What changed in this filing

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Item 1. Financial Statements

2023-01-06 compared with 2022-10-06 · 173 added, 87 removed, 467 unchanged (36% of the section changed)

2 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands except per share data)

Three Months Ended

August 31, 2022 August 31, 2021

Three Months Ended Six Months Ended

(In thousands except per share data) November 30, 2022 November 30, 2021 November 30, 2022 November 30, 2021

Uniform rental and facility services $ 1,709,987 $ 1,535,271 $ 3,407,759 $ 3,043,447

18 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended

2022 August 31,

Three Months Ended Six Months Ended

(In thousands) November 30,

2022 November 30,

2021 November 30,

2022 November 30,

Net income $ 324,293 $ 294,669 $ 675,982 $ 625,848

2 unchanged sentences

( 9,901 ) ( 7,472 ) ( 29,107 ) ( 31,488 )

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

expense (benefit) of $ 320 and $( 12,554 ), respectively

Change in fair value of interest rate lock

agreements, net of tax expense (benefit)

of $ 2,531 , $ 3,744 , $ 2,851 and $( 8,810 ),

7,394 10,940 8,328 ( 25,739 )

Amortization of interest rate lock agreements, net of tax expense

of $ 512 and $ 148 , respectively

Amortization of interest rate lock agreements, net of tax expense of $ 513 , $ 148 , $ 1,025 and $ 296 , respectively

( 1,521 ) ( 460 ) ( 3,042 ) ( 919 )

Other comprehensive loss, net of tax expense (benefit)

of $ 832 and $( 12,406 ), respectively

Other comprehensive (loss) income, net of tax

expense (benefit) of $ 3,044 , $ 3,892 , $ 3,876

and $( 8,514 ), respectively

( 4,028 ) 3,008 ( 23,821 ) ( 58,146 )

3 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands except share data)

(In thousands except per share data) November 30,

Current assets:

18 unchanged sentences

Accrued liabilities 556,211 588,948

Income taxes, current 35,783 —

Operating lease liabilities, current 42,792 43,872

26 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

and Paid-In Capital Retained

1 unchanged sentence

Comprehensive

Income (Loss) Treasury Stock Total

Income Treasury Stock Total

Shareholders'

Shares Amount Shares Amount

(In thousands) Shares Amount Shares Amount

Balance at June 1, 2022 190,838 $ 1,771,917 $ 8,719,163 $ 107,917 ( 89,127 ) $ ( 7,290,801 ) $ 3,308,196

7 unchanged sentences

Balance at August 31, 2022 191,654 $ 1,878,837 $ 8,953,391 $ 88,124 ( 90,122 ) $ ( 7,690,726 ) $ 3,229,626

Net income — — 324,293 — — — 324,293

Comprehensive loss, net of tax — — — ( 4,028 ) — — ( 4,028 )

Dividends — — ( 117,338 ) — — — ( 117,338 )

Stock-based compensation — 25,255 — — — — 25,255

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

Stock options exercised 194 29,053 — — ( 66 ) ( 27,975 ) 1,078

Repurchase of common stock — — — — ( 68 ) ( 28,348 ) ( 28,348 )

Balance at November 30, 2022 191,857 $ 1,933,145 $ 9,160,346 $ 84,096 ( 90,256 ) $ ( 7,747,049 ) $ 3,430,538

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

and Paid-In Capital Retained

3 unchanged sentences

Shareholders'

Shares Amount Shares Amount

(In thousands) Shares Amount Shares Amount

Balance at June 1, 2021 189,071 $ 1,516,202 $ 7,877,015 $ 30,888 ( 85,010 ) $ ( 5,736,258 ) $ 3,687,847

7 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 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

See accompanying notes.

1 unchanged sentence

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

August 31, 2022 August 31, 2021

Six Months Ended

(In thousands) November 30, 2022 November 30, 2021

Cash flows from operating activities:

49 unchanged sentences

Inventory is comprised of the following:

(In thousands) August 31,

(In thousands) November 30,

Raw materials $ 18,431 $ 19,071

2 unchanged sentences

$ 514,839 $ 472,150

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 89.1 million and $ 100.3 million at August 31, 2022 and May 31, 2022, respectively.

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 70.2 million and $ 100.3 million at November 30, 2022 and May 31, 2022, respectively.

