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9 u

United States

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-08504

UNIFIRST CORPORATION

(Exact name of registrant as specified in its charter)


Massachusetts	04-2103460
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

68 Jonspin Road, Wilmington, MA	01887
(Address of Principal Executive Offices)	(Zip Code)

(978) 658-8888

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.10 par value per share	UNF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller Reporting Company	☐

Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of outstanding shares of UniFirst Corporation Common Stock and Class B Common Stock as of July 2, 2025 were 14,991,657 and 3,551,265, respectively.

UniFirst Corporation

Quarterly Report on Form 10-Q

For the Thirteen and Thirty-Nine Weeks Ended May 31, 2025

Table of Contents


Part I – FINANCIAL INFORMATION	3

Item 1 – Financial Statements (unaudited)	3

Consolidated Statements of Income for the Thirteen and Thirty-Nine Weeks ended May 31, 2025 and May 25, 2024	3

Consolidated Statements of Comprehensive Income for the Thirteen and Thirty-Nine Weeks ended May 31, 2025 and May 25, 2024	4

Consolidated Balance Sheets as of May 31, 2025 and August 31, 2024	5

Consolidated Statements of Shareholders’ Equity for the Thirteen and Thirty-Nine Weeks ended May 31, 2025 and May 25, 2024	6

Consolidated Statements of Cash Flows for the Thirty-Nine Weeks ended May 31, 2025 and May 25, 2024	8

Notes to Consolidated Financial Statements	9

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3 – Quantitative and Qualitative Disclosures About Market Risk	34

Item 4 – Controls and Procedures	35

Part II – OTHER INFORMATION	36

Item 1 – Legal Proceedings	36

Item 1A – Risk Factors	36

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3 – Defaults Upon Senior Securities	37

Item 4 – Mine Safety Disclosures	37

Item 5 – Other Information	37

Item 6 – Exhibits	38

Signatures	38

Certifications
Ex-31.1 Section 302 Certification of CEO
Ex-31.2 Section 302 Certification of CFO
Ex-32.1 Section 906 Certification of CEO
Ex-32.2 Section 906 Certification of CFO

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Income

UniFirst Corporation and Subsidiaries

(Unaudited)


	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
(In thousands, except per share data)	May 31, 2025			May 25, 2024			May 31, 2025			May 25, 2024
Revenues	$	610,778		$	603,328		$	1,817,905		$	1,787,564

Operating expenses:
Cost of revenues (1)		385,189			391,244			1,160,388			1,171,231
Selling and administrative expenses (1)		142,690			129,074			418,119			383,350
Depreciation and amortization		34,722			34,560			104,476			103,453
Total operating expenses		562,601			554,878			1,682,983			1,658,034
Operating income		48,177			48,450			134,922			129,530

Other (income) expense:
Interest income, net		(2,514	)		(1,406	)		(7,422	)		(4,590	)
Other (income) expense, net		(2,704	)		522			(1,620	)		1,813
Total other income, net		(5,218	)		(884	)		(9,042	)		(2,777	)
Income before income taxes		53,395			49,334			143,964			132,307
Provision for income taxes		13,715			11,277			36,720			31,468
Net income	$	39,680		$	38,057		$	107,244		$	100,839

Income per share – Basic:
Common Stock	$	2.22		$	2.12		$	6.01		$	5.61
Class B Common Stock	$	1.78		$	1.70		$	4.80		$	4.49

Income per share – Diluted:
Common Stock	$	2.13		$	2.03		$	5.76		$	5.38

Income allocated to – Basic:
Common Stock	$	33,346		$	31,962		$	90,126		$	84,716
Class B Common Stock	$	6,334		$	6,095		$	17,118		$	16,123

Income allocated to – Diluted:
Common Stock	$	39,680		$	38,057		$	107,244		$	100,839

Weighted average shares outstanding – Basic:
Common Stock		14,990			15,062			15,007			15,094
Class B Common Stock		3,557			3,590			3,563			3,590

Weighted average shares outstanding – Diluted:
Common Stock		18,607			18,705			18,633			18,738

(1)

Exclusive of depreciation of the Company’s property, plant and equipment and amortization of its intangible assets.

