Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
May 25, 2019 | Jun. 28, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | May 25, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | UNIFIRST CORP | |
Entity Central Index Key | 0000717954 | |
Current Fiscal Year End Date | --08-31 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | UNF | |
Entity Current Reporting Status | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity File Number | 001-08504 | |
Entity Tax Identification Number | 042103460 | |
Entity Address, Address Line One | 68 Jonspin Road | |
Entity Address, City or Town | Wilmington, MA | |
Entity Address, Postal Zip Code | 01887 | |
City Area Code | (978) | |
Local Phone Number | 658-8888 | |
Entity Address, Country | UNITED STATES | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 15,357,152 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 3,643,009 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
May 25, 2019 | May 26, 2018 | May 25, 2019 | May 26, 2018 | ||
Revenues | $ 453,720 | $ 427,384 | $ 1,329,755 | $ 1,262,426 | |
Operating expenses: | |||||
Cost of revenues | [1] | 279,900 | 267,146 | 838,621 | 786,196 |
Selling and administrative expenses | [1] | 88,207 | 88,350 | 242,487 | 264,508 |
Depreciation and amortization | 25,401 | 24,801 | 75,563 | 70,772 | |
Total operating expenses | 393,508 | 380,297 | 1,156,671 | 1,121,476 | |
Operating income | 60,212 | 47,087 | 173,084 | 140,950 | |
Other (income) expense: | |||||
Interest income, net | (2,293) | (1,189) | (6,007) | (3,895) | |
Other expense, net | 805 | 484 | 2,037 | 452 | |
Total other income, net | (1,488) | (705) | (3,970) | (3,443) | |
Income before income taxes | 61,700 | 47,792 | 177,054 | 144,393 | |
Provision for income taxes | 14,480 | 11,433 | 43,908 | 15,450 | |
Net income | $ 47,220 | $ 36,359 | $ 133,146 | $ 128,943 | |
Income per share – Diluted: | |||||
Common stock (in dollars per share) | $ 2.46 | $ 1.85 | $ 6.93 | $ 6.39 | |
Income allocated to – Basic: | |||||
Common stock | $ 47,220 | $ 36,359 | $ 133,146 | $ 128,943 | |
Income allocated to – Diluted: | |||||
Common stock | $ 47,220 | $ 36,359 | $ 133,146 | $ 128,943 | |
Weighted average shares outstanding – Basic: | |||||
Common stock (in shares) | 19,051 | 19,533 | 19,110 | 20,036 | |
Weighted average shares outstanding – Diluted: | |||||
Common stock (in shares) | 19,168 | 19,687 | 19,220 | 20,178 | |
Common Stock | |||||
Income per share – Basic: | |||||
Common stock (in dollars per share) | $ 2.58 | $ 1.94 | $ 7.25 | $ 6.75 | |
Income allocated to – Basic: | |||||
Common stock | $ 39,563 | $ 30,034 | $ 111,626 | $ 104,324 | |
Weighted average shares outstanding – Basic: | |||||
Common stock (in shares) | 15,341 | 15,446 | 15,400 | 15,463 | |
Class B Common Stock | |||||
Income per share – Basic: | |||||
Common stock (in dollars per share) | $ 2.06 | $ 1.55 | $ 5.80 | $ 5.38 | |
Income allocated to – Basic: | |||||
Common stock | $ 7,657 | $ 6,325 | $ 21,520 | $ 24,619 | |
Weighted average shares outstanding – Basic: | |||||
Common stock (in shares) | 3,710 | 4,087 | 3,710 | 4,573 | |
[1] | Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 25, 2019 | May 26, 2018 | May 25, 2019 | May 26, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 47,220 | $ 36,359 | $ 133,146 | $ 128,943 |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustments | (2,649) | (3,931) | (3,513) | (4,694) |
Pension benefit liabilities | (1,192) | |||
Change in fair value of derivatives, net of income taxes | 184 | 106 | 277 | 165 |
Derivative financial instruments reclassified to earnings | (46) | (34) | (122) | (20) |
Other comprehensive loss | (2,511) | (3,859) | (3,358) | (5,741) |
Comprehensive income | $ 44,709 | $ 32,500 | $ 129,788 | $ 123,202 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | May 25, 2019 | Aug. 25, 2018 |
Current assets: | ||
Cash, cash equivalents and short-term investments | $ 349,410 | $ 270,512 |
Receivables, less reserves of $13,036 and $9,237 | 203,385 | 200,797 |
Inventories | 94,921 | 90,176 |
Rental merchandise in service | 181,451 | 174,392 |
Prepaid taxes | 27,024 | |
Prepaid expenses and other current assets | 32,688 | 21,899 |
Total current assets | 861,855 | 784,800 |
Property, plant and equipment, net of accumulated depreciation of $765,028 and $721,527 | 565,715 | 547,996 |
Goodwill | 399,146 | 397,422 |
Customer contracts, net | 59,249 | 67,318 |
Other intangible assets, net | 15,938 | 15,166 |
Deferred income taxes | 421 | 425 |
Other assets | 78,977 | 30,259 |
Total assets | 1,981,301 | 1,843,386 |
Current liabilities: | ||
Accounts payable | 66,993 | 73,500 |
Accrued liabilities | 105,711 | 124,225 |
Accrued taxes | 1,569 | 736 |
Total current liabilities | 174,273 | 198,461 |
Accrued liabilities | 106,658 | 105,888 |
Accrued and deferred income taxes | 90,674 | 74,070 |
Total liabilities | 371,605 | 378,419 |
Commitments and contingencies (Note 12) | ||
Shareholders’ equity: | ||
Preferred Stock, $1.00 par value; 2,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Capital surplus | 84,836 | 82,973 |
Retained earnings | 1,551,475 | 1,405,239 |
Accumulated other comprehensive loss | (28,517) | (25,159) |
Total shareholders’ equity | 1,609,696 | 1,464,967 |
Total liabilities and shareholders’ equity | 1,981,301 | 1,843,386 |
Common Stock | ||
Shareholders’ equity: | ||
Common Stock | 1,531 | 1,543 |
Class B Common Stock | ||
Shareholders’ equity: | ||
Common Stock | $ 371 | $ 371 |
Consolidated Balance Sheets - P
Consolidated Balance Sheets - Parenthetical - USD ($) $ in Thousands | May 25, 2019 | Aug. 25, 2018 |
Receivables, reserves | $ 13,036 | $ 9,237 |
Accumulated depreciation | $ 765,028 | $ 721,527 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 15,307,333 | 15,431,209 |
Common stock, shares outstanding (in shares) | 15,307,333 | 15,431,209 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 3,710,009 | 3,710,009 |
Common stock, shares outstanding (in shares) | 3,710,009 | 3,710,009 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Class B Common Stock | Common Stock | Common StockClass B Common Stock | Common StockCommon Stock | Capital Surplus | Retained Earnings | Retained EarningsClass B Common Stock | Retained EarningsCommon Stock | Accumulated Other Comprehensive Loss | |
Balance at beginning of period at Aug. 26, 2017 | $ 1,453,192 | $ 482 | $ 1,545 | $ 86,245 | $ 1,386,438 | $ (21,518) | |||||
Balance at beginning of period (in shares) at Aug. 26, 2017 | 4,815 | 15,453 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 34,206 | 34,206 | |||||||||
Change in fair value of derivatives | 86 | 86 | |||||||||
Foreign currency translation | (2,013) | (2,013) | |||||||||
Dividends declared Common Stock | $ (144) | $ (582) | $ (144) | $ (582) | |||||||
Share-based compensation, net | [1] | 596 | 1,334 | (738) | |||||||
Share-based awards exercised, net | [2] | 267 | 2 | 265 | |||||||
Share-based awards exercised, net (in shares) | [2] | 16 | |||||||||
Balance at end of period at Nov. 25, 2017 | 1,485,608 | 482 | 1,547 | 87,844 | 1,419,180 | (23,445) | |||||
Balance at end of period (in shares) at Nov. 25, 2017 | 4,815 | 15,469 | |||||||||
Balance at beginning of period at Aug. 26, 2017 | 1,453,192 | 482 | 1,545 | 86,245 | 1,386,438 | (21,518) | |||||
Balance at beginning of period (in shares) at Aug. 26, 2017 | 4,815 | 15,453 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 128,943 | ||||||||||
Pension benefit liabilities, net | 1,192 | ||||||||||
Foreign currency translation | (4,694) | ||||||||||
Balance at end of period at May. 26, 2018 | 1,429,421 | 371 | 1,543 | 82,408 | 1,372,358 | (27,259) | |||||
Balance at end of period (in shares) at May. 26, 2018 | 3,710 | 15,426 | |||||||||
Balance at beginning of period at Nov. 25, 2017 | 1,485,608 | 482 | 1,547 | 87,844 | 1,419,180 | (23,445) | |||||
Balance at beginning of period (in shares) at Nov. 25, 2017 | 4,815 | 15,469 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 58,378 | 58,378 | |||||||||
Pension benefit liabilities, net | [3] | 1,192 | (1,192) | ||||||||
Change in fair value of derivatives | (13) | (13) | |||||||||
Foreign currency translation | 1,250 | 1,250 | |||||||||
Dividends declared Common Stock | $ (140) | $ (580) | (140) | (580) | |||||||
Share-based compensation, net | [1] | (265) | (265) | ||||||||
Share-based awards exercised, net | [2] | 163 | 2 | 161 | |||||||
Share-based awards exercised, net (in shares) | [2] | 23 | |||||||||
Balance at end of period at Feb. 24, 2018 | 1,544,401 | 482 | 1,549 | 87,740 | 1,478,030 | (23,400) | |||||
Balance at end of period (in shares) at Feb. 24, 2018 | 4,815 | 15,492 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 36,359 | 36,359 | |||||||||
Change in fair value of derivatives | 72 | 72 | |||||||||
Foreign currency translation | (3,931) | (3,931) | |||||||||
Dividends declared Common Stock | $ (334) | $ (1,735) | (334) | (1,735) | |||||||
Share-based compensation, net | [1] | 571 | 571 | ||||||||
Share-based awards exercised, net | [2] | 30 | 1 | 29 | |||||||
Share-based awards exercised, net (in shares) | [2] | 7 | |||||||||
Repurchase of common stock | (146,012) | (111) | (7) | (5,932) | (139,962) | ||||||
Repurchase of common stock (in shares) | (1,105) | (73) | |||||||||
Balance at end of period at May. 26, 2018 | 1,429,421 | 371 | 1,543 | 82,408 | 1,372,358 | (27,259) | |||||
Balance at end of period (in shares) at May. 26, 2018 | 3,710 | 15,426 | |||||||||
Balance at beginning of period at Aug. 25, 2018 | 1,464,967 | 371 | 1,543 | 82,973 | 1,405,239 | (25,159) | |||||
Balance at beginning of period (in shares) at Aug. 25, 2018 | 3,710 | 15,431 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 38,320 | 38,320 | |||||||||
Change in fair value of derivatives | 88 | 88 | |||||||||
Foreign currency translation | (2,282) | (2,282) | |||||||||
Dividends declared Common Stock | $ (334) | $ (1,736) | (334) | (1,736) | |||||||
Share-based compensation, net | [1] | 1,042 | 1,042 | ||||||||
Share-based awards exercised, net (in shares) | [2] | 2 | |||||||||
Balance at end of period at Nov. 24, 2018 | 1,539,498 | 371 | 1,543 | 84,015 | 1,480,922 | (27,353) | |||||
Balance at end of period (in shares) at Nov. 24, 2018 | 3,710 | 15,433 | |||||||||
Balance at beginning of period at Aug. 25, 2018 | 1,464,967 | 371 | 1,543 | 82,973 | 1,405,239 | (25,159) | |||||
Balance at beginning of period (in shares) at Aug. 25, 2018 | 3,710 | 15,431 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 133,146 | ||||||||||
Foreign currency translation | (3,513) | ||||||||||
Balance at end of period at May. 25, 2019 | 1,609,696 | 371 | 1,531 | 84,836 | 1,551,475 | (28,517) | |||||
Balance at end of period (in shares) at May. 25, 2019 | 3,710 | 15,307 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Cumulative effect of change in accounting principle, net | [4] | 39,433 | 39,433 | ||||||||
Balance at beginning of period at Nov. 24, 2018 | 1,539,498 | 371 | 1,543 | 84,015 | 1,480,922 | (27,353) | |||||
Balance at beginning of period (in shares) at Nov. 24, 2018 | 3,710 | 15,433 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 47,606 | 47,606 | |||||||||
Change in fair value of derivatives | (71) | (71) | |||||||||
Foreign currency translation | 1,418 | 1,418 | |||||||||
Dividends declared Common Stock | $ (334) | $ (1,732) | (334) | (1,732) | |||||||
Share-based compensation, net | [1] | 659 | 659 | ||||||||
Share-based awards exercised, net | [2] | 26 | 1 | 25 | |||||||
Share-based awards exercised, net (in shares) | [2] | 12 | |||||||||
Repurchase of common stock | (6,280) | (4) | (245) | (6,031) | |||||||
Repurchase of common stock (in shares) | (45) | ||||||||||
Balance at end of period at Feb. 23, 2019 | 1,580,790 | 371 | 1,540 | 84,454 | 1,520,431 | (26,006) | |||||
Balance at end of period (in shares) at Feb. 23, 2019 | 3,710 | 15,400 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 47,220 | 47,220 | |||||||||
Change in fair value of derivatives | 138 | 138 | |||||||||
Foreign currency translation | (2,649) | (2,649) | |||||||||
Dividends declared Common Stock | $ (334) | $ (1,720) | $ (334) | $ (1,720) | |||||||
Share-based compensation, net | [1] | 902 | 902 | ||||||||
Share-based awards exercised, net | [2] | 22 | 1 | 21 | |||||||
Share-based awards exercised, net (in shares) | [2] | 7 | |||||||||
Repurchase of common stock | (14,673) | (10) | (541) | (14,122) | |||||||
Repurchase of common stock (in shares) | (100) | ||||||||||
Balance at end of period at May. 25, 2019 | $ 1,609,696 | $ 371 | $ 1,531 | $ 84,836 | $ 1,551,475 | $ (28,517) | |||||
Balance at end of period (in shares) at May. 25, 2019 | 3,710 | 15,307 | |||||||||
[1] | These amounts are shown net of any shares withheld by the Company to satisfy certain tax withholdings obligations in connection with the vesting of certain shares of restricted stock or restricted stock units. | ||||||||||
[2] | These amounts are shown net of the effect of income taxes. | ||||||||||
[3] | These amounts include the impact of the adoption of ASU 2018-02 in the second quarter of fiscal 2018. See Note 15, “Accumulated Other Comprehensive Loss” in our Consolidated Financial Statements for further details. | ||||||||||
[4] | These amounts consist of the cumulative impact of the adoption of the new revenue recognition accounting guidance. See Note 2, “Recent Accounting Pronouncements” in the Company’s Consolidated Financial Statements. |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity - Parenthetical - $ / shares | Mar. 28, 2018 | Mar. 27, 2018 | May 25, 2019 | Feb. 23, 2019 | Nov. 24, 2018 | May 26, 2018 | Feb. 24, 2018 | Nov. 25, 2017 |
Common Shares | ||||||||
Dividends declared (in dollars per share) | $ 0.1125 | $ 0.0375 | $ 0.1125 | $ 0.1125 | $ 0.1125 | $ 0.1125 | $ 0.0375 | $ 0.0375 |
Class B Common Stock | ||||||||
Dividends declared (in dollars per share) | $ 0.09 | $ 0.03 | $ 0.0900 | $ 0.0900 | $ 0.0900 | $ 0.0900 | $ 0.0300 | $ 0.0300 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
May 25, 2019 | May 26, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 133,146 | $ 128,943 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 75,563 | 70,772 |
