What changed in this filing

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Item 1. Financial Statements

2024-04-05 compared with 2024-01-08 · 153 added, 104 removed, 500 unchanged (34% of the section changed)

2 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

Three Months Ended Six Months Ended

(In thousands except per share data) November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Three Months Ended Nine Months Ended

(In thousands except per share data) February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023

Uniform rental and facility services $ 1,876,642 $ 1,716,165 $ 5,554,009 $ 5,123,924

18 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

(In thousands) November 30,

2023 November 30,

2022 November 30,

2023 November 30,

Three Months Ended Nine Months Ended

(In thousands) February 29,

2024 February 28,

2023 February 29,

2024 February 28,

Net income $ 397,579 $ 325,827 $ 1,157,277 $ 1,001,809

3 unchanged sentences

Change in fair value of interest rate lock

agreements, net of tax expense of

$ 3,115 , $ 2,531 , $ 5,921 and $ 2,851 ,

agreements, net of tax (benefit) expense

of $( 1,726 ), $ 513 , $ 4,195 and $ 3,364 ,

( 5,042 ) 1,501 12,256 9,829

5 unchanged sentences

$ 130 and $ 0 , respectively

Other comprehensive income (loss), net

of tax expense of $ 2,742 , $ 2,018 ,

Other comprehensive (loss) income, net

of tax (benefit) expense of $( 2,239 ), $ 1 ,

$ 2,822 and $ 1,827 , respectively

4 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands except per share data) November 30,

(In thousands except per share data) February 29,

Current assets:

19 unchanged sentences

Operating lease liabilities, current 44,430 43,710

Debt due within one year 210,000 —

Total current liabilities 1,273,895 1,230,062

47 unchanged sentences

Balance at November 30, 2023 192,861 $ 2,179,951 $ 10,081,267 $ 93,339 ( 91,514 ) $ ( 8,360,076 ) $ 3,994,481

Net income — — 397,579 — — — 397,579

Comprehensive loss, net of tax — — — ( 7,016 ) — — ( 7,016 )

Dividends — — ( 137,598 ) — — — ( 137,598 )

Stock-based compensation — 31,308 — — — — 31,308

Vesting of stock-based compensation awards 1 — — — — — —

Stock options exercised 228 35,070 — — ( 58 ) ( 34,723 ) 347

Repurchase of common stock — — — — ( 74 ) ( 45,018 ) ( 45,018 )

Balance at February 29, 2024 193,090 $ 2,246,329 $ 10,341,248 $ 86,323 ( 91,646 ) $ ( 8,439,817 ) $ 4,234,083

CINTAS CORPORATION

23 unchanged sentences

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

Net income — — 325,827 — — — 325,827

Comprehensive loss, net of tax — — — ( 7,992 ) — — ( 7,992 )

Dividends — — ( 117,495 ) — — — ( 117,495 )

Stock-based compensation — 23,797 — — — — 23,797

Vesting of stock-based compensation awards 3 — — — — — —

Stock options exercised 172 24,668 — — ( 54 ) ( 23,852 ) 816

Repurchase of common stock — — — — ( 49 ) ( 22,235 ) ( 22,235 )

Balance at February 28, 2023 192,032 $ 1,981,610 $ 9,368,678 $ 76,104 ( 90,359 ) $ ( 7,793,136 ) $ 3,633,256

See accompanying notes.

1 unchanged sentence

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

Six Months Ended

(In thousands) November 30, 2023 November 30, 2022

Nine Months Ended

(In thousands) February 29, 2024 February 28, 2023

Cash flows from operating activities:

22 unchanged sentences

Cash flows from financing activities:

Issuance of commercial paper, net 210,000 124,046

Payments of commercial paper, net — ( 62,200 )

Repayment of debt ( 13,450 ) —

5 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 341 ( 2,895 )

Net decrease in cash and cash equivalents ( 38,593 ) ( 672 )

Net increase (decrease) in cash and cash equivalents 4,334 ( 1,908 )

Cash and cash equivalents at beginning of period 124,149 90,471

14 unchanged sentences

Inventory is comprised of the following at:

(In thousands) November 30,

(In thousands) February 29,

Raw materials $ 23,092 $ 27,878

2 unchanged sentences

Inventories, net $ 451,215 $ 506,604

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 73.6 million and $ 80.1 million at November 30, 2023 and May 31, 2023, respectively.

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 74.1 million and $ 80.1 million at February 29, 2024 and May 31, 2023, respectively.

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

1 unchanged sentence

New Accounting Pronouncements

There are no new accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on Cintas' consolidated condensed financial statements.

