What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-01-06 compared with 2021-10-07 · 146 added, 95 removed, 467 unchanged (34% of the section changed)

3 unchanged sentences

(In thousands except per share data)

Three Months Ended

August 31, 2021 August 31, 2020

Three Months Ended Six Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Uniform rental and facility services $ 1,535,271 $ 1,410,488 $ 3,043,447 $ 2,804,899

19 unchanged sentences

(In thousands)

Three Months Ended

2021 August 31,

Three Months Ended Six Months Ended

2021 November 30,

2020 November 30,

2021 November 30,

Net income $ 294,669 $ 284,857 $ 625,848 $ 584,862

2 unchanged sentences

( 7,472 ) 2,960 ( 31,488 ) 29,906

Change in fair value of interest rate lock agreements, net of tax

(benefit) expense of $( 12,554 ) and $ 3,672 , respectively

Change in fair value of interest rate lock

agreements, net of tax expense (benefit)

of $ 3,744 , $ 5,400 , $( 8,810 ) and $ 9,072 ,

10,940 15,942 ( 25,739 ) 26,784

2 unchanged sentences

( 460 ) ( 359 ) ( 919 ) ( 717 )

Other comprehensive (loss) income, net of tax (benefit) expense of

Other comprehensive income (loss), net of

tax expense (benefit) of $ 3,892 , $ 5,515 ,

$( 8,514 ) and $ 9,303 , respectively

5 unchanged sentences

(In thousands except share data)

August 31, 2021 May 31,

November 30, 2021 May 31,

Current assets:

63 unchanged sentences

Balance at August 31, 2021 190,128 $ 1,625,594 $ 8,109,368 $ ( 30,266 ) ( 86,798 ) $ ( 6,395,493 ) $ 3,309,203

Net income — — 294,669 — — — 294,669

Comprehensive income, net of tax — — — 3,008 — — 3,008

Dividends — — ( 98,961 ) — — — ( 98,961 )

Stock-based compensation — 24,397 — — — — 24,397

Vesting of stock-based compensation awards 31 — — — — — —

Stock options exercised, net of shares

surrendered 317 36,302 — — — — 36,302

Repurchase of common stock — — — — ( 13 ) ( 5,491 ) ( 5,491 )

Balance at November 30, 2021 190,476 $ 1,686,293 $ 8,305,076 $ ( 27,258 ) ( 86,811 ) $ ( 6,400,984 ) $ 3,563,127

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

and Paid-In Capital Retained

13 unchanged sentences

Balance at August 31, 2020 188,156 $ 1,375,388 $ 7,596,514 $ ( 115,950 ) ( 83,608 ) $ ( 5,251,148 ) $ 3,604,804

Net income — — 284,857 — — — 284,857

Comprehensive income, net of tax — — — 18,543 — — 18,543

Dividends — — ( 371,827 ) — — — ( 371,827 )

Stock-based compensation — 28,547 — — — — 28,547

Vesting of stock-based compensation awards 21 — — — — — —

Stock options exercised, net of shares

surrendered 424 35,407 — — — — 35,407

Repurchase of common stock — — — — ( 7 ) ( 2,371 ) ( 2,371 )

Balance at November 30, 2020 188,601 $ 1,439,342 $ 7,509,544 $ ( 97,407 ) ( 83,615 ) $ ( 5,253,519 ) $ 3,597,960

See accompanying notes.

2 unchanged sentences

(In thousands)

Three Months Ended

August 31, 2021 August 31, 2020

Six Months Ended

November 30, 2021 November 30, 2020

Cash flows from operating activities:

19 unchanged sentences

Purchases of investments ( 5,967 ) ( 7,205 )

Proceeds from sale of operating assets 15,070 —

Proceeds from sale of operating assets, net of cash disposed 15,347 23,426

Acquisitions of businesses, net of cash acquired ( 45,670 ) ( 6,932 )

27 unchanged sentences

Inventory is comprised of the following:

(In thousands) August 31, 2021 May 31,

(In thousands) November 30, 2021 May 31,

Raw materials $ 16,385 $ 15,109

2 unchanged sentences

$ 464,864 $ 481,797

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 110.2 million and $ 111.0 million at August 31, 2021 and May 31, 2021, respectively.