Amortization of deferred financing costs | 84 | 84 |
Forgiveness of a liability | (7,346) | |
Share-based compensation | 4,281 | 3,539 |
Accretion on environmental contingencies | 566 | 519 |
Accretion on asset retirement obligations | 647 | 704 |
Deferred income taxes | 733 | (20,369) |
Other | (953) | (225) |
Changes in assets and liabilities, net of acquisitions: | ||
Receivables, less reserves | (3,117) | (7,515) |
Inventories | (4,821) | (8,953) |
Rental merchandise in service | (7,606) | (11,864) |
Prepaid expenses and other current assets and Other assets | (2,346) | (8,500) |
Accounts payable | (5,725) | (261) |
Accrued liabilities | (9,931) | (4,468) |
Prepaid and accrued income taxes | 26,265 | 24,886 |
Net cash provided by operating activities | 199,440 | 167,292 |
Cash flows from investing activities: | ||
Acquisition of businesses, net of cash acquired | (2,379) | (38,522) |
Capital expenditures, including capitalization of software costs | (88,198) | (88,870) |
Proceeds from sale of assets | 238 | 1,713 |
Other | (376) | |
Net cash used in investing activities | (90,339) | (126,055) |
Cash flows from financing activities: | ||
Proceeds from exercise of share-based awards | 49 | 460 |
Taxes withheld and paid related to net share settlement of equity awards | (1,678) | (2,645) |
Repurchase of Common Stock | (20,954) | (146,011) |
Payment of cash dividends | (6,204) | (2,172) |
Net cash used in financing activities | (28,787) | (150,368) |
Effect of exchange rate changes | (1,416) | (2,130) |
Net increase (decrease) in cash, cash equivalents and short-term investments | 78,898 | (111,261) |
Cash, cash equivalents and short-term investments at beginning of period | 270,512 | 349,752 |
Cash, cash equivalents and short-term investments at end of period | 349,410 | 238,491 |
Supplemental disclosure of cash flow information: | ||
Non-cash capital expenditures | $ 8,114 | $ 17,080 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
May 25, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation These Consolidated Financial Statements of UniFirst Corporation (“Company”) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the information furnished reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period. It is suggested that these Consolidated Financial Statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 25, 2018. There have been no material changes in the accounting policies followed by the Company during the current fiscal year other than the adoption of recent accounting pronouncements discussed in Note 2. Results for an interim period are not indicative of any future interim periods or for an entire fiscal year. 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. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
May 25, 2019 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | 2. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance for revenue recognition, which it has subsequently modified. This modified update provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of 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 standard includes cost guidance, whereby all direct and incremental costs to obtain or fulfill a contract will be capitalized and amortized over the corresponding period of benefit, determined on a contract by contract basis. This guidance is also intended to improve disclosure requirements and enhance the comparability of revenue recognition practices. Improved disclosures under the amended guidance relate to the nature, amount, timing and uncertainty of revenue that is recognized from contracts with customers. The Company adopted the standard on August 26, 2018 using the modified retrospective adoption method. Upon adoption of this guidance, 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 any material impact to the timing or measurement of revenues. The adjustment to retained earnings relates to the capitalization of certain direct and incremental contract costs required by the new guidance, net of the related income tax effect. Capitalized costs are amortized ratably over the anticipated period of benefit. The Company applied the new guidance to all contracts as of August 26, 2018. Results for reporting periods beginning after August 25, 2018 are presented under the new guidance, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods. 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 the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio. The Company also continues to expense certain costs 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 the modified retrospective method to adopt the new revenue guidance, the adjustments set forth in the table below were made to accounts on the consolidated balance sheet as of August 26, 2018: Consolidated Balance Sheet (In thousands) August 25, 2018 Capitalization of Contract Costs August 26, 2018 Assets Prepaid expenses and other current assets $ 21,899 $ 10,789 $ 32,688 Total current assets 784,800 10,789 795,589 Other assets 30,259 42,405 72,664 Total assets $ 1,843,386 $ 53,194 $ 1,896,580 Liabilities and shareholders’ equity Accrued and deferred income taxes $ 74,070 $ 13,761 $ 87,831 Total liabilities 378,419 13,761 392,180 Retained earnings 1,405,239 39,433 1,444,672 Total shareholders’ equity 1,464,967 39,433 1,504,400 Total liabilities and shareholders’ equity $ 1,843,386 $ 53,194 $ 1,896,580 The impacts of adopting this standard on the thirteen and thirty-nine weeks ended May 25, 2019 Consolidated Financial Statements are presented in the following tables: Thirteen Weeks Ended May 25, 2019 Consolidated Statement of Income (In thousands, except per share data) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Operating expenses: Selling and administrative expenses $ 88,207 $ 89,805 $ (1,598 ) Total operating expenses 393,508 395,106 (1,598 ) Operating income 60,212 58,614 1,598 Income before income taxes 61,700 60,102 1,598 Provision for income taxes 14,480 14,104 376 Net income $ 47,220 $ 45,998 $ 1,222 Income per share – Diluted: $ 2.46 $ 2.40 $ 0.06 Thirty-Nine Weeks Ended May 25, 2019 Consolidated Statement of Income (In thousands, except per share data) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Operating expenses: Selling and administrative expenses $ 242,487 $ 246,310 $ (3,823 ) Total operating expenses 1,156,671 1,160,494 (3,823 ) Operating income 173,084 169,261 3,823 Income before income taxes 177,054 173,231 3,823 Provision for income taxes 43,908 42,960 948 Net income $ 133,146 $ 130,271 $ 2,875 Income per share – Diluted: $ 6.93 $ 6.78 $ 0.15 Balance at May 25, 2019 Consolidated Balance Sheet (In thousands) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Assets Prepaid expenses and other current assets $ 32,688 $ 21,899 $ 10,789 Total current assets 861,855 851,066 10,789 Other assets 78,977 32,748 46,229 Total assets $ 1,981,301 $ 1,924,283 $ 57,018 Liabilities and shareholders’ equity Accrued and deferred income taxes $ 90,674 $ 75,964 $ 14,710 Total liabilities 371,605 356,895 14,710 Retained earnings 1,551,475 1,509,167 42,308 Total shareholders’ equity 1,609,696 1,567,388 42,308 Total liabilities and shareholders’ equity $ 1,981,301 $ 1,924,283 $ 57,018 The adoption of this standard had no impact on the Company’s thirty-nine weeks ended May 25, 2019 operating cash flow, and the only impact of the adoption on its fiscal 2019 consolidated statement of comprehensive income was the impact to net income as presented in the tables above. In January 2016, the FASB issued updated guidance for the recognition, measurement, presentation, and disclosure of certain financial assets and liabilities. This guidance 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 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 both parties 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 leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized 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-use asset 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 be accounted for similar to existing guidance for operating leases. This new guidance is effective for reporting periods beginning after December 15, 2018, however, early adoption is permitted. Entities are 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 financial statements. The Company will adopt the new guidance on September 1, 2019. At August 25, 2018, the Company was contractually obligated to make future payments of $47.1 million under its operating lease obligations in existence as of that date, primarily related to long-term leases. The Company is evaluating the impact that this guidance will have on its financial statements. While the Company has not yet determined the impact on its consolidated balance sheet or consolidated statement of income, these leases will be required to be presented on the consolidated balance sheet in accordance with the requirements of this guidance. In August 2016, the FASB issued updated guidance that reduces diversity in how certain cash receipts and cash payments are presented and classified in the Consolidated Statements of Cash Flows. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2017 and is required to be applied retrospectively, 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 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 certain types of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company is currently evaluating the impact that this guidance will have on its 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 than inventory. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2017 and is required to be applied on a modified retrospective basis, 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 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 of operations. Specifically, entities must present the service cost component of net periodic benefit cost in the same financial statement line items as other compensation costs arising from services rendered by the related employees during the period, whereas the non-service components of net periodic benefit cost must be presented separately from the financial statement line items that include service cost and outside of operating income. The Company’s adoption of this guidance 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, and eliminates the separate measurement and presentation of hedge ineffectiveness. The accounting update is effective for annual and interim periods beginning after December 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 the first 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 other postretirement 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 on August 29, 2021. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures. In August 2018, the FASB issued guidance that addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. The amendments in this update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
May 25, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | 3. Revenue Recognition The following table presents the Company’s revenues for the thirteen and thirty-nine weeks ended May 25, 2019 and May 26, 2018, respectively, disaggregated by service type: Thirteen Weeks Ended Thirty-Nine Weeks Ended May 25, 2019 May 26, 2018 May 25, 2019 May 26, 2018 (In thousands, except percentages) Revenues % of Revenues Revenues % of Revenues Revenues % of Revenues Revenues % of Revenues Core Laundry Operations 399,781 88.1 % $ 379,071 88.7 % $ 1,184,666 89.1 % $ 1,131,822 89.7 % Specialty Garments 37,313 8.2 % 34,060 8.0 % 101,506 7.6 % 89,496 7.1 % First Aid 16,626 3.7 % 14,253 3.3 % 43,583 3.3 % 41,108 3.2 % Total Revenues $ 453,720 100.0 % $ 427,384 100.0 % $ 1,329,755 100.0 % $ 1,262,426 100.0 % For the thirteen weeks ended May 25, 2019, the percentage of revenues recognized over time as the services are performed was 95.8% of Core Laundry Operations revenues and 80.1% of Specialty Garments revenues. For the thirty-nine weeks ended May 25, 2019, the percentage of revenues recognized over time as the services are performed was 95.5% of Core Laundry Operations revenues and 82.0% of Specialty Garments revenues. See Note 16 “Segment Reporting” for additional details of segment definitions. During the thirteen weeks ended May 25, 2019, 4.2% of Core Laundry Operations revenues, 19.9% of Specialty Garments revenues and 100% of First Aid revenues were recognized at a point in time, which generally occurs when the goods are transferred to the customer. During the thirty-nine weeks ended May 25, 2019, 4.5% of Core Laundry Operations revenues, 18.0% of Specialty Garments revenues and 100% of First Aid revenues were recognized at a point in time, which generally occurs when the goods are transferred to the customer. Revenue Recognition Policy Approximately 91.0% of the Company’s revenues are derived from fees for route servicing of Core Laundry Operations, Specialty Garments, and First Aid performed by the Company’s employees at the customer’s location of business. Revenues from the Company’s route servicing customer contracts represent a single-performance obligation. The Company recognizes these revenues over time as services are performed based on the nature of services provided and contractual rates (input method). Certain of the Company’s customer contracts, primarily within the Company’s Core Laundry Operations, include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration due to a customer based on performance metrics specified within the contract. Specifically, some contracts contain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company’s actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period. When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company’s performance period generally corresponds with the monthly invoice period. No significant constraints on the Company’s revenue recognition were applied during the thirteen or thirty-nine weeks ended May 25, 2019. The Company reassesses these estimates during each reporting period. The Company maintains a liability for these discounts and rebates within accrued liabilities on the consolidated balance sheets. Variable consideration also includes consideration paid to a customer at the beginning of a contract. The Company capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue in accordance with the updated accounting guidance for revenue recognition. These assets are included in other assets on the consolidated balance sheets. Costs to Obtain a Contract The Company defers commission expenses paid to its 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. The Company reviews the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when the Company expects to recognize the expense. The current portion is included in prepaid expenses and other current assets and the non-current portion is included in other assets on the Company’s consolidated balance sheets. As of May 25, 2019, the current and non-current assets related to deferred commissions totaled $10.8 million and $46.2 million, respectively. During the thirteen and thirty-nine weeks ended May 25, 2019, the Company recorded $3.0 million and $8.7 million, respectively, of amortization expense related to deferred commissions. This expense is classified in selling and administrative expenses on the consolidated statements of income. |