The accompanying notes are an integral part of these Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

UniFirst Corporation and Subsidiaries

(Unaudited)


	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
(In thousands)	May 31, 2025			May 25, 2024			May 31, 2025			May 25, 2024
Net income	$	39,680		$	38,057		$	107,244		$	100,839
Other comprehensive income (loss):
Foreign currency translation adjustments		8,619			(598	)		(755	)		170
Change in fair value of derivatives, net of income taxes		(84	)		6			(18	)		(40	)
Other comprehensive income (loss)		8,535			(592	)		(773	)		130
Comprehensive income	$	48,215		$	37,465		$	106,471		$	100,969

The accompanying notes are an integral part of these Consolidated Financial Statements.

Consolidated Balance Sheets

UniFirst Corporation and Subsidiaries

(Unaudited)


(In thousands, except share and par value data)	May 31, 2025			August 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	211,910		$	161,571
Short-term investments		—			13,505
Receivables, less reserves of $7,956 and $7,916		281,815			278,851
Inventories		148,847			156,908
Rental merchandise in service		227,580			237,969
Prepaid taxes		12,133			14,893
Prepaid expenses and other current assets		55,589			51,979
Total current assets		937,874			915,676
Property, plant and equipment, net		817,931			801,612
Goodwill		653,300			648,850
Customer contracts, net		76,378			85,990
Other intangible assets, net		30,904			34,009
Deferred income taxes		851			833
Operating lease right-of-use assets, net		72,461			66,682
Other assets		170,328			142,761
Total assets	$	2,760,027		$	2,696,413
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	76,395		$	92,509
Accrued liabilities		172,719			170,240
Accrued taxes		—			447
Operating lease liabilities, current		17,835			18,241
Total current liabilities		266,949			281,437
Accrued liabilities		124,366			123,401
Accrued and deferred income taxes		137,029			132,496
Operating lease liabilities		56,892			50,568
Total liabilities		585,236			587,902
Commitments and contingencies (Note 12)
Shareholders’ equity:
Preferred Stock, $1.00 par value; 2,000,000 shares authorized; no shares issued and outstanding		—			—
Common Stock, $0.10 par value; 30,000,000 shares authorized; 14,935,888 and 15,000,552 shares issued and outstanding as of May 31, 2025 and August 31, 2024, respectively		1,494			1,500
Class B Common Stock, $0.10 par value; 20,000,000 shares authorized; 3,553,435 and 3,590,295 shares issued and outstanding as of May 31, 2025 and August 31, 2024, respectively		355			359
Capital surplus		108,486			104,791
Retained earnings		2,088,873			2,025,505
Accumulated other comprehensive loss		(24,417	)		(23,644	)
Total shareholders’ equity		2,174,791			2,108,511
Total liabilities and shareholders’ equity	$	2,760,027		$	2,696,413

The accompanying notes are an integral part of these Consolidated Financial Statements.

Consolidated Statements of Shareholders’ Equity

UniFirst Corporation and Subsidiaries

(Unaudited)


(In thousands)	Common Shares			Class B Common Shares		Common Stock			Class B Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
Balance, as of August 26, 2023		15,104			3,590	$	1,510		$	359	$	99,303		$	1,926,549		$	(23,761	)	$	2,003,960
Net income		—			—		—			—		—			42,325			—			42,325
Change in fair value of derivatives (1)		—			—		—			—		—			—			(12	)		(12	)
Foreign currency translation		—			—		—			—		—			—			(151	)		(151	)
Dividends declared Common Stock ($0.33 per share)		—			—		—			—		—			(4,993	)		—			(4,993	)
Dividends declared Class B Common Stock ($0.264 per share)		—			—		—			—		—			(948	)		—			(948	)
Repurchase of Common Stock		(2	)		—		—			—		(10	)		(245	)		—			(255	)
Share-based compensation, net (2)		—			—		—			—		244			—			—			244
Share-based awards exercised, net (1)		26			—		3			—		—			—			—			3
Balance, as of November 25, 2023		15,128			3,590	$	1,513		$	359	$	99,537		$	1,962,688		$	(23,924	)	$	2,040,173
Net income		—			—		—			—		—			20,457			—			20,457
Change in fair value of derivatives (1)		—			—		—			—		—			—			(34	)		(34	)
Foreign currency translation		—			—		—			—		—			—			919			919
Dividends declared Common Stock ($0.33 per share)		—			—		—			—		—			(4,976	)		—			(4,976	)
Dividends declared Class B Common Stock ($0.264 per share)		—			—		—			—		—			(948	)		—			(948	)
Repurchase of Common Stock		(45	)		—		(4	)		—		(298	)		(7,562	)		—			(7,864	)
Share-based compensation, net (2)		—			—		—			—		1,958			—			—			1,958
Share-based awards exercised, net (1)		4			—		—			—		—			—			—			—
Balance, as of February 24, 2024		15,087			3,590	$	1,509		$	359	$	101,197		$	1,969,659		$	(23,039	)	$	2,049,685
Net income		—			—		—			—		—			38,057			—			38,057
Change in fair value of derivatives (1)		—			—		—			—		—			—			6			6
Foreign currency translation		—			—		—			—		—			—			(598	)		(598	)
Dividends declared Common Stock ($0.33 per share)		—			—		—			—		—			(4,961	)		—			(4,961	)
Dividends declared Class B Common Stock ($0.264 per share)		—			—		—			—		—			(948	)		—			(948	)
Repurchase of Common Stock		(47	)		—		(5	)		—		(311	)		(7,528	)		—			(7,844	)
Share-based compensation, net (2)		—			—		—			—		2,211			—			—			2,211
Balance, as of May 25, 2024		15,040			3,590	$	1,504		$	359	$	103,097		$	1,994,279		$	(23,631	)	$	2,075,608