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 106.6 million and $ 111.0 million at November 30, 2021 and May 31, 2021, respectively.

The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence.

2 unchanged sentences

Certain prior year amounts have been reclassified for consistency with the current year presentation.

The reclassification has been reflected in the consolidated condensed balance sheet and consolidated condensed statement of shareholders' equity for the fiscal year ended May 31, 2021 and the three months ended August 31, 2020, to combine common stock and paid-in capital for disclosure purposes.

The reclassification has been reflected in the consolidated condensed balance sheet and consolidated condensed statement of shareholders' equity for the fiscal year ended May 31, 2021 and the three and six months ended November 30, 2020, to combine common stock and paid-in capital for presentation purposes.

These reclassifications had no effect on the Company's reported results of operations.

8 unchanged sentences

Note 2 - Revenue Recognition

The following table presents Cintas' total revenue disaggregated by operating segment for the three months ended August 31:

(In thousands) 2021 2020

Uniform Rental and Facility Services $ 1,508,176 79.5 % $ 1,394,411 79.8 %

First Aid and Safety Services 199,116 10.5 % 204,481 11.7 %

Fire Protection Services 128,218 6.8 % 108,065 6.2 %

The following table presents Cintas' total revenue disaggregated by operating segment:

Three Months Ended Six Months Ended

(In thousands) November 30,

2021 November 30,

2020 November 30,

2021 November 30,

Uniform Rental and

Facility Services $ 1,535,271 79.9 % $ 1,410,488 80.3 % $ 3,043,447 79.7 % $ 2,804,899 80.0 %

First Aid and Safety

Services 202,160 10.5 % 194,419 11.0 % 401,276 10.5 % 398,899 11.4 %

Fire Protection

Services 123,254 6.4 % 104,636 6.0 % 251,472 6.6 % 212,701 6.1 %

Uniform Direct Sales 61,596 3.2 % 47,505 2.7 % 123,036 3.2 % 87,123 2.5 %

2 unchanged sentences

Revenue Recognition Policy

Approximately 95 % of the Company's revenues are derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services, performed by a Cintas employee-partner, at the customer's location of business.

Approximately 95 % of the Company's revenue is derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services customers, performed by a Cintas employee-partner, at the customer's location of business.

Revenues from our route servicing customer contracts represent a single-performance obligation.

12 unchanged sentences

The Company's performance period generally corresponds with the monthly invoice period.

No constraints on our revenue recognition were applied during the three months ended August 31, 2021 or 2020.

No constraints on our revenue recognition were applied during the three or six months ended November 30, 2021 or 2020.

The Company reassesses these estimates during each reporting period.

2 unchanged sentences

Cintas capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue.

These assets are included in other assets, net on the consolidated condensed balance sheets.

These assets are included in prepaid expenses and other current assets and in other assets, net on the consolidated condensed balance sheets.

Additionally, certain Uniform Direct Sales operating segment customer contracts contain a provision with an enforceable right of payment, and the underlying product has no alternative use to Cintas.

3 unchanged sentences

The portion of the allowance that is an estimate based on Cintas' historical rates of collections is recorded for overdue amounts, beginning with a nominal percentage when the account is current and increasing substantially as the account ages.

The amount provided as the account ages will differ slightly between the Uniform

Rental and Facility Services reportable operating segment, the First Aid and Safety Services reportable operating segment and All Other because of differences in customers served and the nature of each business.

The amount provided as the account ages will differ slightly between the Uniform Rental and Facility Services reportable operating segment, the First Aid and Safety Services reportable operating segment and All Other because of differences in customers served and the nature of each business.

We update our estimate of credit loss reserves quarterly, considering recent write-offs and collections information and underlying economic expectations.