Business Acquisitions
Business Acquisitions | 9 Months Ended |
May 25, 2019 | |
Business Combinations [Abstract] | |
Business Acquisitions | 4. Business Acquisitions During the thirty-nine weeks ended May 25, 2019, the Company completed four business acquisitions with an aggregate purchase price of approximately $3.0 million. The initial allocations of the purchase prices are incomplete with respect to certain assets acquired. The results of operations of these acquisitions have been included in the Company’s consolidated financial results since their respective acquisition dates. These acquisitions were not significant in relation to the Company’s consolidated financial results and, therefore, pro-forma financial information has not been presented. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
May 25, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 5. Fair Value Measurements The assets or liabilities measured at fair value on a recurring basis are summarized in the tables below (in thousands): As of May 25, 2019 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents $ 212,559 $ — $ — $ 212,559 Pension plan assets — 5,935 — 5,935 Foreign currency forward contracts — 330 — 330 Total assets at fair value $ 212,559 $ 6,265 $ — $ 218,824 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 are valued 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 and Annuity Company (“PRIAC”). All assets are merged with the general assets of PRIAC and are invested predominantly in privately placed securities and mortgages. At the beginning of each calendar year, PRIAC notifies the Company of the annual rates of interest which will be applied to the amounts held in the guaranteed deposit account during the next calendar year. In determining the interest rate to be applied, PRIAC considers the investment performance of the underlying assets of the prior year; however, regardless of the investment performance the Company is contractually guaranteed a minimum rate of return. As such, the Company’s pension plan assets are included within Level 2 of the fair value hierarchy. The Company’s foreign currency forward contracts represent contracts the Company has entered into to exchange Canadian dollars for U.S. dollars at fixed exchange rates in order to manage its exposure related to certain forecasted Canadian dollar denominated sales of one of its subsidiaries. These contracts are included in prepaid expenses and other current assets and other long-term assets as of May 25, 2019 and August 25, 2018. The fair value of the forward contracts is based on similar exchange traded derivatives and are, therefore, included within Level 2 of the fair value hierarchy. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 9 Months Ended |
May 25, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | 6. Derivative Instruments and Hedging Activities As of May 25, 2019, the Company had forward contracts with a notional value of approximately 10.7 million CAD outstanding and recorded the fair value of the contracts of $0.2 million in other long-term assets and $0.1 million in prepaid expenses and other current assets with a corresponding decrease in accumulated other comprehensive loss of $0.2 million, which was recorded net of tax. During the thirty-nine weeks ended May 25, 2019, the Company reclassified $0.1 million from accumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on these forward contracts that resulted in a decrease to accumulated other comprehensive loss as of May 25, 2019 is expected to be reclassified to revenues prior to its maturity on February 25, 2022. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
May 25, 2019 | |
Postemployment Benefits [Abstract] | |
Employee Benefit Plans | 7. Employee Benefit Plans Defined Contribution Retirement Savings Plan The Company has a defined contribution retirement savings plan with a 401(k) feature for all eligible U.S. and Canadian employees not under collective bargaining agreements. The Company matches a portion of the employee’s contribution and may make an additional contribution at its discretion. Contributions charged to expense under the plan for the thirteen weeks ended May 25, 2019 and May 26, 2018 were $5.8 million and $5.4 million, respectively. Contributions charged to expense under the plan for the thirty-nine weeks ended May 25, 2019 and May 26, 2018 were $14.6 million and $13.5 million, respectively. Pension Plans and Supplemental Executive Retirement Plans The Company maintains an unfunded Supplemental Executive Retirement Plan for certain eligible employees of the Company and two frozen non-contributory defined benefit pension plans. The amounts charged to expense related to these plans for the thirteen weeks ended May 25, 2019 and May 26, 2018 were $0.5 million and $0.6 million, respectively. The amounts charged to expense related to these plans for the thirty-nine weeks ended May 25, 2019 and May 26, 2018 were $1.6 million and $1.9 million, respectively. |
Income Per Share
Income Per Share | 9 Months Ended |
May 25, 2019 | |
Earnings Per Share [Abstract] | |
Income Per Share | 8. Income Per Share The Company calculates income per share by allocating income to its unvested participating securities as part of its income per share calculations. 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 Common Stock and Class B Common Stock (in thousands, except per share data): Thirteen Weeks Ended Thirty-Nine Weeks Ended May 25, 2019 May 26, 2018 May 25, 2019 May 26, 2018 Net income available to shareholders $ 47,220 $ 36,359 $ 133,146 $ 128,943 Allocation of net income for Basic: Common Stock $ 39,563 $ 30,034 $ 111,626 $ 104,324 Class B Common Stock 7,657 6,325 21,520 24,619 $ 47,220 $ 36,359 $ 133,146 $ 128,943 Weighted average number of shares for Basic: Common Stock 15,341 15,446 15,400 15,463 Class B Common Stock 3,710 4,087 3,710 4,573 19,051 19,533 19,110 20,036 Income per share for Basic: Common Stock $ 2.58 $ 1.94 $ 7.25 $ 6.75 Class B Common Stock $ 2.06 $ 1.55 $ 5.80 $ 5.38 The Company is required to calculate 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. For the thirteen and thirty-nine weeks ended May 25, 2019, the Company’s diluted income per share assumes the conversion of all vested Class B Common Stock into Common Stock and uses the two-class method for its unvested participating shares. The following table sets forth the computation of diluted income per share of Common Stock for the thirteen and thirty-nine weeks ended May 25, 2019 (in thousands, except per share data): Thirteen Weeks Ended May 25, 2019 Thirty-Nine Weeks Ended May 25, 2019 Earnings to Common Shareholders Common Shares Income Per Share Earnings to Common Shareholders Common Shares Income Per Share As reported - Basic $ 39,563 15,341 $ 2.58 $ 111,626 15,400 $ 7.25 Add: effect of dilutive potential common shares Share-Based Awards — 117 — 110 Class B Common Stock 7,657 3,710 21,520 3,710 As reported – Diluted $ 47,220 19,168 $ 2.46 $ 133,146 19,220 $ 6.93 Share-based awards that would result in the issuance of 797 shares of Common Stock were excluded from the calculation of diluted income per share for the thirteen weeks ended May 25, 2019 because they were anti-dilutive. Share-based awards that would result in the issuance of 909 shares of Common Stock were excluded from the calculation of diluted income per share for the thirty-nine weeks ended May 25, 2019 because they were anti-dilutive. For the thirteen and thirty-nine weeks ended May 26, 2018, the Company’s diluted income per share assumes the conversion of all vested Class B Common Stock into Common Stock and uses the two-class method for its unvested participating shares. The following table sets forth the computation of diluted income per share of Common Stock for the thirteen and thirty-nine weeks ended May 26, 2018 (in thousands, except per share data): Thirteen Weeks Ended May 26, 2018 Thirty-Nine Weeks Ended May 26, 2018 Earnings to Common Shareholders Common Shares Income Per Share Earnings to Common Shareholders Common Shares Income Per Share As reported - Basic $ 30,034 15,446 $ 1.94 $ 104,324 15,463 $ 6.75 Add: effect of dilutive potential common shares Share-Based Awards — 154 — 142 Class B Common Stock 6,325 4,087 24,619 4,573 As reported – Diluted $ 36,359 19,687 $ 1.85 $ 128,943 20,178 $ 6.39 Share-based awards that would result in the issuance of 3,155 shares of Common Stock were excluded from the calculation of diluted income per share for the thirteen weeks ended May 26, 2018 because they were anti-dilutive. Share-based awards that would result in the issuance of 1,744 shares of Common Stock were excluded from the calculation of diluted income per share for the thirty-nine weeks ended May 26, 2018 because they were anti-dilutive. |
Inventories
Inventories | 9 Months Ended |
May 25, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 9. Inventories Inventories 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 goods inventories consist of materials, labor and manufacturing overhead. Judgments and estimates are used in determining the likelihood that new goods on hand can be sold to customers or used in rental operations. Historical inventory usage and current revenue trends are considered in estimating both excess and obsolete inventories. If actual product demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required. The Company uses the first-in, first-out (“FIFO”) method to value its inventories. The components of inventory as of May 25, 2019 and August 25, 2018 were as follows (in thousands): May 25, 2019 August 25, 2018 Raw materials $ 20,362 $ 18,508 Work in process 2,518 3,271 Finished goods 72,041 68,397 Total inventories $ 94,921 $ 90,176 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
May 25, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | 10. Goodwill and Other Intangible Assets As discussed in Note 4, “Business Acquisitions”, when the Company acquires a business, the amount assigned to the tangible assets and liabilities and intangible assets acquired 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 and intangible assets is recorded as goodwill. The changes in the carrying amount of goodwill are as follows (in thousands): Balance as of August 25, 2018 $ 397,422 Goodwill recorded during the period $ 1,879 Other (155 ) Balance as of May 25, 2019 $ 399,146 During fiscal 2019, the Company reclassified $11.6 million of software from property, plant and equipment, net to other intangible assets. Intangible assets information as of August 25, 2018 has been recast in the table that follows, to reflect this change. Intangible assets, net in the Company’s accompanying Consolidated Balance Sheets are as follows (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount May 25, 2019 Customer contracts $ 220,985 $ 161,736 $ 59,249 Software 47,302 33,813 13,489 Other intangible assets 35,000 32,551 2,449 $ 303,287 $ 228,100 $ 75,187 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 |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
May 25, 2019 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | 11. Asset Retirement Obligations The Company recognizes asset retirement obligations 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 part of the carrying amount of the long-lived asset. The Company continues to depreciate, on a straight-line basis, the amount added to property, plant and equipment and recognizes accretion expense in connection with the discounted liability over the various remaining lives which range from approximately one to twenty-six years. A reconciliation of the Company’s asset retirement liability for the thirty-nine weeks ended May 25, 2019 was as follows (in thousands): May 25, 2019 Beginning balance as of August 25, 2018 $ 13,668 Accretion expense 647 Effect of exchange rate changes (106 ) Change in estimate (1,705 ) Ending balance as of May 25, 2019 $ 12,504 Asset retirement obligations are included in current and long-term accrued liabilities in the accompanying Consolidated Balance Sheets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
