to regulation by federal, state and local authorities. There can be no assurance that such regulation will not lead to material disruptionsin the Company’s garment decontamination business.62 During fiscal 2017, the Company recorded a pre-tax non-cash impairment charge of $55.8 million once it was determined that it was not probable that the versionof the Customer Relationship Management (“CRM”) system that was being developed would be completed and placed into service. On December 28, 2018, theCompany entered into a settlement agreement with its lead contractor for the version of the CRM system with respect to which the Company recorded theimpairment charge. As part of the settlement agreement, the Company recorded in the second quarter of fiscal 2019 a total gain of $21.1 million as a reduction ofselling and administrative expenses, which includes the Company’s receipt of a one-time cash payment in the amount of $13.0 million as well as the forgiveness ofamounts previously due the contractor. The Company also received hardware and related maintenance service with a fair value of $0.8 million as part of thesettlement.From time to time, the Company is also subject to legal proceedings and claims arising from the conduct of its business operations, including personal injuryclaims, customer contract matters, employment claims and environmental matters as described above.While it is impossible for the Company to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits andenvironmental contingencies, the Company believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance have beenproperly accrued in accordance with U.S. GAAP. It is possible, however, that the future financial position and/or results of operations for any particular futureperiod could be materially affected by changes in the Company’s assumptions or strategies related to these contingencies or changes out of the Company’s control.Other Contingent LiabilitiesAs security for certain agreements with the NRC and various state agencies related to the nuclear operations (see above) and certain insurance programs, theCompany had standby irrevocable bank commercial letters of credit of $71.8 million and $63.9 million outstanding as of August 31, 2019 and August 25, 2018,respectively.12. Share-based CompensationThe Company adopted a stock incentive plan (the “1996 Plan”) in November 1996 and reserved 1,500,000 shares of Common Stock for issuance under the 1996Plan. The 1996 Plan provided for the issuance of stock options and stock appreciation rights. The Company ceased granting new awards under the 1996 Plan as ofJanuary 21, 2011, and the 1996 Plan expired in accordance with its terms on January 8, 2012. The Company adopted a stock incentive plan (the “2010 Plan”) inOctober 2010 and reserved 600,000 shares of Common Stock for issuance under the 2010 Plan. The 2010 Plan replaced the Company’s 1996 Plan. The 2010 Planpermits the award of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock andperformance shares (collectively referred to as “Share-Based Awards”) as well as dividend equivalent rights and cash-based awards. On October 27, 2014, theBoard of Directors, subject to the approval of the Company’s shareholders, which was received at the 2015 annual meeting of shareholders, adopted an amendmentto the 2010 Plan to, among other matters, reserve for issuance an additional 750,000 shares and extend to 2025 the time period awards may be granted under the2010 Plan. As of August 31, 2019, the number of remaining shares available for future grants under the 2010 Plan was 364,060. Share-based compensation, whichincludes expense related to Share-Based Awards, has been recorded in the accompanying Consolidated Statements of Income in selling and administrativeexpenses.All Share-Based Awards issued to management were recommended to the Board of Directors by the Compensation Committee and approved by the Board ofDirectors. All Share-Based Awards issued to the Company’s non-employee members of the Board of Directors (the “Directors”) under the 2010 Plan wererecommended to the Board of Directors by the Compensation Committee and approved by the Board of Directors. Share-Based Awards granted to non-employeeDirectors are granted on the third business day following the annual shareholders’ meeting.In fiscal 2019, 2018 and 2017, a total of 291, 234 and 735 shares of fully vested unrestricted stock, respectively, were granted to certain non-employee Directors ofthe Company. Accordingly, compensation expense related to the 2019, 2018 and 2017 unrestricted stock was recognized on the date of grant.In fiscal 2019, 2018 and 2017, the Company granted a total of 5,000, 5,000 and 4,940 stock appreciation rights, respectively, under the 2010 Plan to theCompany’s non-employee Directors. Such stock appreciation rights were fully vested upon grant, expire on the earlier of the eighth anniversary of the grant date orthe second anniversary of the date that the Director ceases to be a member of the Board of Directors and must be settled in stock at the time of exercise.Accordingly, compensation expense related to the stock appreciation rights was recognized on the date of grant.63 All stock appreciation rights issued to employees were granted with an exercise price equal to the fair market value of the Company’s Common Stock on the dateof grant. Other than certain stock appreciation rights which vest 20% on each anniversary of the grant date over a five-year period, stock appreciation rights aresubject to a five-year cliff-vesting schedule under which the awards become fully vested or exercisable after five years from the date of grant and expire ten yearsafter the grant date. Share-Based Awards granted to the Company’s non-employee Directors were fully vested as of the date of grant. Prior to fiscal 2009, non-employee Director Share-Based Award grants in the form of stock options expired ten years from the grant date. Beginning in fiscal 2009, non-employee DirectorShare-Based Award grants in the form of stock options and stock appreciation rights expire on the earlier of the eighth anniversary of the grant date or the secondanniversary of the date that the Director ceases to be a member of the Board of Directors.Time-based restricted stock units granted to employees vest either 20% on each anniversary of the grant date over a five-year period, 33% on each anniversary ofthe grant date over a three-year period or on a five-year cliff vesting schedule under which the awards become fully vested after five years from the date of grant.Generally, performance-based restricted stock units granted to employees are earned based on whether and the extent to which the Company achieves certainconsolidated revenues and adjusted operating margins. Any such performance-based restricted stock units earned will vest in three equal annual amounts with thefirst vesting date being the date that the performance criteria have been determined to have been met.On April 21, 2016, the Company entered into a Restricted Stock Award Agreement (the “Award Agreement”) with the Company’s former Chief Executive OfficerRonald D. Croatti, pursuant to which the Company granted 140,000 shares (the “Performance Restricted Shares”) of restricted stock to Mr. Croatti. The fair valueof the Performance Restricted Shares was the closing price on April 21, 2016, which was $111.13.Upon Mr. Croatti’s death in the third quarter of fiscal 2017, 46,666 Performance Restricted Shares of Common Stock were forfeited and 46,667 PerformanceRestricted Shares of Class B Common Stock that were earned in the performance period for the second half of fiscal 2016 became immediately vested.Additionally, the remaining 24,334 and 22,333 Performance Restricted Shares of Class B Common Stock and Common Stock, respectively, were earned in theperformance period for fiscal 2017 upon the achievement of the performance criteria under the Award Agreement and became fully vested. During fiscal 2017, theCompany recognized expense on the Award Agreement of $8.8 million, of which $5.4 million was due to the accelerated vesting of Performance Restricted Sharesupon Mr. Croatti’s death.As of August 31, 2019, the total compensation cost not yet recognized related to non-vested Share-Based Awards was approximately $10.4 million. The weightedaverage period over which compensation cost for Share-Based Awards will be recognized is 2.1 years.The fair value of each stock appreciation right is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted averageassumptions used: Fiscal year ended August 2019 2018 2017 Risk-free interest rate 3.07% 2.23% 1.58%Expected dividend yield 0.48% 0.18% 0.21%Expected life in years 7.24 7.41 7.43 Expected volatility 22.9% 23.1% 24.0% The weighted average fair values of Share-Based Awards granted in the form of stock appreciation rights during fiscal years 2019, 2018 and 2017 were $46.20,$47.51 and $34.74, respectively.64 The following table summarizes the Share-Based Awards activity in the form of stock options and stock