1 unchanged sentence

The Company capitalizes commission expenses paid to our employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract.

As permitted by ASC 606, "Revenue", the Company has elected to apply the guidance to a portfolio of contracts (or performance obligations) with similar characteristics because the Company reasonably expects that the effects on the consolidated condensed financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio.

As permitted by ASC 606, "Revenue from Contracts with Customers (Topic 606)", the Company has elected to apply the guidance to a portfolio of contracts (or performance obligations) with similar characteristics because the Company reasonably expects that the effects on the consolidated condensed financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio.

The Company also continues to expense certain costs to obtain a contract if those costs do not meet the criteria of the standard or the amortization period of the asset would have been one year or less.

3 unchanged sentences

The current portion is included in prepaid expenses and other current assets and the noncurrent portion is included in other assets, net on the Company's consolidated condensed balance sheets.

As of August 31, 2021, the current and noncurrent assets related to deferred commissions totaled $ 80.2 million and $ 227.2 million, respectively.

As of November 30, 2021, the current and noncurrent assets related to deferred commissions totaled $ 81.3 million and $ 228.9 million, respectively.

As of May 31, 2021, the current and noncurrent assets related to deferred commissions totaled $ 79.4 million and $ 227.1 million, respectively.

We recorded amortization expense related to deferred commissions of $ 21.4 million and $ 20.4 million during the three months ended August 31, 2021 and 2020, respectively.

We recorded amortization expense related to deferred commissions of $ 21.7 million and $ 20.7 million during the three months ended November 30, 2021 and 2020, respectively.

During the six months ended November 30, 2021 and 2020, we recorded amortization expense related to deferred commissions of $ 43.1 million and $ 41.1 million, respectively.

These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income.

9 unchanged sentences

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

Operating lease costs were $ 18.2 million and $ 17.1 million for the three months ended August 31, 2021 and 2020, respectively.

Short-term lease expense and variable lease costs are included within operating lease costs and immaterial for the three months ended August 31, 2021 and 2020.

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the three months ended August 31:

Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 18.0 million and $ 18.1 million for the three months ended November 30, 2021 and 2020, respectively.

For the six months ended November 30, 2021 and 2020, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 36.2 million and $ 35.2 million, respectively.

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the six months ended November 30:

(In thousands) 2021 2020

5 unchanged sentences

Weighted-average discount rate - operating leases 2.23 % 2.32 %

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of August 31, 2021:

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2021:

(In thousands)

2022 (remaining nine months)

2022 (remaining six months)

Thereafter 32,379

5 unchanged sentences

These financial instruments measured at fair value on a recurring basis are summarized below:

As of August 31, 2021

As of November 30, 2021

(In thousands) Level 1 Level 2 Level 3 Fair Value

25 unchanged sentences

In addition to assets and liabilities that are recorded at fair value on a recurring basis, Cintas records assets and liabilities at fair value on a nonrecurring basis as required under U.S.

The assets and liabilities measured at fair value on a nonrecurring basis primarily relate to assets and liabilities acquired in a business acquisition, which were not material during the three months ended August 31, 2021 and 2020.

Note 5 - Investments

Cintas' investments are summarized as follows:

(In thousands) August 31,

(In thousands) November 30,

Cash surrender value of insurance policies $ 270,146 $ 252,061

3 unchanged sentences

Investments are generally evaluated for impairment on an annual basis or when indicators of impairment exist.

For the three months ended August 31, 2021 and 2020, no impairment losses were recorded.

For the three and six months ended November 30, 2021 and 2020, no impairment losses were recorded.

Subsequent to November 30, 2021, Cintas purchased the remaining interest in an equity method investment that is a component of its supply chain within the Uniform Rental and Facility Services reportable operating segment for cash consideration of $ 47.7 million.

Subsequent to the purchase, Cintas will consolidate the operations of the previously accounted for equity method investment.

The acquisition will be accounted for under the acquisition method.

Note 6 - Earnings Per Share

Cintas uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of restricted stock awards.

