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What changed in UNIFIRST CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of UNIFIRST CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+235 added−251 removedSource: 10-K (2024-11-14) vs 10-K (2023-10-26)

Top changes in UNIFIRST CORP's 2024 10-K

235 paragraphs added · 251 removed · 204 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe also seek to promote a family culture and believe that our workforce is critical to our success and to the service of our customers. In addition, we focus on the safety and well-being of our team partners. We provide safety training and personal protective equipment. We also provide our team partners with competitive healthcare, wellness and other benefits.
Biggest changeIn addition, we focus on the safety and well-being of our team partners. We provide safety training and personal protective equipment. We also provide our team partners with competitive healthcare, wellness and other benefits. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers are as follows: Name Age Position Steven S.
We continue to address environmental conditions under terms of consent orders negotiated with the applicable environmental authorities or otherwise with respect to certain sites. We routinely review and evaluate sites that may require remediation and monitoring and determine our estimated costs based on various estimates and assumptions.
We continue to address environmental conditions under terms of consent orders negotiated with the applicable environmental authorities or otherwise with respect to certain sites. We routinely review and evaluate sites that may require remediation and monitoring and determine our estimated costs based on 4 various estimates and assumptions.
To date, we have experienced limited difficulty in obtaining any of our raw materials or supplies although at certain times, we have sourced raw materials or supplies from alternative sources or experienced costs increases for such raw materials and supplies. Currently, we also manufacture approximately 99% of the mats we place in service at our plant in Cave City, Arkansas.
To date, we have experienced limited difficulty in obtaining any of our raw materials or supplies although at certain times, we have sourced raw materials or supplies from alternative sources or experienced cost increases for such raw materials and supplies. Currently, we also manufacture approximately 99% of the mats we place in service at our plant in Cave City, Arkansas.
These garments were primarily work pants and shirts manufactured at three of our plants located in San Luis Potosi, Mexico, one plant located in Managua, Nicaragua, as well as at subcontracted manufacturers that we utilize within our sourcing strategy to balance demand and optimize costs.
These garments were primarily work pants and shirts manufactured at two of our plants located in San Luis Potosi, Mexico, one plant located in Managua, Nicaragua, as well as at subcontracted manufacturers that we utilize within our sourcing strategy to balance demand and optimize costs.
These were primarily work pants and shirts manufactured at three of our plants located in San Luis Potosi, Mexico, one plant located in Managua, Nicaragua, as well as at subcontract manufacturers that we utilize within our sourcing strategy to balance demand and optimize costs.
These were primarily work pants and shirts manufactured at two of our plants located in San Luis Potosi, Mexico, one plant located in Managua, Nicaragua, as well as at subcontract manufacturers that we utilize within our sourcing strategy to balance demand and optimize costs.
At certain specialized facilities, we also decontaminate and clean clothes and other items which may have been exposed to radioactive materials and service special cleanroom protective wear and facilities. We also offer non-garment items and services, such as industrial wiping products, floor mats, dry and wet mops, restroom and cleaning supplies and other textile products.
At certain specialized facilities, like nuclear plants, we also decontaminate and clean clothes and other items which may have been exposed to radioactive materials and service special cleanroom protective wear and facilities. We also offer non-garment items and services, such as industrial wiping products, floor mats, dry and wet mops, restroom and cleaning supplies and other textile products.
In addition to our traditional rental competitors, we may increasingly compete in the future with businesses that focus on selling uniforms, facilities services products and other related items. MANUFACTURING AND SOURCING We manufactured approximately 60% of all garments we placed in service during fiscal 2023.
In addition to our traditional rental competitors, we may increasingly compete in the future with businesses that focus on selling uniforms, facilities services products and other related items. MANUFACTURING AND SOURCING We manufactured approximately 65% of all garments we placed in service during fiscal 2024.
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. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years taken measures to avoid their improper disposal.
In particular, industrial laundries currently use and must properly dispose of detergent wastewater and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years taken measures to avoid their improper disposal.
At certain specialized facilities, we also decontaminate and clean work clothes and other items that may have been exposed to radioactive materials, and service special cleanroom protective wear and facilities.
At certain specialized facilities, like nuclear plants, we also decontaminate and clean work clothes and other items that may have been exposed to radioactive materials, and service special cleanroom protective wear and facilities.
We employ specialist executive-level salespeople in our National Accounts organization—with specialists in rental programs and in direct sale programs—to target the very largest national companies with broad uniform and/or facility services program needs. We believe that effective customer service is the most crucial element in developing and maintaining our market position.
We employ specialist, trained sales representatives including executive-level salespeople for our Strategic and National Accounts organization—with specialists in rental programs and in direct sale programs—to target the very largest national companies with broad uniform and/or facility services program needs. We believe that effective customer service is the most crucial element in developing and maintaining our market position.
DiFillippo is an Executive Vice President, Operations and has had primary responsibility for overseeing the operations of certain regions in the U.S. and Canada since 2002. From 2000 through 2002, Mr. DiFillippo served as Vice President, Central Rental Group and, prior to 2000, he served as a Regional General Manager. David M. Katz joined our Company in 2009. Mr.
DiFillippo is an Executive Vice President, Operations and has had primary responsibility for overseeing the operations of certain regions in the U.S. and Canada since 2002. From 2000 through 2002, Mr. DiFillippo served as Vice President, Central Rental Group and, prior to 2000, he served as a Regional General Manager. William M. Ross joined our Company in 1989. Mr.
Ross is an Executive Vice President, Operations and has had primary responsibility for overseeing specified regions in the U.S. since 2016. From 2002 to 2016, Mr. Ross served as Regional Vice President of the Company. Prior to 2002, Mr. Ross held several sales and operations management positions at the Company.
Ross is an Executive Vice President, Operations and has had primary responsibility for overseeing specified regions in the U.S. since 2016. From 2002 to 2016, Mr. Ross served as Regional Vice President of the Company. Prior to 2002, Mr. Ross held several sales and operations management positions at the Company. Michael A. Croatti joined our Company in 1987. Mr.
We also rent and sell industrial wiping products, floor mats, facility service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as certain safety training to a variety of manufacturers, retailers and service companies. We serve businesses of all sizes in numerous industry categories.
We also rent and sell industrial wiping products, floor mats, facility management and service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as certain safety training to a variety of manufacturers, retailers and service companies. We serve businesses of all sizes across multiple industry sectors.
Katz worked for DHL Express where he served as the Northeast Vice President of Field Sales from 2003 to 2007, the Northeast Vice President of National Account Sales from 2007 to 2008 and the Senior Vice President and General Manager of the Northeast from 2008 until 2009. Michael A. Croatti joined our Company in 1987. Mr.
Katz worked for DHL Express where he served as the Northeast Vice President of Field Sales from 2003 to 2007, the Northeast Vice President of National Account Sales from 2007 to 2008 and the Senior Vice President and General Manager of the Northeast from 2008 until 2009. David A. DiFillippo joined our Company in 1979. Mr.
We also sell first aid cabinet services and other safety supplies, provide certain safety training and maintain wholesale distribution and pill packaging operations.
We also sell first aid cabinet services and other safety supplies, provide certain safety training and maintain wholesale distribution and pill packaging operations for non-prescription medicines.
We measure the speed and accuracy of our customer service efforts weekly and continuously survey, record and report satisfaction levels to evaluate current performance and highlight areas for improvement. 2 COMPETITION The uniform rental and sales industry is highly competitive. The principal methods of competition in the industry are the quality of products, the quality of service and pricing.
We measure the speed and accuracy of our customer service efforts weekly and continuously survey, record and report satisfaction levels to evaluate current performance and highlight areas for improvement. 2 COMPETITION The uniform rental and sales industry is highly competitive.
Our centralized services, specialized equipment and economies of scale generally allow us to be more cost effective in providing garment services than customers could be themselves, particularly those customers with high employee turnover rates. During the fiscal year ended August 26, 2023 (“fiscal 2023”), we manufactured approximately 60% of the garments we placed in service.
Our centralized services, specialized equipment and economies of scale generally allow us to be more cost effective in providing garment solutions and services than customers could be themselves, particularly those customers with high employee turnover rates. During the fiscal year ended August 31, 2024 (“fiscal 2024”), we manufactured approximately 65% of the garments placed in service.
For a discussion of our accruals with respect to environmental liabilities and additional discussion regarding environmental matters, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
For a discussion of our accruals with respect to environmental liabilities and additional discussion regarding environmental matters, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K. Refer also to the risk factors set forth in this Annual Report on Form 10-K for additional information regarding environmental matters.
We currently service over 300,000 customer locations in the U.S., Canada and Europe from more than 270 customer service, distribution and manufacturing facilities. MARKETING, SALES, AND CUSTOMER SERVICE We market our products and services to a diverse customer base and to prospects that range across virtually all industry segments.
We currently service over 300,000 customer locations in the United States (“U.S.”), Canada and Europe out of more than 270 UniFirst customer service, distribution and manufacturing facilities. MARKETING, SALES, AND CUSTOMER SERVICE We market our products and services to a diverse customer base and to prospects that range across virtually all industry segments.
CUSTOMERS We serve businesses of all sizes in most industry categories. During each of the past three years, no single customer in our Core Laundry Operations segment accounted for more than 10% of our revenues.
CUSTOMERS We serve businesses of all sizes across multiple industries and sectors. During each of the past three years, no single customer in our Core Laundry Operations segment accounted for more than 10% of our revenues.
O’Connor is an Executive Vice President and our Chief Financial Officer. He has had primary responsibility for overseeing the financial functions of our Company, as well as our information systems department, since January 2018. Mr. O’Connor previously served as our Corporate Controller from 2009 to 2016.
He has had primary responsibility for overseeing the financial functions of our Company, as well as our information systems department, since 2018. Mr. O’Connor previously served as our Corporate Controller from 2009 to 2016.
From 2012 through 2015, he served as Senior Vice President, Service; from 2002 through 2012, he served as Vice President, Central Rental Group; and prior to 2002, he held various operating positions within the Company. Michael A. Croatti is the nephew of Cynthia Croatti, a member of our Board of Directors. William M. Ross joined our Company in 1989. Mr.
From 2012 through 2015, he served as Senior Vice President, Service; from 2002 through 2012, he served as Vice President, Central Rental Group; and prior to 2002, he held various operating positions within the Company. Michael A. Croatti is the nephew of Cynthia Croatti, a member of our Board of Directors. On September 16, 2024, Michael A.
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 us or disruptions in our ability to service such facilities.
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 us or disruptions in our ability to service such facilities.
Our principal competitors include Cintas Corporation, Alsco and Vestis Corporation (formerly Aramark Uniform Services). The remainder of the market is divided among several hundred smaller businesses, mostly serving a single or a limited number of geographic service areas.
The principal sources of differentiation in the industry are the range of products and services, the quality of service and pricing. Our principal competitors include Cintas Corporation, Alsco and Vestis Corporation. The remainder of the market is divided among several hundred smaller businesses, mostly serving a single or a limited number of geographic service areas.
Croatti 54 Executive Vice President, Operations William M. Ross 62 Executive Vice President, Operations The principal occupation and positions for the past five years of our executive officers named above are as follows: Steven S. Sintros joined our Company in 2004. Mr. Sintros is our President and Chief Executive Officer and a Director.
Croatti 55 Executive Vice President, Operations The principal occupation and positions for the past five years of our executive officers named above are as follows: Steven S. Sintros joined our Company in 2004. Mr. Sintros is our President and Chief Executive Officer and a Director. He has had overall responsibility for management of our Company since 2017.
HUMAN CAPITAL As of August 26, 2023, we employed approximately 16,000 persons, and less than 1% of our U.S. employees are represented by a union pursuant to a collective bargaining agreement. We consider our employee relations to be good. Our success depends on our employee team partners. As a result, we strive to recruit, develop and retain talented team partners.
HUMAN CAPITAL As of August 31, 2024, we employed approximately 16,000 persons, and less than 1% of our U.S. employees are represented by a union pursuant to a collective bargaining agreement. We consider our employee relations to be good.
GOVERNMENT REGULATIONS We, like our competitors, are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances.
Croatti agreed to transition from his role as an Executive Officer of the Company effective as of November 30, 2024. GOVERNMENT REGULATIONS We, like our competitors, are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances.
He has had overall responsibility for management of our Company since July 2017. He previously served as our Chief Financial Officer from January 2009 until January 2018. Mr. Sintros served as a Finance Manager in 2004 and Corporate Controller from 2005 until January 2009. 3 Shane O’Connor joined our Company in 2005. Mr.
He previously served as our Chief Financial Officer from 2009 until 2018. Mr. Sintros served as a Finance Manager in 2004 and Corporate Controller from 2005 until 2009. 3 Shane O’Connor joined our Company in 2005. Mr. O’Connor is an Executive Vice President and our Chief Financial Officer.
We also provide representatives with detailed on-line profiles of high opportunity markets to educate them on the typical issues, needs and concerns of those markets. This helps establish credibility and aids their ability to deliver value-based solutions. We employ a large team of trained professional sales representatives to market our services to potential customers and develop new accounts.
This helps establish credibility and aids their ability to deliver value-based solutions. We employ a large team of trained professional sales representatives to market our services to potential customers and develop new accounts.
In 2016, he left the Company to take the role of Senior Vice President and Chief Financial Officer at Unidine Corporation, a managed dining services company, and he then rejoined our Company in January 2018. David A. DiFillippo joined our Company in 1979. Mr.
In 2016, he left the Company to take the role of Senior Vice President and Chief Financial Officer at Unidine Corporation, a managed dining services company, and he then rejoined our Company in 2018. Kelly Rooney joined our Company in September 2024 and has primary responsibility for overseeing the administrative and operational functions of our Company.