May 25, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies The Company and its operations 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 must dispose of detergent waste water and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. The Company is 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 hazardous materials 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 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 be reasonably estimated. Significant judgment is required to determine the 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 the relevant facts and circumstances before recording a contingent liability. 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 a material impact on the amounts recorded for environmental 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 located on, or in, or emanating from, such property, 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, or was responsible for the presence of such hazardous or toxic substances. There can be no assurances that acquired or leased locations have been operated in compliance with environmental laws and regulations or that future uses or conditions will not result in the imposition of liability upon the Company under such laws or expose the Company to third-party actions such as tort suits. The Company continues to address environmental conditions under 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 in Williamstown, 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, the consent 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 remedies at the Woburn site and investigation of environmental conditions in the Central Area. The Company, and other signatories, have implemented and proposed to do additional 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 to EPA’s comments. The Company has implemented mitigation measures and continues to monitor environmental conditions at the Somerville, Massachusetts site. In addition, the Company has received demands from the local transit authority for reimbursement of certain costs associated with its construction of a new municipal transit station in the area of the Somerville site. This station is part of the extension of the transit system. The Company has reserved 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. The Company has also received notice that the Massachusetts Department of Environmental Protection is conducting an audit of the Company’s investigation and remediation work with respect to the Somerville site. The Company routinely reviews and evaluates sites that may require remediation and monitoring and determines its estimated costs based on various estimates and assumptions. These estimates are developed using its internal sources or by third party environmental engineers or other service providers. Internally developed estimates 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 remediation and 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 amount within 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 that both the amount of a particular liability and the timing of the payments are reliably determinable, the Company adjusts the cost in current dollars using a rate of 3% for inflation until the time of expected payment and discounts the cost to present value using current risk-free interest rates. As of May 25, 2019, the risk-free interest rates utilized by the Company ranged from 2.3% to 2.8%. For environmental liabilities that have been discounted, the Company includes interest accretion, based on the effective interest method, in selling and administrative expenses on the Consolidated Statements of Income. The changes to the Company’s environmental liabilities for the thirty-nine weeks ended May 25, 2019 were as follows (in thousands): May 25, 2019 Beginning balance as of August 25, 2018 $ 25,486 Costs incurred for which reserves had been provided (828 ) Insurance proceeds 110 Interest accretion 566 Change in discount rates 479 Balance as of May 25, 2019 $ 25,813 Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of May 25, 2019, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below. (In thousands) 2019 2020 2021 2022 2023 Thereafter Total Estimated costs – current dollars $ 8,666 $ 2,122 $ 1,635 $ 1,272 $ 1,175 $ 12,135 $ 27,005 Estimated insurance proceeds (62 ) (159 ) (173 ) (159 ) (173 ) (829 ) (1,555 ) Net anticipated costs $ 8,604 $ 1,963 $ 1,462 $ 1,113 $ 1,002 $ 11,306 $ 25,450 Effect of inflation 7,855 Effect of discounting (7,492 ) Balance as of May 25, 2019 $ 25,813 Estimated insurance proceeds are primarily received from an annuity received as part of a legal settlement with an insurance company. Annual proceeds of approximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to former operations in Williamstown, Vermont. Annual proceeds received but not expended in the current year accumulate in this account and may be used in future years for costs related to this site through the year 2027. As of May 25, 2019, the balance in this escrow account, which is held in a trust and is not recorded in the Company’s accompanying Consolidated Balance Sheet, was approximately $4.2 million. Also included in estimated insurance proceeds are amounts the Company is entitled to receive pursuant to legal settlements as reimbursements from three insurance companies for estimated costs at the site in Uvalde, Texas. The Company’s nuclear garment decontamination facilities are licensed by the Nuclear Regulatory Commission (“NRC”), or, in certain cases, by the applicable state agency, and are subject to regulation by federal, state and local authorities. The Company also has 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 related services have resulted in the suspension of operations at certain nuclear facilities served by the Company or disruptions in its ability to service such facilities. There can be no assurance that such regulation will not lead to material disruptions in the Company’s garment decontamination business. 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 version of the Customer Relationship Management (“CRM”) system that was being developed would be completed and placed into service. On December 28, 2018, the Company entered into a settlement agreement with its lead contractor for the version of the CRM system with respect to which the Company recorded the impairment charge. As part of the settlement agreement, the Company recorded in the second quarter ended February 23, 2019 a total gain of $21.1 million as a reduction of selling 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 of amounts previously due the contractor. The Company also received hardware and related maintenance service with a fair value of $0.8 million as part of the settlement. From time to time, the Company is also subject to legal proceedings and claims arising from the conduct of its business operations, including personal injury claims, customer contract matters, employment claims and environmental matters as described above. While it is impossible for the Company to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits and environmental contingencies, the Company believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance have been properly accrued in accordance with U.S. GAAP. It is possible, however, that the future financial position and/or results of operations for any particular future period 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. |
Income Taxes
Income Taxes | 9 Months Ended |
May 25, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 13. Income Taxes In accordance with ASC 740, Income Taxes (“ASC 740”), each interim period is considered integral to the annual period and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its annual effective tax rate estimated for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, adjusted for discrete taxable events that occur during the interim period. U.S. Tax Reform The Tax Cuts and Jobs Act (the “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 pay a 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 of the 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 the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. In accordance with SAB 118, during fiscal 2018 the Company recorded its best estimates based on its interpretation of the U.S. legislation while it continued to accumulate data to finalize the underlying calculations. This resulted in the Company recording a provisional net income tax benefit of $20.1 million for the fiscal year 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 thirteen and thirty-nine weeks ended May 25, 2019, the statutory tax rate for the periods was 21.0% compared to the applicable blended statutory tax rate of 25.9% for the corresponding periods 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 no changes from the provisional calculation as recorded through August 25, 2018 to the final calculation. Deferred tax assets and liabilities The Company recorded a final net reduction of its deferred tax liabilities of $22.6 million for the year ended August 25, 2018 related to the Act, as compared to the Company’s initial provisional net reduction of $22.7 million as of May 26, 2018. The Act resulted in a tax benefit pertaining to the re-measurement of certain U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21.0%, partially offset by executive compensation deduction disallowances. Effective tax rate The Company’s effective tax rate for the thirteen weeks ended May 25, 2019 of 23.5% was generally consistent with 23.9% for the corresponding period in the prior year. The lower statutory tax rate in the thirteen weeks ended May 25, 2019 compared to the corresponding period in the prior year was primarily offset by a discrete benefit of $1.5 million related to tax credits. The Company’s effective tax rate for the thirty-nine weeks ended May 25, 2019 was 24.8% compared to 10.7% for the corresponding period in the prior year. The increase 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 the second quarter of fiscal 2018. The benefit of $22.7 million associated with the reduction in the U.S net deferred income tax liabilities was partially offset by a one-time transition tax of $2.5 million for the deemed repatriation of our foreign earnings. Foreign tax effects The one-time transition tax is based on the Company’s total post-1986 earnings and profits (E&P), which were previously deferred from U.S. income taxes, resulting in an increase in income tax expense of $2.5 million in the fiscal year ended August 25, 2018. The 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, Accounting for Global Intangible Low-Taxed Income (“GILTI”) Uncertain tax positions The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense, which is consistent with the recognition of these items in prior reporting periods. During the thirteen and thirty-nine weeks ended May 25, 2019, there were no material changes in the amount of unrecognized tax benefits or the amount accrued for interest and penalties. 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, the Company is no longer subject to state and local income tax examinations for periods prior to fiscal 2014. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
May 25, 2019 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 14. Long-Term Debt The Company has a $250 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 the Company’s election, the Eurodollar rate or a base rate, plus in each case a spread based on the Company’s consolidated funded debt ratio. 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 its compliance with these financial covenants on a fiscal quarterly basis. As of May 25, 2019, the interest rates applicable to the Company’s borrowings under the Credit Agreement would be calculated as LIBOR plus 75 basis points at the time of the respective borrowing. As of May 25, 2019, the Company had no outstanding borrowings and had outstanding letters of credit amounting to $71.8 million, leaving $178.2 million available for borrowing under the Credit Agreement. As of May 25, 2019, the Company was in compliance with all covenants under the Credit Agreement. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
May 25, 2019 | |
Stockholders Equity Note [Abstract] | |
Accumulated Other Comprehensive Loss | 15. Accumulated Other Comprehensive Loss The changes in each component of accumulated other comprehensive loss, net of tax, for the thirteen and thirty-nine weeks ended May 25, 2019 and May 26, 2018 were as follows (in thousands): Thirteen Weeks Ended May 25, 2019 Foreign Currency Translation Pension- related (1) Derivative Financial Instruments (1) Total Accumulated Other Comprehensive Loss Balance as of February 23, 2019 $ (21,980 ) $ (4,135 ) $ 109 $ (26,006 ) Other comprehensive income (loss) before reclassification (2,649 ) — 184 (2,465 ) Amounts reclassified from accumulated other comprehensive loss — — (46 ) (46 ) Net current period other comprehensive (loss) income (2,649 ) — 138 (2,511 ) Balance as of May 25, 2019 $ (24,629 ) $ (4,135 ) $ 247 $ (28,517 ) Thirty-Nine Weeks Ended May 25, 2019 Foreign Currency Translation Pension- related (1) Derivative Financial Instruments (1) Total Accumulated Other Comprehensive Loss Balance as of August 25, 2018 $ (21,116 ) $ (4,135 ) $ 92 $ (25,159 ) Other comprehensive (loss) income before reclassification (3,513 ) — 277 (3,236 ) Amounts reclassified from accumulated other comprehensive loss — — (122 ) (122 ) Net current period other comprehensive (loss) income (3,513 ) — 155 (3,358 ) Balance as of May 25, 2019 $ (24,629 ) $ (4,135 ) $ 247 $ (28,517 ) Thirteen Weeks Ended May 26, 2018 Foreign Currency Translation Pension- related (1)(2) Derivative Financial Instruments (1) Total Accumulated Other Comprehensive Loss Balance as of February 24, 2018 $ (16,695 ) $ (6,669 ) $ (36 ) $ (23,400 ) Other comprehensive (loss) income before reclassification (3,931 ) — 106 (3,825 ) Amounts reclassified from accumulated other comprehensive loss — — (34 ) (34 ) Net current period other comprehensive (loss) income (3,931 ) — 72 (3,859 ) Balance as of May 26, 2018 $ (20,626 ) $ (6,669 ) $ 36 $ (27,259 ) Thirty-Nine Weeks Ended May 26, 2018 Foreign Currency Translation Pension- related (1)(2) Derivative Financial Instruments (1) Total Accumulated Other Comprehensive Loss Balance as of August 26, 2017 $ (15,932 ) $ (5,477 ) $ (109 ) $ (21,518 ) Other comprehensive (loss) income before reclassification (4,694 ) — 165 (4,529 ) Amounts reclassified from accumulated other comprehensive loss — (1,192 ) (20 ) (1,212 ) Net current period other comprehensive (loss) income (4,694 ) (1,192 ) 145 (5,741 ) Balance as of May 26, 2018 $ (20,626 ) $ (6,669 ) $ 36 $ (27,259 ) (1) Amounts are shown net of tax. (2) Activity represents the impact of the adoption of ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. Amounts reclassified from accumulated other comprehensive loss, net of tax, for the thirteen and thirty-nine weeks ended May 25, 2019 and May 26, 2018 were as follows (in thousands): Thirteen Weeks Ended Thirty-Nine Weeks Ended May 25, 2019 May 26, 2018 May 25, 2019 May 26, 2018 Pension benefit liabilities, net: Tax effect reclass (a) $ — $ — $ — $ (1,192 ) Total, net of tax — — — (1,192 ) Derivative financial instruments, net: Forward contracts (b) (46 ) (34 ) (122 ) (20 ) Total, net of tax (46 ) (34 ) (122 ) (20 ) Total amounts reclassified, net of tax $ (46 ) $ (34 ) $ (122 ) $ (1,212 ) (a) Activity represents the impact of the adoption of ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. (b) Amounts included in revenues in the accompanying Consolidated Statements of Income. |