(In thousands)	Common Shares			Class B Common Shares			Common Stock			Class B Common Stock			Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
Balance, as of August 31, 2024		15,000			3,590		$	1,500		$	359		$	104,791		$	2,025,505		$	(23,644	)	$	2,108,511
Net income		—			—			—			—			—			43,105			—			43,105
Change in fair value of derivatives (1)		—			—			—			—			—			—			41			41
Foreign currency translation		—			—			—			—			—			—			(4,936	)		(4,936	)
Dividends declared Common Stock ($0.350 per share)		—			—			—			—			—			(5,260	)		—			(5,260	)
Dividends declared Class B Common Stock ($0.280 per share)		—			—			—			—			—			(996	)		—			(996	)
Repurchase of Common Stock		(34	)		—			(3	)		—			(235	)		(6,135	)		—			(6,373	)
Share-based compensation, net (2)		—			—			—			—			(448	)		—			—			(448	)
Share-based awards exercised, net (1)		33			—			3			—			—			—			—			3
Shares converted		32			(32	)		3			(3	)		—			—			—			—
Balance, as of November 30, 2024		15,031			3,558			1,503			356			104,108			2,056,219			(28,539	)		2,133,647
Net income		—			—			—			—			—			24,459			—			24,459
Change in fair value of derivatives (1)		—			—			—			—			—			—			25			25
Foreign currency translation		—			—			—			—			—			—			(4,438	)		(4,438	)
Dividends declared Common Stock ($0.350 per share)		—			—			—			—			—			(5,251	)		—			(5,251	)
Dividends declared Class B Common Stock ($0.280 per share)		—			—			—			—			—			(996	)		—			(996	)
Repurchase of Common Stock		(33	)		—			(3	)		—			(231	)		(5,921	)		—			(6,155	)
Share-based compensation, net (2)		—			—			—			—			2,264			—			—			2,264
Share-based awards exercised, net (1)		8			—			1			—			—			—			—			1
Balance, as of March 1, 2025		15,006			3,558		$	1,501		$	356		$	106,141		$	2,068,510		$	(32,952	)	$	2,143,556
Net income		—			—			—			—			—			39,680			—			39,680
Change in fair value of derivatives		—			—			—			—			—			—			(84	)		(84	)
Foreign currency translation		—			—			—			—			—			—			8,619			8,619
Dividends declared Common Stock ($0.350 per share)		—			—			—			—			—			(5,227	)		—			(5,227	)
Dividends declared Class B Common Stock ($0.280 per share)		—			—			—			—			—			(995	)		—			(995	)
Repurchase of Common Stock		(76	)		—			(8	)		—			(531	)		(13,095	)		—			(13,634	)
Share-based compensation, net (2)		—			—			—			—			2,876			—			—			2,876
Share-based awards exercised, net (1)		1			—			—			—			—			—			—			—
Shares converted		5			(5	)		1			(1	)		—			—			—			—
Balance, as of May 31, 2025		14,936			3,553			1,494			355			108,486			2,088,873			(24,417	)		2,174,791

(1)

These amounts are shown net of the effect of income taxes.

(2)

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

The accompanying notes are an integral part of these Consolidated Financial Statements.