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures (ASU 2023-07).

ASU 2023-07 requires additional disclosures pertaining to significant expenses and other items of an entity’s reportable operating segments.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023 (fiscal 2025).

Early adoption is permitted.

The Company is currently evaluating the impact of ASU 2023-07 on the consolidated condensed financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures (ASU 2023-09), which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

ASU 2023-09 will be effective for annual periods beginning after December 15, 2024 (fiscal 2026).

The Company is currently evaluating the impact of ASU 2023-09 on the consolidated condensed financial statements.

There are no other accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on Cintas' consolidated condensed financial statements.

Note 2 - Revenue Recognition

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

Three Months Ended Six Months Ended

(In thousands) November 30,

2023 November 30,

2022 November 30,

2023 November 30,

Three Months Ended Nine Months Ended

(In thousands) February 29,

2024 February 28,

2023 February 29,

2024 February 28,

Uniform Rental and

21 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, 2023 or 2022.

No constraints on our revenue recognition were applied during the three or nine months ended February 29, 2024 or February 28, 2023.

We are exposed to credit losses primarily through our trade receivables.

5 unchanged sentences

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 Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 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.

As permitted by Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 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 ASC 606 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 November 30, 2023, the current and noncurrent assets related to deferred commissions totaled $ 93.9 million and $ 258.6 million, respectively.

As of February 29, 2024, the current and noncurrent assets related to deferred commissions totaled $ 94.3 million and $ 260.8 million, respectively.

As of May 31, 2023, the current and noncurrent assets related to deferred commissions totaled $ 92.5 million and $ 251.6 million, respectively.

We recorded amortization expense related to deferred commissions of $ 25.2 million and $ 23.4 million during the three months ended November 30, 2023 and 2022, respectively.

During the six months ended November 30, 2023 and 2022, we recorded amortization expense related to deferred commissions of $ 49.6 million and $ 45.8 million, respectively.

The Company recorded amortization expense related to deferred commissions of $ 25.6 million and $ 24.0 million during the three months ended February 29, 2024 and February 28, 2023, respectively.

During the nine months ended February 29, 2024 and February 28, 2023, the Company recorded amortization expense related to deferred commissions of $ 75.3 million and $ 69.8 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 $ 20.8 million and $ 20.0 million for the three months ended November 30, 2023 and 2022, respectively.

For the six months ended November 30, 2023 and 2022, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 40.5 million and $ 39.5 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) 2023 2022

Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 21.0 million and $ 19.8 million for the three months ended February 29, 2024 and February 28, 2023, respectively.

For the nine months ended February 29, 2024 and February 28, 2023, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 61.5 million and $ 59.3 million, respectively.

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

(In thousands) February 29, 2024 February 28, 2023

Cash paid for amounts included in the measurement of operating lease liabilities $ 38,577 $ 37,103

5 unchanged sentences

Weighted-average discount rate 3.38 % 2.87 %

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2023:

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of February 29, 2024:

(In thousands)

2024 (remaining six months)

2024 (remaining three months)

Thereafter 48,392

3 unchanged sentences

Note 4 - Fair Value Measurements

All financial instruments that are measured at fair value on a recurring basis (at least annually) have been classified within the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the consolidated condensed balance sheet dates.

All financial instruments that are measured at fair value on a recurring basis have been classified within the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the consolidated condensed balance sheet dates.

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

As of November 30, 2023 As of May 31, 2023

As of February 29, 2024 As of May 31, 2023

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

7 unchanged sentences

Financial instruments classified as Level 1 are based on quoted market prices in active markets, and financial instruments classified as Level 2 are based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency.

The types of financial instruments Cintas classifies

within Level 1 include most bank deposits and money market securities.

The types of financial instruments Cintas classifies within Level 1 include most bank deposits and money market securities.

Cintas does not adjust the quoted market price for such financial instruments.

3 unchanged sentences

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

Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated condensed balance sheet dates.

Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair

value of certain financial instruments could result in a different estimate of fair value at the consolidated condensed balance sheet dates.

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.

See No te 9 entitled Acquisitions.