appreciation rights for fiscal 2019: Number ofShares WeightedAverageExercise Price Outstanding, August 25, 2018 585,926 $110.86 Granted 104,174 150.64 Exercised (108,450) 88.60 Forfeited (11,400) 127.22 Outstanding, August 31, 2019 570,250 $122.03 Exercisable, August 31, 2019 137,063 $102.84 The following table summarizes the Share-Based Awards activity in the form of restricted stock units for fiscal 2019: Number ofShares WeightedAverageExercise Price Unvested balance at August 25, 2018 11,720 $168.27 Granted 17,920 145.31 Vested (1,107) 165.40 Forfeited — — Unvested balance at August 31, 2019 28,533 $153.96 13. Shareholders’ EquityOn March 27, 2018, the Company repurchased 1.105 million shares of Class B Common Stock and 0.073 million shares of Common Stock for a combined$146.0 million in a private transaction with the Croatti family at a per share price of $124.00.This opportunity to repurchase shares from the Croatti family was evaluated by an independent special committee of the Board of Directors (the “SpecialCommittee”). The sale of shares by the Croatti family was executed to provide liquidity as well as for estate and family financial planning following the passing offormer UniFirst Chief Executive Officer, Ronald D. Croatti.The Special Committee determined that a repurchase of Croatti family Class B Common Stock at a discount to market was in the best interests of the Company asit is accretive to income per share and addresses uncertainties that may have been created if the Croatti family had pursued other liquidity options. The SpecialCommittee undertook its evaluation with the assistance of Stifel Financial Corp. (“Stifel”) and received an opinion from Stifel to the effect that, as of March 27,2018, the $124.00 per share in cash to be paid was fair to the Company, from a financial point of view. The entire Board of Directors other than Cynthia Croatti,who is affiliated with the selling shareholders and therefore abstained, approved the transaction upon the recommendation of the Special Committee.On March 28, 2018, the Company announced that it would be raising its quarterly dividend to $0.1125 per share for Common Stock and to $0.09 per share forClass B Common Stock, up from $0.0375 and $0.03 per share, respectively.On October 23, 2019, the Company announced that it would be raising its quarterly dividend to $0.25 per share for Common Stock and to $0.20 per share forClass B Common Stock, up from $0.1125 and $0.09 per share, respectively. The amount and timing of any future dividend payment is subject to the approval ofthe Board of Directors each quarter.The Company has two classes of common stock: Common Stock and Class B Common Stock. Each share of Common Stock is entitled to one vote, is freelytransferable, and is entitled to a cash dividend equal to 125% of any cash dividend paid on each share of Class B Common Stock. Each share of Class B CommonStock is entitled to ten votes and can be converted to Common Stock on a share-for-share basis. However, until converted to Common Stock, shares of Class BCommon Stock are not freely transferable. For the year ended August 31, 2019, 67,000 shares of Class B Common Stock were converted to Common Stock.65 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 privatelynegotiated 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 befunded using the Company’s available cash or capacity under its Credit Agreement and may be suspended or discontinued at any time. During fiscal 2019, theCompany repurchased 197,150 shares, respectively, for an average price per share of $154.78.14. Accumulated Other Comprehensive LossThe changes in each component of accumulated other comprehensive loss for fiscal 2019 and 2018 are as follows (in thousands): ForeignCurrencyTranslation Pension-related (1) DerivativeFinancialInstruments (1) TotalAccumulatedOtherComprehensiveLoss Balance as of August 26, 2017 $(15,932) $(5,477) $(109) $(21,518)Change during the year (5,184) 1,342 201 (3,641)Balance as of August 25, 2018 (21,116) (4,135) 92 (25,159)Change during the year (3,524) (5,104) 99 (8,529)Balance as of August 31, 2019 $(24,640) $(9,239) $191 $(33,688) (1)Amounts are shown net of tax. Amounts reclassified from accumulated other comprehensive loss, net of tax, for fiscal 2019 and 2018 were as follows (in thousands): Year EndedAugust 31, 2019 Year EndedAugust 25,2018 Pension benefit liabilities, net: Actuarial losses (a) $645 $464 Tax effect reclass — 1,192 Total, net of tax 645 1,656 Derivative financial instruments, net: Forward contracts gain (b) (153) (46)Total, net of tax (153) (46)Total amounts reclassified, net of tax $492 $1,610 (a)Amounts included in selling and administrative expenses in the accompanying Consolidated Statements of Income.(b)Amounts included in revenues in the accompanying Consolidated Statements of Income.15. Segment ReportingOperating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operatingdecision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decisionmaker is the Company’s chief executive officer. The Company has six operating segments based on the information reviewed by its chief executive officer: U.S.Rental and Cleaning, Canadian Rental and Cleaning, MFG, Specialty Garments, First Aid and Corporate. The U.S. Rental and Cleaning and Canadian Rental andCleaning operating segments have been combined to form the U.S. and Canadian Rental and Cleaning reporting segment, and as a result, the Company has fivereporting segments.66 The U.S. and Canadian Rental and Cleaning reporting segment purchases, rents, cleans, delivers and sells, uniforms and protective clothing and non-garment itemsin the United States and Canada. The laundry locations of the U.S. and Canadian Rental and Cleaning reporting segment are referred to by the Company as“industrial laundries” or “industrial laundry locations.”The MFG operating segment designs and manufactures uniforms and non-garment items primarily for the purpose of providing these goods to the U.S. andCanadian Rental and Cleaning reporting segment. MFG revenues are primarily generated when goods are shipped from the Company’s manufacturing facilities, orits subcontract manufacturers, to other Company locations. These intercompany revenues are recorded at a transfer price which is typically in excess of the actualmanufacturing cost. Manufactured products are carried in inventory until placed in service at which time they are amortized at this transfer price. On a consolidatedbasis, intercompany revenues and income are eliminated and the carrying value of inventories and rental merchandise in service is reduced to the manufacturingcost. Income before income taxes from MFG net of the intercompany MFG elimination offsets the merchandise amortization costs incurred by the U.S. andCanadian Rental and Cleaning reporting segment as the merchandise costs of this reporting segment are amortized and recognized based on inventories purchasedfrom MFG at the transfer price which is above the Company’s manufacturing cost.The Corporate operating segment consists of costs associated with the Company’s distribution center, sales and marketing, information systems, engineering,materials management, manufacturing planning, finance, budgeting, human resources, other general and administrative costs and interest expense. The revenuesgenerated from the Corporate operating segment represent certain direct sales made by the Company directly from its distribution center. The products sold by thisoperating segment are the same products rented and sold by the U.S. and Canadian Rental and Cleaning reporting segment. In the table below, no assets or capitalexpenditures are presented for the Corporate operating segment because no assets are allocated to this operating segment in the information reviewed by the chiefexecutive officer. However, depreciation and amortization expense related to certain assets are reflected in income from operations and income before incometaxes for the Corporate operating segment. The assets that give rise to this depreciation and amortization are included in the total assets of the U.S. and CanadianRental and Cleaning reporting segment as this is how they are tracked and reviewed by the Company. The majority of expenses accounted for within the Corporatesegment relate to costs of the U.S. and Canadian Rental and Cleaning segment, with the remainder of the costs relating to the Specialty Garment and First Aidsegments.The Specialty Garments operating segment purchases, rents, cleans, delivers and sells, specialty garments and non-garment items primarily for nuclear andcleanroom applications and provides cleanroom cleaning services at limited customer locations. The First Aid operating segment sells first aid cabinet services andother safety supplies as well as maintains wholesale distribution and pill packaging operations.The Company refers to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as its “Core Laundry Operations,” which isincluded as a subtotal in the following tables (in thousands): As of and