Segment Reporting
Segment Reporting | 9 Months Ended |
May 25, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting | 16. Segment Reporting Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker 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, Manufacturing (“MFG”), Corporate, Specialty Garments Rental and Cleaning (“Specialty Garments”) and First Aid. The U.S. Rental and Cleaning and Canadian Rental and Cleaning operating segments have been combined to form the U.S. and Canadian Rental and Cleaning reporting segment, and as a result, the Company has five reporting segments. The U.S. and Canadian Rental and Cleaning reporting segment purchases, rents, cleans, delivers and sells, uniforms and protective clothing and non-garment items in 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. and Canadian Rental and Cleaning reporting segment. MFG revenues are generated when goods are shipped from the Company’s manufacturing facilities, or its subcontract manufacturers, to other Company locations. These revenues are recorded at a transfer price which is typically in excess of the actual manufacturing cost. Manufactured products are carried in inventory until placed in service at which time they are amortized at this transfer price. On a consolidated basis, intercompany revenues and income are eliminated and the carrying value of inventories and rental merchandise in service is reduced to the manufacturing cost. Income before income taxes from MFG net of the intercompany MFG elimination offsets the merchandise amortization costs incurred by the U.S. and Canadian Rental and Cleaning reporting segment as the merchandise costs of this reporting segment are amortized and recognized based on inventories purchased from 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 revenues generated from the Corporate operating segment represent certain direct sales made by the Company directly from its distribution center. The products sold by this operating segment are the same products rented and sold by the U.S. and Canadian Rental and Cleaning reporting segment. The majority of expenses accounted for within the Corporate segment 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 Aid segments. The Specialty Garments operating segment purchases, rents, cleans, delivers and sells, specialty garments and non-garment items primarily for nuclear and cleanroom applications and provides cleanroom cleaning services at limited customer locations. The First Aid operating segment sells first aid cabinet services and other 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 is included as a subtotal in the following tables (in thousands): Thirteen weeks ended U.S. and Canadian Rental and Cleaning MFG Net Interco MFG Elim Corporate Subtotal Core Laundry Operations Specialty Garments First Aid Total May 25, 2019 Revenues $ 391,128 $ 58,596 $ (58,573 ) $ 8,630 $ 399,781 $ 37,313 $ 16,626 $ 453,720 Operating income (loss) $ 70,474 $ 18,684 $ 3,115 $ (38,830 ) $ 53,443 $ 5,368 $ 1,401 $ 60,212 Interest income, net $ (1,008 ) $ — $ — $ (1,285 ) $ (2,293 ) $ — $ — $ (2,293 ) Income (loss) before taxes $ 71,480 $ 18,606 $ 3,116 $ (37,975 ) $ 55,227 $ 5,072 $ 1,401 $ 61,700 May 26, 2018 Revenues $ 369,814 $ 61,331 $ (61,300 ) $ 9,226 $ 379,071 $ 34,060 $ 14,253 $ 427,384 Operating income (loss) $ 51,981 $ 21,911 $ (1,499 ) $ (32,420 ) $ 39,973 $ 5,589 $ 1,525 $ 47,087 Interest income, net $ (945 ) $ — $ — $ (244 ) $ (1,189 ) $ — $ — $ (1,189 ) Income (loss) before taxes $ 52,929 $ 21,946 $ (1,499 ) $ (32,203 ) $ 41,173 $ 5,094 $ 1,525 $ 47,792 Thirty-nine weeks ended May 25, 2019 Revenues $ 1,157,392 $ 187,120 $ (187,045 ) $ 27,199 $ 1,184,666 $ 101,506 $ 43,583 $ 1,329,755 Operating income (loss) $ 189,807 $ 63,576 $ 415 $ (96,460 ) $ 157,338 $ 12,073 $ 3,673 $ 173,084 Interest income, net $ (3,113 ) $ — $ — $ (2,894 ) $ (6,007 ) $ — $ — $ (6,007 ) Income (loss) before taxes $ 192,899 $ 63,322 $ 415 $ (94,710 ) $ 161,926 $ 11,455 $ 3,673 $ 177,054 May 26, 2018 Revenues $ 1,103,718 $ 185,045 $ (184,957 ) $ 28,016 $ 1,131,822 $ 89,496 $ 41,108 $ 1,262,426 Operating income (loss) $ 155,295 $ 67,892 $ (9,033 ) $ (89,739 ) $ 124,415 $ 12,866 $ 3,669 $ 140,950 Interest income, net $ (2,988 ) $ — $ — $ (907 ) $ (3,895 ) $ — $ — $ (3,895 ) Income (loss) before taxes $ 158,295 $ 67,830 $ (9,033 ) $ (88,816 ) $ 128,276 $ 12,448 $ 3,669 $ 144,393 |
Shares Repurchased and Dividend
Shares Repurchased and Dividends | 9 Months Ended |
May 25, 2019 | |
Equity [Abstract] | |
Shares Repurchased and Dividends | 17. Shares Repurchased and Dividends On 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 “Special Committee”). 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 of former 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 as it is accretive to income per share and addresses 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 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 will be raising its quarterly dividend to $0.1125 per share for Common Stock and to $0.09 per share for Class B Common Stock, up from $0.0375 and $0.03 per share, respectively. The amount and timing of any dividend payment is subject to the approval of the Board of Directors each quarter. On January 2, 2019, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase from time to time up to $100.0 million of its outstanding shares of common stock. Repurchases made under the program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, the Company stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program will be funded using the Company’s available cash or capacity under its Credit Agreement and may be suspended or discontinued at any time. During the thirteen and thirty-nine weeks ended May 25, 2019, the Company repurchased 99,500 and 144,500 shares, respectively, for an average price per share of $147.47 and $145.01, respectively. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
May 25, 2019 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (“FASB”) issued updated accounting guidance for revenue recognition, which it has subsequently modified. This modified update provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of 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 standard includes cost guidance, whereby all direct and incremental costs to obtain or fulfill a contract will be capitalized and amortized over the corresponding period of benefit, determined on a contract by contract basis. This guidance is also intended to improve disclosure requirements and enhance the comparability of revenue recognition practices. Improved disclosures under the amended guidance relate to the nature, amount, timing and uncertainty of revenue that is recognized from contracts with customers. The Company adopted the standard on August 26, 2018 using the modified retrospective adoption method. Upon adoption of this guidance, 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 any material impact to the timing or measurement of revenues. The adjustment to retained earnings relates to the capitalization of certain direct and incremental contract costs required by the new guidance, net of the related income tax effect. Capitalized costs are amortized ratably over the anticipated period of benefit. The Company applied the new guidance to all contracts as of August 26, 2018. Results for reporting periods beginning after August 25, 2018 are presented under the new guidance, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods. 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 the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio. The Company also continues to expense certain costs 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 the modified retrospective method to adopt the new revenue guidance, the adjustments set forth in the table below were made to accounts on the consolidated balance sheet as of August 26, 2018: Consolidated Balance Sheet (In thousands) August 25, 2018 Capitalization of Contract Costs August 26, 2018 Assets Prepaid expenses and other current assets $ 21,899 $ 10,789 $ 32,688 Total current assets 784,800 10,789 795,589 Other assets 30,259 42,405 72,664 Total assets $ 1,843,386 $ 53,194 $ 1,896,580 Liabilities and shareholders’ equity Accrued and deferred income taxes $ 74,070 $ 13,761 $ 87,831 Total liabilities 378,419 13,761 392,180 Retained earnings 1,405,239 39,433 1,444,672 Total shareholders’ equity 1,464,967 39,433 1,504,400 Total liabilities and shareholders’ equity $ 1,843,386 $ 53,194 $ 1,896,580 The impacts of adopting this standard on the thirteen and thirty-nine weeks ended May 25, 2019 Consolidated Financial Statements are presented in the following tables: Thirteen Weeks Ended May 25, 2019 Consolidated Statement of Income (In thousands, except per share data) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Operating expenses: Selling and administrative expenses $ 88,207 $ 89,805 $ (1,598 ) Total operating expenses 393,508 395,106 (1,598 ) Operating income 60,212 58,614 1,598 Income before income taxes 61,700 60,102 1,598 Provision for income taxes 14,480 14,104 376 Net income $ 47,220 $ 45,998 $ 1,222 Income per share – Diluted: $ 2.46 $ 2.40 $ 0.06 Thirty-Nine Weeks Ended May 25, 2019 Consolidated Statement of Income (In thousands, except per share data) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Operating expenses: Selling and administrative expenses $ 242,487 $ 246,310 $ (3,823 ) Total operating expenses 1,156,671 1,160,494 (3,823 ) Operating income 173,084 169,261 3,823 Income before income taxes 177,054 173,231 3,823 Provision for income taxes 43,908 42,960 948 Net income $ 133,146 $ 130,271 $ 2,875 Income per share – Diluted: $ 6.93 $ 6.78 $ 0.15 Balance at May 25, 2019 Consolidated Balance Sheet (In thousands) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Assets Prepaid expenses and other current assets $ 32,688 $ 21,899 $ 10,789 Total current assets 861,855 851,066 10,789 Other assets 78,977 32,748 46,229 Total assets $ 1,981,301 $ 1,924,283 $ 57,018 Liabilities and shareholders’ equity Accrued and deferred income taxes $ 90,674 $ 75,964 $ 14,710 Total liabilities 371,605 356,895 14,710 Retained earnings 1,551,475 1,509,167 42,308 Total shareholders’ equity 1,609,696 1,567,388 42,308 Total liabilities and shareholders’ equity $ 1,981,301 $ 1,924,283 $ 57,018 The adoption of this standard had no impact on the Company’s thirty-nine weeks ended May 25, 2019 operating cash flow, and the only impact of the adoption on its fiscal 2019 consolidated statement of comprehensive income was the impact to net income as presented in the tables above. In January 2016, the FASB issued updated guidance for the recognition, measurement, presentation, and disclosure of certain financial assets and liabilities. This guidance 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 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 both parties 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 leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized 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-use asset 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 be accounted for similar to existing guidance for operating leases. This new guidance is effective for reporting periods beginning after December 15, 2018, however, early adoption is permitted. Entities are 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 financial statements. The Company will adopt the new guidance on September 1, 2019. At August 25, 2018, the Company was contractually obligated to make future payments of $47.1 million under its operating lease obligations in existence as of that date, primarily related to long-term leases. The Company is evaluating the impact that this guidance will have on its financial statements. While the Company has not yet determined the impact on its consolidated balance sheet or consolidated statement of income, these leases will be required to be presented on the consolidated balance sheet in accordance with the requirements of this guidance. In August 2016, the FASB issued updated guidance that reduces diversity in how certain cash receipts and cash payments are presented and classified in the Consolidated Statements of Cash Flows. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2017 and is required to be applied retrospectively, 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 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 certain types of financial instruments including trade receivables. The estimate of expected credit losses will require entities to incorporate historical information, current information and reasonable and supportable forecasts. This guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company is currently evaluating the impact that this guidance will have on its 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 than inventory. This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2017 and is required to be applied on a modified retrospective basis, 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 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 of operations. Specifically, entities must present the service cost component of net periodic benefit cost in the same financial statement line items as other compensation costs arising from services rendered by the related employees during the period, whereas the non-service components of net periodic benefit cost must be presented separately from the financial statement line items that include service cost and outside of operating income. The Company’s adoption of this guidance 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, and eliminates the separate measurement and presentation of hedge ineffectiveness. The accounting update is effective for annual and interim periods beginning after December 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 the first 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 other postretirement 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 on August 29, 2021. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures. In August 2018, the FASB issued guidance that addresses customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This guidance is effective for annual reporting periods, and any interim periods within those annual periods, that begin after December 15, 2019 with early adoption permitted. The amendments in this update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Accordingly, the guidance will be effective for the Company on August 30, 2020. The Company is currently evaluating the impact that this guidance will have on its financial statements and related disclosures. |
