What changed in this filing

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Item 1. Financial Statements

2022-04-07 compared with 2022-01-06 · 207 added, 110 removed, 503 unchanged (39% of the section changed)

3 unchanged sentences

(In thousands except per share data)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Uniform rental and facility services $ 1,553,320 $ 1,417,865 $ 4,596,767 $ 4,222,764

19 unchanged sentences

(In thousands)

Three Months Ended Six Months Ended

2021 November 30,

2020 November 30,

2021 November 30,

Three Months Ended Nine Months Ended

2022 February 28,

2021 February 28,

2022 February 28,

Net income $ 315,448 $ 258,384 $ 941,296 $ 843,246

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

1 unchanged sentence

Change in fair value of interest rate lock

agreements, net of tax expense (benefit)

agreements, net of tax expense

of $ 11,832 , $ 25,689 , $ 3,022 and

$ 34,761 , respectively

34,567 75,850 8,828 102,634

Amortization of interest rate lock agreements, net of tax benefit

of $ 148 , $ 115 , $ 296 and $ 231 , respectively

Amortization of interest rate lock

agreements, net of tax benefit of $ 149 ,

$ 116 , $ 445 and $ 347 , respectively

( 459 ) ( 358 ) ( 1,378 ) ( 1,075 )

Other comprehensive income (loss), net of

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

tax expense of $ 11,981 , $ 25,805 , $ 3,467

and $ 35,108 , respectively

5 unchanged sentences

(In thousands except share data)

November 30, 2021 May 31,

Current assets:

40 unchanged sentences

85,009,794 shares

Accumulated other comprehensive (loss) income ( 27,258 ) 30,888

Accumulated other comprehensive income 12,147 30,888

Total shareholders’ equity 3,293,900 3,687,847

16 unchanged sentences

Vesting of stock-based compensation awards 493 — — — — — —

Stock options exercised, net of shares

surrendered 564 72,896 — — — — 72,896

Stock options exercised 564 72,896 — — — — 72,896

Repurchase of common stock — — — — ( 1,788 ) ( 659,235 ) ( 659,235 )

5 unchanged sentences

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

Stock options exercised, net of shares

surrendered 317 36,302 — — — — 36,302

Stock options exercised 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

Net income — — 315,448 — — — 315,448

Comprehensive income, net of tax — — — 39,405 — — 39,405

Dividends — — ( 98,197 ) — — — ( 98,197 )

Stock-based compensation — 22,794 — — — — 22,794

Vesting of stock-based compensation awards 2 — — — — — —

Stock options exercised 215 20,438 — — — — 20,438

Repurchase of common stock — — — — ( 1,466 ) ( 569,115 ) ( 569,115 )

Balance at February 28, 2022 190,693 $ 1,729,525 $ 8,522,327 $ 12,147 ( 88,277 ) $ ( 6,970,099 ) $ 3,293,900

CINTAS CORPORATION

12 unchanged sentences

Vesting of stock-based compensation awards 568 — — — — — —

Stock options exercised, net of shares

surrendered 795 72,123 — — — — 72,123

Stock options exercised 795 72,123 — — — — 72,123

Repurchase of common stock — — — — ( 230 ) ( 69,011 ) ( 69,011 )

5 unchanged sentences

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

Stock options exercised, net of shares

surrendered 424 35,407 — — — — 35,407

Stock options exercised 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

Net income — — 258,384 — — — 258,384

Comprehensive income, net of tax — — — 84,439 — — 84,439

Dividends — — ( 79,503 ) — — — ( 79,503 )

Stock-based compensation — 25,819 — — — — 25,819

Vesting of stock-based compensation awards 9 — — — — — —

Stock options exercised 304 12,519 — — — — 12,519

Repurchase of common stock — — — — ( 260 ) ( 83,108 ) ( 83,108 )

Balance at February 22, 2021 188,914 $ 1,477,680 $ 7,688,425 $ ( 12,968 ) ( 83,875 ) $ ( 5,336,627 ) $ 3,816,510

See accompanying notes.