Consolidated Statements of Cash Flows

UniFirst Corporation and Subsidiaries

(Unaudited)


Thirty-Nine Weeks Ended (in thousands)	May 31, 2025			May 25, 2024
Cash flows from operating activities:
Net income	$	107,244		$	100,839
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization (1)		104,476			103,453
Share-based compensation		9,049			7,145
Accretion on environmental contingencies		960			948
Accretion on asset retirement obligations		602			721
Deferred income taxes		3,514			4,048
Gain on sale of property and equipment		(2,690	)		—
Other		336			1,061
Changes in assets and liabilities, net of acquisitions:
Receivables, less reserves		(3,174	)		(5,288	)
Inventories		8,338			(13,101	)
Rental merchandise in service		10,018			5,308
Prepaid expenses and other current assets and Other assets		(16,729	)		(11,518	)
Accounts payable		(16,668	)		(5,118	)
Accrued liabilities		(12,190	)		(3,212	)
Prepaid and accrued income taxes		3,395			7,726
Net cash provided by operating activities		196,481			193,012

Cash flows from investing activities:
Acquisition of businesses, net of cash acquired		(5,374	)		(203	)
Capital expenditures, including capitalization of software costs		(109,823	)		(121,937	)
Purchases of investments		(14,734	)		(24,581	)
Maturities of investments		28,356			21,679
Proceeds from sale of assets		3,115			749
Net cash used in investing activities		(98,460	)		(124,293	)

Cash flows from financing activities:
Proceeds from exercise of share-based awards		4			3
Taxes withheld and paid related to net share settlement of equity awards		(4,357	)		(2,731	)
Repurchase of Common Stock		(25,593	)		(15,962	)
Payment of cash dividends		(18,402	)		(17,436	)
Net cash used in financing activities		(48,348	)		(36,126	)

Effect of exchange rate changes		666			210

Net increase in cash and cash equivalents		50,339			32,803
Cash and cash equivalents at beginning of period		161,571			79,443
Cash and cash equivalents at end of period	$	211,910		$	112,246

Supplemental disclosure of cash flow information:
Non-cash capital expenditures	$	11,723		$	6,010

(1)

Depreciation and amortization for the thirty-nine weeks ended May 31, 2025 and May 25, 2024 included approximately $12.7 million and $13.9 million, respectively, of non-cash amortization expense recognized for acquisition-related intangible assets.

The accompanying notes are an integral part of these Consolidated Financial Statements.

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements

1. Basis of Presentation

These Consolidated Financial Statements of UniFirst Corporation (the “Company”) included herein have been prepared, without audit, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the information furnished reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period.

It is suggested that these Consolidated Financial Statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2024. There have been no material changes in the accounting policies followed by the Company during the current fiscal year other than with respect to the recent accounting pronouncements discussed in Note 2, “Recent Accounting Pronouncements”. Results for an interim period are not indicative of any future interim periods or for an entire fiscal year.

2. Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances effective tax rate reconciliation disclosure requirements and provides clarity to the disclosures of income taxes paid, income before taxes and provision for income taxes. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. The ASU requires a public business entity to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis including purchases of inventory, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains those expenses. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC have not had, or are not believed by management to have, a material impact on the Company’s present or future financial statements.

3. Revenue Recognition

The following table presents the Company’s revenues for the thirteen and thirty-nine weeks ended May 31, 2025 and May 25, 2024, respectively, disaggregated by service type:


	Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	May 31, 2025					May 25, 2024					May 31, 2025					May 25, 2024
(In thousands, except percentages)	Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues
Core Laundry Operations	$	533,188		87.3	%	$	528,454		87.6	%	$	1,596,282		87.8	%	$	1,574,863		88.1	%
Specialty Garments		47,803		7.8	%		47,582		7.9	%		138,160		7.6	%		135,713		7.6	%
First Aid		29,787		4.9	%		27,292		4.5	%		83,463		4.6	%		76,988		4.3	%
Total revenues	$	610,778		100.0	%	$	603,328		100.0	%	$	1,817,905		100.0	%	$	1,787,564		100.0	%

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

Revenue Recognition Policy

During the thirteen weeks ended May 31, 2025 and May 25, 2024, approximately 83.9% and 83.8%, respectively, of the Company’s revenues were derived from fees for route servicing of the Core Laundry Operations, Specialty Garments, and First Aid segments performed by the Company’s employees at each customer’s location of business. During the thirty-nine weeks ended May 31, 2025 and May 25, 2024, approximately 83.8% and 84.1%, respectively, of the Company’s revenues were derived from fees for route servicing of the Core Laundry Operations, Specialty Garments, and First Aid segments performed by the Company’s employees at each customer’s location of business. Revenues from the Company’s route servicing customer contracts represent a single performance obligation. The Company recognizes these revenues over time as services are performed based on the nature of services provided and contractual rates (input method). Certain of the Company’s customer contracts, primarily within the Company’s Core Laundry Operations, include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration due to customer-based performance metrics specified within the contract. Specifically, some contracts contain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company’s actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period.