Recent Accounting Pronounceme_3
Recent Accounting Pronouncements (Tables) | 9 Months Ended |
May 25, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Impact of New Accounting Pronouncements | As a result of applying the modified retrospective method to adopt the new revenue guidance, the adjustments set forth in the table below were made to accounts on the consolidated balance sheet as of August 26, 2018: Consolidated Balance Sheet (In thousands) August 25, 2018 Capitalization of Contract Costs August 26, 2018 Assets Prepaid expenses and other current assets $ 21,899 $ 10,789 $ 32,688 Total current assets 784,800 10,789 795,589 Other assets 30,259 42,405 72,664 Total assets $ 1,843,386 $ 53,194 $ 1,896,580 Liabilities and shareholders’ equity Accrued and deferred income taxes $ 74,070 $ 13,761 $ 87,831 Total liabilities 378,419 13,761 392,180 Retained earnings 1,405,239 39,433 1,444,672 Total shareholders’ equity 1,464,967 39,433 1,504,400 Total liabilities and shareholders’ equity $ 1,843,386 $ 53,194 $ 1,896,580 The impacts of adopting this standard on the thirteen and thirty-nine weeks ended May 25, 2019 Consolidated Financial Statements are presented in the following tables: Thirteen Weeks Ended May 25, 2019 Consolidated Statement of Income (In thousands, except per share data) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Operating expenses: Selling and administrative expenses $ 88,207 $ 89,805 $ (1,598 ) Total operating expenses 393,508 395,106 (1,598 ) Operating income 60,212 58,614 1,598 Income before income taxes 61,700 60,102 1,598 Provision for income taxes 14,480 14,104 376 Net income $ 47,220 $ 45,998 $ 1,222 Income per share – Diluted: $ 2.46 $ 2.40 $ 0.06 Thirty-Nine Weeks Ended May 25, 2019 Consolidated Statement of Income (In thousands, except per share data) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Operating expenses: Selling and administrative expenses $ 242,487 $ 246,310 $ (3,823 ) Total operating expenses 1,156,671 1,160,494 (3,823 ) Operating income 173,084 169,261 3,823 Income before income taxes 177,054 173,231 3,823 Provision for income taxes 43,908 42,960 948 Net income $ 133,146 $ 130,271 $ 2,875 Income per share – Diluted: $ 6.93 $ 6.78 $ 0.15 Balance at May 25, 2019 Consolidated Balance Sheet (In thousands) As Reported Under Historical Guidance Impact of Adopting New Revenue Standard Assets Prepaid expenses and other current assets $ 32,688 $ 21,899 $ 10,789 Total current assets 861,855 851,066 10,789 Other assets 78,977 32,748 46,229 Total assets $ 1,981,301 $ 1,924,283 $ 57,018 Liabilities and shareholders’ equity Accrued and deferred income taxes $ 90,674 $ 75,964 $ 14,710 Total liabilities 371,605 356,895 14,710 Retained earnings 1,551,475 1,509,167 42,308 Total shareholders’ equity 1,609,696 1,567,388 42,308 Total liabilities and shareholders’ equity $ 1,981,301 $ 1,924,283 $ 57,018 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
May 25, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Total Revenue Disaggregated by Service Type | The following table presents the Company’s revenues for the thirteen and thirty-nine weeks ended May 25, 2019 and May 26, 2018, respectively, disaggregated by service type: Thirteen Weeks Ended Thirty-Nine Weeks Ended May 25, 2019 May 26, 2018 May 25, 2019 May 26, 2018 (In thousands, except percentages) Revenues % of Revenues Revenues % of Revenues Revenues % of Revenues Revenues % of Revenues Core Laundry Operations 399,781 88.1 % $ 379,071 88.7 % $ 1,184,666 89.1 % $ 1,131,822 89.7 % Specialty Garments 37,313 8.2 % 34,060 8.0 % 101,506 7.6 % 89,496 7.1 % First Aid 16,626 3.7 % 14,253 3.3 % 43,583 3.3 % 41,108 3.2 % Total Revenues $ 453,720 100.0 % $ 427,384 100.0 % $ 1,329,755 100.0 % $ 1,262,426 100.0 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
May 25, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets or Liabilities Measured at Fair Value on a Recurring Basis | The assets or liabilities measured at fair value on a recurring basis are summarized in the tables below (in thousands): As of May 25, 2019 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents $ 212,559 $ — $ — $ 212,559 Pension plan assets — 5,935 — 5,935 Foreign currency forward contracts — 330 — 330 Total assets at fair value $ 212,559 $ 6,265 $ — $ 218,824 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 |
Income Per Share (Tables)
Income Per Share (Tables) | 9 Months Ended |
May 25, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic Income Per Share | 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 Common Stock and Class B Common Stock (in thousands, except per share data): Thirteen Weeks Ended Thirty-Nine Weeks Ended May 25, 2019 May 26, 2018 May 25, 2019 May 26, 2018 Net income available to shareholders $ 47,220 $ 36,359 $ 133,146 $ 128,943 Allocation of net income for Basic: Common Stock $ 39,563 $ 30,034 $ 111,626 $ 104,324 Class B Common Stock 7,657 6,325 21,520 24,619 $ 47,220 $ 36,359 $ 133,146 $ 128,943 Weighted average number of shares for Basic: Common Stock 15,341 15,446 15,400 15,463 Class B Common Stock 3,710 4,087 3,710 4,573 19,051 19,533 19,110 20,036 Income per share for Basic: Common Stock $ 2.58 $ 1.94 $ 7.25 $ 6.75 Class B Common Stock $ 2.06 $ 1.55 $ 5.80 $ 5.38 |
Schedule of Computation of Diluted Income Per Share | The following table sets forth the computation of diluted income per share of Common Stock for the thirteen and thirty-nine weeks ended May 25, 2019 (in thousands, except per share data): Thirteen Weeks Ended May 25, 2019 Thirty-Nine Weeks Ended May 25, 2019 Earnings to Common Shareholders Common Shares Income Per Share Earnings to Common Shareholders Common Shares Income Per Share As reported - Basic $ 39,563 15,341 $ 2.58 $ 111,626 15,400 $ 7.25 Add: effect of dilutive potential common shares Share-Based Awards — 117 — 110 Class B Common Stock 7,657 3,710 21,520 3,710 As reported – Diluted $ 47,220 19,168 $ 2.46 $ 133,146 19,220 $ 6.93 Thirteen Weeks Ended May 26, 2018 Thirty-Nine Weeks Ended May 26, 2018 Earnings to Common Shareholders Common Shares Income Per Share Earnings to Common Shareholders Common Shares Income Per Share As reported - Basic $ 30,034 15,446 $ 1.94 $ 104,324 15,463 $ 6.75 Add: effect of dilutive potential common shares Share-Based Awards — 154 — 142 Class B Common Stock 6,325 4,087 24,619 4,573 As reported – Diluted $ 36,359 19,687 $ 1.85 $ 128,943 20,178 $ 6.39 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
May 25, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Components of Inventory | The components of inventory as of May 25, 2019 and August 25, 2018 were as follows (in thousands): May 25, 2019 August 25, 2018 Raw materials $ 20,362 $ 18,508 Work in process 2,518 3,271 Finished goods 72,041 68,397 Total inventories $ 94,921 $ 90,176 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
May 25, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill are as follows (in thousands): Balance as of August 25, 2018 $ 397,422 Goodwill recorded during the period $ 1,879 Other (155 ) Balance as of May 25, 2019 $ 399,146 |
Schedule of Intangible Assets, Net | Intangible assets, net in the Company’s accompanying Consolidated Balance Sheets are as follows (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount May 25, 2019 Customer contracts $ 220,985 $ 161,736 $ 59,249 Software 47,302 33,813 13,489 Other intangible assets 35,000 32,551 2,449 $ 303,287 $ 228,100 $ 75,187 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 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
May 25, 2019 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Reconciliation of Asset Retirement Liability | A reconciliation of the Company’s asset retirement liability for the thirty-nine weeks ended May 25, 2019 was as follows (in thousands): May 25, 2019 Beginning balance as of August 25, 2018 $ 13,668 Accretion expense 647 Effect of exchange rate changes (106 ) Change in estimate (1,705 ) Ending balance as of May 25, 2019 $ 12,504 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
May 25, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Changes to Environmental Liabilities | The changes to the Company’s environmental liabilities for the thirty-nine weeks ended May 25, 2019 were as follows (in thousands): May 25, 2019 Beginning balance as of August 25, 2018 $ 25,486 Costs incurred for which reserves had been provided (828 ) Insurance proceeds 110 Interest accretion 566 Change in discount rates 479 Balance as of May 25, 2019 $ 25,813 |
Schedule of Anticipated Payments and Insurance Proceeds of Currently Identified Environmental Remediation Liabilities | Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of May 25, 2019, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below. (In thousands) 2019 2020 2021 2022 2023 Thereafter Total Estimated costs – current dollars $ 8,666 $ 2,122 $ 1,635 $ 1,272 $ 1,175 $ 12,135 $ 27,005 Estimated insurance proceeds (62 ) (159 ) (173 ) (159 ) (173 ) (829 ) (1,555 ) Net anticipated costs $ 8,604 $ 1,963 $ 1,462 $ 1,113 $ 1,002 $ 11,306 $ 25,450 Effect of inflation 7,855 Effect of discounting (7,492 ) Balance as of May 25, 2019 $ 25,813 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
May 25, 2019 | |
Stockholders Equity Note [Abstract] | |
Schedule of Changes in Components of Accumulated Other Comprehensive Loss, Net of Tax | The changes in each component of accumulated other comprehensive loss, net of tax, for the thirteen and thirty-nine weeks ended May 25, 2019 and May 26, 2018 were as follows (in thousands): Thirteen Weeks Ended May 25, 2019 Foreign Currency Translation Pension- related (1) Derivative Financial Instruments (1) Total Accumulated Other Comprehensive Loss Balance as of February 23, 2019 $ (21,980 ) $ (4,135 ) $ 109 $ (26,006 ) Other comprehensive income (loss) before reclassification (2,649 ) — 184 (2,465 ) Amounts reclassified from accumulated other comprehensive loss — — (46 ) (46 ) Net current period other comprehensive (loss) income (2,649 ) — 138 (2,511 ) Balance as of May 25, 2019 $ (24,629 ) $ (4,135 ) $ 247 $ (28,517 ) Thirty-Nine Weeks Ended May 25, 2019 Foreign Currency Translation Pension- related (1) Derivative Financial Instruments (1) Total Accumulated Other Comprehensive Loss Balance as of August 25, 2018 $ (21,116 ) $ (4,135 ) $ 92 $ (25,159 ) Other comprehensive (loss) income before reclassification (3,513 ) — 277 (3,236 ) Amounts reclassified from accumulated other comprehensive loss — — (122 ) (122 ) Net current period other comprehensive (loss) income (3,513 ) — 155 (3,358 ) Balance as of May 25, 2019 $ (24,629 ) $ (4,135 ) $ 247 $ (28,517 ) Thirteen Weeks Ended May 26, 2018 Foreign Currency Translation Pension- related (1)(2) Derivative Financial Instruments (1) Total Accumulated Other Comprehensive Loss Balance as of February 24, 2018 $ (16,695 ) $ (6,669 ) $ (36 ) $ (23,400 ) Other comprehensive (loss) income before reclassification (3,931 ) — 106 (3,825 ) Amounts reclassified from accumulated other comprehensive loss — — (34 ) (34 ) Net current period other comprehensive (loss) income (3,931 ) — 72 (3,859 ) Balance as of May 26, 2018 $ (20,626 ) $ (6,669 ) $ 36 $ (27,259 ) Thirty-Nine Weeks Ended May 26, 2018 Foreign Currency Translation Pension- related (1)(2) Derivative Financial Instruments (1) Total Accumulated Other Comprehensive Loss Balance as of August 26, 2017 $ (15,932 ) $ (5,477 ) $ (109 ) $ (21,518 ) Other comprehensive (loss) income before reclassification (4,694 ) — 165 (4,529 ) Amounts reclassified from accumulated other comprehensive loss — (1,192 ) (20 ) (1,212 ) Net current period other comprehensive (loss) income (4,694 ) (1,192 ) 145 (5,741 ) Balance as of May 26, 2018 $ (20,626 ) $ (6,669 ) $ 36 $ (27,259 ) (1) Amounts are shown net of tax. (2) Activity represents the impact of the adoption of ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. |
Schedule of Amounts Reclassified from Accumulated Other Comprehensive Loss, Net of Tax | Amounts reclassified from accumulated other comprehensive loss, net of tax, for the thirteen and thirty-nine weeks ended May 25, 2019 and May 26, 2018 were as follows (in thousands): Thirteen Weeks Ended Thirty-Nine Weeks Ended May 25, 2019 May 26, 2018 May 25, 2019 May 26, 2018 Pension benefit liabilities, net: Tax effect reclass (a) $ — $ — $ — $ (1,192 ) Total, net of tax — — — (1,192 ) Derivative financial instruments, net: Forward contracts (b) (46 ) (34 ) (122 ) (20 ) Total, net of tax (46 ) (34 ) (122 ) (20 ) Total amounts reclassified, net of tax $ (46 ) $ (34 ) $ (122 ) $ (1,212 ) (a) Activity represents the impact of the adoption of ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. (b) Amounts included in revenues in the accompanying Consolidated Statements of Income. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