Note 5 - 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, 2023 November 30, 2022 November 30, 2023 November 30, 2022

February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023

Net income $ 397,579 $ 325,827 $ 1,157,277 $ 1,001,809

4 unchanged sentences

Basic earnings per share $ 3.90 $ 3.19 $ 11.34 $ 9.82

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

Diluted Earnings per Share

(In thousands except per share data)

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

February 29, 2024 February 28, 2023 February 29, 2024 February 28, 2023

Net income $ 397,579 $ 325,827 $ 1,157,277 $ 1,001,809

8 unchanged sentences

Diluted earnings per share $ 3.84 $ 3.14 $ 11.15 $ 9.65

For the three months ended November 30, 2023 and 2022, options granted to purchase 0.5 million and 1.1 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

For the six months ended November 30, 2023 and 2022, options granted to purchase 0.3 million and 0.9 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

For both the three months ended February 29, 2024 and February 28, 2023, options granted to purchase 0.5 million shares of Cintas common stock were excluded from the computation of diluted earnings per share.

For the nine months ended February 29, 2024 and February 28, 2023, options granted to purchase 0.4 million and 1.0 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

The following table summarizes the share buyback activity by program and period:

Three Months Ended Six Months Ended

November 30, 2023 November 30, 2023

Three Months Ended Nine Months Ended

February 29, 2024 February 29, 2024

Buyback Activity

9 unchanged sentences

Total repurchase of Cintas common stock $ 45,018 $ 468,146

Three Months Ended Six Months Ended

November 30, 2022 November 30, 2022

Three Months Ended Nine Months Ended

February 28, 2023 February 28, 2023

Buyback Activity

12 unchanged sentences

The following table summarizes Cintas' non-cash share buyback activity:

Three Months Ended Six Months Ended

November 30, 2023 November 30, 2023

Three Months Ended Nine Months Ended

February 29, 2024 February 29, 2024

(In thousands except per share data)

3 unchanged sentences

Non-cash transaction activity 58 $ 598.80 $ 34,723 244 $ 528.68 $ 129,023

Three Months Ended Six Months Ended

November 30, 2022 November 30, 2022

Three Months Ended Nine Months Ended

February 28, 2023 February 28, 2023

per Share Non-Cash

3 unchanged sentences

Note 6 - Goodwill, Service Contracts and Other Assets, Net

Changes in the carrying amount of goodwill and service contracts for the six months ended November 30, 2023, 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 29, 2024, by reportable operating segment and All Other, are as follows:

(In thousands)

5 unchanged sentences

Foreign currency translation ( 66 ) ( 6 ) — ( 72 )

Balance as of November 30, 2023 $ 2,686,568 $ 293,850 $ 140,088 $ 3,120,506

Balance as of February 29, 2024 $ 2,773,493 $ 293,824 $ 145,115 $ 3,212,432

Service Contracts

7 unchanged sentences

Foreign currency translation 70 11 — 81

Balance as of November 30, 2023 $ 295,645 $ 18,829 $ 15,037 $ 329,511

Balance as of February 29, 2024 $ 302,156 $ 17,517 $ 16,190 $ 335,863

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

As of November 30, 2023 As of May 31, 2023

As of February 29, 2024 As of May 31, 2023

(In thousands) Carrying

10 unchanged sentences

Total other assets, net $ 971,849 $ 558,850 $ 412,999 $ 863,965 $ 480,974 $ 382,991

(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, 2023 and May 31, 2023, is $ 93.9 million and $ 92.5 million, respectively.

Amortization expense for service contracts and other assets was $ 39.4 million and $ 37.3 million for the three months ended November 30, 2023 and 2022, respectively.

For the six months ended November 30, 2023 and 2022, amortization expense for service contracts and other assets was $ 77.9 million and $ 73.7 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 29, 2024 and May 31, 2023, is $ 94.3 million and $ 92.5 million, respectively.

Amortization expense for service contracts and other assets was $ 40.0 million and $ 37.8 million for the three months ended February 29, 2024 and February 28, 2023, respectively.

For the nine months ended February 29, 2024 and February 28, 2023, amortization expense for service contracts and other assets was $ 117.9 million and $ 111.5 million, respectively.

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

As of November 30, 2023, 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 29, 2024, 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)

2024 (remaining six months) $ 77,591

2024 (remaining three months) $ 40,005

Thereafter 200,916

5 unchanged sentences

Issued Fiscal Year

Maturity November 30,

Debt due within one year

Commercial paper 5.52 % (1)

2024 2024 $ 210,000 $ —

Total debt due within one year $ 210,000 $ —

Maturity February 29,

Debt due after one year

7 unchanged sentences

Total debt due after one year $ 2,474,908 $ 2,486,405

(1) Variable rate debt instrument.

The rate presented is the variable borrowing rate at November 30, 2023.

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

3 unchanged sentences

Cintas' senior notes, excluding the G&K senior notes assumed with the acquisition of G&K in fiscal 2017, are recorded at cost, net of debt issuance costs.