These prospect records serve as a primary targeting resource for our professional sales organization and are constantly updated, expanded and maintained by an in-house team of specialist database qualifiers and managers. To aid in the effective marketing of products and services, we supply sales representatives with an extensive selection of sales aids, brochures, presentation materials and vertical market communications tools.
These prospect records serve as a primary targeting resource for our professional sales and marketing organization and are constantly updated, expanded and maintained by an in-house team of specialist database qualifiers and managers.
We provide training to our team partners along with opportunities to advance. For example, our leadership development program provides leadership education, operational knowledge and hands-on business experience within the industrial laundry and facilities services industry and is designed to develop our future managers.
For example, our leadership development program provides leadership education, operational knowledge and hands-on business experience within the industrial laundry and facilities services industry and is designed to develop our future managers. We also seek to promote a family culture and believe that our workforce is critical to our success and to the service of our customers.
Refer also to the risk factors set forth in this Annual Report on Form 10-K for additional information regarding environmental matters. 4 Our nuclear garment decontamination facilities in the U.S. are licensed by the Nuclear Regulatory Commission, or in certain cases, by the applicable state agency, and are subject to regulation by federal, state and local authorities.
Our nuclear garment decontamination facilities in the U.S. are licensed by the Nuclear Regulatory Commission, or in certain cases, by the applicable state agency, and are subject to regulation by federal, state and local authorities. We also have nuclear garment decontamination facilities in the United Kingdom and the Netherlands.
ITEM 1. B USINESS GENERAL UniFirst Corporation, a corporation organized under the laws of the Commonwealth of Massachusetts in 1950, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, is one of the leading providers of workplace uniforms and protective work wear clothing in the United States (“U.S.”).
B USINESS GENERAL UniFirst Corporation, a corporation organized under the laws of the Commonwealth of Massachusetts in 1950, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, is one of the leading providers in the supply and servicing of uniform and workwear programs, facility management and service products, as well as first aid and safety supplies and services in North America.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS Our executive officers are as follows: Name Age Position Steven S. Sintros 50 President and Chief Executive Officer Shane O’Connor 49 Executive Vice President and Chief Financial Officer David A. DiFillippo 66 Executive Vice President, Operations David M. Katz 60 Executive Vice President, Sales and Marketing Michael A.
Sintros 51 President and Chief Executive Officer Shane O’Connor 50 Executive Vice President and Chief Financial Officer Kelly Rooney 50 Executive Vice President and Chief Operating Officer David M. Katz 61 Executive Vice President, Sales and Marketing David A. DiFillippo 67 Executive Vice President, Operations William M. Ross 63 Executive Vice President, Operations Michael A.
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We also have nuclear garment decontamination facilities in the United Kingdom and the Netherlands. These facilities are licensed and regulated by the respective country’s applicable federal agency.
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To aid in the effective marketing of products and services, we supply sales representatives with an extensive selection of sales aids, brochures, presentation materials and vertical market communications tools. We also provide representatives with detailed on-line profiles of high opportunity markets to educate them on the typical issues, needs and concerns of those markets.
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Given how much of our success depends on our employee team partners, we strive to recruit, develop and retain the best talent. We provide continuous training to our team partners along with opportunities to advance.
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Prior to joining UniFirst, Ms. Rooney held various operational roles at Waste Management, including as an Area General Manager from August 2020 to September 2021 and a Director of Operations from April 2019 to August 2020. Most recently, Ms.
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Rooney served as Senior Vice President and Chief Human Resources Officer from August 2022 to September 2024 and Vice President, Human Resources from September 2021 to August 2022 at Waste Management. As Chief Human Resources Officer, Ms.
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Rooney was responsible for leading the development and implementation of Waste Management’s overall human capital, employee experience and operational effectiveness strategy, with a focus on building organizational health and capability and developing talent. Prior to joining Waste Management, Ms.
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Rooney held various operational and leadership roles at other companies in the waste management industry, including at Advanced Disposal Services, Inc., where she was the Regional General Manager from 2015 to 2019 and Director of Operations, Recycling from 2012 to 2015. David M. Katz joined our Company in 2009. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSuch factors include, but are not limited to, uncertainties caused by an economic recession or other adverse economic conditions, including, without limitation, as a result of continued high inflation rates or further increases in inflation or interest rates or extraordinary events or circumstances such as geopolitical conflicts like the conflict between Russia and Ukraine, disruption in the Middle East or the COVID-19 pandemic, and their impact on our customers’ businesses and workforce levels, disruptions of our business and operations, including limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers in connection with extraordinary events or circumstances such as the COVID-19 pandemic, uncertainties regarding our ability to consummate acquisitions and successfully integrate acquired businesses, including Clean Uniform (“Clean”), and the performance of such businesses, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, any adverse outcome of pending or future contingencies or claims, our ability to compete successfully without any significant degradation in our margin rates, seasonal and quarterly fluctuations in business levels, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the effect of currency fluctuations on our results of operations and financial condition, our dependence on third parties to supply us with raw materials, which such supply could be severely disrupted as a result of extraordinary events or circumstances such as the conflict between Russia and Ukraine, any loss of key management or other personnel, increased costs as a result of any changes in federal, state, international or other laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding, or adverse impacts from continued high price levels of natural gas, electricity, fuel and labor or increases in such costs, the negative effect on our business from sharply depressed oil and natural gas prices, the continuing increase in domestic healthcare costs, increased workers’ compensation claim costs, increased healthcare claim costs, our ability to retain and grow our customer base, demand and prices for our products and services, fluctuations in our Specialty Garments business, political or other instability, supply chain disruption or infection among our employees in Mexico and Nicaragua where our principal garment manufacturing plants are located, our ability to properly and efficiently design, construct, implement and operate a new customer relationship management (“CRM”) computer system and an enterprise resource planning (“ERP”) computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, additional professional and internal costs necessary for compliance with any changes in or additional SEC, New York Stock Exchange (the “NYSE”) and accounting or other rules, including, without limitation, recent rules proposed by the SEC regarding climate-related and cybersecurity-related disclosures, strikes and unemployment levels, our efforts to evaluate and potentially reduce internal costs, economic and other developments associated with the war on terrorism and its impact on the economy, the impact of foreign trade policies and tariffs or other impositions on imported goods on our business, results of operations and financial condition, general economic conditions, our ability to successfully implement our business strategies and processes, including our capital allocation strategies, our ability to successfully remediate the material weakness in internal control over financial reporting disclosed in this Annual Report on Form 10-K in an appropriate and timely matter or at all, and the other factors described under “Item 1A.
Biggest changeSuch factors include, but are not limited to, uncertainties caused by an economic recession or other adverse economic conditions, including, without limitation, as a result of elevated inflation or interest rates or extraordinary events or circumstances such as geopolitical conflicts like the conflict between Russia and Ukraine and disruption in the Middle East, and their impact on our customers’ businesses and workforce levels, disruptions of our business and operations, including limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers in connection with extraordinary events or circumstances, uncertainties regarding our ability to consummate acquisitions and successfully integrate acquired businesses, and the performance of such businesses, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, any adverse outcome of pending or future contingencies or claims, our ability to compete successfully without any significant degradation in our margin rates, seasonal and quarterly fluctuations in business levels, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the effect of currency fluctuations on our results of operations and financial condition, our dependence on third parties to supply us with raw materials, which such supply could be severely disrupted as a result of extraordinary events or circumstances such as the conflict between Russia and Ukraine, any loss of key management or other personnel, increased costs as a result of any changes in federal, state, international or other laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding, or adverse impacts from continued high price levels of natural gas, electricity, fuel and labor or increases in such costs, the negative effect on our business from sharply depressed oil and natural gas prices, the continuing increase in domestic healthcare costs, increased workers’ compensation claim costs, increased healthcare claim costs, our ability to retain and grow our customer base, demand and prices for our products and services, fluctuations in our Specialty Garments business, political or other instability, supply chain disruption or infection among our employees in Mexico and Nicaragua where our principal garment manufacturing plants are located, our ability to properly and efficiently design, construct, implement and operate a new enterprise resource planning (“ERP”) computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, additional professional and internal costs necessary for compliance with any changes in or additional SEC, New York Stock Exchange (the “NYSE”) and accounting or other rules, including, without limitation, recent rules adopted by the SEC regarding climate-related and cybersecurity-related disclosures, strikes and unemployment levels, our efforts to evaluate and potentially reduce internal costs, the impact of foreign trade policies and tariffs or other impositions on imported goods on our business, results of operations and financial condition, our ability to successfully implement our business strategies and processes, including our capital allocation strategies, our ability to successfully remediate the material weaknesses in internal control over financial reporting disclosed in this Annual Report on Form 10-K in an appropriate and timely matter or at all, and the other factors described under “Part I, Item 1A.
Our business is subject to various state, federal, international and other rules and regulations, including employment laws and regulations such as the FLSA, minimum wage requirements, overtime requirements, working condition requirements, citizenship requirements, healthcare insurance mandates, data protection requirements, import and export requirements and restrictions and other laws, rules and regulations, including those of the SEC and NYSE and those relating to accounting.
Our business is subject to various state, federal, international and other laws, rules and regulations, including employment laws and regulations such as the FLSA, minimum wage requirements, overtime requirements, working condition requirements, citizenship requirements, healthcare insurance mandates, data protection requirements, import and export requirements and restrictions and other laws, rules and regulations, including those of the SEC and NYSE and those relating to accounting.
In addition to contingencies and claims relating to environmental compliance matters, we are subject from time to time to legal or regulatory proceedings, including, without limitation, with respect to tax matters, and to claims and disputes arising from the conduct of our business operations, including personal injury claims, customer contract matters and employment claims such as claims alleging violations of, and damages under, the Fair Labor Standards Act (the “FLSA”).
In addition to contingencies and claims relating to environmental matters, we are subject from time to time to legal or regulatory proceedings, including, without limitation, with respect to tax matters, and to claims and disputes arising from the conduct of our business operations, including personal injury claims, customer contract matters and employment claims such as claims alleging violations of, and damages under, the Fair Labor Standards Act (the “FLSA”).
If we fail to comply with such laws or regulations, we may be subject to litigation, monetary damages, enforcement actions or fines in one or more jurisdictions, which could have an adverse effect on our business. We also rely on systems and applications provided by third-party vendors for certain information technology services.
If we fail to 10 comply with such laws or regulations, we may be subject to litigation, monetary damages, enforcement actions or fines in one or more jurisdictions, which could have an adverse effect on our business. We also rely on systems and applications provided by third-party vendors for certain information technology services.
We also may experience lower than expected sales and potential adverse impacts on our competitive position if there is a decrease in customer spending or a 7 negative reaction to our pricing. A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth.
We also may experience lower than expected sales and potential adverse impacts on our competitive position if there is a decrease in customer spending or a negative reaction to our pricing. A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth.
We recognize as a liability the present value of the estimated future costs to decommission these facilities. The estimated liability is based on historical experience in decommissioning nuclear laundry facilities, estimated useful lives of the underlying assets, external vendor estimates as to the cost to decommission these assets in the future, and federal and state regulatory requirements.
We recognize as a liability the present value of the estimated future costs to decommission these facilities. The estimated liability is based on historical experience in decommissioning nuclear laundry 13 facilities, estimated useful lives of the underlying assets, external vendor estimates as to the cost to decommission these assets in the future, and federal and state regulatory requirements.
Should the value 15 of our acquired goodwill or one or more of our acquired intangibles become impaired, our consolidated earnings and net worth may be materially adversely affected. The price of our Common Stock may be highly volatile, which could result in significant price declines. The price of our Common Stock may experience significant volatility.
Should the value of our acquired goodwill or one or more of our acquired intangibles become impaired, our consolidated earnings and net worth may be materially adversely affected. The price of our Common Stock may be highly volatile, which could result in significant price declines. The price of our Common Stock may experience significant volatility.
Although we believe that our current tax provisions are reasonable and appropriate, there can be no assurance that these items will be settled for the amounts accrued, that additional tax exposures will not be identified in the future or that additional tax reserves will not be necessary for any such exposures.
Although we believe that our current tax provisions are reasonable and appropriate, there can be no assurance that these items 15 will be settled for the amounts accrued, that additional tax exposures will not be identified in the future or that additional tax reserves will not be necessary for any such exposures.
If we are unable to remediate the material weakness appropriately and timely, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and have a material adverse effect on our business, results of operations, financial condition and stock price.
If we are unable to remediate the material weaknesses appropriately and timely, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and have a material adverse effect on our business, results of operations, financial condition and stock price.
This competition may increase the price for acquisitions and reduce the number of acquisition candidates available to us. As a result, our ability to acquire businesses in the future, and to acquire such businesses on favorable terms, may be limited.
This competition may 7 increase the price for acquisitions and reduce the number of acquisition candidates available to us. As a result, our ability to acquire businesses in the future, and to acquire such businesses on favorable terms, may be limited.
We have raised, and expect to continue to raise, our wage rates and benefits to reflect these changes, which has the effect of increasing our labor costs, which in turn adversely affects our results of operation and financial 8 condition.
We have raised, and expect to continue to raise, our wage rates and benefits to reflect these changes, which has the effect of increasing our labor costs, which in turn adversely affects our results of operation and financial condition.
The strength of the U.S. dollar has generally increased recently as compared to other currencies, which has had, and may continue to have, an adverse effect on our operating results as reported in U.S. dollars.
The strength of the U.S. dollar has generally increased recently as compared to other 9 currencies, which has had, and may continue to have, an adverse effect on our operating results as reported in U.S. dollars.
We, together with 13 multiple other companies, are party to a consent decree related to our property and parcels of land (the “ Central Area”) at a site in Woburn, Massachusetts. The U.S.
We, together with multiple other companies, are party to a consent decree related to our property and parcels of land (the “ Central Area”) at a site in Woburn, Massachusetts. The U.S.