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

3 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) 2022 2021

Uniform Rental and Facility Services $ 1,697,772 78.4 % $ 1,508,176 79.5 %

First Aid and Safety Services 234,161 10.8 % 199,116 10.5 %

Fire Protection Services 151,847 7.0 % 128,218 6.8 %

Uniform Direct Sales 82,674 3.8 % 61,440 3.2 %

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

Three Months Ended Six Months Ended

(In thousands) November 30,

2022 November 30,

2021 November 30,

2022 November 30,

Uniform Rental and

Facility Services $ 1,709,987 78.6 % $ 1,535,271 79.9 % $ 3,407,759 78.5 % $ 3,043,447 79.7 %

First Aid and Safety

Services 235,974 10.9 % 202,160 10.5 % 470,135 10.8 % 401,276 10.5 %

Fire Protection

Services 146,602 6.7 % 123,254 6.4 % 298,449 6.9 % 251,472 6.6 %

Uniform Direct

Sales 82,295 3.8 % 61,596 3.2 % 164,969 3.8 % 123,036 3.2 %

Total revenue $ 2,174,858 100.0 % $ 1,922,281 100.0 % $ 4,341,312 100.0 % $ 3,819,231 100.0 %

Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 12 entitled Segment Information.

The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 12 entitled Segment Information.

Revenue Recognition Policy

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.

The Company recognizes revenues over time as services are performed, based on the nature of services provided and contractual rates (output method) or at a point in time when the performance obligation under the terms of the contract with a customer are satisfied, 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 operating segment customers, performed by a Cintas employee-partner, at the customer's location of business.

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

The Company recognizes revenue over time as services are performed, based on the nature of services provided and contractual rates (output method) or at a point in time when the performance obligation under the terms of the contract with a customer are satisfied, at the customer's location of business.

The Company's remaining revenue, primarily within the Uniform Direct Sales operating segment, and representing approximately 5 % of the Company's total revenue, is recognized when the obligations under the terms of a contract with a customer are satisfied.

10 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, 2022 or 2021.

No constraints on our revenue recognition were applied during the three or six months ended November 30, 2022 or 2021.

The Company reassesses these estimates during each reporting period.

5 unchanged sentences

We determine the allowance for credit losses using both an estimate, based on historical rates of collections, and reserves for specific accounts identified as uncollectible.

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.

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.

8 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, 2022, the current and noncurrent assets related to deferred commissions totaled $ 86.1 million and $ 239.2 million, respectively.

As of November 30, 2022, the current and noncurrent assets related to deferred commissions totaled $ 88.2 million and $ 244.1 million, respectively.

As of May 31, 2022, the current and noncurrent assets related to deferred commissions totaled $ 83.7 million and $ 232.2 million, respectively.

We recorded amortization expense related to deferred commissions of $ 22.4 million and $ 21.4 million during the three months ended August 31, 2022 and 2021, respectively.

We recorded amortization expense related to deferred commissions of $ 23.4 million and $ 21.7 million during the three months ended November 30, 2022 and 2021, respectively.

During the six months ended November 30, 2022 and 2021, we recorded amortization expense related to deferred commissions of $ 45.8 million and $ 43.1 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, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 19.5 million and $ 18.1 million for the three months ended August 31, 2022 and 2021, respectively.

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 $ 20.0 million and $ 18.0 million for the three months ended November 30, 2022 and 2021, respectively.

For the six months ended November 30, 2022 and 2021, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 39.5 million and $ 36.2 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) 2022 2021

5 unchanged sentences

Weighted-average discount rate - operating leases 2.50 % 2.20 %

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of August 31, 2022:

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2022:

(In thousands)

2023 (remaining nine months)

2023 (remaining six months)

Thereafter 40,859

5 unchanged sentences

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

As of August 31, 2022

As of November 30, 2022

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

24 unchanged sentences

Cintas' investments are summarized as follows:

(In thousands) August 31,

(In thousands) November 30,

Cash surrender value of insurance policies $ 238,637 $ 237,136

2 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, 2022 and 2021, no impairment losses were recorded.

For the three and six months ended November 30, 2022 and 2021, no impairment losses were recorded.