forthe year ended August 31, 2019 US andCanadianRental andCleaning MFG NetIntercoMFGElim Corporate SubtotalCoreLaundryOperations SpecialtyGarments FirstAid Total Revenues $1,582,416 $254,218 $(254,111) $33,682 $1,616,205 $132,767 $60,404 $1,809,376 Income (loss) from operations $235,046 $84,248 $1,128 $(107,468) $212,954 $14,145 $4,909 $232,008 Interest (income) expense, net $(4,105) $— $— $(4,977) $(9,082) $— $— $(9,082)Income (loss) before taxes $239,122 $84,008 $1,128 $(104,742) $219,516 $13,499 $4,909 $237,924 Depreciation and amortization $69,376 $2,384 $— $25,098 $96,858 $4,759 $1,716 $103,333 Capital expenditures $115,071 $401 $— $— $115,472 $3,423 $920 $119,815 Total assets $1,865,713 $36,376 $— $— $1,902,089 $110,335 $34,896 $2,047,320 As of and forthe year ended August 25, 2018 US andCanadianRental andCleaning MFG NetIntercoMFGElim Corporate SubtotalCoreLaundryOperations SpecialtyGarments FirstAid Total Revenues $1,485,548 $247,530 $(247,424) $37,994 $1,523,648 $118,477 $54,364 $1,696,489 Income (loss) from operations $213,322 $89,035 $(9,658) $(129,111) $163,588 $14,070 $4,718 $182,376 Interest income, net $(3,927) $— $— $(1,616) $(5,543) $— $— $(5,543)Income (loss) before taxes $217,252 $88,856 $(9,658) $(127,510) $168,940 $13,589 $4,717 $187,246 Depreciation and amortization $64,481 $2,238 $— $24,108 $90,827 $4,244 $1,591 $96,662 Capital expenditures $105,481 $2,882 $— $— $108,363 $3,781 $603 $112,747 Total assets $1,670,713 $33,622 $— $— $1,704,335 $110,811 $28,240 $1,843,38667 As of and forthe year ended August 26, 2017 US andCanadianRental andCleaning MFG NetIntercoMFGElim Corporate SubtotalCoreLaundryOperations SpecialtyGarments FirstAid Total Revenues $1,415,423 $206,572 $(206,316) $26,470 $1,442,149 $98,024 $50,785 $1,590,958 Income (loss) from operations $200,585 $76,115 $(3,415) $(176,978) $96,307 $9,018 $4,958 $110,283 Interest (income) expense, net $(3,371) $— $— $(898) $(4,269) $— $— $(4,269)Income (loss) before taxes $204,108 $75,738 $(3,415) $(175,595) $100,836 $9,329 $4,958 $115,123 Depreciation and amortization $59,899 $2,185 $— $20,866 $82,950 $4,429 $1,500 $88,879 Capital expenditures $104,984 $1,079 $— $— $106,063 $1,737 $754 $108,554 Total assets $1,667,540 $34,045 $— $— $1,701,585 $87,767 $29,776 $1,819,128 The Company’s long-lived assets as of August 31, 2019 and August 25, 2018 and revenues and income before income taxes for the years ended August 31, 2019,August 25, 2018 and August 26, 2017 were attributed to the following countries (in thousands): Long-lived assets as of: August 31,2019 August 25,2018 United States $1,087,901 $1,012,167 Europe, Canada, Mexico and Nicaragua (1) 45,628 46,419 Total $1,133,529 $1,058,586 Revenues for fiscal years: 2019 2018 2017 United States $1,683,321 $1,559,780 $1,472,432 Europe and Canada (1) 126,055 136,709 118,526 Total $1,809,376 $1,696,489 $1,590,958 Income before income taxes for fiscal years: 2019 2018 2017 United States $236,843 $184,605 $109,741 Europe, Canada, Mexico and Nicaragua (1) 1,081 2,641 5,382 Total $237,924 $187,246 $115,123 (1)No country accounts for greater than 10% of total long-lived assets, revenues or income before income taxes68 Report of Independent Registered Public Accounting FirmTo the Shareholders and the Board of Directors of UniFirst Corporation Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of UniFirst Corporation and subsidiaries (the “Company”) as of August 31, 2019 and August 25,2018, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the periodended August 31, 2019, and the related notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidatedfinancial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at August31, 2019 and August 25, 2018, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2019, in conformitywith U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internalcontrol over financial reporting as of August 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework), and our report dated October 29, 2019 expressed an unqualified opinion thereon. Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statementsbased on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordancewith the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures toassess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Suchprocedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believethat our audits provide a reasonable basis for our opinion. Critical Audit MattersThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required tobe communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especiallychallenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financialstatements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on theaccounts or disclosures to which they relate. Self-Insurance AccrualsDescription of theMatter As of August 31, 2019, the Company had recognized current and long-term insurance related liabilities of $30.1 million and $50.5million, respectively. As discussed in Note 1 to the Company’s consolidated financial statements, the Company is self-insured forcertain obligations related to health, workers’ compensation, vehicles and general liability programs and judgments and estimates areused by the Company in determining the potential value associated with reported claims and for events that have occurred but havenot been reported. 69 Auditing management’s estimate of the portion of the insurance related liabilities related to workers’ compensation, vehicles andgeneral liability is highly judgmental and complex due to the significant uncertainty in the potential value of reported claims and thenumber and potential value of incurred but not reported claims, the application of significant management judgment in making thoseestimates and the use of various actuarial methods. The reserve estimate is sensitive to actuarial assumptions used to estimate theultimate liability for reported claims and to estimate the value of claims that have been incurred but have not been reported. How We Addressed theMatter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s self-insurance accrual process. This includes controls over the assumptions and methods used to establish the estimate. Specifically, wetested controls related to management’s review of data provided to the actuary, significant actuarial assumptions and the relatedreconciliations. To test the self-insurance accrual, we performed audit procedures over the significant inputs used in management’s analysis, includingperforming transactional testing over the completeness and accuracy of claims data and vouching payments made to third parties.Furthermore, we involved our actuarial specialists to assist in evaluating the key assumptions and methodologies used by managementto determine the reserve. We then compared the Company’s reserve amount to a range which our actuarial specialist developed basedon independently selected assumptions. Environmental ContingenciesDescription of theMatter As discussed in Note 11 to the Company’s consolidated financial statements, the Company is subject to various federal, state, andlocal laws and regulations governing the treatment and disposal of hazardous waste and other substances. As of August 31, 2019, theCompany had recorded a current and long-term liability of $9.8 million and $17.9 million, respectively, representing its best estimateof losses related to these environmental matters. Auditing management’s accounting for environmental loss contingencies was especially challenging, as significant judgment isrequired by the Company to evaluate whether it is probable that an environmental loss contingency has been incurred and to estimatethe future costs to remediate the environmental matters. These judgments include management’s identification of sites with potentialliabilities, management’s estimate of the amount and timing of remediation and other costs, allocation of costs among otherpotentially responsible parties, changes to enacted laws and regulations, discount rates, and evaluation of information available fromregulatory agencies. How We Addressed theMatter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’sidentification and measurement of the environmental loss contingency. For example, we tested controls over management’s review ofthe environmental loss contingency calculation and management’s meetings where they evaluate key judgments and estimatesaffecting the environmental loss contingency, including those outlined in the paragraph above. To test the assessment of the probability of incurrence of a loss and whether the loss was reasonably estimable, we inspectedcorrespondence to and from regulatory agencies, obtained legal counsel confirmation letters, met with the Company’s legal counseland other members of management to discuss environmental matters, inspected environmental studies, read the minutes of themeetings of the Company’s Board of Directors and committees of the Company’s Board of Directors, and obtained a representationletter from the Company. Additionally, we utilized