What changed in this filing

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Item 1. Business

2022-07-27 compared with 2021-07-28 · 32 added, 34 removed, 113 unchanged (37% of the section changed)

1 unchanged sentence

With products and services including uniforms, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training, Cintas helps customers get Ready for the Workday ® .

The company is also the creator of the Total Clean Program ™ — a first-of-its-kind service that includes scheduled delivery of essential cleaning supplies, hygienically clean laundering, and sanitizing and disinfecting projects and services.

Cintas was founded in 1968 by Richard T.

Farmer, currently the Chairman Emeritus of the Board of Directors, when he left his family's industrial laundry business in order to develop uniform programs using an exclusive new fabric.

Farmer when he left his family's industrial laundry business in order to develop uniform programs using an exclusive new fabric.

In the early 1970's, Cintas acquired the family industrial laundry business.

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COVID-19 Pandemic

In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China, and has since spread globally.

In March 2020, the World Health Organization characterized COVID-19 as a pandemic.

Efforts to contain the spread of COVID-19 intensified during our fiscal 2020 fourth quarter and have remained in effect throughout our fiscal 2021.

Most states and municipalities within the U.S., as well as Canada, enacted temporary closures of businesses, issued quarantine orders and took other restrictive measures in response to the COVID-19 pandemic.

Many of the business closures, quarantine orders and other restrictive measures remained in place through fiscal 2021.

Within the U.S., our business was designated an essential business, which allowed us to continue to serve customers that remained open.

During our fiscal 2021 fourth quarter, the roll out of vaccines, lower COVID-19 case counts and lifting of restrictions on businesses had a positive impact on our business.

We have operations throughout the U.S.

and Canada and participate in a global supply chain.

During most of fiscal 2021, the existence of the COVID-19 pandemic, the fear associated with the COVID-19 pandemic and the reactions of governments around the world in response to the COVID-19 pandemic to regulate the flow of labor and products

and impede the business of our customers, impacted our ability to conduct normal business operations, which had an adverse effect on our business.

Since fiscal 2020, the existence of the novel strain of coronavirus (COVID-19) pandemic, the fear associated with the COVID-19 pandemic and the reactions of governments around the world in response to the COVID-19 pandemic to regulate the flow of labor and products and impede the business of our customers, impacted our ability to conduct normal business operations, which had an adverse effect on our business.

Many of Cintas' customers were also impacted by the COVID-19 pandemic, and we saw an impact on some customer's ability to pay timely.

While there was minimal disruption to our supply chain, Cintas did increase inventory, primarily personal protective equipment and facility services inventory, in response to the customer needs and demand associated with the safety and cleanliness requirements of COVID-19.

The increase in inventory resulted in additional inventory reserves during fiscal 2021 and could result in future inventory reserve increases if demand for personal protective equipment declines.

See Note 1 entitled Significant Accounting Policies of " Notes to Consolidated Financial Statements " for additional detail on the additional reserve placed on inventory.

The increase in inventory resulted in additional inventory reserves during fiscal 2022 and fiscal 2021.

See Note 1 entitled Significant Accounting Policies of " Notes to Consolidated Financial Statements " for additional detail on the incremental reserves placed on inventory.

The on-going roll out of the COVID-19 vaccines and gradual lifting of COVID-19 restrictions had a positive impact on our business during fiscal 2022.

The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot predict the extent to which our business, consolidated results of operations, consolidated financial condition or liquidity will ultimately be impacted.

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This diversity in customer base results in no individual customer accounting for greater than one percent of Cintas' total revenue.

As a result, the loss of one account would not have a significant financial impact on Cintas.

The primary markets served by all Cintas businesses are local in nature and highly fragmented.

As a result, the loss of one account would not have a material financial impact on Cintas.

The primary markets served by each of the Cintas operating segments are local in nature and highly fragmented.

Cintas competes with national, regional and local providers, large national retailers and small local retailers as well as companies with a significant online presence and the level of competition varies at each of Cintas' local operations.