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, 2022 November 30, 2021 November 30, 2022 November 30, 2021

Net income $ 324,293 $ 294,669 $ 675,982 $ 625,848

income allocated to participating securities 1,520 1,765

Income available to common shareholders $ 350,169 $ 329,414

net income allocated to participating securities 1,372 1,495 2,859 3,179

Net income available to common shareholders

$ 322,921 $ 293,174 $ 673,123 $ 622,669

Basic weighted average common shares outstanding

1 unchanged sentence

Basic earnings per share $ 3.18 $ 2.83 $ 6.63 $ 6.02

Three Months Ended Six Months Ended

Diluted Earnings per Share

(In thousands except per share data)

November 30, 2022 November 30, 2021 November 30, 2022 November 30, 2021

Net income $ 324,293 $ 294,669 $ 675,982 $ 625,848

income allocated to participating securities 1,520 1,765

Income available to common shareholders $ 350,169 $ 329,414

net income allocated to participating securities 1,372 1,495 2,859 3,179

Net income available to common shareholders

$ 322,921 $ 293,174 $ 673,123 $ 622,669

Basic weighted average common shares outstanding

1 unchanged sentence

Effect of dilutive securities – employee stock options

1,719 2,476 1,813 2,563

Diluted weighted average common shares outstanding

1 unchanged sentence

Diluted earnings per share $ 3.12 $ 2.76 $ 6.51 $ 5.87

For the three months ended August 31, 2022 and 2021, options granted to purchase 0.8 million and 0.1 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

For the three months ended November 30, 2022 and 2021, options granted to purchase 1.1 million and 0.1 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

For the six months ended November 30, 2022 and 2021, options granted to purchase 0.9 million and 0.1 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).

1 unchanged sentence

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

From the inception of the July 27, 2021 share buyback program through August 31, 2022, Cintas purchased a total of 2.7 million shares of Cintas common stock at an average price of $ 385.66 per share for a total purchase price of $ 1.0 billion.

From the inception of the July 27, 2021 share buyback program through November 30, 2022, Cintas purchased a total of 2.7 million shares of Cintas common stock at an average price of $ 385.62 per share for a total purchase price of $ 1.0 billion.

On July 26, 2022, Cintas announced that the Board of Directors authorized a new $ 1.0 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:

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

Three Months Ended Six Months Ended

November 30, 2022 November 30, 2022

Buyback Activity

3 unchanged sentences

per Share Purchase

October 29, 2019 — $ — $ — 1,590 $ 365.41 $ 581,220

July 27, 2021 12 $ 377.66 $ 4,683 544 $ 395.97 $ 215,434

3 unchanged sentences

56 $ 423.64 $ 23,665 326 $ 408.97 $ 133,248

Total repurchase of Cintas

common stock $ 320,334 $ 659,235

Total repurchase of Cintas common stock $ 28,348 $ 348,682

Three Months Ended Six Months Ended

November 30, 2021 November 30, 2021

Buyback Activity

(In thousands except per share data)

per Share Purchase

Price Shares Avg.

per Share Purchase

October 29, 2019 — $ — $ — 1,590 $ 365.41 $ 581,220

July 27, 2021 — — — — — —

— $ — $ — 1,590 $ 365.41 $ 581,220

Shares acquired for taxes due (1)

13 $ 420.87 $ 5,483 211 $ 395.84 $ 83,506

Total repurchase of Cintas common stock $ 5,483 $ 664,726

(1) Shares of Cintas common 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 months ended August 31, 2022, Cintas acquired 0.2 million shares of Cintas common stock via such non-cash transactions at an average price of $ 411.93 for a total non-cash value of $ 79.6 million.

During the three months ended November 30, 2022, Cintas acquired 0.1 million shares of Cintas common stock via such non-cash transactions at an average price of $ 421.85 for a total non-cash value of $ 28.0 million.

During the six months ended November 30, 2022, Cintas acquired 0.3 million shares of Cintas common stock via such non-cash transactions at an average price of $ 414.46 for a total non-cash value of $ 107.6 million.

During the three and six months ended November 30, 2021, there were no shares of Cintas common stock acquired via non-cash transactions, in connection with net-share settlements of option exercises.