our environmental specialists to perform a search for unrecorded environmentalliabilities related to the Company’s sites to look for new or contrary evidence. To test the measurement of the environmentalliabilities, we performed detailed testing over costs incurred, and based on historical trends and input from management, we evaluatedthe reasonableness of estimated costs to be incurred. We tested the allocation of costs among potentially responsible parties byanalyzing allocation settlement agreements, and tested other assumptions impacting the estimate such as inflation and discount ratesby agreeing to third party sources. We also evaluated the accuracy of any changes in measurement of the liability through comparisonwith historical data. /s/ Ernst & Young LLPWe have served as the Company’s auditor since 2002. Boston, MassachusettsOctober 29, 201970 Quarterly Financial Data (Unaudited)The following is a summary of the results of operations for each of the quarters within the years ended August 31, 2019 and August 25, 2018. This quarterlyfinancial information was prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission; however, theCompany believes that the information furnished reflects all adjustments (consisting only of normal recurring adjustments) which were, in the opinion ofmanagement, necessary for a fair statement of results in the interim periods. This summary should be read in conjunction with these Consolidated FinancialStatements and notes to Consolidated Financial Statements. (In thousands, except per share data)For the year ended August 31, 2019 FirstQuarter SecondQuarter (1) ThirdQuarter (2) FourthQuarter (3) Revenues $438,550 $437,485 $453,720 $479,621 Income before income taxes 51,959 63,395 61,700 60,870 Provision for income taxes 13,639 15,789 14,480 14,882 Net income $38,320 $47,606 $47,220 $45,988 Income per share—basic Common Stock $2.08 $2.59 $2.58 $2.52 Class B Common Stock $1.67 $2.07 $2.06 $2.01 Income per share—diluted Common Stock $1.99 $2.48 $2.46 $2.40 Income allocated to—basic Common Stock $32,137 $39,923 $39,563 $38,619 Class B Common Stock $6,183 $7,683 $7,657 $7,369 Income allocated to—diluted Common Stock $38,320 $47,606 $47,220 $45,988 Weighted average number of shares outstanding—basic Common Stock 15,432 15,428 15,341 15,340 Class B Common Stock 3,710 3,710 3,710 3,659 Weighted average number of shares outstanding—diluted Common Stock 19,302 19,232 19,168 19,159 (1)During the second quarter of fiscal 2019, the Company repurchased 45,000 shares for an average price per share of $139.57.During fiscal 2017, we recorded a pre-tax non-cash impairment charge of $55.8 million once it was determined that it was not probable that the version ofthe CRM system that was being developed would be completed and placed into service. During fiscal 2019, we entered into a settlement agreement withour lead contractor for the version of the CRM system with respect to which we recorded the impairment charge. As part of the settlement agreement, werecorded a total gain of $21.1 million as a reduction of selling and administrative expenses, which includes our receipt of a one-time cash payment in theamount of $13.0 million as well as the forgiveness of amounts previously due the contractor. We also received hardware and related maintenance servicewith a fair value of $0.8 million as part of the settlement. This gain, net of tax, benefitted the Company’s diluted income per share by $0.81 in fiscal2019. (2)During the third quarter of fiscal 2019, the Company repurchased 99,500 shares for an average price per share of $147.47.(3)During the fourth quarter of fiscal 2019, the Company repurchased 52,650 shares for an average price per share of $181.61.71 (In thousands, except per share data)For the year ended August 25, 2018 FirstQuarter SecondQuarter (1) ThirdQuarter (2) FourthQuarter (3) Revenues $415,778 $419,264 $427,384 $434,063 Income before income taxes 53,033 43,568 47,792 42,853 Provision (benefit) for income taxes 18,827 (14,810) 11,433 7,901 Net income $34,206 $58,378 $36,359 $34,952 Income per share—basic Common Stock $1.77 $3.02 $1.94 $1.90 Class B Common Stock $1.42 $2.42 $1.55 $1.52 Income per share—diluted Common Stock $1.67 $2.85 $1.85 $1.81 Income allocated to—basic Common Stock $27,384 $46,744 $30,034 $29,312 Class B Common Stock $6,822 $11,634 $6,325 $5,640 Income allocated to—diluted Common Stock $34,206 $58,378 $36,359 $34,952 Weighted average number of shares outstanding—basic Common Stock 15,462 15,481 15,446 15,429 Class B Common Stock 4,816 4,816 4,087 3,711 Weighted average number of shares outstanding—diluted Common Stock 20,434 20,463 19,687 19,335 (1)The Company’s second quarter results include a $20.1 million benefit to the Company’s provision for income taxes due to remeasurement of deferred taxbalances and the one-time transition tax resulting from the Act enacted on December 22, 2017. This gain translated into $0.98 gain to the Company’sdiluted earnings per share.(2)On March 27, 2018, UniFirst repurchased 1.105 million shares of Class B Common Stock and 0.073 million shares of Common Stock for a combined$146.0 million in a private transaction with the Croatti family at a per share price of $124.00.(3)The Company’s fourth quarter results also include a $7.2 million pre-tax one-time bonus to our employees so that they may share in the benefits receivedfrom the recent U.S. tax reform. This expense, net of tax, reduced the Company’s diluted earnings per share by $0.25.The Company’s fiscal year ends on the last Saturday in August. For financial reporting purposes, fiscal 2019 consisted of 53 weeks, and fiscal 2018 consisted of 52weeks. Each of the quarterly periods contained 13 weeks except for the fourth quarter of fiscal 2019 which contained 14 weeks.72 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURESDisclosure Controls and ProceduresAs required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation under the supervision andwith the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation ofour disclosure controls and procedures as of the end of the period covered by this report. Based upon their evaluation, our Chief Executive Officer and ChiefFinancial Officer concluded that our disclosure controls and procedures are effective to ensure that material information relating to the Company required to bedisclosed by the Company in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specifiedin Securities and Exchange Commission rules and forms and to ensure that such information is accumulated and communicated to management, including ourChief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating ourdisclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide onlyreasonable assurances of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating thecontrols and procedures. We continue to review our disclosure controls and procedures, and our internal control over financial reporting, and may from time totime make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting during the quarter ended August 31, 2019 that have materially affected, or that arereasonably likely to materially affect, our internal control over financial reporting.Management’s Responsibility for Financial StatementsOur management is responsible for the preparation, integrity and objectivity of our Consolidated Financial Statements and other financial information contained inour Annual Report on Form 10-K. Those Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in theUnited States. In preparing those Consolidated Financial Statements, management was required to make certain estimates and judgments, which are based uponcurrently available information and management’s view of current conditions and circumstances.The Audit Committee of our Board of Directors, which consists solely of independent directors, oversees our process of reporting financial information and theaudit of our Consolidated Financial Statements. The Audit Committee stays informed of our financial condition and regularly reviews management’s financialpolicies and procedures, the independence of our independent auditors, our internal control and the objectivity of our financial reporting. Our independentregistered public accounting firm has full access to the Audit Committee and meets with the Audit Committee periodically, both with and without managementpresent.We have retained Ernst & Young LLP, an independent registered public accounting firm, to audit our Consolidated Financial Statements found in this AnnualReport on Form 10-K for the year ended August 31, 2019. We have made available to Ernst & Young LLP all of our financial records and related data inconnection with their audit of our Consolidated Financial Statements.Management’s Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reportingpurposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financialreporting may not prevent or detect misstatements. Management has assessed the effectiveness of our internal control over financial reporting as of August 31,2019. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations (“COSO”) of the TreadwayCommission in Internal Control—Integrated Framework (2013 Framework). Management concluded that based on its assessment, our internal control overfinancial reporting was effective as of August 31, 2019.The effectiveness of our internal control over financial reporting as of August 31, 2019 has been audited by Ernst & Young LLP, and a copy of its attestationreport is included below.73 Report of Independent Registered Public Accounting FirmTo the shareholders and the Board of Directors of UniFirst CorporationOpinion on Internal Control over Financial ReportingWe have audited UniFirst Corporation and subsidiaries’ internal control over financial reporting as of August 31, 2019, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In ouropinion, UniFirst Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of August 31, 2019, basedon the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balancesheets of UniFirst Corporation as of August 31, 2019 and August 25, 2018, the related consolidated statements of income, comprehensive income, shareholders’equity and cash flows for each of the three years in the period ended August 31, 2019, and the related notes and the financial statement schedule listed in the Indexat Item 15(a) of the Company and our report dated October 29, 2019 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to expressan opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and arerequired to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate./s/ Ernst & Young LLPBoston, MassachusettsOctober 29, 201974 ITEM 9B. OTHER INFORMATIONNone.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEWe have adopted a Statement of Corporate Policy and Code of Business Conduct and Ethics, which applies to our directors and all of our employees, including ourprincipal executive officer, principal financial officer, principal accounting officer and corporate controller. Our Statement of Corporate Policy and Code ofBusiness Conduct and Ethics is available, free of charge, on our website at www.unifirst.com. Information contained on our website is not part of this AnnualReport on Form 10-K or the documents incorporated by reference into this Annual Report on Form 10-K. We intend to disclose any amendment to or waiver of aprovision of the Statement of Corporate Policy and Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer,principal accounting officer or controller by posting such information on our website at www.unifirst.com.Information regarding our directors and executive officers required by this Item 10 will be included in our definitive Proxy Statement to be filed with the Securitiesand Exchange Commission for our 2020 Annual Meeting of Shareholders and is incorporated by reference into this Item 10. Certain information required by thisItem 10 is set forth in Item 1 of this Annual Report on Form 10-K under the heading “Executive Officers”.ITEM 11. EXECUTIVE COMPENSATIONInformation required by this Item 11 will be included in our definitive Proxy Statement to be filed with the Securities and Exchange Commission for our 2020Annual Meeting of Shareholders and is incorporated by reference into this Item 11.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSInformation required by this Item 12 will be included in our definitive Proxy Statement to be filed with the Securities and Exchange Commission for our 2020Annual Meeting of Shareholders and is incorporated by reference into this Item 12.Information concerning our equity compensation plans contained in the table entitled “Equity Compensation Plan Information” set forth in Item 5 of this AnnualReport on Form 10-K is incorporated by reference into this Item 12.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEInformation required by this Item 13 will be included in our definitive Proxy Statement to be filed with the Securities and Exchange Commission for our 2020Annual Meeting of Shareholders and is incorporated by reference into this Item 13.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESInformation required by this Item 14 will be included in our definitive Proxy Statement to be filed with the Securities and Exchange Commission for our 2020Annual Meeting of Shareholders and is incorporated by reference into this Item 14.75 PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a) The financial statements listed below are filed as part of this report:(1) and (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.The financial statements listed below are included under Item 8 of this Annual Report on Form 10-K:Consolidated statements of income for each of the three years in the period ended August 31, 2019Consolidated statements of comprehensive income for each of the three years in the period ended August 31, 2019Consolidated balance sheets as of August 31, 2019 and August 25, 2018Consolidated statements of shareholders’ equity for each of the three years in the period ended August 31, 2019Consolidated statements of cash flows for each of the three years in the period ended August 31, 2019Notes to Consolidated Financial StatementsReport of Ernst & Young LLP, Independent Registered Public Accounting FirmThe items listed below are included under Item 9a of this Annual Report on Form 10-KManagement’s Report on Internal Control Over Financial ReportingReport of Ernst & Young LLP, Independent Registered Public Accounting FirmThe following additional schedule is filed herewith:Schedule II—Valuation and qualifying accounts and reserves for each of the three years in the period ended August 31, 2019UNIFIRST CORPORATION AND SUBSIDIARIESSCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVESFOR EACH OF THE THREE YEARS IN THE PERIOD ENDEDAUGUST 31, 2019 (IN THOUSANDS) Description Balance,Beginning ofPeriod Charged toCosts andExpenses Charges forWhichReservesWere Createdor Deductions Balance,End ofPeriod Reserves for Accounts Receivable For the year ended August 31, 2019 $9,237 $5,996 $(5,298) $9,935 For the year ended August 25, 2018 $8,719 $5,882 $(5,364) $9,237 For the year ended August 26, 2017 $7,675 $5,629 $(4,585) $8,719 Separate financial statements of the Company have been omitted because the Company is primarily an operating company and all subsidiaries included in theConsolidated Financial Statements are totally held.All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, orbecause the information required is included in the financial statements or the notes thereto. 76 (3) EXHIBITS. The list of exhibits filed as part of this Annual Report on Form 10-K is set forth below.DESCRIPTION 3.1 Restated Articles of Organization (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with theCommission on July 5, 2006) 3.2 Articles of Amendment dated January 13, 1988 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed withthe Commission on July 5, 2006) 3.3 Articles of Amendment dated January 21, 1993 (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed withthe Commission on July 5, 2006) 3.4 By-laws (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on January 10, 2008) 4.1 Specimen Stock Certificate for Shares of Common Stock (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-Kfiled with the Commission on July 5, 2006) 4.2 Description of securities (filed herewith) *10.1 Form of UniFirst Corporation stock option award to non-employee directors under the Amended 1996 Stock Incentive Plan (incorporated byreference to Exhibit 10-E to the Company’s Annual Report on Form 10-K for the fiscal year ended August 27, 2004 filed with the Commission onNovember 12, 2004) *10.2 Form of UniFirst Corporation stock option award to executive officers under the Amended 1996 Stock Incentive Plan (incorporated by reference toExhibit 10-F to the Company’s Annual Report on Form 10-K for the fiscal year ended August 27, 2004 filed with the Commission onNovember 12, 2004) *10.3 UniFirst Corporation Unfunded Supplemental Executive Retirement Plan as restated January 11, 2017 to incorporate and consolidate all previousamendments thereto (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission onApril 4, 2017) *10.4 Form of Restricted Stock Award Agreement under the UniFirst Corporation Amended 1996 Stock Incentive Plan (incorporated by reference toExhibit 10.7 the Company’s Quarterly Report on Form 10-Q filed with the Commission on April 9, 2009) *10.5 Employment Agreement, dated December 14, 2017, by and between UniFirst Corporation and Steven S. Sintros (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on December 20, 2017) *10.6 Restricted Stock Unit Award Agreement, dated December 14, 2017, by and between UniFirst Corporation and Steven S. Sintros (incorporated byreference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on December 20, 2017) *10.7 UniFirst Corporation Amended 1996 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form10-Q filed with the Commission on January 7, 2010) *10.8 Second Amendment to the UniFirst Corporation