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, 2023 were $ 2,486.6 million and $ 2,396.5 million, respectively, and as of May 31, 2023 were $ 2,500.0 million and $ 2,443.8 million, respectively.

During the three and six months ended November 30, 2023, Cintas repurchased, and subsequently retired, $ 3.5 million and $ 13.5 million, respectively, of its 6.15 %, 30-year senior notes.

In conjunction with these transactions, during the three and six months ended November 30, 2023, Cintas recognized a loss of $ 0.1 million and $ 0.9 million, respectively, which is recorded in interest expense on the consolidated condensed statements of income.

During the six months ended November 30, 2023 and 2022, Cintas issued $ 210.0 million and $ 124.0 million, net of commercial paper, respectively.

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

The carrying value and fair value of Cintas' debt as of February 29, 2024 were $ 2,486.6 million and $ 2,410.8 million, respectively, and as of May 31, 2023 were $ 2,500.0 million and $ 2,443.8 million, respectively.

During the nine months ended February 29, 2024, Cintas repurchased, and subsequently retired, $ 13.5 million of its 6.15 %, 30-year senior notes.

In conjunction with these transactions Cintas recognized a loss of $ 0.9 million, which is recorded in interest expense on the consolidated condensed statement of income for the nine months ended February 29, 2024.

During the nine months ended February 28, 2023, Cintas paid $ 62.2 million, net of commercial paper.

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

1 unchanged sentence

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

As of November 30, 2023, there was $ 210.0 million of commercial paper outstanding with a weighted average interest rate of 5.52 % and maturity dates less than 90 days and no borrowings on our revolving credit facility.

As of May 31, 2023, there was no commercial paper outstanding and no borrowings on our revolving credit facility.

As of both February 29, 2024 and May 31 2023, there was no commercial paper outstanding and no borrowings on our revolving credit facility.

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 2017 and fiscal 2022.

The amortization of the interest rate locks resulted in a decrease to other comprehensive income (loss) of $ 1.5 million for both the three months ended November 30, 2023 and 2022.

For the six months ended November 30, 2023 and 2022, the amortization of the interest rate locks resulted in a decrease to other comprehensive income (loss) of $ 2.9 million and $ 3.0 million, respectively.

The amortization of the interest rate locks resulted in a decrease to other comprehensive income (loss) of $ 1.5 million for both the three months ended February 29, 2024 and February 28, 2023.

For the nine months ended February 29, 2024 and February 28, 2023, the amortization of the interest rate locks resulted in a decrease to other comprehensive income (loss) of $ 4.5 million and $ 4.6 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 November 30, 2023 and May 31, 2023.

The aggregate notional value of outstanding cash flow hedges was $ 500.0 million at both February 29, 2024 and May 31, 2023.

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

November 30, 2023 May 31, 2023

February 29, 2024 May 31, 2023

Fiscal Year of Issuance

4 unchanged sentences

The changes 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, 2023 or 2022.

These interest rate locks had no impact on net income or cash flows for the three and nine months ended February 29, 2024 or February 28, 2023.

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, 2023 and May 31, 2023, recorded unrecognized tax benefits were $ 31.3 million and $ 29.3 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance sheets.

As of February 29, 2024 and May 31, 2023, recorded unrecognized tax benefits were $ 27.9 million and $ 29.3 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 status and resolution of the various audits and other potential regulatory developments, it is expected that the balance of unrecognized tax benefits will not materially change for the fiscal year ending May 31, 2024.

Cintas’ effective tax rate was 20.9 % and 22.1 % for the three months ended November 30, 2023 and 2022, respectively.

For the six months ended November 30, 2023 and 2022, Cintas' effective tax rate was 20.1 % and 18.4 %, respectively.

Cintas’ effective tax rate was 19.9 % and 22.1 % for the three months ended February 29, 2024 and February 28, 2023, respectively.

For the nine months ended February 29, 2024 and February 28, 2023, Cintas' effective tax rate was 20.0 % and 19.7 %, respectively.

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

Note 9 - Acquisitions

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

Cintas acquired the following number of individually immaterial businesses by reportable operating segment and All Other during the nine months ended:

February 29, 2024 February 28, 2023

Uniform Rental and Facility Services 7 3

First Aid and Safety Services 1 4

All Other 8 8

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

(In thousands) February 29, 2024 February 28, 2023

Fair value of tangible assets acquired $ 14,350 $ 5,506

Fair value of service contracts acquired 28,860 8,448

Fair value of other intangibles acquired 5,278 1,062

Net goodwill recognized 155,653 20,793

Total fair value of assets acquired 204,141 35,809

Total fair value of liabilities assumed ( 19,113 ) ( 2,826 )

Total consideration for acquisitions, net of cash acquired $ 185,028 $ 32,983

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 statements of income subsequent to the date of acquisition and are not material to the consolidated condensed financial statements.

Note 10 - Accumulated Other Comprehensive Income (Loss)

15 unchanged sentences

Balance at November 30, 2023 ( 16,180 ) 111,075 ( 1,556 ) 93,339

Other comprehensive loss before reclassifications ( 450 ) ( 5,042 ) — ( 5,492 )

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 1,524 ) — ( 1,524 )

Net current period other comprehensive loss ( 450 ) ( 6,566 ) — ( 7,016 )

Balance at February 29, 2024 $ ( 16,630 ) $ 104,509 $ ( 1,556 ) $ 86,323

(In thousands) Foreign

14 unchanged sentences

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

Other comprehensive (loss) income before

reclassifications ( 7,972 ) 1,501 — ( 6,471 )

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 1,521 ) — ( 1,521 )

Net current period other comprehensive loss ( 7,972 ) ( 20 ) — ( 7,992 )

Balance at February 28, 2023 $ ( 20,073 ) $ 97,954 $ ( 1,777 ) $ 76,104

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

6 unchanged sentences

Statements of Income

Three Months Ended Six Months Ended

(In thousands) November 30,

2023 November 30,

2022 November 30,

2023 November 30,

Three Months Ended Nine Months Ended

(In thousands) February 29,

2024 February 28,

2023 February 29,

2024 February 28,

Amortization of interest

15 unchanged sentences

Other Corporate (1)

For the three months ended November 30, 2023

For the three months ended February 29, 2024

Revenue $ 1,876,642 $ 262,602 $ 266,929 $ — $ 2,406,173

Income (loss) before income taxes $ 420,407 $ 57,717 $ 42,676 $ ( 24,600 ) $ 496,200

For the three months ended November 30, 2022

For the three months ended February 28, 2023

Revenue $ 1,716,165 $ 231,605 $ 242,216 $ — $ 2,189,986

Income (loss) before income taxes $ 359,995 $ 47,271 $ 39,546 $ ( 28,446 ) $ 418,366

As of and for the six months ended November 30, 2023

As of and for the nine months ended February 29, 2024

Revenue $ 5,554,009 $ 789,696 $ 781,975 $ — $ 7,125,680

1 unchanged sentence

Total assets $ 7,503,038 $ 745,633 $ 602,096 $ 128,108 $ 8,978,875

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

As of and for the nine months ended February 28, 2023

Revenue $ 5,123,924 $ 701,740 $ 705,634 $ — $ 6,531,298

9 unchanged sentences

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 U.S.

District Court for the District of Nevada denied Cintas’ motion to compel arbitration, and on March 6, 2023, the Ninth Circuit Court of Appeals affirmed.

Any liability in this matter is not probable nor estimable at this time.

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 March 2024, and subsequent to the consolidated condensed balance sheet date, an agreement in principle was reached with the plaintiff which would require a one-time monetary payment related to the contract dispute of $ 45.0 million, which was accrued for and included in accrued liabilities on the consolidated condensed balance sheet at February 29, 2024.

The amount accrued for this matter did not have a material impact on the consolidated condensed statements of income for any period presented.

The Company will also make certain future investments such as people and technology.

These future investments will not be material to the Company.

The tentative settlement remains subject to confirmatory discovery and approval of the U.S.

District Court for the District of Nevada, however, we do not anticipate any material changes in the amounts reflected in the consolidated condensed financial statements.

The Company, the Board of Directors, Scott Farmer (Executive Chairman) and the Investment Policy Committee are defendants in a purported class action, filed on December 13, 2019, pending in the U.S.

2 unchanged sentences

In November 2023, an agreement in principle was reached with the plaintiffs, which would require a payment of an immaterial amount that would be covered by the Company's insurance.

The settlement remains subject to reaching a definitive agreement and the approval of the U.S.

The settlement remains subject to approval of the U.S.

District Court for the Southern District of Ohio.

Cintas records an accrual for legal contingencies when Cintas determines that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As of November 30, 2023 and May 31, 2023, Cintas did not accrue any material amounts for legal contingencies.

The litigation discussed above, if decided or settled adversely to Cintas, may result in liability material to Cintas' consolidated financial condition, consolidated results of operations or consolidated cash flows and could increase costs of operations on an ongoing basis.

Cintas may enter into discussions regarding settlement of these and other lawsuits and may enter into settlement agreements if it believes such settlement is in the best interest of Cintas' shareholders.

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