Note 7 - Goodwill, Service Contracts and Other Assets, Net

Changes in the carrying amount of goodwill and service contracts for the three months ended August 31, 2022, 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, 2022, by reportable operating segment and All Other, are as follows:

(in thousands)

5 unchanged sentences

Foreign currency translation ( 14,377 ) ( 1,273 ) ( 50 ) ( 15,700 )

Balance as of August 31, 2022 $ 2,626,486 $ 288,232 $ 122,560 $ 3,037,278

Balance as of November 30, 2022 $ 2,623,720 $ 291,210 $ 122,576 $ 3,037,506

Service Contracts

7 unchanged sentences

Foreign currency translation ( 2,730 ) ( 122 ) — ( 2,852 )

Balance as of August 31, 2022 $ 338,313 $ 23,799 $ 17,267 $ 379,379

Balance as of November 30, 2022 $ 328,080 $ 23,193 $ 16,339 $ 367,612

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

As of August 31, 2022 As of May 31, 2022

As of November 30, 2022 As of May 31, 2022

(In thousands) Carrying

10 unchanged sentences

Total other assets, net $ 799,225 $ 431,014 $ 368,211 $ 728,160 $ 384,050 $ 344,110

(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, 2022 and May 31, 2022, is $ 86.1 million and $ 83.7 million, respectively.

Amortization expense for service contracts and other assets, was $ 36.4 million and $ 36.5 million for the three months ended August 31, 2022 and 2021, 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, 2022 and May 31, 2022, is $ 88.2 million and $ 83.7 million, respectively.

Amortization expense for service contracts and other assets, was $ 37.3 million and $ 36.9 million for the three months ended November 30, 2022 and 2021, respectively.

For the six months ended November 30, 2022 and 2021, amortization expense for service contracts and other assets was $ 73.7 million and $ 73.4 million, respectively.

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

As of August 31, 2022, 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, 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)

2023 (remaining nine months)

2023 (remaining six months)

Thereafter 191,764

5 unchanged sentences

Issued Fiscal Year

Maturity August 31,

Maturity November 30,

Debt due within one year

15 unchanged sentences

(1) Variable rate debt instrument.

The rate presented is the variable borrowing rate at August 31, 2022.

The rate presented is the variable borrowing rate at November 30, 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 August 31, 2022 were $ 3,007.2 million and $ 2,990.2 million, respectively, and as of May 31, 2022 were $ 2,811.2 million and $ 2,862.2 million, respectively.

During the three months ended August 31, 2022 and 2021, Cintas issued $ 196.0 million and $ 326.0 million, net of commercial paper, respectively.

The carrying value and fair value of Cintas' debt as of November 30, 2022 were $ 2,935.2 million and $ 2,876.9 million, respectively, and as of May 31, 2022 were $ 2,811.2 million and $ 2,862.2 million, respectively.

During the six months ended November 30, 2022 and 2021, Cintas issued $ 124.0 million and $ 167.0 million, net of commercial paper, respectively.

The credit agreement that supports our commercial paper program has a revolving credit facility with a capacity of $ 2.0 billion.

1 unchanged sentence

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

As of August 31, 2022, there was $ 457.2 million of commercial paper outstanding with a weighted average interest rate of 2.69 % and maturity dates less than 120 days and no borrowings on our revolving credit facility.

As of November 30, 2022, there was $ 385.2 million of commercial paper outstanding with a weighted average interest rate of 4.30 % and maturity dates less than 120 days and no borrowings on our revolving credit facility.

As of May 31, 2022, there was $ 261.2 million of commercial paper outstanding with a weighted average interest rate of 1.20 % and maturity dates less than 120 days and no borrowings on our revolving credit facility.

3 unchanged sentences

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 2013, fiscal 2017 and fiscal 2022.

The amortization of the interest rate locks resulted in a decrease to other comprehensive income of $ 1.5 million and $ 0.5 million for the three months ended August 31, 2022 and 2021, respectively.

The amortization of the interest rate locks resulted in a decrease to comprehensive income of $ 1.5 million and $ 0.4 million for the three months ended November 30, 2022 and 2021, respectively.

For the six months ended November 30, 2022 and 2021, the amortization of the interest rate locks resulted in a decrease to comprehensive income of $ 3.0 million and $ 0.9 million, respectively.

During fiscal 2022 and fiscal 2020, Cintas entered into interest rate lock agreements for forecasted debt issuances.

The aggregate notional value of outstanding cash flow hedges was $ 500.0 million at both August 31, 2022 and May 31, 2022, respectively.

The aggregate notional value of outstanding cash flow hedges was $ 500.0 million at both November 30, 2022 and May 31, 2022, respectively.