Amended 1996 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’sQuarterly Report on Form 10-Q filed with the Commission on January 7, 2010) *10.9 Third Amendment to the UniFirst Corporation Amended 1996 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’sQuarterly Report on Form 10-Q filed with the Commission on January 7, 2010) *10.10 Fourth Amendment to the UniFirst Corporation Amended 1996 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’sQuarterly Report on Form 10-Q filed with the Commission on January 7, 2010) *10.11 Fifth Amendment to the UniFirst Corporation Amended 1996 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company’sQuarterly Report on Form 10-Q filed with the Commission on April 8, 2010) *10.12 UniFirst Corporation 2010 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K filed with the Commission on January 14, 2011) *10.13 Form of Stock Appreciation Right Award Agreement for Company Employees under the UniFirst Corporation 2010 Stock Option and IncentivePlan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on January 14, 2011) 77 *10.14 Form of Stock Appreciation Right Agreement for Non-Employee Directors under the UniFirst Corporation 2010Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with theCommission on January 14, 2011) *10.15 Form of Non-Qualified Stock Option Agreement for Company Employees under the UniFirst Corporation 2010 Stock Option and Incentive Plan(incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on January 14, 2011) *10.16 Form of Non-Qualified Stock Option Agreement for Non-Employee Directors under the UniFirst Corporation 2010 Stock Option and IncentivePlan (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Commission on January 14, 2011) 10.17 Amended and Restated Credit Agreement, dated as of April 11, 2016, among UniFirst Corporation and certain of its subsidiaries as Borrowers,Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer, JPMorgan Chase Bank, N.A., as an L/C Issuer andSyndication Agent, the other lenders a party thereto, Merrill Lynch, Pierce Fenner & Smith Incorporated and JPMorgan Chase Bank, N.A., asJoint Lead Arrangers and Book Managers, and Santander Bank, N.A. and Wells Fargo Bank, N.A., as Co-Documentation Agents (incorporated byreference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 13, 2016) * 10.18 UniFirst Corporation CEO Cash Incentive Bonus Plan, as amended (incorporated by reference to Appendix A to the Company’s Definitive ProxyStatement filed with the Commission on December 3, 2013) *10.19 UniFirst Corporation Amended and Restated 2010 Stock Option and Incentive Plan (incorporated by reference to Appendix A to the Company’sDefinitive Proxy Statement filed with the Commission on December 2, 2014). * 10.20 Restricted Stock Unit Award Agreement, dated December 14, 2017, between the Company and Steven S. Sintros (incorporated by reference toExhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on December 20, 2017) *10.21 Stock Appreciation Right Award Agreement, dated December 14, 2017, between the Company and Steven S. Sintros (incorporated by referenceto Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on December 20, 2017) *10.22 Form of Restricted Stock Unit Award Agreement under the UniFirst Corporation Amended and Restated 2010 Stock Option and Incentive Plan(incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Commission on December 20, 2017) *10.23 Form of Restricted Stock Unit Award Agreement under the UniFirst Corporation Amended and Restated 2010 Stock Option and Incentive Plan(with respect to performance-based restricted stock unit awards) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q filed with the Commission on January 3, 2019) *10.24 UniFirst Corporation Amendment No. 1 to Amended and Restated 2010 Stock Option and Incentive Plan (incorporated by reference to Exhibit10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Commission on April 4, 2018) *10.25 Stock Repurchase Agreement, dated as of March 27, 2018, by and among the Company and the Sellers identified therein (incorporated byreference to the Company’s Current Report on Form 8-K filed with the Commission on March 28, 2018) 21 List of Subsidiaries (filed herewith) 23.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Steven S. Sintros (filed herewith) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Shane O’Connor (filed herewith) 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of2002 (furnished herewith) 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002(furnished herewith) 101 The following materials from UniFirst Corporation’s Annual Report on Form 10-K for the year ended August 31, 2019, formatted in XBRL(eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income,(iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes toConsolidated Financial Statements and (vii) Schedule II. *Management contract, compensatory plan or arrangement78 ITEM 16. FORM 10-K SUMMARYNot Applicable.79 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized. UniFirst Corporation By:/s/ Steven S. Sintros Steven S. Sintros President and Chief Executive Officer October 29, 2019Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated. NAME TITLE DATE /s/ Steven S. Sintros President and Chief Executive Officer(Principal Executive Officer) October 29, 2019Steven S. Sintros /s/ Shane O’Connor Senior Vice President and Chief FinancialOfficer (Principal Financial Officer andPrincipal Accounting Officer) October 29, 2019Shane O’Connor /s/ Cynthia Croatti Director October 29, 2019Cynthia Croatti /s/ Phillip L. Cohen Director October 29, 2019Phillip L. Cohen /s/ Kathleen Camilli Director October 29, 2019Kathleen Camilli /s/ Michael Iandoli Director October 29, 2019Michael Iandoli /s/ Thomas Postek Director October 29, 2019Thomas S. Postek /s/ Raymond Zemlin Chairman of the Board of Directors October 29, 2019Raymond C. Zemlin 80Exhibit 21 List of subsidiaries of the Company: Name of SubsidiaryJurisdiction of Organization or Incorporation UniFirst Holdings, Inc.DelawareUniTech Services Group, Inc.CaliforniaUniFirst First-Aid CorporationMarylandUniTech Services Canada Ltd.CanadaUniTech Services SASFranceUniTech Services B.V.NetherlandsUniTech Services GmbHGermanyUniTech Services Group Ltd.United KingdomUniFirst Canada Ltd.CanadaRC Air LLCNew HampshireUONE CorporationMassachusettsUniformes de San Luis S.A. de C.V.MexicoUniFirst S.A. de C.V.MexicoUniFirst Far East LimitedHong KongUniFirst Manufacturing CorporationMassachusettsUniFirst Nicaragua S.A. de C.V.Nicaragua Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the following Registration Statements: (1)Registration Statement (Form S-8 No. 333-96097) pertaining to the UniFirst Corporation 1996 Stock Incentive Plan, (2)Registration Statement (Form S-8 No. 333-82682) pertaining to the UniFirst Corporation 1996 Stock Incentive Plan, (3)Registration Statement (Form S-8 No. 333-142138) pertaining to the UniFirst Corporation 1996 Stock Incentive Plan, (4)Registration Statement (Form S-8 No. 333-165840) pertaining to the UniFirst Corporation 1996 Stock Incentive Plan, (5)Registration Statement (Form S-8 No. 333-177485) pertaining to the UniFirst Corporation 2010 Stock Option andIncentive Plan, and (6)Registration Statement (Form S-8 No. 333-203339) pertaining to the UniFirst Corporation Amended and Restated 2010Stock Option and Incentive Plan; of our reports dated October 29, 2019, with respect to the consolidated financial statements and schedule of UniFirst Corporationand subsidiaries, and the effectiveness of internal control over financial reporting of UniFirst Corporation and subsidiaries, includedin this Annual Report (Form 10-K) of UniFirst Corporation for the year ended August 31, 2019. /s/ Ernst & Young LLP Boston, MassachusettsOctober 29, 2019 Exhibit 31.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIESEXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION302 OF THE SARBANES-OXLEY ACT OF 2002I, Steven S. Sintros, certify that:1.I have reviewed this Annual Report on Form 10-K of UniFirst Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theRegistrant, and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recentfiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the Registrant’s internal control over financial reporting; and5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theRegistrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controlover financial reporting. Date: October 29, 2019By:/s/ Steven S. Sintros Steven S. Sintros President and Chief Executive Officer(Principal Executive Officer) Exhibit 31.2CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIESEXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION302 OF THE SARBANES-OXLEY ACT OF 2002I, Shane O’Connor, certify that:1.I have reviewed this Annual Report on Form 10-K of UniFirst Corporation;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theRegistrant, and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recentfiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the Registrant’s internal control over financial reporting; and5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theRegistrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controlover financial reporting. Date: October 29, 2019By:/s/ Shane O’Connor Shane O’Connor Senior Vice President and Chief FinancialOfficer (Principal Financial Officer) Exhibit 32.