When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company’s performance period generally corresponds with the monthly invoice period. No significant constraints on the Company’s revenue recognition were applied during the thirteen and thirty-nine weeks ended May 31, 2025 and May 25, 2024. The Company reassesses these estimates during each reporting period.

The Company maintains a liability for these discounts and rebates within accrued liabilities on the Consolidated Balance Sheets. Variable consideration also includes consideration paid to a customer at the beginning of a contract. The Company capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue in accordance with the updated accounting guidance for revenue recognition. These assets are included in other assets on the Consolidated Balance Sheets.

The Company is exposed to credit losses primarily through its accounts receivables. Accounts receivable represents amounts due from customers and is presented net of reserves for expected credit losses. The Company utilizes its judgment and estimates are used in determining the collectability of accounts receivable and evaluating the adequacy of the reserve for expected credit losses. The Company considers specific accounts receivable and historical credit loss experience, customer credit worthiness, current economic trends and the age of outstanding balances as part of its evaluation. When an account is considered uncollectible, it is written off against the reserve for expected credit losses.

The following table presents the change in the allowance for credit losses, which is included in Receivables, net of reserves on the Consolidated Balance Sheets for the thirty-nine weeks ended May 31, 2025 (in thousands):


Balance as of August 31, 2024	$	7,916
Current period provision		6,403
Write-offs and other		(6,363	)
Balance as of May 31, 2025	$	7,956

Costs to Obtain a Contract

The Company defers commission expenses paid to its employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. The Company reviews the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or non-current based on the timing of when the Company expects to recognize the expense. The current portion is included in prepaid expenses and other current assets and the non-current portion is included in other assets on the Company’s Consolidated Balance Sheets.

The following table presents deferred commissions on the Company's Consolidated Balance Sheets as of May 31, 2025 and August 31, 2024:


(in thousands)	May 31, 2025		August 31, 2024
Prepaid expenses and other current assets	$	19,303	$	18,079
Other assets		83,739		78,856

The following table presents the Company's amortization expense related to deferred commissions on the Consolidated Statements of Income for the thirteen and thirty-nine weeks ended May 31, 2025 and May 25, 2024, respectively:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
(in thousands)	May 31, 2025		May 25, 2024		May 31, 2025		May 25, 2024
Selling and administrative expenses	$	4,961	$	4,578	$	14,589	$	13,366

4. Acquisitions

Whenever the Company acquires a business, consistent with current accounting guidance, the results of operations of the acquisition are included in the Company’s consolidated financial results from the date of the acquisition. The amount assigned to intangible assets acquired is based on their respective fair values determined as of the acquisition date. The excess of the purchase price over the tangible and intangible assets is recorded as goodwill. Goodwill is allocated to the segment to which the acquisition relates and is deductible for tax purposes.

During the thirty-nine weeks ended May 31, 2025, the Company completed four business acquisitions with an aggregate purchase price of approximately $6.5 million, which was primarily assigned to goodwill and intangible assets. Tangible assets acquired primarily relate to inventory and property, plant and equipment. The results of operations of these acquisitions have been included in the Company’s consolidated financial results under the First Aid segment subsequent to their respective acquisition dates. These acquisitions were not significant in relation to the Company’s consolidated financial results and, therefore, pro forma financial information has not been presented.

5. Fair Value Measurements

U.S. GAAP establishes a framework for measuring fair value and establishes disclosure requirements about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company considered non-performance risk when determining fair value of our derivative financial instruments.

The fair value hierarchy prescribed under U.S. GAAP contains three levels as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

All financial assets or liabilities that are measured at fair value on a recurring basis (at least annually) have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.

The assets or liabilities measured at fair value on a recurring basis are summarized in the tables below (in thousands):


	May 31, 2025								August 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Short-term investments	$	—	$	—	$	—	$	—	$	—	$	13,505	$	—

UNIFIRST CORP 10-Q