May 25, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | The Company refers to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as its “Core Laundry Operations,” which is included as a subtotal in the following tables (in thousands): Thirteen weeks ended U.S. and Canadian Rental and Cleaning MFG Net Interco MFG Elim Corporate Subtotal Core Laundry Operations Specialty Garments First Aid Total May 25, 2019 Revenues $ 391,128 $ 58,596 $ (58,573 ) $ 8,630 $ 399,781 $ 37,313 $ 16,626 $ 453,720 Operating income (loss) $ 70,474 $ 18,684 $ 3,115 $ (38,830 ) $ 53,443 $ 5,368 $ 1,401 $ 60,212 Interest income, net $ (1,008 ) $ — $ — $ (1,285 ) $ (2,293 ) $ — $ — $ (2,293 ) Income (loss) before taxes $ 71,480 $ 18,606 $ 3,116 $ (37,975 ) $ 55,227 $ 5,072 $ 1,401 $ 61,700 May 26, 2018 Revenues $ 369,814 $ 61,331 $ (61,300 ) $ 9,226 $ 379,071 $ 34,060 $ 14,253 $ 427,384 Operating income (loss) $ 51,981 $ 21,911 $ (1,499 ) $ (32,420 ) $ 39,973 $ 5,589 $ 1,525 $ 47,087 Interest income, net $ (945 ) $ — $ — $ (244 ) $ (1,189 ) $ — $ — $ (1,189 ) Income (loss) before taxes $ 52,929 $ 21,946 $ (1,499 ) $ (32,203 ) $ 41,173 $ 5,094 $ 1,525 $ 47,792 Thirty-nine weeks ended May 25, 2019 Revenues $ 1,157,392 $ 187,120 $ (187,045 ) $ 27,199 $ 1,184,666 $ 101,506 $ 43,583 $ 1,329,755 Operating income (loss) $ 189,807 $ 63,576 $ 415 $ (96,460 ) $ 157,338 $ 12,073 $ 3,673 $ 173,084 Interest income, net $ (3,113 ) $ — $ — $ (2,894 ) $ (6,007 ) $ — $ — $ (6,007 ) Income (loss) before taxes $ 192,899 $ 63,322 $ 415 $ (94,710 ) $ 161,926 $ 11,455 $ 3,673 $ 177,054 May 26, 2018 Revenues $ 1,103,718 $ 185,045 $ (184,957 ) $ 28,016 $ 1,131,822 $ 89,496 $ 41,108 $ 1,262,426 Operating income (loss) $ 155,295 $ 67,892 $ (9,033 ) $ (89,739 ) $ 124,415 $ 12,866 $ 3,669 $ 140,950 Interest income, net $ (2,988 ) $ — $ — $ (907 ) $ (3,895 ) $ — $ — $ (3,895 ) Income (loss) before taxes $ 158,295 $ 67,830 $ (9,033 ) $ (88,816 ) $ 128,276 $ 12,448 $ 3,669 $ 144,393 |
Basis of Presentation (Detail)
Basis of Presentation (Detail) $ in Millions | 12 Months Ended |
Aug. 25, 2018USD ($) | |
Computer Software, Intangible Asset [Member] | |
Prior Period Reclassification Adjustment | $ 11.6 |
Recent Accounting Pronounceme_4
Recent Accounting Pronouncements - Schedule of Impacts of New Accounting Pronouncements on Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | May 25, 2019 | Feb. 23, 2019 | Nov. 24, 2018 | Aug. 26, 2018 | Aug. 25, 2018 | May 26, 2018 | Feb. 24, 2018 | Nov. 25, 2017 | Aug. 26, 2017 |
Assets | |||||||||
Prepaid expenses and other current assets | $ 32,688 | $ 32,688 | $ 21,899 | ||||||
Total current assets | 861,855 | 795,589 | 784,800 | ||||||
Other assets | 78,977 | 72,664 | 30,259 | ||||||
Total assets | 1,981,301 | 1,896,580 | 1,843,386 | ||||||
Liabilities and shareholders’ equity | |||||||||
Accrued and deferred income taxes | 90,674 | 87,831 | 74,070 | ||||||
Total liabilities | 371,605 | 392,180 | 378,419 | ||||||
Retained earnings | 1,551,475 | 1,444,672 | 1,405,239 | ||||||
Total shareholders’ equity | 1,609,696 | $ 1,580,790 | $ 1,539,498 | 1,504,400 | 1,464,967 | $ 1,429,421 | $ 1,544,401 | $ 1,485,608 | $ 1,453,192 |
Total liabilities and shareholders’ equity | 1,981,301 | $ 1,896,580 | 1,843,386 | ||||||
Under Historical Guidance | |||||||||
Assets | |||||||||
Prepaid expenses and other current assets | 21,899 | ||||||||
Total current assets | 851,066 | ||||||||
Other assets | 32,748 | ||||||||
Total assets | 1,924,283 | ||||||||
Liabilities and shareholders’ equity | |||||||||
Accrued and deferred income taxes | 75,964 | ||||||||
Total liabilities | 356,895 | ||||||||
Retained earnings | 1,509,167 | ||||||||
Total shareholders’ equity | 1,567,388 | ||||||||
Total liabilities and shareholders’ equity | 1,924,283 | ||||||||
Accounting Standards Update 2014-09 | |||||||||
Assets | |||||||||
Prepaid expenses and other current assets | 10,789 | ||||||||
Total current assets | 10,789 | ||||||||
Other assets | 42,405 | ||||||||
Total assets | 53,194 | ||||||||
Liabilities and shareholders’ equity | |||||||||
Accrued and deferred income taxes | 13,761 | ||||||||
Total liabilities | 13,761 | ||||||||
Retained earnings | 39,433 | ||||||||
Total shareholders’ equity | 39,433 | ||||||||
Total liabilities and shareholders’ equity | $ 53,194 | ||||||||
Accounting Standards Update 2014-09 | Capitalization of Contract Costs and Impact of Adopting New Revenue Standard | |||||||||
Assets | |||||||||
Prepaid expenses and other current assets | 10,789 | ||||||||
Total current assets | 10,789 | ||||||||
Other assets | 46,229 | ||||||||
Total assets | 57,018 | ||||||||
Liabilities and shareholders’ equity | |||||||||
Accrued and deferred income taxes | 14,710 | ||||||||
Total liabilities | 14,710 | ||||||||
Retained earnings | 42,308 | ||||||||
Total shareholders’ equity | 42,308 | ||||||||
Total liabilities and shareholders’ equity | $ 57,018 |
Recent Accounting Pronounceme_5
Recent Accounting Pronouncements - Schedule of Impact of New Accounting Pronouncements on Consolidated Statement of Income (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
May 25, 2019 | Feb. 23, 2019 | Nov. 24, 2018 | May 26, 2018 | Feb. 24, 2018 | Nov. 25, 2017 | May 25, 2019 | May 26, 2018 | ||
Operating expenses: | |||||||||
Selling and administrative expenses | [1] | $ 88,207 | $ 88,350 | $ 242,487 | $ 264,508 | ||||
Total operating expenses | 393,508 | 380,297 | 1,156,671 | 1,121,476 | |||||
Operating income | 60,212 | 47,087 | 173,084 | 140,950 | |||||
Income before income taxes | 61,700 | 47,792 | 177,054 | 144,393 | |||||
Provision for income taxes | 14,480 | 11,433 | 43,908 | 15,450 | |||||
Net income | $ 47,220 | $ 47,606 | $ 38,320 | $ 36,359 | $ 58,378 | $ 34,206 | $ 133,146 | $ 128,943 | |
As reported - Diluted (in dollars per share) | $ 2.46 | $ 1.85 | $ 6.93 | $ 6.39 | |||||
Under Historical Guidance | |||||||||
Operating expenses: | |||||||||
Selling and administrative expenses | $ 89,805 | $ 246,310 | |||||||
Total operating expenses | 395,106 | 1,160,494 | |||||||
Operating income | 58,614 | 169,261 | |||||||
Income before income taxes | 60,102 | 173,231 | |||||||
Provision for income taxes | 14,104 | 42,960 | |||||||
Net income | $ 45,998 | $ 130,271 | |||||||
As reported - Diluted (in dollars per share) | $ 2.40 | $ 6.78 | |||||||
Impact of Adopting New Revenue Standard | Accounting Standards Update 2014-09 | |||||||||
Operating expenses: | |||||||||
Selling and administrative expenses | $ (1,598) | $ (3,823) | |||||||
Total operating expenses | (1,598) | (3,823) | |||||||
Operating income | 1,598 | 3,823 | |||||||
Income before income taxes | 1,598 | 3,823 | |||||||
Provision for income taxes | 376 | 948 | |||||||
Net income | $ 1,222 | $ 2,875 | |||||||
As reported - Diluted (in dollars per share) | $ 0.06 | $ 0.15 | |||||||
[1] | Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets. |
Recent Accounting Pronounceme_6
Recent Accounting Pronouncements - Narrative (Details) $ in Millions | Aug. 25, 2018USD ($) |
Accounting Policies [Abstract] | |
Future minimum payments due under operating lease | $ 47.1 |
Revenue Recognition - Total Rev
Revenue Recognition - Total Revenue Disaggregated by Service Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 25, 2019 | May 26, 2018 | May 25, 2019 | May 26, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 453,720 | $ 427,384 | $ 1,329,755 | $ 1,262,426 |
Revenue | Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenues | 100.00% | 100.00% | 100.00% | 100.00% |
Core Laundry Operations | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 399,781 | $ 379,071 | $ 1,184,666 | $ 1,131,822 |
Core Laundry Operations | Revenue | Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenues | 88.10% | 88.70% | 89.10% | 89.70% |
Specialty Garments | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 37,313 | $ 34,060 | $ 101,506 | $ 89,496 |
Specialty Garments | Revenue | Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenues | 8.20% | 8.00% | 7.60% | 7.10% |
First Aid | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 16,626 | $ 14,253 | $ 43,583 | $ 41,108 |
First Aid | Revenue | Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of revenues | 3.70% | 3.30% | 3.30% | 3.20% |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
May 25, 2019USD ($) | May 25, 2019USD ($) | |
Disaggregation of Revenue [Line Items] | ||
Percentage of revenues derived from route servicing fees | 91.00% | |
Current assets related to deferred commissions | $ 10.8 | $ 10.8 |
Noncurrent assets related to deferred commissions | 46.2 | 46.2 |
Amortization expense related to deferred commissions | $ 3 | $ 8.7 |
Core Laundry Operations | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenues recognized over time | 95.80% | 95.50% |
Percentage of revenues recognized at a point in time | 4.20% | 4.50% |
Specialty Garments | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenues recognized over time | 80.10% | 82.00% |
Percentage of revenues recognized at a point in time | 19.90% | 18.00% |
First Aid | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of revenues recognized at a point in time | 100.00% | 100.00% |
Business Acquisitions - Narrati
Business Acquisitions - Narrative (Details) $ in Millions | 9 Months Ended |
May 25, 2019USD ($)Business | |
Business Combinations [Abstract] | |
Number of business acquired | Business | 4 |
Business acquisitions, aggregate purchase price | $ | $ 3 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets or Liabilities Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands | May 25, 2019 | Aug. 25, 2018 |
Assets: | ||
Cash equivalents | $ 212,559 | $ 103,190 |
Pension plan assets | 5,935 | 6,325 |
Foreign currency forward contracts | 330 | 127 |
Total assets at fair value | 218,824 | 109,642 |
Level 1 | ||
Assets: | ||
Cash equivalents | 212,559 | 103,190 |
Pension plan assets | 0 | 0 |
Foreign currency forward contracts | 0 | 0 |
Total assets at fair value | 212,559 | 103,190 |
Level 2 | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Pension plan assets | 5,935 | 6,325 |
Foreign currency forward contracts | 330 | 127 |
Total assets at fair value | 6,265 | 6,452 |
Level 3 | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Pension plan assets | 0 | 0 |
Foreign currency forward contracts | 0 | 0 |
Total assets at fair value | $ 0 | $ 0 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities - Narrative (Details) $ in Thousands, $ in Millions | 9 Months Ended | ||
May 25, 2019USD ($) | May 25, 2019CAD ($) | Aug. 25, 2018USD ($) | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Amount reclassified from accumulated other comprehensive loss | $ (28,517) | $ (25,159) | |
Forward Contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional value (CAD) | $ 10.7 | ||
Amount reclassified from accumulated other comprehensive loss | 200 | ||
Reclassification from accumulated other comprehensive loss to revenue | 100 | ||
Other Long-Term Assets | Forward Contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Fair value of the contracts | 200 | ||
Prepaid Expenses and Other Current Assets | Forward Contracts | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Fair value of the contracts | $ 100 |
Employee Benefit Plans - Narrat
Employee Benefit Plans - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
May 25, 2019USD ($)Retirement-Plan | May 26, 2018USD ($) | May 25, 2019USD ($)Retirement-Plan | May 26, 2018USD ($) | |
Postemployment Benefits [Abstract] | ||||
Contributions charged to expense under the plan | $ 5.8 | $ 5.4 | $ 14.6 | $ 13.5 |
Number of frozen non-contributory defined benefit pension plans | Retirement-Plan | 2 | 2 | ||
Amounts charged to expense related to the plans | $ 0.5 | $ 0.6 | $ 1.6 | $ 1.9 |
Income Per Share - Schedule of
Income Per Share - Schedule of Computation of Basic Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
May 25, 2019 | Feb. 23, 2019 | Nov. 24, 2018 | May 26, 2018 | Feb. 24, 2018 | Nov. 25, 2017 | May 25, 2019 | May 26, 2018 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||||||
Net income available to shareholders | $ 47,220 | $ 47,606 | $ 38,320 | $ 36,359 | $ 58,378 | $ 34,206 | $ 133,146 | $ 128,943 |
Allocation of net income for Basic: | ||||||||
Common stock | $ 47,220 | $ 36,359 | $ 133,146 | $ 128,943 | ||||
Weighted average number of shares for Basic: | ||||||||
Common stock (in shares) | 19,051 | 19,533 | 19,110 | 20,036 | ||||
Common Stock | ||||||||
Allocation of net income for Basic: | ||||||||
Common stock | $ 39,563 | $ 30,034 | $ 111,626 | $ 104,324 | ||||
Weighted average number of shares for Basic: | ||||||||
Common stock (in shares) | 15,341 | 15,446 | 15,400 | 15,463 | ||||
Income per share for Basic: | ||||||||
Common stock (in dollars per share) | $ 2.58 | $ 1.94 | $ 7.25 | $ 6.75 | ||||
Class B Common Stock | ||||||||
Allocation of net income for Basic: | ||||||||
Common stock | $ 7,657 | $ 6,325 | $ 21,520 | $ 24,619 | ||||
Weighted average number of shares for Basic: | ||||||||
Common stock (in shares) | 3,710 | 4,087 | 3,710 | 4,573 | ||||
Income per share for Basic: | ||||||||
Common stock (in dollars per share) | $ 2.06 | $ 1.55 | $ 5.80 | $ 5.38 |
Income Per Share - Schedule o_2
Income Per Share - Schedule of Computation of Diluted Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 25, 2019 | May 26, 2018 | May 25, 2019 | May 26, 2018 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
As reported - Basic | $ 47,220 | $ 36,359 | $ 133,146 | $ 128,943 |
As reported - Basic (in shares) | 19,051 | 19,533 | 19,110 | 20,036 |
As reported – Diluted | $ 47,220 | $ 36,359 | $ 133,146 | $ 128,943 |
As reported - Diluted (in shares) | 19,168 | 19,687 | 19,220 | 20,178 |
As reported - Diluted (in dollars per share) | $ 2.46 | $ 1.85 | $ 6.93 | $ 6.39 |
Common Stock | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
As reported - Basic | $ 39,563 | $ 30,034 | $ 111,626 | $ 104,324 |
As reported - Basic (in shares) | 15,341 | 15,446 | 15,400 | 15,463 |
As reported - Basic (in dollars per share) | $ 2.58 | $ 1.94 | $ 7.25 | $ 6.75 |
Add: effect of dilutive potential common shares | $ 0 | $ 0 | $ 0 | $ 0 |
Add: effect of dilutive potential common shares (in shares) | 117 | 154 | 110 | 142 |
Class B Common Stock | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