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 ofTitle 18, United States Code), I, Steven S. Sintros, President and Chief Executive Officer of UniFirst Corporation (the “Company”), do hereby certify, to the bestof my knowledge, that:(1)The Company’s Annual Report on Form 10-K for the year ended August 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 29, 2019By:/s/ Steven S. Sintros Steven S. Sintros President and Chief Executive Officer(Principal Executive Officer) Exhibit 32.2CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 ofTitle 18, United States Code), I, Shane O’Connor, Senior Vice President and Chief Financial Officer of UniFirst Corporation (the “Company”), do hereby certify,to the best of my knowledge, that:(1)The Company’s Annual Report on Form 10-K for the year ended August 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: October 29, 2019By:/s/ Shane O’Connor Shane O’Connor Senior Vice President and Chief FinancialOfficer (Principal Financial Officer)  Exhibit 4.2Description of the Registrant’s Securities Registered Pursuant toSection 12 of the Securities Exchange Act of 1934, as amendedThe summary of the general terms and provisions of the registered securities of UniFirst Corporation (“UniFirst,” “we,” or “our”) set forth below doesnot purport to be complete and is subject to and qualified in its entirety by reference to our Restated Articles of Organization, as amended (our“articles of organization”) and By-laws (our “by-laws” and, together with our articles of organization, our “Charter Documents”), each of which isincorporated by reference as an exhibit to our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. Weencourage you to read our Charter Documents and the applicable provisions of the Massachusetts Business Corporation Act (the “MBCA”) foradditional information.GeneralOur authorized capital stock consists of 30,000,000 shares of Common Stock, par value $0.10 per share (“Common Stock”), 20,000,000 shares ofClass B Common Stock, par value $0.10 per share (“Class B Stock”), and 2,000,000 shares of Preferred Stock, par value $1.00 per share(“Preferred Stock”).Common StockOnly our Common Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).DividendsOur board of directors may declare and pay dividends on our Common Stock and our Class B Stock out of funds legally available for that purpose,subject to the rights of holders of Preferred Stock.If our board of directors declares a dividend on the Class B Stock, whether payable in cash, in property or in shares of our capital stock, a dividendshall also be declared on our Common Stock. Cash dividends payable on each outstanding share of our Common Stock shall be equal to 125% ofthe cash dividend payable on each outstanding share of our Class B Stock. If dividends are declared that are payable in shares of our CommonStock or Class B Stock, such dividends shall be payable at the same rate on both classes of capital stock, provided that dividends payable inCommon Stock shall be payable only to holders of Common Stock and dividends payable in Class B Stock shall be payable only to holders of ClassB Stock.VotingEach share of our Common Stock shall entitle the holder thereof to one vote and each share of our Class B Stock shall entitle the holder thereof toten votes. Other than with respect to the election of directors or as required by the MBCA, all actions submitted to a vote of stockholders shall bevoted on by the holders of our Common Stock and our Class B Stock (as well as the holders of any series of our Preferred Stock, if any, entitled tovote thereon) voting together as a single class.With respect to the election of directors, holders of our Common Stock voting separately as a single class shall be entitled to elect 25% of the totalnumber of directors constituting the full board of directors and, if such 25% is not a whole number, then the holders of our Common Stock shall beentitled to elect the nearest higher whole number of directors that is at least 25% of the total number of directors and shall have the sole right toremove such Director(s). Holders of our Common Stock and Class B Stock voting together as a single class shall be entitled to elect the remainingdirectors. Each director is to be elected by the affirmative vote of a plurality of the votes cast with respect to that director’s election.  Our by-laws provide that, except as required by law or our Charter Documents and other than with respect to the election of directors, all matters willbe decided by the vote of the majority of the votes cast.Other RightsUpon liquidation, the holders of our Common Stock and Class B Stock are entitled to share ratably in assets available for distribution to stockholdersafter the payment or provision for payment of our debts and liabilities and any preferential amounts to which the holders of any outstanding sharesof Preferred Stock are entitled. The issuance of any shares of any series of Preferred Stock in future financings, acquisitions or otherwise may resultin dilution of the voting power and relative equity interest of the holders of our Common Stock and will subordinate our Common Stock to any priordividend and liquidation rights of the outstanding shares of such Preferred Stock.Our Common Stock has no conversion rights, nor are there any redemption or sinking fund provisions with respect to the Common Stock. Holders ofour Common Stock have no pre-emptive rights to subscribe for or purchase any additional stock or securities of UniFirst.To UniFirst’s knowledge, all of the outstanding shares of our Class B Stock are owned by certain members of the Croatti family and are not freelytransferable. However, holders of our Class B Stock have the right, at any time, and from time to time, at such holder’s option, to convert suchshares of Class B Stock into one fully paid and nonassessable share of our Common Stock on the terms and subject to the conditions set forth inour articles of organization.Preferred StockPursuant to our articles of organization, our board of directors has the authority, without further action by the stockholders, to issue from time to timeup to two million shares of Preferred Stock in one or more series. No shares of Preferred Stock are outstanding as of the date of our Annual Reporton Form 10-K with which this Exhibit 4.2 is filed as an exhibit. Our board of directors may designate the rights, preferences, privileges and restrictions of the Preferred Stock, including the title of the series, thenumber of shares to contribute to such series, dividend rights, redemption rights, liquidation preference, sinking fund terms, conversion rights, votingrights and any other material term of the series. The issuance of Preferred Stock could have the effect of restricting dividends on the CommonStock, diluting the voting power of the Common Stock, impairing the liquidation rights of the Common Stock or delaying, deterring or preventing achange in control. Anti-Takeover Effects of Massachusetts Law and Provisions of our Charter DocumentsCertain provisions of the MBCA and of our Charter Documents could have the effect of delaying, deferring or discouraging a future takeover orchange in control of UniFirst unless such takeover or change in control is approved by our board of directors.Voting control of our principal stockholders. As described above, our articles of organization provide that each share of our Common Stock entitlesits holder to one vote and each share of our Class B Stock entitles its holder to ten votes. As of the date of our Annual Report on Form 10-K withwhich this Exhibit 4.2 is filed as an exhibit, to UniFirst’s knowledge, the members of the Croatti family owned, directly or indirectly, more than two-thirds of the combined voting power of the outstanding shares of our Common Stock and Class B Stock. As a result, the members of the Croattifamily, acting with other family members, could effectively control most matters requiring approval by our stockholders, including the election of amajority of the directors. While historically the members of the Croatti family have individually voted their respective shares of Class B Stock in thesame manner, there is no contractual understanding requiring this and there is no assurance that the family members will continue to individuallyvote their shares of Class B Stock in the same manner in the future. This voting control by the members of the Croatti family may have the effect ofdelaying, deferring or preventing a change in control of our Company.  