The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares for the three months ending August 31:

The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares.

Three Months Ended Six Months Ended

Basic Earnings per Share

(In thousands except per share data)

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Net income $ 294,669 $ 284,857 $ 625,848 $ 584,862

income allocated to participating securities 1,765 2,173

income allocated to participating

securities 1,495 2,015 3,179 4,153

Income available to common shareholders $ 293,174 $ 282,842 $ 622,669 $ 580,709

2 unchanged sentences

Basic earnings per share $ 2.83 $ 2.69 $ 6.02 $ 5.55

Three Months Ended Six Months Ended

Diluted Earnings per Share

(In thousands except per share data)

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Net income $ 294,669 $ 284,857 $ 625,848 $ 584,862

4 unchanged sentences

Effect of dilutive securities – employee stock options

2,476 2,982 2,563 3,010

Diluted weighted average common shares outstanding

1 unchanged sentence

Diluted earnings per share $ 2.76 $ 2.62 $ 5.87 $ 5.40

For the three months ended August 31, 2021 and 2020, options granted to purchase 0.1 million and 0.2 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

For the three months ended November 30, 2021 and 2020, options granted to purchase 0.1 million and 0.2 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

For the six months ended November 30, 2021 and 2020, options granted to purchase 0.1 million and 0.2 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

The exercise prices of these options were greater than the average market price of the common stock (anti-dilutive).

2 unchanged sentences

On July 27, 2021, Cintas announced that the Board of Directors authorized a new $ 1.5 billion share buyback program, which does not have an expiration date.

The following tables summarize the share buyback activity by program for the three months ended August 31:

There were no share buybacks for the three months ended November 30, 2021 or 2020.

The following table summarizes the share buyback activity by program for the six months ended November 30:

Buyback Program

6 unchanged sentences

1,590 $ 365.41 $ 581,220 — $ — $ —

There were no share buybacks in the period subsequent to August 31, 2021, through October 7, 2021 under any share buyback program.

For the three months ended August 31, 2021, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested.

For the three months ended November 30, 2021, Cintas acquired less than 0.1 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested.

These shares were acquired at an average price of $ 420.87 per share for a total purchase price of $ 5.5 million.

For the three months ended August 31, 2020, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested.

For the three months ended November 30, 2020, Cintas acquired less than 0.1 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested.

These shares were acquired at an average price of $ 333.60 per share for a total purchase price of $ 2.4 million.

During the six months ended November 30, 2021, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested.

These shares were acquired at an average price of $ 395.84 per share for a total purchase price of $ 83.5 million.

During the six months ended November 30, 2020, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested.

These shares were acquired at an average price of $ 301.01 per share for a total purchase price of $ 71.4 million.

Note 7 - Goodwill, Service Contracts and Other Assets

Changes in the carrying amount of goodwill and service contracts for the three months ended August 31, 2021, by reportable operating segment and All Other, are as follows:

Changes in the carrying amount of goodwill and service contracts for the six months ended November 30, 2021, by reportable operating segment and All Other, are as follows:

(in thousands)

5 unchanged sentences

Foreign currency translation ( 14,824 ) ( 1,313 ) ( 51 ) ( 16,188 )

Balance as of August 31, 2021 $ 2,560,457 $ 247,547 $ 116,989 $ 2,924,993

Balance as of November 30, 2021 $ 2,557,198 $ 256,602 $ 117,507 $ 2,931,307

Service Contracts

7 unchanged sentences

Foreign currency translation ( 3,404 ) ( 160 ) — ( 3,564 )

Balance as of August 31, 2021 $ 366,931 $ 17,178 $ 19,873 $ 403,982

Balance as of November 30, 2021 $ 353,792 $ 18,479 $ 19,338 $ 391,609

Information regarding Cintas’ service contracts and other assets is as follows:

As of August 31, 2021 As of May 31, 2021

As of November 30, 2021 As of May 31, 2021

(In thousands) Carrying

10 unchanged sentences

Total other assets $ 637,242 $ 342,397 $ 294,845 $ 609,133 $ 298,719 $ 310,414

(1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of August 31, 2021 and May 31, 2021, is $ 80.2 million and $ 79.4 million, respectively.