As reported - Basic | $ 7,657 | $ 6,325 | $ 21,520 | $ 24,619 |
As reported - Basic (in shares) | 3,710 | 4,087 | 3,710 | 4,573 |
As reported - Basic (in dollars per share) | $ 2.06 | $ 1.55 | $ 5.80 | $ 5.38 |
Income Per Share - Narrative (D
Income Per Share - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
May 25, 2019 | May 26, 2018 | May 25, 2019 | May 26, 2018 | |
Earnings Per Share [Abstract] | ||||
Anti-dilutive securities excluded from calculation of diluted earnings per share (in shares) | 797 | 3,155 | 909 | 1,744 |
Inventories - Components of Inv
Inventories - Components of Inventory (Details) - USD ($) $ in Thousands | May 25, 2019 | Aug. 25, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 20,362 | $ 18,508 |
Work in process | 2,518 | 3,271 |
Finished goods | 72,041 | 68,397 |
Total inventories | $ 94,921 | $ 90,176 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
May 25, 2019USD ($) | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Beginning balance | $ 397,422 |
Goodwill recorded during the period | 1,879 |
Other | (155) |
Ending balance | $ 399,146 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Narrative (Details) $ in Millions | May 25, 2019USD ($) |
Technology-Based Intangible Assets [Member] | Plant Property Equipment [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible Assets, Gross (Excluding Goodwill) | $ 11.6 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | May 25, 2019 | Aug. 25, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 303,287 | $ 297,218 |
Accumulated Amortization | 228,100 | 214,734 |
Net Carrying Amount | 75,187 | 82,484 |
Customer contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 220,985 | 220,303 |
Accumulated Amortization | 161,736 | 152,985 |
Net Carrying Amount | 59,249 | 67,318 |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 35,000 | 35,030 |
Accumulated Amortization | 32,551 | 31,444 |
Net Carrying Amount | 2,449 | 3,586 |
Computer Software, Intangible Asset [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 47,302 | 41,885 |
Accumulated Amortization | 33,813 | 30,305 |
Net Carrying Amount | $ 13,489 | $ 11,580 |
Asset Retirement Obligations -
Asset Retirement Obligations - Narrative (Details) | 9 Months Ended |
May 25, 2019 | |
Minimum | |
Asset Retirement Obligations [Line Items] | |
Remaining lives | 1 year |
Maximum | |
Asset Retirement Obligations [Line Items] | |
Remaining lives | 26 years |
Asset Retirement Obligations _2
Asset Retirement Obligations - Reconciliation of Asset Retirement Liability (Details) - USD ($) $ in Thousands | 9 Months Ended | |
May 25, 2019 | May 26, 2018 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Beginning balance | $ 13,668 | |
Accretion expense | 647 | $ 704 |
Effect of exchange rate changes | (106) | |
Change in estimate | (1,705) | |
Ending balance | $ 12,504 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Feb. 23, 2019USD ($) | May 25, 2019USD ($)sitecompany | Aug. 25, 2018USD ($) | |
Gain Contingencies [Line Items] | |||
Estimated rate of inflation | 3.00% | ||
Annual proceeds | $ 0.3 | ||
Balance in escrow account | $ 4.2 | ||
Number of insurance companies | company | 3 | ||
Pre-tax non-cash impairment charge | $ 55.8 | ||
Gain (Loss) Related to Litigation Settlement | $ 21.1 | ||
One-time cash payment received for sale of CRM system | 13 | ||
Hardware received at fair value | $ 0.8 | ||
Minimum | |||
Gain Contingencies [Line Items] | |||
Risk-free interest rates utilized | 2.30% | ||
Maximum | |||
Gain Contingencies [Line Items] | |||
Risk-free interest rates utilized | 2.80% | ||
Williamstown, Vermont | |||
Gain Contingencies [Line Items] | |||
Number of sites related to former operations | site | 2 |
Commitments and Contingencies_2
Commitments and Contingencies - Changes to Environmental Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
May 25, 2019 | May 26, 2018 | |
Accrual For Environmental Loss Contingencies Roll Forward | ||
Beginning balance | $ 25,486 | |
Costs incurred for which reserves had been provided | (828) | |
Insurance proceeds | 110 | |
Accretion on environmental contingencies | 566 | $ 519 |
Change in discount rates | 479 | |
Ending balance | $ 25,813 |
Commitments and Contingencies_3
Commitments and Contingencies - Anticipated Payments and Insurance Proceeds of Identified Environmental Remediation Liabilities (Details) - USD ($) $ in Thousands | May 25, 2019 | Aug. 25, 2018 |
Estimated costs – current dollars | ||
2019 | $ 8,666 | |
2020 | 2,122 | |
2021 | 1,635 | |
2022 | 1,272 | |
2023 | 1,175 | |
Thereafter | 12,135 | |
Total | 27,005 | |
Estimated insurance proceeds | ||
2019 | (62) | |
2020 | (159) | |
2021 | (173) | |
2022 | (159) | |
2023 | (173) | |
Thereafter | (829) | |
Total | (1,555) | |
Net anticipated costs | ||
2019 | 8,604 | |
2020 | 1,963 | |
2021 | 1,462 | |
2022 | 1,113 | |
2023 | 1,002 | |
Thereafter | 11,306 | |
Total | 25,450 | |
Effect of inflation | 7,855 | |
Effect of discounting | (7,492) | |
Balance at end of period | $ 25,813 | $ 25,486 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
May 25, 2019 | May 26, 2018 | May 25, 2019 | May 26, 2018 | Aug. 25, 2018 | |
Percentage of domestic federal statutory tax rate | 21.00% | 25.90% | 21.00% | 25.90% | |
Provisional net benefit | $ 20.1 | ||||
Deferred tax reduction | $ 22.7 | 22.6 | |||
Effective income tax rate | 23.50% | 23.90% | 24.80% | 10.70% | |
Discrete income tax benefit | $ 1.5 | ||||
Deferred income tax expense (benefit) | $ 22.7 | ||||
Transition tax | $ 2.5 | $ 2.5 | |||
Maximum | |||||
Percentage of domestic federal statutory tax rate | 35.00% | ||||
Minimum | |||||
Percentage of domestic federal statutory tax rate | 21.00% |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - Revolving Credit Facility - Credit Agreement $ in Millions | 9 Months Ended |
May 25, 2019USD ($) | |
Debt Instrument [Line Items] | |
Maximum borrowing capacity | $ 250 |
Maturity date | Apr. 11, 2021 |
Outstanding borrowings | $ 0 |
Outstanding letters of credit | 71.8 |
Amount available for borrowing | $ 178.2 |
LIBOR | |
Debt Instrument [Line Items] | |
Basis spread on variable rate (as percent) | 0.75% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Loss, Net of Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
May 25, 2019 | May 26, 2018 | May 25, 2019 | May 26, 2018 | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Balance at beginning of period | $ 1,580,790 | $ 1,544,401 | $ 1,464,967 | $ 1,453,192 | |||
Other comprehensive loss | (2,511) | (3,859) | (3,358) | (5,741) | |||
Balance at end of period | 1,609,696 | 1,429,421 | 1,609,696 | 1,429,421 | |||
Foreign Currency Translation | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Balance at beginning of period | (21,980) | (16,695) | (21,116) | (15,932) | |||
Other comprehensive income (loss) before reclassification | (2,649) | (3,931) | (3,513) | (4,694) | |||
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 | 0 | 0 | |||
Other comprehensive loss | (2,649) | (3,931) | (3,513) | (4,694) | |||
Balance at end of period | (24,629) | (20,626) | (24,629) | (20,626) | |||
Pension-related | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Balance at beginning of period | [1] | (4,135) | (6,669) | [2] | (4,135) | (5,477) | [2] |
Other comprehensive income (loss) before reclassification | [1] | 0 | 0 | [2] | 0 | 0 | [2] |
Amounts reclassified from accumulated other comprehensive loss | [1] | 0 | 0 | [2] | 0 | (1,192) | [2] |
Other comprehensive loss | [1] | 0 | 0 | [2] | 0 | (1,192) | [2] |
Balance at end of period | [1] | (4,135) | (6,669) | [2] | (4,135) | (6,669) | [2] |
Derivative Financial Instruments | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Balance at beginning of period | [1] | 109 | (36) | 92 | (109) | ||
Other comprehensive income (loss) before reclassification | [1] | 184 | 106 | 277 | 165 | ||
Amounts reclassified from accumulated other comprehensive loss | [1] | (46) | (34) | (122) | (20) | ||
Other comprehensive loss | [1] | 138 | 72 | 155 | 145 | ||
Balance at end of period | [1] | 247 | 36 | 247 | 36 | ||
Total Accumulated Other Comprehensive (Loss) Income | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Balance at beginning of period | (26,006) | (23,400) | (25,159) | (21,518) | |||
Other comprehensive income (loss) before reclassification | (2,465) | (3,825) | (3,236) | (4,529) | |||
Amounts reclassified from accumulated other comprehensive loss | (46) | (34) | (122) | (1,212) | |||
Other comprehensive loss | (2,511) | (3,859) | (3,358) | (5,741) | |||
Balance at end of period | $ (28,517) | $ (27,259) | $ (28,517) | $ (27,259) | |||
[1] | Amounts are shown net of tax. | ||||||
[2] | Activity represents the impact of the adoption of ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Amounts Reclassified from Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
May 25, 2019 | Feb. 23, 2019 | Nov. 24, 2018 | May 26, 2018 | Feb. 24, 2018 | Nov. 25, 2017 | May 25, 2019 | May 26, 2018 | ||
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||
Provision for income taxes | $ 14,480 | $ 11,433 | $ 43,908 | $ 15,450 | |||||
Net income | 47,220 | $ 47,606 | $ 38,320 | 36,359 | $ 58,378 | $ 34,206 | 133,146 | 128,943 | |
Reclassification out of Accumulated Other Comprehensive Income | |||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||
Net income | (46) | (34) | (122) | (1,212) | |||||
Pension Benefit Liabilities, Net | Reclassification out of Accumulated Other Comprehensive Income | |||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||
Provision for income taxes | [1] | 0 | 0 | 0 | (1,192) | ||||
Net income | 0 | 0 | 0 | (1,192) | |||||
Derivative Financial Instruments | Reclassification out of Accumulated Other Comprehensive Income | |||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||
Net income | (46) | (34) | (122) | (20) | |||||
Derivative Financial Instruments | Forward Contracts | Reclassification out of Accumulated Other Comprehensive Income | |||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||
Forward contracts | [2] | $ (46) | $ (34) | $ (122) | $ (20) | ||||
[1] | Activity represents the impact of the adoption of ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. | ||||||||
[2] | Amounts included in revenues in the accompanying Consolidated Statements of Income. |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 9 Months Ended |
May 25, 2019segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 6 |
Number of reporting segments | 5 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 25, 2019 | May 26, 2018 | May 25, 2019 | May 26, 2018 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 453,720 | $ 427,384 | $ 1,329,755 | $ 1,262,426 |
Operating income (loss) | 60,212 | 47,087 | 173,084 | 140,950 |
Interest income, net | (2,293) | (1,189) | (6,007) | (3,895) |
Income (loss) before taxes | 61,700 | 47,792 | 177,054 | 144,393 |
U.S. and Canadian Rental and Cleaning | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 391,128 | 369,814 | 1,157,392 | 1,103,718 |
Operating income (loss) | 70,474 | 51,981 | 189,807 | 155,295 |
Interest income, net | (1,008) | (945) | (3,113) | (2,988) |
Income (loss) before taxes | 71,480 | 52,929 | 192,899 | 158,295 |
MFG | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 58,596 | 61,331 | 187,120 | 185,045 |
Operating income (loss) | 18,684 | 21,911 | 63,576 | 67,892 |
Income (loss) before taxes | 18,606 | 21,946 | 63,322 | 67,830 |
MFG | Net Interco MFG Elim | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | (58,573) | (61,300) | (187,045) | (184,957) |
Operating income (loss) | 3,115 | (1,499) | 415 | (9,033) |
Income (loss) before taxes | 3,116 | (1,499) | 415 | (9,033) |
Corporate | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 8,630 | 9,226 | 27,199 | 28,016 |
Operating income (loss) | (38,830) | (32,420) | (96,460) | (89,739) |
Interest income, net | (1,285) | (244) | (2,894) | (907) |
Income (loss) before taxes | (37,975) | (32,203) | (94,710) | (88,816) |
Subtotal Core Laundry Operations | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 399,781 | 379,071 | 1,184,666 | 1,131,822 |
Operating income (loss) | 53,443 | 39,973 | 157,338 | 124,415 |
Interest income, net | (2,293) | (1,189) | (6,007) | (3,895) |
Income (loss) before taxes | 55,227 | 41,173 | 161,926 | 128,276 |
Specialty Garments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 37,313 | 34,060 | 101,506 | 89,496 |
Specialty Garments | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 37,313 | 34,060 | 101,506 | 89,496 |
Operating income (loss) | 5,368 | 5,589 | 12,073 | 12,866 |
Income (loss) before taxes | 5,072 | 5,094 | 11,455 | 12,448 |
First Aid | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 16,626 | 14,253 | 43,583 | 41,108 |
First Aid | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 16,626 | 14,253 | 43,583 | 41,108 |
Operating income (loss) | 1,401 | 1,525 | 3,673 | 3,669 |
Income (loss) before taxes | $ 1,401 | $ 1,525 | $ 3,673 | $ 3,669 |
Shares Repurchased and Divide_2
Shares Repurchased and Dividends - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Jan. 02, 2019 | Mar. 28, 2018 | Mar. 27, 2018 | May 25, 2019 | Feb. 23, 2019 | Nov. 24, 2018 | May 26, 2018 | Feb. 24, 2018 | Nov. 25, 2017 | May 25, 2019 |
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Repurchase of common stock, value | $ 146 | |||||||||
Total cost of shares repurchased divided by the total number of shares repurchased ($ / share) | $ 124 | $ 147.47 | $ 145.01 | |||||||
Stock Repurchased During Period, Value | $ 100 | |||||||||
Number of shares that have been repurchased during the period | 99,500 | 144,500 | ||||||||
Class B Common Stock | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Shares repurchased (in shares) | 1,105,000 | |||||||||
Quarterly dividend amount (in dollars per share) | $ 0.09 | $ 0.03 | $ 0.0900 | $ 0.0900 | $ 0.0900 | $ 0.0900 | $ 0.0300 | $ 0.0300 | ||
Common Stock | ||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||
Shares repurchased (in shares) | 73,000 | |||||||||
Quarterly dividend amount (in dollars per share) | $ 0.1125 | $ 0.0375 | $ 0.1125 | $ 0.1125 | $ 0.1125 | $ 0.1125 | $ 0.0375 | $ 0.0375 |