2 unchanged sentences

(In thousands)

Six Months Ended

November 30, 2021 November 30, 2020

Nine Months Ended

February 28, 2022 February 28, 2021

Cash flows from operating activities:

4 unchanged sentences

Stock-based compensation 83,687 83,421

Gain on equity method investment transaction ( 30,151 ) —

Gain on sale of operating assets ( 12,129 ) ( 21,861 )

24 unchanged sentences

Other, net ( 6,657 ) ( 3,836 )

Net cash (used in) provided by financing activities ( 819,876 ) 34,461

Net cash used in financing activities ( 1,078,574 ) ( 410,095 )

Effect of exchange rate changes on cash and cash equivalents ( 1,674 ) 2,153

16 unchanged sentences

Inventory is comprised of the following:

(In thousands) November 30, 2021 May 31,

(In thousands) February 28,

Raw materials $ 23,218 $ 15,109

2 unchanged sentences

$ 486,750 $ 481,797

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.

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 103.0 million and $ 111.0 million at February 28, 2022 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 and six months ended November 30, 2020, to combine common stock and paid-in capital for presentation 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 nine months ended February 28, 2021, to combine common stock and paid-in capital for presentation purposes.

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

9 unchanged sentences

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,

Three Months Ended Nine Months Ended

(In thousands) February 28,

2022 February 28,

2021 February 28,

2022 February 28,

Uniform Rental and

23 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 or six months ended November 30, 2021 or 2020.

No constraints on our revenue recognition were applied during the three or nine months ended February 28, 2022 or 2021.

The Company reassesses these estimates during each reporting period.

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

As of February 28, 2022, the current and noncurrent assets related to deferred commissions totaled $ 82.8 million and $ 232.7 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 $ 21.7 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.

We recorded amortization expense related to deferred commissions of $ 22.0 million and $ 20.9 million during the three months ended February 28, 2022 and 2021, respectively.

During the nine months ended February 28, 2022 and 2021, we recorded amortization expense related to deferred commissions of $ 65.1 million and $ 62.0 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, 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:

Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 19.0 million and $ 17.7 million for the three months ended February 28, 2022 and 2021, respectively.

For the nine months ended February 28, 2022 and 2021, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 55.2 million and $ 52.9 million, respectively.

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the nine months ended February 28:

(In thousands) 2022 2021

2 unchanged sentences

operating lease liabilities $ 17,452 $ 27,771

Operating lease right-of-use assets acquired in business combinations $ 17,734 $ —

Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows:

1 unchanged sentence

Weighted-average discount rate - operating leases 2.17 % 2.32 %

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

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of February 28, 2022:

(In thousands)

2022 (remaining six months)

2022 (remaining three months)

Thereafter 45,506

5 unchanged sentences

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

As of November 30, 2021

As of February 28, 2022

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

Cash and cash equivalents $ 84,136 $ — $ — $ 84,136

Prepaid expenses and other current assets:

Interest rate lock agreements — 22,645 — 22,645

Other assets, net:

3 unchanged sentences

Interest rate lock agreements $ — $ 52,540 $ — $ 52,540

Long-term accrued liabilities:

Interest rate lock agreements — 793 — 793

Total liabilities at fair value $ — $ 53,333 $ — $ 53,333

14 unchanged sentences

The fair value was determined by comparing the locked rates against the benchmarked treasury rate.

No other amounts included in other assets, net, current accrued liabilities or long-term accrued liabilities are recorded at fair value on a recurring basis.

No other amounts included in prepaid expenses and other current assets, other assets, net, current accrued liabilities or long-term accrued liabilities are recorded at fair value on a recurring basis.

The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values.

1 unchanged sentence

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 or six months ended November 30, 2021 and 2020.