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

August 31, 2022 May 31, 2022

November 30, 2022 May 31, 2022

Fiscal Year of Issuance

3 unchanged sentences

2020 $ 43,760 $ 38,546

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

These interest rate locks had no impact on net income or cash flows for the three months ended August 31, 2022 or 2021.

The change in fair value of the interest rate locks are 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, 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 August 31, 2022 and May 31, 2022, recorded unrecognized tax benefits were $ 26.0 million and $ 30.8 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance sheets.

As of November 30, 2022 and May 31, 2022, recorded unrecognized tax benefits were $ 26.0 million and $ 30.8 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.

8 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, 2023.

Cintas’ effective tax rate was 14.8 % and 11.0 % for the three months ended August 31, 2022 and 2021, respectively.

Cintas’ effective tax rate was 22.1 % and 18.0 % for the three months ended November 30, 2022 and 2021, respectively.

For the six months ended November 30, 2022 and 2021, Cintas' effective tax rate was 18.4 % and 14.5 %, respectively.

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

8 unchanged sentences

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.

During the three months ended August 31, 2022, no material adjustments were made to the preliminary purchase price allocation.

The 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.

During the three and six months ended November 30, 2022, no material adjustments were made to the preliminary purchase price allocation.

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.

No ne 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:

None of the goodwill is deductible for income tax purposes.

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

(In thousands) December 10, 2021

7 unchanged sentences

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.

The separately identifiable intangible assets are primarily made up of a customer relationship intangible asset that will be amortized over a period of nine 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).

13 unchanged sentences

Balance at August 31, 2022 ( 2,200 ) 92,101 ( 1,777 ) 88,124

Other comprehensive (loss) income before

reclassifications ( 9,901 ) 7,394 — ( 2,507 )

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 1,521 ) — ( 1,521 )

Net current period other comprehensive (loss) income ( 9,901 ) 5,873 — ( 4,028 )

Balance at November 30, 2022 $ ( 12,101 ) $ 97,974 $ ( 1,777 ) $ 84,096

(In thousands) Foreign

7 unchanged sentences

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

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

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 )

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

Details about Accumulated

5 unchanged sentences

Statements of Income

(In thousands) 2022 2021

Three Months Ended Six Months Ended

(In thousands) November 30,

2022 November 30,

2021 November 30,

2022 November 30,

Amortization of interest rate locks

15 unchanged sentences

Other Corporate (1)

As of and for the three months ended August 31, 2022

For the three months ended November 30, 2022

Revenue $ 1,709,987 $ 235,974 $ 228,897 $ — $ 2,174,858

Income (loss) before income taxes $ 369,095 $ 45,495 $ 30,344 $ ( 28,576 ) $ 416,358

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

As of and for the six months ended November 30, 2022

Revenue $ 3,407,759 $ 470,135 $ 463,418 $ — $ 4,341,312

Income (loss) before income taxes $ 733,866 $ 86,341 $ 64,847 $ ( 56,141 ) $ 828,913

Total assets $ 7,142,226 $ 699,184 $ 495,798 $ 89,799 $ 8,427,007

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

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

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

2 unchanged sentences

(1) Corporate assets include cash and cash equivalents and marketable securities, if applicable, in all periods.

Note 13 - Litigation and Other Contingencies

Cintas is subject to legal proceedings, insurance receipts, legal settlements and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims.

In the opinion of management, the aggregate liability, if any, with respect to such ordinary course of business actions will not have a material adverse effect on the consolidated financial position, consolidated results of operations or consolidated cash flows of Cintas.

Cintas is party to additional litigation not considered in the ordinary course of business, including the litigation discussed below.

The Company is a defendant in a purported class action lawsuit, City of Laurel, Mississippi v.

Cintas Corporation No.

2 , filed on March 12, 2021.

This is a contract dispute whereby plaintiffs allege that Cintas breached its contracts with participating public agencies and seek, among other things, contract-based damages in an unspecified amount.

In March 2022, the District Court denied Cintas’ motion to compel arbitration.

Cintas’ appeal from the denial of its motion is pending.

Liability in this matter is not probable nor estimable at this time.

However, this matter, if decided adversely to Cintas or settled, may result in liability material to Cintas’ consolidated financial condition, consolidated results of operation or consolidated cash flows.

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