Amortization expense for service contracts and other assets was $ 36.5 million and $ 35.1 million for the three months ended August 31, 2021 and 2020, respectively.

(1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of November 30, 2021 and May 31, 2021, is $ 81.3 million and $ 79.4 million, respectively.

Amortization expense for service contracts and other assets was $ 36.9 million and $ 35.4 million for the three months ended November 30, 2021 and 2020, respectively.

For the six months ended November 30, 2021 and 2020, amortization expense for service contracts and other assets was $ 73.4 million and $ 70.5 million, respectively.

These expenses are recorded in selling and administrative expenses on the consolidated condensed statements of income.

As of August 31, 2021, the estimated future amortization expense for service contracts and other assets, excluding any future acquisitions and commissions to be earned, is as follows:

As of November 30, 2021, the estimated future amortization expense for service contracts and other assets, excluding any future acquisitions and commissions to be earned, is as follows:

Fiscal Year (In thousands)

2022 (remaining nine months)

2022 (remaining six months)

Thereafter 213,745

5 unchanged sentences

Issued Fiscal Year

Maturity August 31,

Maturity November 30,

Debt due within one year

17 unchanged sentences

(1) Variable rate debt instrument.

The rate presented is the variable borrowing rate at August 31, 2021.

The rate presented is the variable borrowing rate at November 30, 2021.

(2) Cintas assumed these senior notes with the acquisition of G&K Services, Inc.

7 unchanged sentences

The fair value of the long-term debt is estimated using Level 2 inputs based on general market prices.

The carrying value and fair value of Cintas' debt as of August 31, 2021 were $ 2,626.0 million and $ 2,863.8 million, respectively, and as of May 31, 2021 were $ 2,550.0 million and $ 2,788.8 million, respectively.

The carrying value and fair value of Cintas' debt as of November 30, 2021 were $ 2,467.0 million and $ 2,540.7 million, respectively, and as of May 31, 2021 were $ 2,550.0 million and $ 2,788.8 million, respectively.

On June 1, 2021, in accordance with the terms of the notes, Cintas paid the $ 250.0 million aggregate principal amount of its 4.30 %, 10-year senior notes that matured on that date with cash on hand.

During the three months ended August 31, 2021, Cintas issued $ 326.0 million, net of commercial paper borrowings.

During the six months ended November 30, 2021, Cintas issued $ 167.0 million, net of commercial paper borrowings.

The credit agreement that supports our commercial paper program has a revolving credit facility with a capacity of $ 1.0 billion.

1 unchanged sentence

The maturity date of the revolving credit facility is May 23, 2024 .

As of August 31, 2021, there was $ 326.0 million of commercial paper outstanding with maturity dates less than 30 days and with a weighted average interest rate of 0.20 % and there was no borrowings on our revolving credit facility.

As of November 30, 2021, there was $ 167.0 million of commercial paper outstanding with maturity dates less than 30 days and with a weighted average interest rate of 0.22 % and there was no borrowings on our revolving credit facility.

As of May 31, 2021, t her e was no commercial paper outstanding and no borrowings on our revolving credit facility.

1 unchanged sentence

The interest rate locks are entered into to protect against unfavorable movements in the benchmark treasury rate related to forecasted debt issuances.

Cintas used interest rate lock agreements to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 2012, fiscal 2013 and fiscal 2017.

The amortization of the cash flow hedges resulted in a decrease to other comprehensive income of $ 0.5 million and $ 0.4 million three months ended August 31, 2021 and 2020, respectively.

During fiscal 2020 and fiscal 2019, Cintas entered into interest rate lock agreements with a total

notional value of $ 950.0 million and $ 500.0 million, respectively, for forecasted debt issuances in connection with upcoming debt maturities.