The assets and liabilities measured at fair value on a nonrecurring basis primarily relate to assets and liabilities acquired in a business acquisition.

The Company's acquisition of the remaining interest of an equity method investment during the three months ended February 28, 2022 was recorded at fair value.

See Note 10 entitled Acquisitions for additional information .

Note 5 - Investments

Cintas' investments are summarized as follows:

(In thousands) November 30,

(In thousands) February 28,

Cash surrender value of insurance policies $ 254,245 $ 252,061

3 unchanged sentences

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

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.

For the three and nine months ended February 28, 2022 and 2021, no impairment losses were recorded.

During the three months ended February 28, 2022, Cintas acquired the remaining interest of an equity method investment, and as a result, such investment is no longer accounted for as an equity method investment and is no longer included in the table above.

See Note 10 entitled Acquisitions for more information.

Note 6 - Earnings Per Share

1 unchanged sentence

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

Three Months Ended Nine Months Ended

Basic Earnings per Share

(In thousands except per share data)

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

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Net income $ 315,448 $ 258,384 $ 941,296 $ 843,246

income allocated to participating

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

income allocated to participating securities 1,581 1,894 4,706 5,908

Income available to common shareholders $ 313,867 $ 256,490 $ 936,590 $ 837,338

2 unchanged sentences

Basic earnings per share $ 3.04 $ 2.44 $ 9.05 $ 7.99

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

Diluted Earnings per Share

(In thousands except per share data)

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

February 28, 2022 February 28, 2021 February 28, 2022 February 28, 2021

Net income $ 315,448 $ 258,384 $ 941,296 $ 843,246

8 unchanged sentences

Diluted earnings per share $ 2.97 $ 2.37 $ 8.84 $ 7.78

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.

For the three months ended February 28, 2022 and 2021, options granted to purchase 0.6 million and 0.1 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

For the nine months ended February 28, 2022 and 2021, options granted to purchase 0.5 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).

On October 29, 2019, Cintas announced that the Board of Directors authorized a $ 1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022.

On October 30, 2018, Cintas announced that the Board of Directors authorized a $ 1.0 billion share buyback program, which was completed during the third quarter of fiscal 2021.

On October 29, 2019, we announced that the Board of Directors authorized a $ 1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022.

From the inception of the October 29, 2019 share buyback program through July 2021, Cintas purchased a total of 2.8 million shares of Cintas common stock at an average price of $ 358.93 per share for a total purchase price of $ 1.0 billion.

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.

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

The following tables summarize the share buyback activity by program and period:

Three Months Ended Nine Months Ended

February 28, 2022 February 28, 2022

Buyback Activity

(In thousands except per share data)

5 unchanged sentences

1,386 $ 388.03 $ 537,655 2,976 $ 375.94 $ 1,118,875

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 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.

Shares acquired for taxes due (1)

50 $ 390.60 $ 19,460 261 $ 394.84 $ 102,966

Total repurchase of Cintas

common stock $ 557,115 $ 1,221,841

Three Months Ended Nine Months Ended

February 28, 2021 February 28, 2021

Buyback Activity

(In thousands except per share data)

per Share Purchase

Price Shares Avg.

per Share Purchase

October 30, 2018 190 $ 319.88 $ 60,877 190 $ 319.88 $ 60,877

October 29, 2019 66 $ 321.51 $ 21,080 66 $ 321.51 $ 21,080

256 $ 320.30 $ 81,957 256 $ 320.30 $ 81,957

Shares acquired for taxes due (1)

4 $ 332.73 $ 1,151 241 $ 301.49 $ 72,533

Total repurchase of Cintas

common stock $ 83,108 $ 154,490

(1) Shares of Cintas stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards.

In addition to the share buyback activity presented above, Cintas acquired shares of Cintas common stock, via non-cash transactions, in connection with net-share settlements of option exercises.

During the three and nine months ended February 28, 2022, Cintas acquired less than 0.1 million shares of Cintas common stock via such non-cash transactions at an average price of $ 391.03 for a total non-cash value of $ 12.0 million.