Product, design, price, quality, service and convenience to the customer are the competitive elements in each of our businesses.

In addition, businesses may decide to perform certain services in-house instead of outsourcing these services.

Product, design, price, quality, service and convenience to the customer are the competitive elements in each of our operating segments.

Operations and Distribution

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As mentioned on our website, www.cintas.com, each and every supplier must comply with a vendor code of conduct as a condition of doing business with Cintas.

Cintas also conducts internal training to ensure that employees who have direct responsibility for supply chain management are knowledgeable and aware of issues and concerns surrounding our supply chain.

Cintas also conducts internal training to ensure that employee-partners who have direct responsibility for supply chain management are knowledgeable and aware of issues and concerns surrounding our supply chain.

In addition to sourcing from third-party suppliers, Cintas operates five manufacturing facilities that provide for standard uniform needs.

Cintas purchases fabric, used in the manufacturing of its products, from several suppliers.

Cintas is not aware of any circumstances that would hinder its ability to continue obtaining these materials.

Cintas' ability to find qualified suppliers who meet its standards and to access products in a timely and efficient manner, is subject to ongoing market risks.

For a discussion of the risks associated with sourcing that may materially impact Cintas, please see " I tem 1A:

Risk Factors - Risks Relating to Business Strategy and Operations ."

Government Laws and Regulations

Cintas is subject to a wide array of laws, government regulations, including environmental regulations, and standards in each domestic and foreign jurisdiction in which it operates.

In addition to Cintas’s U.S.

operations, which in fiscal 2021 generated over 90% of its consolidated net sales, Cintas also operates its business through wholly-owned subsidiaries in foreign jurisdictions, primarily in Canada.

Compliance with these laws, government regulations, including environmental regulations, and standards requires the dedication of time and effort of employees as well as financial resources.

In addition to Cintas’ U.S.

operations, which in fiscal 2022 generated over 90% of its consolidated revenue, Cintas also operates its business through wholly-owned subsidiaries in foreign jurisdictions, primarily in Canada.

Compliance with these laws, government regulations, including environmental regulations, and standards requires the dedication of time and effort of employee-partners as well as financial resources.

Compliance with environmental regulations and prioritizing our environmental sustainability efforts are important to us as a good corporate citizen.

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Our laundering processes generate far less wastewater than home laundering.

discharged into the environment is treated at our operating facilities and in accordance with local discharge standards and permits.

Water discharged into the environment is treated at our operating facilities and in accordance with local discharge standards and permits.

Our lasting commitment to the environment and our communities is evident from our processes and innovation, which are designed to ensure that our operational facilities are operating efficiently.

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We are also subject to the Superfund Amendments and Reauthorization Act of 1986, which imposes certain reporting requirements as to emissions of hazardous substances into the air, land and water.

While environmental compliance is not a material component of our costs, Cintas makes capital expenditures and associated operating costs, primarily for water treatment and waste removal, on a regular basis in order to comply with environmental laws and regulations, to promote employee safety and to carry out its environmental sustainability principles.

While environmental compliance is not a material component of our costs, Cintas makes capital expenditures and associated operating costs, primarily for water treatment and waste removal,

on a regular basis in order to comply with environmental laws and regulations, to promote employee-partner safety and to carry out its environmental sustainability principles.

Environmental spending related to water treatment and waste removal was approximately $22.0 million in fiscal 2022, approximately $19.0 million in fiscal 2021 and approximately $20.0 million in fiscal 2020.

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and other jurisdictions regarding privacy, data protection and data security, including those related to the collection, storage, use, transmission and protection of personal information and other consumer, customer, vendor or employee data.

With respect to the laws and regulations noted above, as well as other applicable laws and regulations, Cintas’s compliance programs may under certain circumstances involve material investments in the form of additional processes, training, personnel, information technology and capital.

In fiscal 2021, compliance with the applicable laws, government regulations, including environmental regulations, and standards did not have a material effect on Cintas’s capital expenditures or consolidated results of operations.