If we are unable to accurately predict our future tax liabilities or become subject to increased levels of taxation or our tax contingencies are unfavorably resolved, our results of operations and financial condition could be adversely affected.
If we are unable to accurately predict our future tax liabilities or become subject to increased levels of taxation or our tax contingencies are unfavorably resolved, our results of operations and financial condition could be materially adversely affected.
We have incurred, and will continue to incur, capital and operating expenditures and other costs in the ordinary course of our business in complying with the laws and regulations to which we are subject.
We have incurred, and will continue to incur, capital and operating expenditures and other costs in the ordinary course of our business in complying with the laws, rules and regulations to which we are subject.
Unanticipated issues related to integration may result in additional expense or in disruption to our operations, either of which could negatively impact our ability to achieve anticipated benefits. While we believe we will be able to fully integrate acquired businesses, such as Clean, we can give no assurance that we will be successful in this regard.
Unanticipated issues related to integration may result in additional expense or in disruption to our operations, either of which could negatively impact our ability to achieve anticipated benefits. While we believe we will be able to fully integrate acquired businesses, such as Clean Uniform (“Clean”), we can give no assurance that we will be successful in this regard.
If not remediated appropriately and timely, such material weakness could adversely impact our ability to record, process and report financial information accurately, result in loss of investor confidence and have a material adverse impact on our business, results of operations, financial condition and stock price.
If not remediated appropriately and timely, such material weaknesses could adversely impact our ability to record, process and report financial information accurately, result in loss of investor confidence and have a material adverse impact on our business, results of operations, financial condition and stock price.
Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting, including as a result of the material weakness identified by management and discussed above.
Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting, including as a result of the material weaknesses identified by management and discussed above.
We also import various facility services products, such as towels, microfiber, conventional mops, aprons, disposable gloves, etc., and our ability to obtain these supplies could potentially be impacted by supply chain disruptions.
We also source or import various facility services products, such as towels, microfiber, conventional mops, aprons, disposable gloves, etc., and our ability to obtain these supplies could potentially be impacted by supply chain disruptions.
Our operating margins have been, and may continue to be, adversely impacted by the recent volatility in energy prices. Periods of high fuel and energy costs and any increases in fuel and energy costs could materially adversely affect our operating costs.
Our operating margins have been, and may continue to be, adversely impacted by volatility in energy prices. Periods of high fuel and energy costs and any increases in fuel and energy costs could materially adversely affect our operating costs.
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. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal.
In particular, industrial laundries currently use and must dispose of detergent wastewater and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal.
We expect this system and the supply chain and procurement capabilities that it will provide will enable lower operating costs and customer churn through enhanced inventory utilization and vendor management, improved response times to customer orders and more efficient back-end processes.
We expect the ERP system and the new supply chain and procurement capabilities that it will provide to enable lower operating costs and customer churn through enhanced inventory utilization and vendor management, improved response times to customer orders and more efficient back-end processes.
Growth of our business will likely require us to increase our work force, the scope of our operating and financial systems and the geographic area of our operations. We believe this growth will increase our operating complexity and the level of responsibility for both existing and new management personnel.
Growth of our business will likely require us to increase our workforce, the scope of our operating and financial systems and the geographic area of our operations. We believe this growth will increase our operating complexity and the level of responsibility for both existing and new management personnel.
We have 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 an ongoing extension of the transit system.
We have 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 was part of an extension of the local transit system.
In addition, if our costs increase and we are not able to pass along these price increases to our customers, our results of operations would be adversely affected, and the adverse impact may be material. Higher inflation rates have had an adverse impact on our operating margins.
In addition, if our costs increase and we are not able to pass along these price increases to our customers, our results of operations would be adversely affected, and the adverse impact may be material. Elevated inflation rates have at times had an adverse impact on our operating margins.
Any of these circumstances would have the effect of reducing the number of employees utilizing our uniform, workwear and facility services, which could have a material adverse impact on our sales and results of operations. Continued high inflation rates, or further increases in inflation rates, could have a material adverse impact on our revenues and operating margins.
Any of these circumstances would have the effect of reducing the number of employees utilizing our uniform, workwear and facility services, which could have a material adverse impact on our sales and results of operations. Increases in inflation rates, could have a material adverse impact on our revenues and operating margins.
For example, in the fourth quarter of fiscal 2022, the Mexican federal tax authority issued a tax assessment on our subsidiary in Mexico for fiscal 2016 import taxes, value added taxes and custom processing fees of over $17.0 million, plus surcharges, fines and penalties of over $67.7 million for a total assessment of over $84.7 million, which accrues interest and other charges.
For example, in the fourth quarter of fiscal 2022, the Mexican federal tax authority issued a tax assessment on our subsidiary in Mexico for fiscal 2016 import taxes, value added taxes and custom processing fees of over $17.0 million, plus surcharges, fines and penalties of $67.7 million for a total assessment of $84.7 million.
Unexpected events, including, without limitation, fires at facilities, natural disasters as a result of climate change or otherwise, such as hurricanes, earthquakes, floods and tornadoes, public health emergencies, war or terrorist activities, including the conflicts in the Middle East or between Russia and Ukraine, unplanned utility outages, pandemics such as the COVID-19 pandemic, supply disruptions, failure of equipment or information systems, temporary or long-term disruption of our computer systems, or changes in laws and/or regulations impacting our business, could adversely affect our operating results.
Unexpected events, including, without limitation, fires at facilities, natural disasters as a result of climate change or otherwise, such as hurricanes, earthquakes, floods and tornadoes, public health emergencies, war or terrorist activities, including the conflicts in the Middle East or between Russia and Ukraine, unplanned utility outages, pandemics such as the 11 COVID-19 pandemic, supply disruptions, failure of equipment or information systems, temporary or long-term disruption of our computer systems, or changes in laws and/or regulations impacting our business, could have a material adverse impact on our operating results.
Moreover, it is generally expected that healthcare costs in the U.S. will increase over the coming years. In addition, we may incur significant healthcare costs if a significant number of our employees experience injury or illness, including in connection with public health emergencies such as the COVID-19 pandemic.
Moreover, it is generally expected that healthcare costs in the U.S. will increase over the coming years. In addition, we may incur significant healthcare costs if a significant number of our employees experience injury or illness, including in connection with public health emergencies.
If we do encounter pressure from any labor unions in connection with our acquisitions of other businesses, any resulting labor unrest could disrupt our business by impairing our ability to produce and deliver our products.
If we do encounter pressure from any labor unions in connection with our acquisitions of other businesses, any resulting labor unrest could disrupt our business by impairing our ability to produce and deliver our products and diverting the attention of our management.
However, if we were to experience difficulty obtaining any of our raw materials from such suppliers and were unable to obtain new materials or supplies from other industry suppliers, or if the cost of obtaining such materials or supplies were to increase, including in any case as a result of continued or increasing inflation, high or rising interest rates, the COVID-19 pandemic, the conflict between Russia and Ukraine or other supply chain disruptions, it could adversely affect our results of operations.
However, if we were to experience difficulty obtaining any of our raw materials from such suppliers and were unable to obtain new materials or supplies from other industry suppliers, or if the cost of obtaining such materials or supplies were to increase, including in any case as a result of inflation, high or rising interest rates, geopolitical issues such as the conflict between Russia and Ukraine or other supply chain disruptions, it could adversely affect our results of operations.
As of August 26, 2023, we employ approximately 16,000 persons and less than 1% of our U.S. employees are represented by a union pursuant to a collective bargaining agreement. Competitors within our industry have been the target of corporate unionization campaigns by multiple labor unions.
As of August 31, 2024, we employed approximately 16,000 persons and less than 1% of our U.S. employees are represented by a union pursuant to a collective bargaining agreement. Competitors within our industry have been the target of corporate unionization campaigns by multiple labor unions.
We identified a material weakness in our internal control over financial reporting related to certain information technology general controls (ITGCs) supporting the manage change and manage access processes.
We identified material weaknesses in our internal control over financial reporting related to certain information technology general controls ( “ ITGCs ” ) supporting the manage change and manage access processes.
In addition, the NYSE historically has experienced extreme price and volume fluctuations that often have been unrelated to, or disproportionate to, the operating performance of its listed companies. These fluctuations, as well as general economic, political and market conditions, may adversely affect the market price of our Common Stock.
In addition, stocks listed on the NYSE have occasionally experienced extreme price and volume fluctuations that often have been unrelated to, or disproportionate to, the operating performance of the listed companies. These fluctuations, as well as general economic, political and market conditions, may adversely affect the market price of our Common Stock.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting, including new and revised financial and information technology-related controls that we have been designing, implementing and operating in connection with the deployment of our new CRM system, may not prevent all errors, misstatements or misrepresentations.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting, including new and revised financial and information technology-related controls that we have been designing, implementing and operating, may not prevent all errors, misstatements or misrepresentations.
In addition, geopolitical conflicts, calamities or other events, including the conflict between Russian and Ukraine, disruption in the Middle East and public health events such as the COVID-19 pandemic, may disrupt domestic and global business and financial markets and conditions.
In addition, geopolitical conflicts, calamities or other events, including the conflict between Russian and Ukraine, disruption in the Middle East and public health events, may disrupt domestic and global business and financial markets and conditions.
In addition, the destruction or temporary loss of, or other disruptions with respect to, our distribution facility in Owensboro, Kentucky or our manufacturing facilities in Mexico and Nicaragua would have a material adverse effect on our operations and financial results.
In addition, the destruction or temporary loss of, or other disruptions with respect to, key facilities such as our distribution facility in Owensboro, Kentucky or our manufacturing facilities in Mexico, Nicaragua or Cave City, Arkansas, would have a material adverse effect on our operations and financial results.
This voting control by the members of the Croatti family, together with certain provisions of our by-laws and articles of organization, could have the effect of delaying, deferring or preventing a change in control of our Company that would otherwise be beneficial to our public shareholders.
This voting control by the members of the Croatti family, together with certain provisions of our by-laws and articles of organization, could have the effect of delaying, deferring or preventing a change in control of our Company that would otherwise be beneficial to our public shareholders. ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
Violence, crime and instability in Mexico has had, and may continue to have, an adverse effect on our operations, including the hijacking of our trucks and the implementation of security measures to protect our employees.
In addition, we own and operate manufacturing facilities in Mexico. Violence, crime and instability in Mexico has had, and may continue to have, an adverse effect on our operations, including the hijacking of our trucks and the implementation of security measures to protect our employees.
We manufactured approximately 60% of all garments we placed in service during fiscal 2023. These were primarily work pants and shirts manufactured at three of our plants located in San Luis Potosi, Mexico, one plant located in Managua, 11 Nicaragua, as well as at subcontracted manufacturers that we utilize within our sourcing strategy to balance demand and optimize costs.
We manufactured approximately 65% of all garments we placed in service during fiscal 2024. These were primarily work pants and shirts manufactured at two of our plants located in San Luis Potosi, Mexico, at one plant located in Managua, Nicaragua, and by subcontracted manufacturers that we utilize within our sourcing strategy to balance demand and optimize costs.
As of October 20, 2023, to the Company’s knowledge, the members of the Croatti family and other family members owned, directly or indirectly, in the aggregate approximately 3,590,295 shares of our Class B Common Stock, which represents approximately 19.2% of the aggregate number of outstanding shares of our Common Stock and Class B Common Stock, but approximately 70.4% of the combined voting power of the outstanding shares of our Common Stock and Class B Common Stock.
As of October 23, 2024, to the Company’s knowledge, the members of the Croatti family and other family members owned, directly or indirectly, in the aggregate approximately 3,558,435 shares of our Class B Common Stock, which represents approximately 19.2% of the aggregate number of outstanding shares of our Common Stock and Class B Common Stock, but approximately 70.3% of the combined voting power of the outstanding shares of our Common Stock and Class B Common Stock.
In addition to contingencies and claims relating to environmental compliance matters, we may from time to time be subject to legal or regulatory proceedings and claims related to our business operations which may adversely affect our financial condition and operating results.
In addition to contingencies and claims relating to environmental compliance matters, we may from time to time be subject to legal or regulatory proceedings and claims related to our business operations which may have a material adverse effect on our financial condition and operating results.
The rental and sales industry with respect to uniforms, workwear and facility services is highly competitive. The principal methods of competition in the industry are quality of products, quality of service and price. Our leading competitors include Cintas Corporation, Alsco and Vestis Corporation (formerly Aramark Uniform Services).
The rental and sales industry with respect to uniforms, workwear and facility services is highly competitive. The main sources of differentiation in the industry are quality of products, quality of service and price. Our leading competitors include Cintas Corporation, Alsco and Vestis Corporation.
The failure to properly, efficiently and economically design, implement and operate an ERP system on a timely basis or at all could materially disrupt our operations, including our supply chain, adversely impact the servicing of our customers and have a material adverse effect on our financial results. In addition, we began deployment of our new CRM project during fiscal 2021.
The failure to properly, efficiently and economically design processes, implement and operate an ERP system on a timely basis or at all could materially disrupt our operations, including our supply chain, adversely impact the servicing of our customers and have a material adverse effect on our financial results.
Federal Reserve has raised, and may continue to raise, interest rates in response to concerns about inflation. Continued high interest rates or increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks, which may result in economic recession.
Continued high interest rates or increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks, which may result in economic recession.
We believe these capabilities will allow us to more effectively respond to and mitigate the types of supply chain challenges we experienced during the COVID-19 pandemic and continue to experience primarily as a result of the current inflationary environment.
We believe these capabilities will allow us to more effectively respond to and mitigate the types of supply chain challenges we experienced during the COVID-19 pandemic.
In addition, our information technology systems could be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, ransomware, computer viruses or cyber-based attacks.