In the period subsequent to February 28, 2022, through April 7, 2022, we purchased 0.1 million shares of Cintas common stock at an average price of $ 368.75 for a total purchase price of $ 46.5 million.

From the inception of the July 27, 2021 program through April 7, 2022, Cintas has purchased 1.5 million shares of Cintas common stock in the aggregate, at an average price of $ 386.42 per share, for a total purchase price of $ 584.2 million.

Note 7 - Goodwill, Service Contracts and Other Assets

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:

Changes in the carrying amount of goodwill and service contracts for the nine months ended February 28, 2022, by reportable operating segment and All Other, are as follows:

(in thousands)

5 unchanged sentences

Foreign currency translation ( 12,715 ) ( 1,126 ) ( 44 ) ( 13,885 )

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

Balance as of February 28, 2022 $ 2,634,621 $ 276,100 $ 122,017 $ 3,032,738

Service Contracts

7 unchanged sentences

Foreign currency translation ( 3,062 ) ( 143 ) — ( 3,205 )

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

Balance as of February 28, 2022 $ 361,095 $ 22,325 $ 18,946 $ 402,366

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

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

As of February 28, 2022 As of May 31, 2021

(In thousands) Carrying

10 unchanged sentences

Total other assets $ 671,749 $ 365,095 $ 306,654 $ 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 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.

(1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of February 28, 2022 and May 31, 2021, is $ 82.8 million and $ 79.4 million, respectively.

Amortization expense for service contracts and other assets was $ 38.0 million and $ 35.6 million for the three months ended February 28, 2022 and 2021, respectively.

For the nine months ended February 28, 2022 and 2021, amortization expense for service contracts and other assets was $ 111.4 million and $ 106.0 million, respectively.

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

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:

As of February 28, 2022, 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 six months)

2022 (remaining three months)

Thereafter 237,557

5 unchanged sentences

Issued Fiscal Year

Maturity November 30,

Maturity February 28,

Debt due within one year

17 unchanged sentences

(1) Variable rate debt instrument.

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

The rate presented is the variable borrowing rate at February 28, 2022.

(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 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.

The carrying value and fair value of Cintas' debt as of February 28, 2022 were $ 2,859.0 million and $ 2,994.0 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 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.

During the nine months ended February 28, 2022, Cintas issued $ 559.2 million, net of commercial paper.

The credit agreement that supports our commercial paper program was amended and restated on March 23, 2022.

The amendment increased the capacity of the revolving credit facility from $ 1.0 billion to $ 2.0 billion.

The credit agreement has an accordion feature that provides Cintas the ability to request increases to the borrowing commitments under the revolving credit facility of up to $ 500.0 million in the aggregate, subject to customary conditions.

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

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.

The maturity date of the revolving credit facility is March 23, 2027.

As of February 28, 2022, there was $ 559.2 million of commercial paper outstanding with a weighted average interest rate of 0.43 % and maturity dates less than 120 days and no borrowings on our revolving credit facility.

The fair value of the commercial paper, which approximates carrying value, is estimated using level 2 inputs based on general market prices and interest rates.

Cintas uses interest rate locks to manage its overall interest expense as interest rate locks effectively change the interest rate of specific debt issuances.

1 unchanged sentence

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:

November 30, 2021 May 31, 2021

The amortization of the interest rate locks resulted in a decrease to other comprehensive income of $ 0.5 million and $ 0.4 million for the three months ended February 28, 2022 and 2021, respectively.

For the nine months ended February 28, 2022 and 2021, the

amortization of the interest rate locks resulted in a decrease to other comprehensive income of $ 1.4 million and $ 1.1 million, respectively.

The notional and fair values of the outstanding interest rate locks, for forecasted debt issuances, are summarized as follows:

February 28, 2022 May 31, 2021

Fiscal Year of Issuance

(in thousands)

Value Prepaid expenses

current assets Other

assets, net Current

accrued liabilities Other

accrued liabilities Long-term

liabilities Other

assets, net Long-term

accrued liabilities

2022 $ 250,000 $ — $ — $ — $ 793 $ — $ —

2020 $ 950,000 $ 22,645 $ 21,370 $ — $ — $ 40,400 $ —

2019 $ 500,000 $ — $ — $ 52,540 $ — $ — $ 61,657

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 and six months ended November 30, 2021 or 2020.

These interest rate locks had no impact on net income or cash flows for the three and nine months ended February 28, 2022 or 2021.

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 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.

As of February 28, 2022 and May 31, 2021, recorded unrecognized tax benefits were $ 32.6 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 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.

Cintas’ effective tax rate was 18.2 % and 14.4 % for the three months ended February 28, 2022 and 2021, respectively.

For the nine months ended February 28, 2022 and 2021, Cintas' effective tax rate was 15.8 % and 11.8 %, respectively.

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

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.

In addition, the effective tax rate for the three and nine months ended February 28, 2022, included a one-time tax benefit from a gain on an equity method investment transaction.

The effective tax rate for the nine months ended February 28, 2021, included a one-time tax benefit on the sale of certain operating assets.

Note 10 - Acquisitions

On December 10, 2021, Cintas acquired the remaining interest of an equity method investment.

The acquisition will operate as a component of Cintas' supply chain within the Uniform Rental and Facility Services reportable operating segment.

The cash consideration transferred to acquire the remaining interest of the equity method investment was $ 48.0 million, net of cash acquired of $ 1.7 million.

Under applicable accounting guidance, the Company was required to record its historical equity method investment at fair value ($ 43.5 million), resulting in a gain of $ 30.2 million, which is recorded as a reduction in selling and administrative expenses in the three and nine months ended February 28, 2022.

The fair value of the historical equity method investment was determined using a combination of a market and income approach (discounted cash flow analysis).

The key assumptions and estimates utilized in these approaches included market data and market multiples, discount rates, as well as future levels of revenue growth and operating margins.

The Company believes these assumptions and estimate are reasonable and based on the best information available at the valuation date.

Cintas accounted for the acquisition using the acquisition method of accounting.

The preliminary purchase price allocation was determined by management with the assistance of third-party valuation specialists and is based on estimates of the fair value of assets acquired and liabilities assumed as of December 10, 2021.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

The factors contributing to the recognition of the amount of goodwill are based on several strategic supply chain and synergistic benefits that will allow for Cintas to further vertically integrate the operations for certain product lines, and are expected to be realized from the acquisition.

None of the goodwill is expected to be deductible for income tax purposes.

The allocation of the preliminary purchase price, including the value of the previously held equity method investment, at fair value is as follows:

(In thousands) December 10, 2021

Working capital assets $ 17,352

Property and equipment 16,230

Operating lease right-of-use assets 16,882

Goodwill 55,986

Separately identifiable intangible assets 9,201

Total current liabilities ( 6,425 )

Operating lease liabilities ( 17,734 )

Total allocation (consideration) $ 91,492

As additional information is obtained, adjustments may be made to the preliminary purchase price allocation.

The Company is still finalizing the estimated fair value of certain of the tangible and identifiable intangible assets acquired and liabilities assumed.

The separately identifiable intangible assets are primarily made up of a customer relationship intangible asset that will be amortized over a period of 9 years, which represents the estimated useful life of the economic benefit.

Cintas is required to provide additional disclosures about fair value measurements as part of the consolidated condensed financial statements for each major category of assets and liabilities measured at fair value on a nonrecurring basis (including business combinations).

The working capital assets and liabilities, as well as the property and equipment acquired, were valued using Level 2 inputs which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach).

Goodwill and separately identifiable intangible assets were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach).