Cintas used interest rate locks, which represent cash flow hedges, to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 2012, fiscal 2013 and fiscal 2017.

The amortization of the interest rate locks resulted in a decrease to other comprehensive income of $ 0.4 million for both the three months ended November 30, 2021 and 2020.

For the six months ended November 30, 2021 and 2020, the amortization of the interest rate locks resulted in a decrease to other comprehensive income of $ 0.9 million and $ 0.7 million, respectively.

fiscal 2020 and fiscal 2019, Cintas entered into interest rate lock agreements with a total notional value of $ 950.0 million and $ 500.0 million, respectively, for forecasted debt issuances in connection with upcoming debt maturities.

The fair values of the outstanding interest rate lock agreements are summarized as follows:

August 31, 2021 May 31, 2021

November 30, 2021 May 31, 2021

Fiscal Year of Issuance

7 unchanged sentences

The interest rate locks are also recorded in other comprehensive income (loss), net of tax.

These interest rate locks had no impact on net income or cash flows for the three months ended August 31, 2021 or 2020.

These interest rate locks had no impact on net income or cash flows for the three and six months ended November 30, 2021 or 2020.

Cintas has certain covenants related to debt agreements.

6 unchanged sentences

In the normal course of business, Cintas provides for uncertain tax positions and the related interest and adjusts its unrecognized tax benefits and accrued interest accordingly.

As of August 31, 2021 and May 31, 2021, recorded unrecognized tax benefits were $ 34.6 million and $ 34.2 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance sheets.

As of November 30, 2021 and May 31, 2021, recorded unrecognized tax benefits were $ 31.1 million and $ 34.2 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance sheets.

The majority of Cintas' operations are in North America.

7 unchanged sentences

Based on the resolution of the various audits and other potential regulatory developments, it is reasonably possible that the balance of unrecognized tax benefits would not change for the fiscal year ending May 31, 2022.

Cintas’ effective tax rate was 11.0 % and 7.8 % for the three months ended August 31, 2021 and 2020, respectively.

Cintas’ effective tax rate was 18.0 % and 13.3 % for the three months ended November 30, 2021 and 2020, respectively.

For the six months ended November 30, 2021 and 2020, Cintas' effective tax rate was 14.5 % and 10.5 %, respectively.

The effective tax rate for all periods was impacted by certain discrete items (primarily the tax accounting for stock-based compensation).

Note 10 - Pension Plans

In conjunction with the acquisition of G&K in fiscal 2017, Cintas assumed G&K's noncontributory defined benefit pension plan (the Pension Plan) that covers substantially all legacy G&K employees who were employed as of July 1, 2005, except certain employees who were covered by union-administered plans.

Benefits are based on the number of years of service and each employee’s compensation near retirement.

We will make annual contributions to the Pension Plan consistent with federal funding requirements.

The Pension Plan was frozen by G&K effective December 31, 2006.

Future growth in benefits will not occur beyond this date.

Applicable accounting standards require that the consolidated condensed balance sheets reflect the funded status of the Pension Plan.

The funded status of the Pension Plan is measured as the difference between the plan assets at fair value and the projected benefit obligation (PBO).

The PBO represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels.

The measurement of the PBO is based on the Company’s estimates and actuarial valuations.

The net pension liability is included in long-term accrued liabilities on the consolidated condensed balance sheets.

Unrecognized differences between actual amounts and estimates based on actuarial assumptions are included in accumulated other comprehensive (loss) income on our consolidated condensed balance sheets.

The difference between actual amounts and estimates based on actuarial assumptions are recognized in other comprehensive (loss) income, net of tax, in the period in which they occur.

The Pension Plan assumptions are evaluated annually and are updated as deemed necessary.

The components of net periodic pension benefit are summarized as follows for the three months ended August 31:

(In thousands) 2021 2020

Interest cost $ 542 $ 512

Expected return on assets ( 917 ) ( 731 )

Amortization of net loss — 56

Net periodic pension benefit $ ( 375 ) $ ( 163 )

In addition, the effective tax rate for the three and six months ended November 30, 2020 included a one-time tax benefit on the sale of certain operating assets.