The failure of these information technology systems to perform as we anticipate could disrupt our business and negatively impact our results of operations. In addition, our information technology systems could be damaged or cease to function properly due to any number of causes, such as catastrophic events, power outages, security breaches, ransomware, computer viruses or cyber-based attacks.
Any failure to comply with applicable laws, rules and regulations could result in substantial fines or penalties by government authorities, payment of damages to private litigants or possible revocation of our authority to conduct our operations, which could adversely affect our ability to service customers and our results of operations.
Any failure to comply with applicable laws, rules and regulations could result in substantial fines or penalties by government authorities, payment of damages to private litigants or possible revocation of our authority to conduct our operations, which could materially adversely affect our ability to service customers and our results of operations. 14 Changes in or new interpretations of the governmental regulatory framework may affect our contract terms and may reduce our sales or profits.
We are not insured against such criminal attacks and there can be no assurance that losses that could result from an attack on our trucks or our personnel would not have a material adverse effect on our business, results of operations and financial condition.
While we carry certain insurance coverage, there can be no assurance that losses not covered by insurance that could result from an attack on our trucks or our personnel would not have a material adverse effect on our business, results of operations and financial condition.
Our failure to comply with these regulatory requirements would expose us to applicable penalties and increase the likelihood that we would be subject to unionization campaigns. Further mandates would require additional increases to our labor costs and adversely affect our operating margins.
Our failure to comply with these regulatory requirements would expose us to applicable penalties and increase the likelihood that we would be subject to unionization campaigns.
Although we are working on remedial measures, there can be no assurance that such remedial measures will be successful and we will be able to remediate the material weakness in a timely manner.
While we are in the process of implementing changes to remediate the material weaknesses identified, there can be no assurance that such remedial measures will be successful and we will be able to remediate the material weaknesses in a timely manner.
Any conditions or events that adversely affect our current customers or sales prospects may cause such customers or prospects to restrict expenditures, reduce workforces or even to cease to conduct their businesses.
Any such adverse economic conditions could have a material adverse impact on our business, including our operating margins. Any conditions or events that adversely affect our current customers or sales prospects may cause such customers or prospects to restrict expenditures, reduce workforces or even to cease to conduct their businesses.
We disagree with such tax assessment and are challenging the validity of the tax assessment through an appeal process. Certain of the claims to which we are subject are typically not covered by our available insurance. In addition, claims occasionally result in significant investigation and litigation expenses and, if successful, may result in material losses to us.
Certain of the claims to which we are subject are typically not covered by our available insurance. In addition, claims occasionally result in significant investigation and litigation expenses and, if successful, may result in material losses to us. Certain claims may also result in significant adverse publicity against us.
Deficiencies in our internal control over financial reporting, including the material weakness identified by management and discussed above and any additional material weakness which may occur in the future, could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.
Deficiencies in our internal control over financial reporting, including the material weaknesses identified by management and discussed above and any additional material weakness which may occur in the future, could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity. 12 LEGAL AND REGULATORY RISKS The expenses we may incur to comply with environmental regulations, including costs associated with potential environmental remediation, may prove to be significant and could have a material adverse effect on our results of operations and financial condition.
As a consequence, successful claims against us not covered by our available insurance coverage or the adverse outcome of a legal or regulatory proceeding, or the impact of adverse publicity against us, could have a material adverse effect on our business, financial condition and results of operation. 14 Failure to comply with state, federal and other rules and regulations to which we are subject may result in penalties or costs that could have a material adverse effect on our business.
As a consequence, successful claims against us not covered by our available insurance coverage or the adverse outcome of a legal or regulatory proceeding, or the impact of adverse publicity against us, could have a material adverse effect on our business, financial condition and results of operation.
A portion of our sales is derived from international markets. Revenue denominated in currencies other than the U.S. dollar represented approximately 7.0%, 7.9% and 8.4% of total consolidated revenues for fiscal 2023, the fiscal year ended August 27, 2022 (“fiscal 2022”) and the fiscal year ended August 28, 2021 (“fiscal 2021”), respectively.
Revenue denominated in currencies other than the U.S. dollar represented approximately 6.9%, 7.0% and 7.9% of total consolidated revenues for fiscal 2024, the fiscal year ended August 26, 2023 (“fiscal 2023”) and the fiscal year ended August 27, 2022 (“fiscal 2022”), respectively.
The impact of any new laws, rules and regulations, or changes to laws, rules and regulations, cannot be predicted and could cause us to incur substantial compliance costs.
The impact of any new laws, rules and regulations such as recent rules adopted by the SEC regarding climate-related and cybersecurity-related disclosures, or changes to laws, rules and regulations or governmental interpretations of such laws, rules and regulations, cannot be predicted and could cause us to incur substantial compliance costs.
Our ability to do so generally depends on a variety of factors, including the quality, price and responsiveness of our services, as well as our ability to market these services effectively and to differentiate ourselves from our competitors. In addition, renewal rates and our ability to obtain new customers are generally adversely affected by difficult economic and business conditions.
Our success depends on our ability to retain our current customers, renew our existing customer contracts and obtain new customers. Our ability to do so generally depends on a variety of factors, including the quality, price and responsiveness of our services, as well as our ability to market these services effectively and to differentiate ourselves from our competitors.
Our failure to retain our current customers, renew our existing customer contracts and enter into customer contracts with new customers could adversely affect our business, results of operations and financial condition. Our success depends on our ability to retain our current customers, renew our existing customer contracts and obtain new customers.
Further mandates would require additional increases to our labor costs and adversely affect our operating margins. 8 Our failure to retain our current customers, renew our existing customer contracts and enter into customer contracts with new customers could adversely affect our business, results of operations and financial condition.
While we worked during fiscal 2023 to remediate the previously identified material weakness, we were unable to fully remediate the material weakness prior to the end of fiscal 2023. 12 As disclosed in Part II, Item 9A of this Annual Report on Form 10-K for fiscal 2023, management identified a material weakness in internal control over financial reporting related to certain ITGCs supporting the manage change and manage access processes that were not designed and operating effectively as of the date of management’s assessment.
As disclosed in Part II, Item 9A of our Annual Report on Form 10-K for fiscal 2023, we previously identified a material weakness related to deficiencies in our manage change and manage access processes that were not designed and operating effectively.
In recent quarters, we have observed increased economic uncertainty in the U.S. and abroad, including the potential for an economic recession. Impacts of such general economic weakness include, without limitation: falling overall demand for goods and services; reduced credit availability; reduced liquidity; volatility in credit, equity and foreign exchange markets; bankruptcies and rising interest rates.
The impacts of any general economic uncertainty, weakness or recession may include or result in, without limitation: falling overall demand for goods and services; reduced credit availability; reduced liquidity; volatility in credit, equity and foreign exchange markets; bankruptcies, inflation and interest rate volatility.
Fluctuations in our nuclear decontamination business, including the loss of key customers of our Specialty Garments business, or a significant reduction in our business derived from such key customers, could materially adversely affect our results of operations and financial condition. 9 Our international business results are influenced by currency fluctuations and other risks that could have an adverse effect on our results of operations and financial condition.
This concentration subjects this business to significant risks and may result in greater volatility in this segment’s results of operations. Fluctuations in our nuclear decontamination business, including the loss of key customers of our Specialty Garments business, or a significant reduction in our business derived from such key customers, could materially adversely affect our results of operations and financial condition.
Changes in or new interpretations of the governmental regulatory framework may affect our contract terms and may reduce our sales or profits. A portion of our total consolidated revenues is derived from business with U.S. federal, state and local governments and agencies.
A portion of our total consolidated revenues is derived from business with U.S. federal, state and local governments and agencies.
In addition to our traditional rental competitors, we may increasingly compete in the future with businesses that focus on selling uniforms and other related items, including single-use disposable garments for use in the nuclear industry.
The remainder of the market, however, is divided among hundreds of smaller businesses, many of which serve one or a limited number of markets or geographic service areas. In addition to our traditional rental competitors, we compete with businesses that focus on selling uniforms and other related items, including single-use disposable garments for use in the nuclear industry.
Unexpected events could disrupt our operations and adversely affect our operating results.
Unexpected events could disrupt our operations and have a material adverse impact on our operating results.
Refer to Note 11, “Commitments and Contingencies”, of our Consolidated Financial Statements for further discussion, including regarding the tax assessment matter in Mexico. ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
Refer to Note 11, “Commitments and Contingencies”, of our Consolidated Financial Statements for further discussion, including regarding the tax assessment matter in Mexico. We are controlled by our principal shareholders, and our other shareholders may be unable to affect the outcome of shareholder voting.
Our failure to properly and efficiently design, construct, implement and operate a new enterprise resource planning (“ERP”) system and to successfully complete the implementation of our customer relationship management (“CRM”) computer system could materially disrupt our operations, adversely impact the servicing of our customers and have a material adverse effect on our financial performance.
Our failure to properly and efficiently design, construct, implement and operate a new ERP system could materially disrupt our operations, adversely impact the servicing of our customers and have a material adverse effect on our financial performance. In fiscal 2022, we initiated a multiyear ERP project with a strong focus on supply chain and procurement automation and technology.
In addition, U.S. and foreign trade policies and tariffs and other impositions on imported goods may have a negative impact on our business.
In addition, U.S. and foreign trade policies and tariffs and other impositions on imported goods may have a negative impact on our business. There can be no assurance that the foregoing factors will not have an adverse effect on our international operations or on our consolidated financial condition and results of operations.
The failure to successfully complete the implementation and operate the CRM system on a timely basis or at all could materially disrupt our operations, adversely impact the servicing of our customers and have a material adverse effect on our financial results. 10 If our information technology systems suffer interruptions or failures, including as a result of cyber-attacks, our business operations could be disrupted or other material adverse impacts on our business could result.
If our information technology systems suffer interruptions or failures, including as a result of cyber-attacks, our business operations could be disrupted or other material adverse impacts on our business could result. Our information technology systems serve an important role in the efficient operation of our business.
In fiscal 2022, we initiated a multiyear ERP project with a strong focus on supply chain and procurement automation and technology. We believe that this initiative will become the core of the UniFirst technology footprint and will integrate and complement the capabilities of the CRM system that we are currently deploying.
We believe that this initiative will become the core of the UniFirst technology footprint and will integrate and complement the capabilities of our customer relationship management (“CRM”) system.
As a result, management concluded that our internal control over financial reporting was not effective as of August 26, 2023. The material weakness relates to our CRM system that we are in the process of deploying and affects revenue and receivables as well as a group of legacy applications which affect revenue and receivables, supply inventory and merchandise in service.
These deficiencies related to our CRM system and affected revenue and receivables as well as a group of legacy applications which affected revenue and receivables, supply inventory and merchandise in service.
Removed
The remainder of the market, however, is divided among more than 600 smaller businesses, many of which serve one or a limited number of markets or geographic service areas.
Added
Any period of sustained inflation could pressure our margins in future periods. In addition, the U.S. Federal Reserve rapidly increased its benchmark interest rate from 2021 through 2023 in response to sustained elevated inflation and has only modestly reduced that rate thus far in 2024. Adverse economic conditions resulting from inflationary pressures, U.S.
Removed
Adverse economic conditions have included or resulted, and could continue to include or result, in a significant increase in inflation, which could have a material adverse impact on our business, including our operating margins. Continued high inflation has had a negative impact on our operating margins in recent periods.
Added
Federal Reserve actions, including elevated interest rates and/or increases in interest rates, geopolitical issues or otherwise are difficult to predict and may have a material adverse impact on our business, results of operations and financial condition.
Removed
Although inflation rates have moderated somewhat recently, continued high inflation or future increases in inflation may result in decreased demand for our products and services, increased operating costs, including our labor costs, reduced liquidity, and limitations on our ability to access credit or otherwise raise debt and equity capital. In addition, the U.S.
Added
In addition, renewal rates and our ability to obtain new customers are generally adversely affected by difficult economic and business conditions.
Removed
This concentration subjects this business to significant risks and may result in greater volatility in this segment’s results of operations.
Added
Our international business results are influenced by currency fluctuations and other risks that could have an adverse effect on our results of operations and financial condition. A portion of our sales is derived from international markets.
Removed
We disagree with such tax assessment and are challenging the validity of the tax assessment through an appeal process. There can be no assurance that the foregoing factors will not have an adverse effect on our international operations or on our consolidated financial condition and results of operations. In addition, we own and operate manufacturing facilities in Mexico.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PR OPERTIES As of August 26, 2023, we owned or leased approximately 281 facilities containing an aggregate of approximately 8.6 million square feet located in the U.S., Canada, Mexico, Europe and Nicaragua. We owned 143 of these facilities, containing approximately 6.4 million square feet.
Biggest changeITEM 2. PR OPERTIES As of August 31, 2024, we owned or leased 278 facilities containing an aggregate of approximately 8.3 million square feet located in the U.S., Canada, Mexico, Europe and Nicaragua. We owned 147 of these facilities, containing approximately 6.6 million square feet.
We believe that our facilities and our production, cleaning and decontamination equipment have been well maintained and are adequate for our present needs. We also own a fleet of approximately 4,375 delivery vans, trucks and other vehicles. 16
We believe that our facilities and our production, cleaning and decontamination equipment have been well maintained and are adequate for our present needs. We also own a fleet of approximately 4,603 delivery vans, trucks and other vehicles.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed8 unchanged
Biggest changeIn particular, industrial laundries currently use and must dispose of detergent waste water and other residues, and, in the past, have used perchloroethylene and other dry cleaning solvents.
Biggest changeIn particular, industrial laundries currently use and must properly dispose of detergent wastewater and other residues, and, in the past, have used perchloroethylene and other dry cleaning solvents.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−1 removed3 unchanged
Biggest changeWe did not repurchase any shares of our Common Stock during the quarter ended August 26, 2023. As of August 26, 2023, the Company had $63.6 million remaining to repurchase under the share repurchase program. Repurchases made under the program, if any, will continue to be made in either the open market or in privately negotiated transactions.
Biggest changeRepurchases made from time to time under the new program, if any, will be made in either the open market or in privately negotiated transactions.
The graph assumes an investment of $100 in each of UniFirst Corporation’s Common Stock, the Russell 2000 Index, and the performance through August 31, 2023, assuming the reinvestment of dividends. 19 ITEM 6. [ RESERVED] 20
The graph assumes an investment of $100 in each of UniFirst Corporation’s Common Stock, the Russell 2000 Index, and the performance through August 31, 2024, assuming the reinvestment of dividends. 19 ITEM 6. [ RESERVED] 20
The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, the trading price of our Common Stock, corporate liquidity requirements and priorities, applicable legal requirements and other factors.
The timing, manner, price and amount of any repurchase 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 amount and timing of any future dividend payment is subject to the approval of the Board of Directors each quarter. The approximate number of shareholders of record of our Common Stock and Class B Common Stock as of October 20, 2023 was 48 and 43, respectively.
The amount and timing of any future dividend payment is subject to the approval of the Board of Directors each quarter. The approximate number of shareholders of record of our Common Stock and Class B Common Stock as of October 23, 2024 was 47 and 42, respectively.
On July 11, 2023, our Board of Directors declared a quarterly cash dividend of $0.310 per share of Common Stock and $0.248 per share of Class B Common Stock. Both dividends were paid on September 28, 2023 to shareholders of record as of September 7, 2023.
On July 11, 2024, our Board of Directors declared a quarterly cash dividend of $0.330 per share of Common Stock and $0.264 per share of Class B Common Stock. Both dividends were paid on September 27, 2024 to shareholders of record as of September 6, 2024.
Removed
Issuer Purchases of Equity Securities On October 18, 2021, our Board of Directors approved a share repurchase program authorizing the Company to repurchase from time to time up to $100.0 million of our outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved in January 2019, which program has no scheduled expiration date.
Added
Issuer Purchases of Equity Securities The following table provides information regarding our purchases of equity securities for the periods set forth therein: Period (a) Total Number of Shares Purchased (1) (b) Average Price Paid per Share (1) (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program (1) (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Program (1) May 26, 2024 - June 22, 2024 17,806 $ 156.92 17,806 $ 81,243,296 June 23, 2024 - July 27, 2024 12,750 $ 174.73 12,750 $ 79,015,185 July 28, 2024 - August 31, 2024 15,000 $ 186.34 15,000 $ 76,219,818 Total 45,556 45,556 (1) On October 24, 2023, our Board of Directors authorized a new share repurchase program to repurchase from time to time up to a total authorized $100.0 million of its outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved on October 18, 2021.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed1 unchanged
Biggest changeFinancial Statements and Supplementary Data 37 Consolidated Statements of Income for each of the three years in the period ended August 26, 2023 37 Consolidated Statements of Comprehensive Income for each of the three years in the period ended August 26, 2023 38 Consolidated Balance Sheets as of August 26, 2023 and August 27, 2022 39 Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended August 26, 2023 40 Consolidated Statements of Cash Flows for each of the three years in the period ended August 26, 2023 41 Notes to Consolidated Financial Statements 42 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm 69
Biggest changeFinancial Statements and Supplementary Data 37 Consolidated Statements of Income for each of the three years in the period ended August 31, 2024 37 Consolidated Statements of Comprehensive Income for each of the three years in the period ended August 31, 2024 38 Consolidated Balance Sheets as of August 31, 2024 and August 26, 2023 39 Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended August 31, 2024 40 Consolidated Statements of Cash Flows for each of the three years in the period ended August 31, 2024 41 Notes to Consolidated Financial Statements 42 Report of Ernst & Young LLP, Independent Registered Public Accounting Firm 71

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

81 edited+14 added−31 removed92 unchanged
Biggest change(In thousands, except percentages) Fiscal 2023 Fiscal 2022 Dollar Change Percent Change Net cash provided by operating activities $ 215,762 $ 122,649 $ 93,113 75.9 % Net cash used in investing activities (487,647 ) (186,507 ) (301,140 ) 161.5 % Net cash used in financing activities (25,839 ) (69,438 ) 43,599 (62.8 )% Effect of exchange rate changes 768 (3,173 ) 3,941 (124.2 )% Net decrease in cash and cash equivalents $ (296,956 ) $ (136,469 ) $ (160,487 ) 117.6 % Net Cash Provided by Operating Activities The net cash provided by operating activities in fiscal 2023 increased as compared to fiscal 2022 due to positive impacts from receivables of $18.9 million, accrued liabilities of $18.8 million, rental merchandise in service of $15.7 million, prepaid and accrued income taxes of $15.6 million, inventories of $12.1 million and accounts payable of $11.0 million.
Biggest changeSources and uses of cash flows for fiscal 2024 and 2023, respectively, are summarized as follows: (In thousands, except percentages) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change Net cash provided by operating activities $ 295,269 $ 215,762 $ 79,507 36.8 % Net cash used in investing activities (162,236 ) (487,647 ) 325,411 (66.7 )% Net cash used in financing activities (50,360 ) (25,839 ) (24,521 ) 94.9 % Effect of exchange rate changes (545 ) 768 (1,313 ) (171.0 )% Net decrease in cash and cash equivalents $ 82,128 $ (296,956 ) $ 379,084 (127.7 )% Net Cash Provided by Operating Activities The net cash provided by operating activities in fiscal 2024 increased as compared to fiscal 2023 due to our improved profitability and benefit of depreciation and amortization as well as positive impacts from rental merchandise in service of $31.4 million, receivables of $22.2 million and accrued liabilities of $9.7 million.
Our liabilities are based on our estimates, and, while we believe that our accruals are adequate, the ultimate liability may be significantly different from the amounts recorded. In certain cases where partial insurance coverage exists, we must estimate the portion of the liability that will be covered by existing insurance policies to arrive at our net expected liability.
Our liabilities are based on our estimates, and, while we believe that our accruals are adequate, the ultimate liability may be significantly different from the amounts recorded. In certain cases where partial insurance coverage exists, we must estimate the portion of the liability that will be covered by existing insurance policies to arrive at 23 our net expected liability.
Our operating results in future years could be negatively impacted by any further devaluation, as compared to the U.S. dollar, of the Canadian dollar or any of the currencies of the other countries in which we operate. In fiscal 2018, we initiated a multiyear CRM project to further develop, implement and deploy a third-party application we licensed.
Our operating results in future years could be negatively impacted by any further devaluation, as compared to the U.S. dollar, of the Canadian dollar or any of the currencies of the other countries in which we operate. In fiscal 2018, we initiated a multiyear CRM project to further develop, implement and deploy a third-party software application we licensed.
Future changes in plan asset returns, assumed discount rates and various other factors related to the participants in our pension plans will impact our future pension expense and liabilities. We cannot predict with certainty what these factors will be in the future. Income Taxes We compute income tax expense by jurisdiction based on our operations in each jurisdiction.
Future changes in plan asset returns, assumed discount rates and various other factors related to the participants in our pension plans will impact our future pension expense and liabilities. We cannot predict with certainty what these factors will be in the future. 24 Income Taxes We compute income tax expense by jurisdiction based on our operations in each jurisdiction.
Adjustments to the fair value of assets and liabilities made after the end of the measurement period are recorded within the Company’s operating results. 23 Insurance We self-insure for certain obligations related to health and dental, workers’ compensation, vehicles and general liability programs.
Adjustments to the fair value of assets and liabilities made after the end of the measurement period are recorded within the Company’s operating results. Insurance We self-insure for certain obligations related to health and dental, workers’ compensation, vehicles and general liability programs.
On March 13, 2023, we completed our acquisition of the business and certain real estate assets of Clean from Clean Holdco, Inc. and certain of its affiliates for an aggregate purchase price of approximately $299.1 million, net of cash acquired. Clean is a uniform, workwear and facility service program provider with 11 locations covering Missouri, Illinois, Arkansas, Kansas and Oklahoma.
On March 13, 2023, we completed our acquisition of the business and certain real estate assets of Clean from Clean Holdco, Inc. and certain of its affiliates for an aggregate purchase price of approximately $299.1 million, net of cash acquired. Clean was a uniform, workwear and facility service program provider with 11 locations covering Missouri, Illinois, Arkansas, Kansas and Oklahoma.
“Risk Factors” in this Annual Report on Form 10-K for an additional discussion of risks and potential risks of inflation and adverse economic conditions on our business, financial condition and results of operations. 25 Results of Operations The following table presents certain selected financial data, including the percentage of revenues represented by each item, for fiscal years 2023 and 2022.
“Risk Factors” in this Annual Report on Form 10-K for an additional discussion of risks and potential risks of inflation and adverse economic conditions on our business, financial condition and results of operations. 25 Results of Operations The following table presents certain selected financial data, including the percentage of revenues represented by each item, for fiscal years 2024 and 2023.
Annual proceeds of approximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to our former operations. 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.
Annual proceeds of approximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to our 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.
Our evaluation considers changes in the operating environment, competitive information, market trends, operating performance and cash flow modeling. We completed our annual goodwill impairment test as of the first day of the fourth quarter in fiscal 2023, fiscal 2022 and fiscal 2021. There have been no impairments of goodwill or other intangible assets in fiscal 2023, 2022 or 2021.
Our evaluation considers changes in the operating environment, competitive information, market trends, operating performance and cash flow modeling. We completed our annual goodwill impairment test as of the first day of the fourth quarter in fiscal 2024, fiscal 2023 and fiscal 2022. There have been no impairments of goodwill or other intangible assets in fiscal 2024, 2023 or 2022.
Useful lives are based on our estimates of the period that the assets will generate economic benefits. Long-lived assets are evaluated for impairment whenever events or circumstances indicate an asset may be impaired. There were no material impairments of long-lived assets in fiscal 2023, 2022 or 2021.
Useful lives are based on our estimates of the period that the assets will generate economic benefits. Long-lived assets are evaluated for impairment whenever events or circumstances indicate an asset may be impaired. There were no material impairments of long-lived assets in fiscal 2024, 2023 or 2022.
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 products sold by this operating segment are the same products rented and/or sold by the U.S. and Canadian Rental and Cleaning reporting segment.
Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and fiscal 2021 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended August 27, 2022, which was filed with the SEC on October 26, 2022.
Discussions of fiscal 2022 items and year-to-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended August 26, 2023, which was filed with the SEC on October 26, 2023.
In addition, the amendment provides for the replacement of LIBOR with SOFR such that borrowings are based on, at our election, the SOFR rate or a base rate, plus in each case a spread based on our consolidated funded debt ratio.
In addition, the amendment provided for the replacement of LIBOR with SOFR such that borrowings are based on, at our election, the SOFR rate or a base rate, plus in each case a spread based on our consolidated funded debt ratio.
We also provide our customers with restroom and cleaning supplies, including air fresheners, paper products and hand soaps. At certain specialized facilities, we also decontaminate and clean work clothes and other items that may have been exposed to radioactive materials and service special cleanroom protective wear and facilities.
We also provide our customers with restroom and cleaning supplies, including air fresheners, paper products and hand soaps. At certain specialized facilities, like nuclear operations, we also decontaminate and clean work clothes and other items that may have been exposed to radioactive materials and service special cleanroom protective wear and facilities.
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 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 products and services and other safety supplies as well as maintains wholesale distribution and pill packaging operations for non-prescription medicines.
Revenues denominated in currencies other than the U.S. dollar represented approximately 7.0% and 7.9% of total consolidated revenues for fiscal 2023 and 2022, respectively. The operating results of our international subsidiaries are translated into U.S. dollars and such results are affected by movements in foreign currencies relative to the U.S. dollar.
Revenues denominated in currencies other than the U.S. dollar represented approximately 6.9% and 7.0% of total consolidated revenues for fiscal 2024 and 2023, respectively. The operating results of our international subsidiaries are translated into U.S. dollars and such results are affected by movements in foreign currencies relative to the U.S. dollar.
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. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal.
In particular, industrial laundries currently use and must dispose of detergent wastewater and other residues, and, in the past, used perchloroethylene and other dry cleaning solvents. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal.
Federal Reserve actions, including continued high interest rates and/or increases in interest rates, geopolitical issues or otherwise are difficult to predict and may have a material adverse impact on our business, results of operations and financial condition. Please see Part I, Item 1A.
Federal Reserve actions, including elevated interest rates and/or increases in interest rates, geopolitical issues or otherwise are difficult to predict and may have a material adverse impact on our business, results of operations and financial condition. Please see Part I, Item 1A.
For discussion of fiscal 2022 results compared to fiscal 2021 results, see the Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Annual Report on Form 10-K for the fiscal year ended August 27, 2022, filed with the SEC on October 26, 2022.
For discussion of fiscal 2023 results compared to fiscal 2022 results, see the Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Annual Report on Form 10-K for the fiscal year ended August 26, 2023, filed with the SEC on October 26, 2023.
As of August 26, 2023, we were in compliance with all covenants under the Credit Agreement. Derivative Instruments and Hedging Activities In August 2021, we entered into twenty forward contracts to exchange CAD for U.S. dollars at fixed exchange rates in order to manage our exposure related to certain forecasted CAD denominated sales of one of our subsidiaries.
As of August 31, 2024, we were in compliance with all covenants under the Credit Agreement. Derivative Instruments and Hedging Activities In August 2021, we entered into twenty forward contracts to exchange CAD for U.S. dollars at fixed exchange rates in order to manage our exposure related to certain forecasted CAD denominated sales of one of our subsidiaries.
In fiscal 2022, we initiated a multiyear ERP project that will continue through 2027, with early phases focused on master data management and finance capabilities followed by subsequent phases with a strong focus on supply chain and procurement automation and technology.
In fiscal 2022, we initiated a multiyear ERP project that we plan to continue through 2027, with early phases focused on master data management and finance capabilities followed by subsequent phases with a strong focus on supply chain and procurement automation and technology.
The exercise of the accordion feature increases the aggregate commitments under the Credit Agreement by $100.0 million, for a total aggregate commitment of up to $275.0 million.
The exercise of the accordion feature increased the aggregate commitments under the Credit Agreement by $100.0 million, for a total aggregate commitment of up to $275.0 million.
We have 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 an ongoing extension of the transit system.
We have 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 was part of an extension of the transit system.
During fiscal 2023, we reclassified $0.1 million from accumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of August 26, 2023 is expected to be reclassified to revenues prior to their maturity on August 29, 2026.
During fiscal 2024, we reclassified $0.1 million from accumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of August 31, 2024 is expected to be reclassified to revenues prior to their maturity on August 29, 2026.
During fiscal 2023, we reclassified $0.1 million from accumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of August 26, 2023 is expected to be reclassified to revenues prior to their maturity on August 29, 2026.
During fiscal 2024, we reclassified $0.1 million from accumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of August 31, 2024 is expected to be reclassified to revenues prior to their maturity on August 29, 2026.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Business Overview UniFirst Corporation, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, is one of the leading providers of workplace uniforms and protective work wear clothing in the U.S.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Business Overview UniFirst Corporation, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, is one of the leading providers of workplace uniforms and protective work wear clothing in North America.
In addition, in the fourth quarter of fiscal 2022, the Mexican federal tax authority issued a tax assessment on our subsidiary in Mexico for fiscal 2016 import taxes, value added taxes and custom processing fees of over $17.0 million, plus surcharges, fines and penalties of over $67.7 million for a total assessment of over $84.7 million, which accrues interest and other charges.
In addition, in the fourth quarter of fiscal 2022, the Mexican federal tax authority issued a tax assessment on our subsidiary in Mexico for fiscal 2016 import taxes, value added taxes and custom processing fees of over $17.0 million, plus surcharges, fines and penalties of over $67.7 million for a total assessment of over $84.7 million.
Our operating results are also directly impacted by the costs of the gasoline used to fuel our vehicles and the natural gas used to operate our plants. Our operating margins have been, and may continue to be, adversely impacted by volatility in energy prices.
Our operating results are also directly impacted by the costs of the gasoline used to fuel our vehicles, the cost of electricity for our electric vehicles and the natural gas used to operate our plants. Our operating margins have been, and may continue to be, adversely impacted by volatility in energy prices.
Energy Costs Significant variability in energy costs, specifically with respect to natural gas and gasoline, can materially affect our operating costs. During fiscal 2023, our energy costs, which include fuel, natural gas, and electricity, represented approximately 4.3% of our total revenue.
Energy Costs Significant variability in energy costs, specifically with respect to natural gas, gasoline and electricity can materially affect our operating costs. During fiscal 2024, our energy costs, which include fuel, natural gas, and electricity, represented approximately 4.0% of our total revenue.
We also rent and sell industrial wiping products, floor mats, facility service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as provide certain safety training to a variety of manufacturers, retailers and service companies. We serve businesses of all sizes in numerous industry categories.
We also rent and sell industrial wiping products, floor mats, facility service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as provide certain safety training to a variety of manufacturers, retailers and service companies. We serve businesses of all sizes across multiple industry sectors.
Approximately 87.8% of our revenues in fiscal 2023 were derived from our U.S. and Canadian Rental and Cleaning and Corporate segments. A key driver of this business is the number of workers employed by our customers. Our revenues are directly impacted by fluctuations in these employment levels.
Approximately 88.1% of our revenues in fiscal 2024 were derived from our U.S. and Canadian Rental and Cleaning and Corporate segments. A key driver of this business is the number of workers employed by our customers. Our revenues are directly impacted by fluctuations in these employment levels.
As of August 26, 2023, the risk-free interest rates we utilized ranged from 4.3% to 4.7%. For environmental liabilities that have been discounted, we include interest accretion, based on the effective interest method, in selling and administrative expenses on the Consolidated Statements of Income.
As of August 31, 2024, the risk-free interest rates we utilized ranged from 4.2% to 4.3%. For environmental liabilities that have been discounted, we include interest accretion, based on the effective interest method, in selling and administrative expenses on the Consolidated Statements of Income.
The estimated liability for environmental contingencies has been discounted as of August 26, 2023 using risk-free interest rates ranging from 4.3% to 4.7% over periods ranging from three to thirty years. The estimated current costs, net of legal settlements with insurance carriers, have been adjusted for the estimated impact of inflation at 3.0% per year.
The estimated liability for environmental contingencies has been discounted as of August 31, 2024 using risk-free interest rates ranging from 4.2% to 4.3% over periods ranging from twenty to thirty years. The estimated current costs, net of legal settlements with insurance carriers, have been adjusted for the estimated impact of inflation at 3.0% per year.
We are depreciating this system over a 10-year life and recognized $3.3 million and $3.2 million of amortization expense in fiscal 2023 and fiscal 2022, respectively.
We are depreciating this system over a 10-year life and recognized $3.6 million and $3.3 million of amortization expense in fiscal 2024 and fiscal 2023, respectively.
Revenues from Specialty Garments, which accounted for approximately 8.0% of our fiscal 2023 revenues, increase during outages and refueling by nuclear power plants, as garment usage increases at these times. First Aid represented approximately 4.2% of our total revenues in fiscal 2023.
Revenues from Specialty Garments, which accounted for approximately 7.5% of our fiscal 2024 revenues, increase during outages and refueling by nuclear power plants, as garment usage increases at these times. First Aid represented approximately 4.4% of our total revenues in fiscal 2024.
As discussed above under “Derivative Instruments and Hedging Activities”, as of August 26, 2023, we had forward contracts with a notional value of approximately 5.4 million CAD outstanding and recorded the fair value of the contracts of $0.2 million in prepaid expenses and other current assets with a corresponding gain of $0.2 million in accumulated other comprehensive loss, which was recorded net of tax.
As discussed above under “Derivative Instruments and Hedging Activities”, as of August 31, 2024, we had forward contracts with a notional value of approximately 3.6 million CAD outstanding and recorded the fair value of the contracts of $0.1 million in prepaid expenses and other current assets with a corresponding gain of $0.1 million in accumulated other comprehensive loss, which was recorded net of tax.
Pension expense is generally independent of funding decisions or requirements. 24 The calculation of pension expense and the corresponding liability requires us to use a number of critical assumptions, including the expected long-term rates of return on plan assets, the assumed discount rate, the assumed rate of compensation increases and life expectancy of participants.
The calculation of pension expense and the corresponding liability requires us to use a number of critical assumptions, including the expected long-term rates of return on plan assets, the assumed discount rate, the assumed rate of compensation increases and life expectancy of participants.
In fiscal 2023 and 2022, foreign currency fluctuations impacted our consolidated revenues negatively by 0.6% and 0.1%, respectively. These impacts were primarily driven by fluctuations in the Canadian dollar.
In fiscal 2024 and 2023, foreign currency fluctuations impacted our consolidated revenues negatively by a nominal percentage and 0.6%, respectively. These impacts were primarily driven by fluctuations in the Canadian dollar.
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 the amount we projected, additional inventory write-downs may be required. We use the first-in, first-out method to value our inventories, which primarily consist of finished goods.
If actual product demand and market conditions are less favorable than the amount we projected, additional inventory write-downs may be required. We use the first-in, first-out method to value our inventories, which primarily consist of finished goods.
However, the current inflationary environment has had a negative impact on our margins, including as a result of increased energy costs for our vehicles and our plants, as well as increasing wages in the labor markets in which we compete. Inflation could continue to pressure our margins in future periods.
However, the inflationary environment in recent years had a negative impact on our margins, including as a result of increased energy costs for our vehicles and our plants, as well as increasing wages in the labor markets in which we compete. While inflation has moderated recently, a period of sustained inflation could pressure our margins in future periods.
As of August 26, 2023, we had forward contracts with a notional value of approximately 5.4 million CAD outstanding and recorded the fair value of the contracts of $0.2 million in prepaid expenses and other current assets with a corresponding gain of $0.2 million in accumulated other comprehensive loss, which was recorded net of tax.
As of August 31, 2024, we had forward contracts with a notional value of approximately 3.6 million CAD outstanding and recorded the fair value of the contracts of $0.1 million in prepaid expenses and other current assets with a corresponding gain of $0.1 million in accumulated other comprehensive loss, which was recorded net of tax.
As discussed above under “Long-Term Debt and Borrowing Capacity”, as of August 26, 2023, we had borrowing capacity of $375.0 million under our Credit Agreement, of which approximately $208.5 million was available for borrowing. Also, as of such date, we had no outstanding borrowings and letters of credit outstanding of $66.5 million.
As discussed above under “Long-Term Debt and Borrowing Capacity”, as of August 31, 2024, we had borrowing capacity of $375.0 million under our Credit Agreement, of which approximately $209.9 million was available for borrowing. Also, as of such date, we had no outstanding borrowings and letters of credit outstanding of $65.1 million.
As of August 26, 2023, the balance in this escrow account, which is held in a trust and is not recorded in our Consolidated Balance Sheet, was approximately $5.2 million.
As of August 31, 2024, the balance in this escrow account, which is held in a trust and is not recorded in our Consolidated Balance Sheets, was approximately $5.6 million.
The deferred commissions are amortized on a straight-line basis over the expected period of benefit, which is generally the estimated life of the customer relationship. We review the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense.
The deferred commissions are amortized on a straight-line basis over the expected period of benefit, which is generally the estimated life of the customer relationship. We review the deferred commission balances for impairment on an ongoing basis.
Supplemental Executive Retirement Plan and Pension Plan We recognize pension expense on an accrual basis over our employees’ estimated service periods.
Supplemental Executive Retirement Plan and Pension Plan We recognize pension expense on an accrual basis over our employees’ estimated service periods. Pension expense is generally independent of funding decisions or requirements.
The increase in our Core Laundry Operations was due to organic growth of 8.5%, the effect of Canadian dollar exchange rate changes on our revenues of (0.5)%, and acquisition related growth of 2.8%.
The increase in our Core Laundry Operations was due to organic growth of 4.6%, growth from fiscal 2024's extra week of 2.1% and acquisition related growth of 2.5%. Partially offsetting this growth was the effect of Canadian dollar exchange rate changes on our revenues of (0.1)%.
Repurchases made under the new program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, our stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors.
The timing, manner, price and amount of any repurchases will depend on a variety of factors, including economic and market conditions, our stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors.
Cost of revenues (In thousands, except percentages) Fiscal 2023 Fiscal 2022 Dollar Change Percent Change Cost of revenues $ 1,481,296 $ 1,306,451 $ 174,845 13.4 % % of Revenues 66.3 % 65.3 % The increase in consolidated costs of revenues of 13.4% during fiscal 2023 compared to the prior fiscal year was due primarily to the impact of the revenue growth, as mentioned above.
Cost of revenues (In thousands, except percentages) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change Cost of revenues $ 1,579,835 $ 1,481,296 $ 98,539 6.7 % % of Revenues 65.1 % 66.3 % The increase in consolidated cost of revenues of 6.7% during fiscal 2024 compared to the prior fiscal year was due primarily to the impact of the revenue growth mentioned above.
We believe, although there can be no assurance, that our current cash and cash equivalents balances, our cash generated from future operations and amounts available under our Credit Agreement (as defined below) will be sufficient to meet our current anticipated working capital and capital expenditure requirements for at least the next 12 months and will help us manage the impacts of inflation and address related liquidity needs.
Pursuant to the share repurchase program approved by our Board of Directors on October 24, 2023, we repurchased 139,556 shares of our Common Stock for an aggregate of approximately $23.8 million during fiscal 2024. 30 We believe, although there can be no assurance, that our current cash and cash equivalents balances, our cash generated from future operations and amounts available under our Credit Agreement (as defined below) will be sufficient to meet our current anticipated working capital and capital expenditure requirements for at least the next 12 months and will help us manage the impacts of inflation and address related liquidity needs.
The changes to the amounts of our environmental liabilities for fiscal 2023 and 2022 are as follows (in thousands): Year ended August 26, 2023 August 27, 2022 Beginning balance $ 32,191 $ 32,859 Costs incurred for which reserves have been provided (1,936 ) (2,188 ) Insurance proceeds 147 135 Interest accretion 1,036 596 Changes in discount rates (2,446 ) (3,235 ) Revisions in estimates 1,037 4,024 Ending balance $ 30,029 $ 32,191 33 Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of August 26, 2023 for the next five fiscal years and thereafter, as measured in current dollars, are reflected below (in thousands): Fiscal year ended August 2024 2025 2026 2027 2028 Thereafter Total Estimated costs—current dollars $ 14,049 $ 2,651 $ 1,442 $ 1,270 $ 972 $ 14,617 $ 35,001 Estimated insurance proceeds (180 ) (195 ) (159 ) (173 ) (9 ) (230 ) (946 ) Net anticipated costs $ 13,869 $ 2,456 $ 1,283 $ 1,097 $ 963 $ 14,387 $ 34,055 Effect of inflation 9,227 Effect of discounting (13,253 ) Balance as of August 26, 2023 $ 30,029 Estimated insurance proceeds are primarily received from an annuity received as part of our legal settlement with an insurance company.
The changes to the amounts of our environmental liabilities for fiscal 2024 and 2023 are as follows (in thousands): Year ended August 31, 2024 August 26, 2023 Beginning balance $ 30,029 $ 32,191 Costs incurred for which reserves have been provided (3,176 ) (1,936 ) Insurance proceeds 238 147 Interest accretion 1,264 1,036 Changes in discount rates 244 (2,446 ) Revisions in estimates 2,656 1,037 Ending balance $ 31,255 $ 30,029 33 Anticipated payments and insurance proceeds of currently identified environmental remediation liabilities as of August 31, 2024 for the next five fiscal years and thereafter, as measured in current dollars, are reflected below (in thousands): Fiscal year ended August 2025 2026 2027 2028 2029 Thereafter Total Estimated costs—current dollars $ 14,425 $ 2,836 $ 1,527 $ 1,280 $ 997 $ 15,047 $ 36,112 Estimated insurance proceeds (180 ) (195 ) (159 ) (173 ) (9 ) (230 ) (946 ) Net anticipated costs $ 14,245 $ 2,641 $ 1,368 $ 1,107 $ 988 $ 14,817 $ 35,166 Effect of inflation 9,501 Effect of discounting (13,412 ) Balance as of August 31, 2024 $ 31,255 Estimated insurance proceeds are primarily obtained from an annuity received as part of our legal settlement with an insurance company.
Revenues and income (loss) from operations by reporting segment for fiscal 2023 and 2022 are presented in the following table: Fiscal Fiscal (In thousands) 2023 2022 Segment Information Revenues U.S. and Canadian Rental and Cleaning $ 1,907,765 $ 1,733,088 MFG 297,752 281,112 Net intercompany MFG elimination (297,752 ) (281,112 ) Corporate 53,424 37,414 Subtotal: Core Laundry Operations 1,961,189 1,770,502 Specialty Garments 177,034 152,885 First Aid 94,824 77,435 Total consolidated revenues $ 2,233,047 $ 2,000,822 Operating income (loss) U.S. and Canadian Rental and Cleaning $ 293,171 $ 289,018 MFG 88,292 64,884 Net intercompany MFG elimination (16,717 ) 236 Corporate (266,080 ) (243,428 ) Subtotal: Core Laundry Operations 98,666 110,710 Specialty Garments 37,488 23,658 First Aid (2,551 ) (17 ) Total operating income $ 133,603 $ 134,351 26 General We derive our revenues through the design, manufacture, personalization, rental, cleaning, delivering, and selling of a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks and aprons and specialized protective wear, such as flame resistant and high visibility garments.
Revenues and income (loss) from operations by reporting segment for fiscal 2024 and 2023 are presented in the following table: Fiscal Fiscal (In thousands) 2024 2023 Segment Information Revenues U.S. and Canadian Rental and Cleaning $ 2,083,059 $ 1,907,765 MFG 315,159 297,752 Net intercompany MFG elimination (315,159 ) (297,752 ) Corporate 55,889 53,424 Subtotal: Core Laundry Operations 2,138,948 1,961,189 Specialty Garments 182,212 177,034 First Aid 106,271 94,824 Total consolidated revenues $ 2,427,431 $ 2,233,047 Operating income (loss) U.S. and Canadian Rental and Cleaning $ 331,031 $ 293,171 MFG 95,072 88,292 Net intercompany MFG elimination (9,707 ) (16,717 ) Corporate (272,962 ) (266,080 ) Subtotal: Core Laundry Operations 143,434 98,666 Specialty Garments 41,976 37,488 First Aid (1,832 ) (2,551 ) Total operating income $ 183,578 $ 133,603 26 General We derive our revenues through the design, manufacture, personalization, rental, cleaning, delivering, and selling of a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks and aprons and specialized protective wear, such as flame resistant and high visibility garments.
Changes in enacted laws, regulatory orders or decrees, our estimates of costs, risk-free interest rates, insurance proceeds, participation by other parties, the timing of 32 payments, the input of our attorneys and outside consultants or other factual circumstances could have a material impact on the amounts recorded for our environmental and other contingent liabilities.
Changes in enacted laws, regulatory orders or decrees, our estimates of costs, risk-free interest rates, insurance proceeds, participation by other parties, the timing of payments, the input of our attorneys and outside consultants or other factual circumstances could have a material impact on the amounts recorded for our environmental and other contingent liabilities. 32 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.
In addition, as described above, the current inflationary environment has had a negative impact on our margins, and could continue to pressure our margins in future periods.
In addition, as described above, the inflationary environment in recent years had a negative impact on our margins. While inflation has moderated recently, a period of sustained inflation could pressure our margins in future periods.
This increase was driven primarily by increased activity in the wholesale distribution business, which accounted for growth of 12.0% and our continued investment in expanding the first aid van business, which accounted for growth of 10.5%.
This increase was driven by our continued investment in expanding the first aid van business, which accounted for growth of 10.1%, and growth from fiscal 2024's extra week of 2.2%.
(In thousands, except for percentages) Fiscal 2023 % of Revenues Fiscal 2022 % of Revenues % Change Revenues $ 2,233,047 100.0 % $ 2,000,822 100.0 % 11.6 % Operating expenses: Cost of revenue (1) 1,481,296 66.3 1,306,451 65.3 13.4 Selling and administrative expenses (1) 496,915 22.3 451,243 22.6 10.1 Depreciation and amortization 121,233 5.4 108,777 5.4 11.5 Total operating expenses 2,099,444 94.0 1,866,471 93.3 12.5 Operating income 133,603 6.0 134,351 6.7 (0.6 ) Other (income) expense, net (5,234 ) (0.2 ) 26 0.0 (20,230.8 ) Income before income taxes 138,837 6.2 134,325 6.7 3.4 Provision for income taxes 35,163 1.6 30,921 1.5 13.7 Net income $ 103,674 4.6 % $ 103,404 5.2 % 0.3 % (1) Exclusive of depreciation on our property, plant and equipment and amortization of our intangible assets.
(In thousands, except for percentages) Fiscal 2024 % of Revenues Fiscal 2023 % of Revenues % Change Revenues $ 2,427,431 100.0 % $ 2,233,047 100.0 % 8.7 % Operating expenses: Cost of revenue (1) 1,579,835 65.1 1,481,296 66.3 6.7 Selling and administrative expenses (1) 522,586 21.5 496,915 22.3 5.2 Depreciation and amortization 141,432 5.8 121,233 5.4 16.7 Total operating expenses 2,243,853 92.4 2,099,444 94.0 6.9 Operating income 183,578 7.6 133,603 6.0 37.4 Other income, net (5,801 ) (0.2 ) (5,234 ) (0.2 ) 10.8 Income before income taxes 189,379 7.8 138,837 6.2 36.4 Provision for income taxes 43,905 1.8 35,163 1.6 24.9 Net income $ 145,474 6.0 % $ 103,674 4.6 % 40.3 % (1) Exclusive of depreciation on our property, plant and equipment and amortization of our intangible assets.
This was partially offset by an increase in dividends paid of $1.3 million. 31 Long-term Debt and Borrowing Capacity On March 26, 2021, we entered into an amended and restated $175.0 million unsecured revolving credit agreement (as subsequently amended, the “Credit Agreement”) with a syndicate of banks, which matures on March 26, 2026.
Net Cash Used in Financing Activities The net cash used in financing activities in fiscal 2024 increased as compared to fiscal 2023 due primarily to a $23.8 million increase in the repurchase of Common Stock during the period. 31 Long-term Debt and Borrowing Capacity On March 26, 2021, we entered into an amended and restated $175.0 million unsecured revolving credit agreement (as subsequently amended, the “Credit Agreement”) with a syndicate of banks, which matures on March 26, 2026.
Given the uncertainty associated with the ultimate resolution of this matter, we are unable to reasonably assess an estimate or range of estimates of any potential losses.
While we are unable to ascertain the ultimate outcome of this matter, based on the information currently available, we believe that a loss with respect to this matter is neither probable nor remote. Given the uncertainty associated with the ultimate resolution of this matter, we are unable to reasonably assess an estimate or range of estimates of any potential losses.
Inventories and Rental Merchandise in Service Our inventories are stated at the lower of cost or net realizable value, net of any reserve for excess and obsolete inventory. Judgments and estimates are used in determining the likelihood that new goods on hand can be sold to our customers or used in our rental operations.
Judgments and estimates are used in determining the likelihood that new goods on hand can be sold to our customers or used in our rental operations. Historical inventory usage and current revenue trends are considered in estimating both excess and obsolete inventories.
The share repurchase program may be funded using available cash or capacity under our Credit Agreement (as defined below) and may be suspended or discontinued at any time. During fiscal 2023, we did not repurchase any shares. During fiscal 2022, we repurchased 0.2 million shares for an average price per share of $179.98.
The share repurchase program may be funded using available cash or capacity under our Credit Agreement (as defined below) and may be suspended or discontinued at any time.
Fiscal Year Ended August 26, 2023 Compared with Fiscal Year Ended August 27, 2022 Revenues (In thousands, except percentages) Fiscal 2023 Fiscal 2022 Dollar Change Percent Change Core Laundry Operations $ 1,961,189 $ 1,770,502 $ 190,687 10.8 % Specialty Garments 177,034 152,885 24,149 15.8 % First Aid 94,824 77,435 17,389 22.5 % Total consolidated revenues $ 2,233,047 $ 2,000,822 $ 232,225 11.6 % The increase in consolidated revenues of 11.6% during fiscal 2023 compared to the prior year was due primarily to growth in our Core Laundry Operations of 10.8%.
Fiscal Year Ended August 31, 2024 Compared with Fiscal Year Ended August 26, 2023 Revenues (In thousands, except percentages) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change Core Laundry Operations $ 2,138,948 $ 1,961,189 $ 177,759 9.1 % Specialty Garments 182,212 177,034 5,178 2.9 % First Aid 106,271 94,824 11,447 12.1 % Total consolidated revenues $ 2,427,431 $ 2,233,047 $ 194,384 8.7 % The increase in consolidated revenues of 8.7% during fiscal 2024 compared to the prior year was due primarily to growth in our Core Laundry Operations of 9.1%.
On October 24, 2023, our Board of Directors authorized a new share repurchase program to repurchase from time to time up to $100.0 million of our outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved on October 18, 2021.
On October 24, 2023, our Board of Directors authorized a share repurchase program to repurchase from time to time up to $100.0 million of our outstanding shares of Common Stock. Repurchases made under the new program, if any, will be made in either the open market or in privately negotiated transactions.
Our ability to secure short-term and long-term debt financing in the future will depend on several factors, including our future profitability, our levels of debt and equity, and the overall credit and equity market environments. 34 Contractual Obligations and Other Commercial Commitments The following information is presented as of August 26, 2023 (in thousands): Payments Due by Fiscal Period Contractual Obligations Total Less than 1 year 1 – 3 years 3 – 5 years More than 5 years Retirement plan benefit payments $ 28,668 $ 2,276 $ 3,891 $ 3,799 $ 18,702 Asset retirement obligations 16,471 — — — 16,471 Operating leases 71,444 19,629 29,034 16,163 6,618 Forward contracts 3,969 992 2,977 — — Purchase Commitments* 74,787 45,870 15,985 10,782 2,150 Total contractual cash obligations $ 195,339 $ 68,767 $ 51,887 $ 30,744 $ 43,941 *Includes non-cancellable purchase commitments for inventories, software, and services.
Our ability to secure short-term and long-term debt financing in the future will depend on several factors, including our future profitability, our levels of debt and equity, and the overall credit and equity market environments. 34 Contractual Obligations and Other Commercial Commitments The following information is presented as of August 31, 2024 (in thousands): Payments Due by Fiscal Period Contractual Obligations Total Less than 1 year 1 – 3 years 3 – 5 years More than 5 years Retirement plan benefit payments $ 29,489 $ 2,550 $ 3,924 $ 3,988 $ 19,027 Asset retirement obligations 17,929 — — — 17,929 Operating leases 75,833 20,557 30,751 16,160 8,365 Forward contracts 2,668 1,334 1,334 — — Purchase Commitments* 91,206 58,441 21,115 10,687 963 Total contractual cash obligations $ 217,125 $ 82,882 $ 57,124 $ 30,835 $ 46,284 *Includes non-cancellable purchase commitments for inventories, software, and services.
As of August 26, 2023, the interest rates applicable to our borrowings under the Credit Agreement would be calculated as SOFR plus 1.00% at the time of the respective borrowing. During fiscal 2023, we borrowed $80.0 million under our Credit Agreement to finance the acquisition of Clean and fund our day-to-day operations.
As of August 31, 2024, the interest rates applicable to our borrowings under the Credit Agreement would be calculated as SOFR plus 1.00% at the time of the respective borrowing. As of August 31, 2024, we had no outstanding borrowings and had outstanding letters of credit amounting to $65.1 million, leaving $209.9 million available for borrowing under the Credit Agreement.
Refer to Note 4, “Income Taxes”, of our Consolidated Financial Statements for further discussion regarding our accounting for income taxes and our uncertain tax positions for financial accounting purposes. Effects of Inflation and Current Economic Conditions In general, we believe that our results of operations are not dependent on moderate changes in the inflation rate.
Effects of Inflation and Adverse Economic Conditions In general, we believe that our results of operations are not dependent on moderate changes in the inflation rate.
Provision for income taxes (In thousands, except percentages) Fiscal 2023 Fiscal 2022 Dollar Change Percent Change Provision for income taxes $ 35,163 $ 30,921 $ 4,242 13.7 % Effective income tax rate 25.3 % 23.0 % The increase in the effective tax rate for fiscal 2023 as compared to the prior fiscal year was due primarily from the release of certain tax reserves during fiscal 2022 which did not recur in fiscal 2023.
Provision for income taxes (In thousands, except percentages) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change Provision for income taxes $ 43,905 $ 35,163 $ 8,742 24.9 % Effective income tax rate 23.2 % 25.3 % The decrease in the effective tax rate for fiscal 2024 as compared to the corresponding period year was due primarily to the release of certain tax reserves and a U.S. state legislative change enacted during the first quarter of fiscal 2024.