With respect to the laws and regulations noted above, as well as other applicable laws and regulations, Cintas’ compliance programs may under certain circumstances involve material investments in the form of additional processes, training, personnel, information technology and capital.

In fiscal 2022, compliance with the applicable laws, government regulations, including environmental regulations, and standards did not have a material effect on Cintas’ capital expenditures or consolidated results of operations.

For a discussion of the risks associated with government regulations that may materially impact Cintas, please see “ Item 1A:

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Cintas uses its corporate website, www.cintas.com, as a channel for routine distribution of important information, including news releases, analyst presentations and financial information.

This year, Cintas produced an expanded Environmental, Social and Governance (ESG) Report to share our focus on making a positive impact through our key ESG priorities.

This included work in areas of safety and health, energy and emissions, water usage, sustainable supply chain, and governance, ethics and integrity to support diversity and equality, assisting our employee-partners in need and giving back to the communities where we live and work.

Particularly during unprecedented times and issues as a result of the COVID-19 pandemic, Cintas responded with improved policies, cleaning regimens and sanitizing products and services to help keep our employee-partners, and in turn, our customers, safer.

We are also READY™ to help as many of our customers fully reopen their businesses.

Cintas files with or furnishes to the Securities and Exchange Commission (SEC) Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, as well as proxy statements and annual reports to shareholders, and, from time to time, other documents.

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These documents are available in print to any shareholder who requests a copy by writing or calling Cintas as set forth on the Investor Information page.

The content on any website referred to in this Annual Report on Form 10-K is not incorporated by reference into this Form 10-K unless expressly noted.

The content on any website referred to in this Annual Report on Form 10-K is not incorporated herein by reference unless expressly noted.

Environmental, Social and Governance

Cintas is in the midst of a comprehensive, enterprise-wide review of its business model as it relates to environmental, social and governance (ESG) opportunities, improvements and efficiencies.

In 2021, Cintas announced our ambition to achieve Net Zero greenhouse gas (GHG) emissions by 2050.

In fiscal 2022, Cintas expanded our ESG report to share our focus on making a positive impact through our key ESG priorities.

This included work in areas of climate and energy initiatives, water interactions, materials and waste innovations, sustainable supply chain, diversity, equity and inclusion efforts, employee-partner development, safety and health strategy, human rights and labor rights positions and governance, ethics and integrity foundations.

Cintas' most recent ESG report can be found on our website at www.cintas.com/esg.

Human Capital

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Keeping people safe remains our top priority, and the diligence and flexibility of our employee-partners in complying with these new controls has allowed us to continue to focus on providing essential products and services to our customers, ranging from cleaning supplies, disinfectant services, hand sanitizer, scrubs, face masks and face shields.

Diversity & Inclusion

Cintas supports diversity and inclusion by fostering a respectful, creative and productive environment where all employee-partners can reach their full potential without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or protected veteran status.

Diversity, Equity & Inclusion

Cintas supports diversity, equity and inclusion by fostering a respectful, creative and productive environment where all employee-partners can reach their full potential without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or protected veteran status.

We actively recruit, retain, develop and advance a diverse and talented workforce.

We have four Employee-Partner Business Resource Groups, focused on Women, African Americans, Hispanic and Latin Americans, and Military and Veteran employee-partners.

We have five Employee-Partner Business Resource Groups, focused on Women, African Americans, Hispanic and Latin Americans, Asian American / Pacific Islanders and Military and Veteran employee-partners.

These groups provide platforms for our employee-partners to showcase skills, experiences and perspectives.

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We also have a Management Trainee program that helps Cintas find the best talent for our leadership pipeline, and we monitor representation across management positions.

Cintas’ diversity and inclusion efforts are led by our Chief Diversity Officer.

Cintas’ diversity, equity and inclusion efforts are led by our Chief Diversity Officer.

This position regularly reports to our Chief Executive Officer and works to help achieve our goals and obtain a diverse and talented workforce, which is critical to our success.

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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-K

Item 1. Business