The results of operations of the acquisition are included in Cintas' consolidated condensed statements of income subsequent to the date of acquisition, and are not material to the consolidated condensed financial statements.

Other Acquisitions During Fiscal 2022

The purchase price paid for each acquisition in fiscal 2022 has been allocated to the fair value of the assets acquired and liabilities assumed.

Excluding the acquisition of the remaining interest in an equity method investment discussed above, during the nine months ended February 28, 2022, Cintas acquired three businesses included in the Uniform Rental and Facility Services reportable operating segment, seven businesses included in the First Aid and Safety Services reportable operating segment and six businesses included in All Other.

During the nine months ended February 28, 2021, Cintas acquired two business included in the Uniform Rental and Facility Services reportable operating segment, three businesses included in the First Aid and Safety Services reportable operating segment and three businesses included in All Other.

The following summarizes the aggregate purchase price and fair value allocations for all businesses acquired during the nine months ended February 28:

(In thousands) 2022 2021

Fair value of tangible assets acquired $ 36,736 $ 476

Fair value of service contracts acquired 41,560 4,203

Fair value of other intangibles acquired 5,439 432

Fair value of operating lease right-of-use assets, net 16,882 —

Net goodwill recognized 132,206 5,850

Total fair value of assets acquired 232,823 10,961

Fair value of liabilities assumed ( 20,746 ) ( 3,391 )

Fair value of operating lease liabilities ( 17,734 ) —

Total fair value of liabilities assumed ( 38,480 ) ( 3,391 )

Total consideration for acquisitions, net of cash acquired $ 194,343 $ 7,570

Note 11 - Accumulated Other Comprehensive Income (Loss)

1 unchanged sentence

(In thousands) Foreign

Currency Unrealized Loss on

Interest Rate Locks Other Total

Currency Unrealized (Loss) Income

on Interest Rate Locks Other Total

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

10 unchanged sentences

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

Other comprehensive income before reclassifications 5,297 34,567 — 39,864

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 459 ) — ( 459 )

Net current period other comprehensive income 5,297 34,108 — 39,405

Balance at February 28, 2022 $ 15,648 $ 142 $ ( 3,643 ) $ 12,147

(In thousands) Foreign

12 unchanged sentences

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:

Other comprehensive income before reclassifications 8,947 75,850 — 84,797

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 358 ) — ( 358 )

Net current period other comprehensive income 8,947 75,492 — 84,439

Balance at February 28, 2021 $ 12,510 $ ( 11,159 ) $ ( 14,319 ) $ ( 12,968 )

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

Details about Accumulated

5 unchanged sentences

Statements of Income

Three Months Ended Six Months Ended

(In thousands) November 30,

2021 November 30,

2020 November 30,

2021 November 30,

Three Months Ended Nine Months Ended

(In thousands) February 28,

2022 February 28,

2021 February 28,

2022 February 28,

Amortization of interest rate locks

15 unchanged sentences

Other Corporate (1)

For the three months ended November 30, 2021

For the three months ended February 28, 2022

Revenue $ 1,553,320 $ 212,958 $ 194,264 $ — $ 1,960,542

Income (loss) before income taxes $ 355,990 $ 26,304 $ 25,311 $ ( 21,974 ) $ 385,631

For the three months ended November 30, 2020

For the three months ended February 28, 2021

Revenue $ 1,417,865 $ 198,474 $ 160,717 $ — $ 1,777,056

Income (loss) before income taxes $ 283,403 $ 25,820 $ 17,245 $ ( 24,465 ) $ 302,003

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

As of and for the nine months ended February 28, 2022

Revenue $ 4,596,767 $ 614,234 $ 568,772 $ — $ 5,779,773

1 unchanged sentence

Total assets $ 7,022,646 $ 668,475 $ 393,343 $ 84,136 $ 8,168,600

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

As of and for the nine months ended February 28, 2021

Revenue $ 4,222,764 $ 597,373 $ 460,541 $ — $ 5,280,678

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