In addition, in response to the concerns over inflation risk in the broader U.S. economy, the U.S. Federal Reserve has increased its benchmark interest rate significantly and has signaled that it may approve one additional rate increase in 2023. Interest rates may remain high and/or continue to increase in 2024. Adverse economic conditions resulting from inflationary pressures, U.S.
In addition, the U.S. Federal Reserve rapidly increased its benchmark interest rate from 2021 through 2023 in response to sustained elevated inflation and has only modestly reduced that rate thus far 2024. Adverse economic conditions resulting from inflationary pressures, U.S.
Specialty Garments revenues for fiscal 2023 increased compared to the prior fiscal year due primarily to growth in our North American nuclear operations and our cleanroom operations. North American nuclear operations accounted for growth of 8.5%, due primarily to increased project work in fiscal 2023 and the cleanroom revenue growth accounted for growth of 7.1%.
Specialty Garments revenues for fiscal 2024 increased slightly compared to the prior year due primarily to growth from fiscal 2024's extra week of 1.9%, and growth in both our cleanroom and U.S. nuclear operations. First Aid revenues for fiscal 2024 increased 12.1% compared to the prior fiscal year.
Operating Income For fiscal 2023, changes in our revenues and costs as discussed above resulted in the following changes in our operating income and margin: (In thousands, except percentages) Fiscal 2023 Fiscal 2022 Dollar Change Percent Change Core Laundry Operations $ 98,666 $ 110,710 $ (12,044 ) (10.9 )% Specialty Garments 37,488 23,658 13,830 58.5 % First Aid (2,551 ) (17 ) (2,534 ) 14905.9 % Operating income $ 133,603 $ 134,351 $ (748 ) (0.6 )% Operating income margin 6.0 % 6.7 % Other (income) expense, net (In thousands, except percentages) Fiscal 2023 Fiscal 2022 Dollar Change Percent Change Interest income, net $ (6,738 ) $ (2,851 ) $ (3,887 ) 136.3 % Other expense, net 1,504 2,877 (1,373 ) (47.7 )% Total other (income) expense, net $ (5,234 ) $ 26 $ (5,260 ) (20230.8 )% The increase in other (income) expense, net, in fiscal 2023 compared to the prior fiscal year was due primarily to increases in interest income earned on our cash reserves and short-term investments as a result of rising interest rates.
Operating Income For fiscal 2024, changes in our revenues and costs as discussed above resulted in the following changes in our operating income and margin: (In thousands, except percentages) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change Core Laundry Operations $ 143,434 $ 98,666 $ 44,768 45.4 % Specialty Garments 41,976 37,488 4,488 12.0 % First Aid (1,832 ) (2,551 ) 719 (28.2 )% Operating income $ 183,578 $ 133,603 $ 49,975 37.4 % Operating income margin 7.6 % 6.0 % Other income, net (In thousands, except percentages) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change Interest income, net $ (7,242 ) $ (6,738 ) $ (504 ) 7.5 % Other expense, net 1,441 1,504 (63 ) (4.2 )% Total other income, net $ (5,801 ) $ (5,234 ) $ (567 ) 10.8 % Other income, net, in fiscal 2024 increased as compared to the prior year due primarily to $2.1 million of interest income recorded in fiscal 2024 as a result of a tax dispute we favorably resolved.
This new solution is intended to improve functionality, capability and information flow as well as increase automation in servicing our customers.
This new solution is intended to improve functionality, capability and information flow as well as increase automation for our operations in servicing our customers. We began deployment of our new CRM project during the second half of fiscal 2021 and concluded the deployment to our U.S. locations in the first quarter of fiscal 2024.
We believe that this initiative will become the core of the UniFirst technology footprint and will integrate and complement the capabilities of the CRM system that we are currently deploying.
We believe that this initiative will become the core of the UniFirst systems technology footprint and will integrate and complement the capabilities of the CRM system. We expect the ERP system and the new supply chain and procurement capabilities that it will provide to enable lower operating costs and reduced customer churn.
The results of operations from Clean were included in our results under the Core Laundry Operations segment subsequent to the acquisition date of March 13, 2023. We paid for the acquisition of Clean with cash on hand and borrowings under the Credit Agreement, which we repaid in full during the third quarter of fiscal 2023.
We paid for the acquisition of Clean with cash on hand and borrowings under the Credit Agreement, which we repaid in full during the third quarter of fiscal 2023. 28 The following section of this Annual Report on Form 10-K generally discusses fiscal 2024 and fiscal 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023.
Selling and administrative expenses (In thousands, except percentages) Fiscal 2023 Fiscal 2022 Dollar Change Percent Change Selling and administrative expenses $ 496,915 $ 451,243 $ 45,672 10.1 % % of Revenues 22.3 % 22.6 % The increase in selling and administrative costs of 10.1% during fiscal 2023 compared to the prior fiscal year was due primarily to additional investments we are making in our support functions due to our growth and in support of our ongoing technology initiatives.
Selling and administrative expenses (In thousands, except percentages) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change Selling and administrative expenses $ 522,586 $ 496,915 $ 25,671 5.2 % % of Revenues 21.5 % 22.3 % The increase in selling and administrative costs of 5.2% during fiscal 2024 compared to the prior fiscal year was due primarily to continued investments we have made in our corporate capabilities over the last year and incremental costs from the Clean acquisition as compared to the prior year.
These capabilities will allow us to more effectively respond to and mitigate the types of supply chain challenges that we experienced during the COVID-19 pandemic and that we continue to experience primarily as a result of the current inflationary environment. 27 We have been focused on the three discrete strategic initiatives that are critical in our efforts to transform the Company in terms of our overall capabilities and competitive positioning.
These capabilities will allow us to more effectively respond to and mitigate the types of supply chain challenges that we experienced during the COVID-19 pandemic and inflationary environment of 2022 and 2023. 27 We refer to our CRM and ERP projects together as our (“Key Initiatives”).
The impact on our revenues from acquisitions was primarily the result of our acquisition of Clean, which was completed on March 13, 2023. During fiscal 2023, Clean accounted for $43.0 million of revenue, which was included in Core Laundry Operations.
The Core Laundry Operations strong organic growth rate was mostly the result of solid new account sales and improved pricing with our customers. The impact on our revenues from acquisitions was the result of our acquisition of Clean, which was completed on March 13, 2023.
Liquidity and Capital Resources General Cash and cash equivalents and short-term investments totaled $89.6 million as of August 26, 2023, a decrease of $286.8 million from $376.4 million as of August 27, 2022.
Liquidity and Capital Resources General Cash and cash equivalents, and short-term investments totaled $175.1 million as of August 31, 2024, an increase of $85.5 million from $89.6 million as of August 26, 2023. The increase in cash and cash equivalents and short-term investments was largely driven by our cash flows from operating activities.
We expect this system and the supply chain and procurement capabilities that it will provide to enable lower operating costs and customer churn through enhanced inventory utilization and vendor management, improved response times to customer orders and more efficient back-end processes.
Such benefits are expected to be delivered through enhanced inventory utilization and vendor management, improved response times to customer orders and more efficient back-end processes.
The decrease in cash and cash equivalents and short-term investments was largely driven by our purchase of Clean for $299.1 million, net of cash, and continued investment in our business with capital expenditures. We generated $215.8 million and $122.6 million in cash from operating activities in fiscal 2023 and 2022, respectively.
We generated $295.3 million and $215.8 million in cash from operating activities in fiscal 2024 and 2023, respectively. The increase was due primarily to increased profitability and lower working capital needs of the business. During fiscal 2024, we continued to invest in our business with capital expenditures totaling $160.4 million.
Net Cash Used in Financing Activities The decrease in net cash used in financing activities in fiscal 2023 was due primarily to no Common Stock repurchases during fiscal 2023 as compared to $44.4 million of repurchases in the prior fiscal period.
Net Cash Used in Investing Activities The net cash used in investing activities in fiscal 2024 decreased as compared to fiscal 2023 due primarily to the Clean acquisition in the third quarter of fiscal 2023, a decrease in capital expenditures of $11.6 million and a reduced net investment in certificates of deposit of $7.1 million during fiscal 2024.
Also contributing to the increase were $3.0 million of Clean acquisition-related costs in fiscal 2023 and an additional $0.5 million of costs to support our Key Initiatives compared to the prior year comparable period. 29 Depreciation and amortization (In thousands, except percentages) Fiscal 2023 Fiscal 2022 Dollar Change Percent Change Depreciation and amortization $ 121,233 $ 108,777 $ 12,456 11.5 % % of Revenues 5.4 % 5.4 % Depreciation and amortization expense increased by 11.5% in fiscal 2023 as compared to the prior fiscal year but remained relatively consistent with the prior fiscal year as a percentage of revenues.
We also benefited from lower theft losses and a decrease in healthcare claims expenses compared to the prior year. 29 Depreciation and amortization (In thousands, except percentages) Fiscal 2024 Fiscal 2023 Dollar Change Percent Change Depreciation and amortization $ 141,432 $ 121,233 $ 20,199 16.7 % % of Revenues 5.8 % 5.4 % Depreciation and amortization expense increased by 16.7% in fiscal 2024 as compared to the prior fiscal year due primarily to continued investment in our systems and technology capabilities and infrastructure to support our future growth.
In fiscal 2023, we incurred $17.8 million, $4.8 million and $11.0 million of costs related to our CRM system, UniFirst branding project and ERP system, respectively, for a total of $33.6 million directly attributable to our Key Initiatives.
For fiscal 2024, we expensed $11.8 million of non-recurring costs related to our Key Initiatives, primarily relating to our ERP project. As of August 31, 2024, we capitalized $47.2 million related to our CRM project and $18.9 million related to our ERP project.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn seeking to minimize the risks from interest rate fluctuations, we manage exposures through our operating and financing activities. We are exposed to interest rate risk primarily through borrowings under our Credit Agreement. During fiscal 2023, we borrowed and repaid $80.0 million under the Credit Agreement.
Biggest changeIn seeking to minimize the risks from interest rate fluctuations, we manage exposures through our operating and financing activities. We are exposed to interest rate risk primarily through borrowings under our Credit Agreement. During fiscal 2023, we borrowed and repaid $80.0 million under the Credit Agreement. During fiscal 2024, we had no outstanding borrowings under the Credit Agreement.
Any losses or gains resulting from unhedged foreign currency transactions, including exchange rate fluctuations on intercompany accounts are reported as transaction losses (gains) in our other expense, net. The intercompany payables and receivables are denominated in Canadian dollars, euros, British pounds, Mexican pesos and Nicaraguan cordobas. During fiscal 2023 transaction losses included in other expense, net, was $0.5 million.
Any losses or gains resulting from unhedged foreign currency transactions, including exchange rate fluctuations on intercompany accounts are reported as transaction losses (gains) in our other expense, net. The intercompany payables and receivables are denominated in Canadian dollars, euros, British pounds, Mexican pesos and Nicaraguan cordobas. During fiscal 2024 transaction losses included in other expense, net, was $0.5 million.
During fiscal 2023, we reclassified $0.1 million from accumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of August 26, 2023 is expected to be reclassified to revenues prior to their maturity on August 29, 2026.
During fiscal 2024, we reclassified $0.1 million from accumulated other comprehensive loss to revenue, related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of August 31, 2024 is expected to be reclassified to revenues prior to their maturity on August 29, 2026.
As such, our financial condition and operating results are affected by fluctuations in the value of the U.S. dollar as compared to currencies in foreign countries. Revenues denominated in currencies other than the U.S. dollar represented approximately 7.0%, 7.9% and 8.4% of our total consolidated revenues for fiscal 2023, 2022 and 2021, respectively.
As such, our financial condition and operating results are affected by fluctuations in the value of the U.S. dollar as compared to currencies in foreign countries. Revenues denominated in currencies other than the U.S. dollar represented approximately 6.9%, 7.0% and 7.9% of our total consolidated revenues for fiscal 2024, 2023 and 2022, respectively.
If exchange rates had changed by 10% during fiscal 2023, we would have recognized exchange gains or losses of approximately $1.2 million. Interest Rate Sensitivity We are exposed to market risk from changes in interest rates, which may adversely affect our financial position, results of operations and cash flows.
If exchange rates had changed by 10% during fiscal 2024, we would have recognized exchange gains or losses of approximately $0.8 million. Interest Rate Sensitivity We are exposed to market risk from changes in interest rates, which may adversely affect our financial position, results of operations and cash flows.
Total assets denominated in currencies other than the U.S. dollar represented approximately 6.6% and 6.8% of our total consolidated assets at August 26, 2023 and August 27, 2022, respectively.
Total assets denominated in currencies other than the U.S. dollar represented approximately 6.8% and 6.6% of our total consolidated assets at August 31, 2024 and August 26, 2023, respectively.
As of August 26, 2023, we had forward contracts with a notional value of approximately 5.4 million CAD outstanding and recorded the fair value of the contracts of $0.2 million in prepaid expenses and other current assets with a corresponding gain of $0.2 million in accumulated other comprehensive loss, which was recorded net of tax.
As of August 31, 2024, we had forward contracts with a notional value of approximately 3.6 million CAD outstanding and recorded the fair value of the contracts of $0.1 million in prepaid expenses and other current assets with a corresponding gain of $0.1 million in accumulated other comprehensive loss, which was recorded net of tax.
If exchange rates had increased or decreased by 10% from the actual rates in effect during fiscal 2023, our revenues and assets for the year ended and as of August 26, 2023 would have increased or decreased by approximately $0.2 million and $17.1 million, respectively.
If exchange rates had increased or decreased by 10% from the actual rates in effect during fiscal 2024, our revenues and assets for the year ended and as of August 31, 2024 would have increased or decreased by approximately $16.7 million and $18.3 million, respectively.

Other UNF 10-K year-over-year comparisons