Action by written consent; special meeting of stockholders. Our by-laws provide that stockholder action can be taken only at an annual or specialmeeting of stockholders or by the unanimous written consent of all stockholders entitled to vote in lieu of such a meeting. Our by-laws also providethat, except as otherwise required by law, special meetings of the stockholders can only be called by the chairman or vice chairman of our board ofdirectors or by our board of directors or holders of at least two-thirds in interest of our then outstanding capital stock entitled to vote at the meeting.These restrictions may limit the ability of our stockholders to force consideration of a proposal. Advance notice procedures. Our by-laws contain an advance notice procedure for stockholder proposals to be brought before an annual meeting ofour stockholders, including proposed nominations of persons for election to our board of directors. Stockholders at an annual meeting will only beable to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of our board ofdirectors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who hasgiven our clerk timely written notice, in proper form, of the stockholder’s intention to bring that business before the meeting. These advance noticeprocedures may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed and may alsodiscourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempt to obtaincontrol of UniFirst. Board composition and filling vacancies. In accordance with our by-laws, our board of directors is divided into three classes serving staggeredthree-year terms, with one class being elected each year. Our by-laws also provide that, subject to the rights of the holders of Common Stock votingas a single class to remove directors described above, directors may be removed only for cause and only by the affirmative vote of (i) a majority ofthe shares of capital stock outstanding and entitled to vote in the election of directors or (ii) by the vote of a majority of the entire number of directorsthen in office. Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size ofour board, may only be filled by the affirmative vote of a majority of our directors then in office, even if less than a quorum. We are also subject toprovisions of the MBCA providing that the directors of a public Massachusetts corporation shall have staggered terms unless the board or thestockholders representing two-thirds of the outstanding capital stock adopts a vote providing that the corporation elects to be exempt from suchprovisions. The classification of directors, together with the limitations on removal of directors and treatment of vacancies, has the effect of making itmore difficult for stockholders to change the composition of our board of directors. Authorized but unissued shares. Our authorized but unissued shares of Common Stock, Class B Stock and Preferred Stock are available for futureissuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offeringsto raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of Common Stock,Class B Stock and Preferred Stock could render more difficult or discourage an attempt to obtain control of a majority of our Common Stock bymeans of a proxy contest, tender offer, merger or otherwise. Business combinations. Our articles of organization provide that no “business combination” may be effected with a “related person” unlessapproved by the affirmative vote of (i) the holders of our outstanding voting securities entitled to exercise 80% of the combined voting power ofUniFirst and (ii) two-thirds of our outstanding voting securities beneficially owned by stockholders other than the related person. The definition of“business combination” includes, but is not limited to: •a merger or consolidation of UniFirst or any subsidiary of UniFirst with or into the related person; •the sale, lease, exchange, transfer or other disposition, including without limitation a mortgage or other security device, by UniFirst or anysubsidiary of UniFirst to the related person of assets that have an aggregate fair market value greater than 30% of the aggregate marketvalue of the total assets of UniFirst or the subsidiary in question;  •a merger or consolidation of the related person with or into UniFirst or any subsidiary of UniFirst; •the sale, lease, exchange, transfer or other disposition by the related person to UniFirst or any subsidiary of UniFirst of assets that havean aggregate fair market value greater than 30% of the aggregate market value of the total assets of the related person; •the issuance of any securities of UniFirst or a subsidiary of UniFirst to the related person; •a reclassification of securities of UniFirst that would have the effect of increasing the voting power of the related person; •the adoption of a plan or proposal of liquidation or dissolution of UniFirst proposed by or on behalf of the related person; or •any agreement, contract or other arrangement providing for any of the transactions described above.A “related person” is defined in our articles of organization as an individual, corporation, partnership or other person or entity which, together with itsaffiliates and associates (as defined in Rule 12b-2 of the Exchange Act), beneficially owns (as defined in Rule 13d-3 of the Exchange Act) in theaggregate 20% or more of the shares of our capital stock entitled to vote generally for directors, and any affiliate or associate of such person orentity.These provisions are not applicable if the business combination is: (i) approved by two-thirds of “continuing directors” (as defined in our articles oforganization); (ii) solely between UniFirst and another corporation, 100% of the voting stock of which is owned directly or indirectly by UniFirst; or(iii) a merger or consolidation and the consideration to be received per share by holders of UniFirst capital stock in the business combination is cashand is in an amount not less than the highest per share price (as adjusted for recapitalizations, stock splits, stock dividends, etc.) paid by the relatedperson in acquiring any of its holdings in UniFirst’s Common Stock.Business combinations are also governed by Chapter 110F of the MBCA, which generally prohibits a Massachusetts corporation from engaging in a“business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interestedstockholder, unless the business combination is approved in a prescribed manner. A Massachusetts corporation may “opt out” of these provisionswith an express provision in its original articles of organization or an express provision in its articles of organization or bylaws resulting from astockholders’ amendment approved by at least a majority of the outstanding voting shares. We have not opted out of these provisions. Theprovisions of the MBCA and of our articles of organization could have the effect of discouraging others from attempting takeovers and could make itmore difficult to accomplish transactions that stockholders might otherwise deem to be in their best interest. Control Share Acquisitions. We are also subject to the provisions of Chapter 110D of the MBCA, which provides that any person, including his, heror its affiliates, who acquires shares of a corporation that are subject to the control share acquisitions statute and whose shares represent one-fifthor more, one-third or more, or a majority or more of the voting power of the corporation in the election of directors cannot exercise any voting powerwith respect to those shares, or any shares acquired by the person within 90 days before or after an acquisition of this nature, unless these votingrights are authorized by the stockholders of the corporation. The authorization of such voting rights requires the affirmative vote of the holders of a majority of the outstanding voting shares of a corporation,excluding shares owned by: (i) the person making an acquisition of this nature; (ii) any officer of the corporation; and (iii) any employee who is also adirector of the corporation.  The MBCA permits the corporation, to the extent authorized by its articles of organization or bylaws, to redeem all shares acquired by an acquiringperson in a control share acquisition for fair value if (i) no control share acquisition statement is delivered by the acquiring person or (ii) a controlshare acquisition statement has been delivered and voting rights were not authorized for such shares by the corporation’s stockholders inaccordance with the applicable provision of Chapter 110D. Our by-laws authorize such a redemption. There are several other types of share acquisitions that are not subject to these provisions of the MBCA, including acquisitions of shares under atender offer, merger or consolidation which is made in connection with an agreement to which the corporation is a party or to acquisitions of sharesdirectly from the corporation or a wholly owned subsidiary thereof. We may amend our articles of organization or by-laws at any time to elect not to be governed by Chapter 110D of the MBCA, but such amendmentwould not apply to an acquisition that occurred prior to the effective date of such amendment. 

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