Note 10 - Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive (loss) income, net of tax:

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss), net of tax:

(In thousands) Foreign

Currency Unrealized Loss on

Interest Rate Hedges Other Total

Interest Rate Locks Other Total

Balance at June 1, 2021 $ 41,839 $ ( 7,308 ) $ ( 3,643 ) $ 30,888

Other comprehensive loss before reclassifications ( 24,016 ) ( 36,679 ) — ( 60,695 )

Amounts reclassified from accumulated other comprehensive (loss) income

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 459 ) — ( 459 )

1 unchanged sentence

Balance at August 31, 2021 17,823 ( 44,446 ) ( 3,643 ) ( 30,266 )

Other comprehensive (loss) income before

reclassifications ( 7,472 ) 10,940 — 3,468

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 460 ) — ( 460 )

Net current period other comprehensive (loss) income ( 7,472 ) 10,480 — 3,008

Balance at November 30, 2021 $ 10,351 $ ( 33,966 ) $ ( 3,643 ) $ ( 27,258 )

(In thousands) Foreign

Currency Unrealized Loss on

Interest Rate Hedges Other Total

Interest Rate Locks Other Total

Balance at June 1, 2020 $ ( 26,343 ) $ ( 112,718 ) $ ( 14,319 ) $ ( 153,380 )

Other comprehensive income before reclassifications 26,946 10,842 — 37,788

Amounts reclassified from accumulated other comprehensive (loss) income — ( 358 ) — ( 358 )

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 358 ) — ( 358 )

Net current period other comprehensive income 26,946 10,484 — 37,430

Balance at August 31, 2020 603 ( 102,234 ) ( 14,319 ) ( 115,950 )

The following table summarizes the reclassifications out of accumulated other comprehensive (loss) income for the three months ended August 31:

Other comprehensive income before reclassifications 2,960 15,942 — 18,902

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 359 ) — ( 359 )

Net current period other comprehensive income 2,960 15,583 — 18,543

Balance at November 30, 2020 $ 3,563 $ ( 86,651 ) $ ( 14,319 ) $ ( 97,407 )

The following table summarizes the reclassifications out of accumulated other comprehensive (loss) income:

Details about Accumulated

Other Comprehensive

(Loss) Income Components Amount Reclassified from

Income (Loss) Components Amount Reclassified from

Accumulated Other

Comprehensive (Loss) Income Affected Line in the

Comprehensive Income (Loss) Affected Line in the

Consolidated Condensed

Statements of Income

(In thousands) 2021 2020

Three Months Ended Six Months Ended

(In thousands) November 30,

2021 November 30,

2020 November 30,

2021 November 30,

Amortization of interest rate locks

15 unchanged sentences

Other Corporate (1)

As of and for the three months ended August 31, 2021

For the three months ended November 30, 2021

Revenue $ 1,535,271 $ 202,160 $ 184,850 $ — $ 1,922,281

Income (loss) before income taxes $ 337,615 $ 22,077 $ 21,536 $ ( 21,846 ) $ 359,382

For the three months ended November 30, 2020

Revenue $ 1,410,488 $ 194,419 $ 152,141 $ — $ 1,757,048

Income (loss) before income taxes $ 315,609 $ 21,506 $ 15,757 $ ( 24,339 ) $ 328,533

As of and for the six months ended November 30, 2021

Revenue $ 3,043,447 $ 401,276 $ 374,508 $ — $ 3,819,231

Income (loss) before income taxes $ 666,997 $ 47,805 $ 60,527 $ ( 43,644 ) $ 731,685

Total assets $ 6,901,366 $ 632,421 $ 370,453 $ 113,170 $ 8,017,410

As of and for the three months ended August 31, 2020

As of and for the six months ended November 30, 2020

Revenue $ 2,804,899 $ 398,899 $ 299,824 $ — $ 3,503,622

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements