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Item 8. Financial Statements and Supplementary Data

2024-07-25 compared with 2023-07-27 · 195 added, 162 removed, 970 unchanged (27% of the section changed)

13 unchanged sentences

To the Shareholders of Cintas Corporation:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S.

generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S.

generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to consolidated financial statement preparation.

With the supervision of our President and Chief Executive Officer and our Chief Financial Officer, management assessed our internal control over financial reporting as of May 31, 2024.

2 unchanged sentences

This assessment is supported by testing and monitoring performed by our internal audit function.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of May 31, 2023, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of May 31, 2024, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S.

generally accepted accounting principles.

We reviewed the results of management's assessment with the Audit Committee of our Board of Directors.

98 unchanged sentences

( 5,984 ) ( 6,085 ) ( 2,061 )

Other, net of tax (benefit) expense of $( 54 ), $ 638 and $ 3,578 , respectively

Other, net of tax expense (benefit) of $ 867 , $( 54 ) and $ 638 ,

2,535 ( 158 ) 1,866

Other comprehensive (loss) income, net of tax expense of $ 5,456 , $ 36,242 and $ 40,213 , respectively

Other comprehensive income (loss), net of tax expense of $ 5,070 ,

$ 1,358 and $ 34,898 , respectively

13,423 ( 30,139 ) 77,029

10 unchanged sentences

Uniforms and other rental items in service 1,040,144 1,011,918

Income taxes, current — 21,708

Prepaid expenses and other current assets 148,665 142,795

43 unchanged sentences

Comprehensive

(Loss) Income Treasury Stock Total

Income Treasury Stock Total

Shareholders'

10 unchanged sentences

Net income — — 1,348,010 — — — 1,348,010

Comprehensive income, net of tax — — — 77,029 — — 77,029

Comprehensive loss, net of tax — — — ( 30,139 ) — — ( 30,139 )

Dividends — — ( 469,858 ) — — — ( 469,858 )

5 unchanged sentences

Net income — — 1,571,592 — — — 1,571,592

Comprehensive loss, net of tax — — — ( 30,139 ) — — ( 30,139 )

Comprehensive income, net of tax — — — 13,423 — — 13,423

Dividends — — ( 550,952 ) — — — ( 550,952 )

15 unchanged sentences

Net gain on sale of operating assets — — ( 12,129 )

Long-lived asset impairment — — 5,114

Deferred income taxes ( 28,912 ) 23,233 52,110

41 unchanged sentences

The remainder of Cintas’ operating segments, which consists of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, are included in All Other.

Cintas evaluates operating segment performance based on revenue and income before income taxes.

Revenue and income before income taxes the reportable operating segments for the years ended May 31, 2023, 2022 and 2021 are presented in Note 13 entitled Operating Segment Information.

Cintas evaluates operating segment performance based on revenue and operating income.

Revenue and operating income for the fiscal years ended May 31, 2024, 2023 and 2022 are presented in Note 14 entitled Operating Segment Information.

The Company regularly reviews its operating segments for reporting purposes based on the information its chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance and makes changes when appropriate.

10 unchanged sentences

Revenue recognition.

Rental revenue, which is recorded in the Uniform Rental and Facility Services reportable operating segment, is recognized when services are performed or the performance obligation under the terms of a contract with a customer are satisfied.

Other revenue, which is recorded in the First Aid and Safety Services reportable operating segment and All Other, is recognized when either services are performed or the performance obligation under the terms of a contract with a customer are satisfied.

Revenue is measured as the amount of consideration we expect to receive in exchange for the performance of the service or transfer of the inventory.

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.

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.

This generally occurs when the goods are transferred to the customer.

Revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities.

Shipping and handling costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer.

Certain of our customer contracts include pricing terms and conditions that include components of variable consideration.

The variable consideration is typically in the form of consideration paid to a customer based on performance metrics specified within the contract and is not material in any period presented.

When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue.

In making these assessments, the Company considers the likelihood and magnitude of a potential

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

No constraints on our revenue recognition were applied during the fiscal years ended May 31, 2024, 2023 or 2022.

See Note 2 entitled Revenue Recognition.

8 unchanged sentences

Cash and cash equivalents.

Cintas considers all highly liquid domestic investments with a maturity of three months or less, at date of purchase, to be cash equivalents.

Cintas considers all highly liquid investments with a maturity of three months or less, at date of purchase, to be cash equivalents.

At May 31, 2024 and 2023, cash and cash equivalents includes $ 34.3 million and $ 32.7 million, respectively, of restricted cash used as collateral associated with our insurance reserve.

Accounts receivable.

Accounts receivable is comprised of amounts owed through product shipments and services provided and is presented net of an allowance for credit losses.

Accounts receivable is comprised of amounts owed through products and services provided and is presented net of an allowance for credit losses.

The allowance includes both an estimate, based on historical rates of collections, and reserves for specific accounts identified as uncollectible.

4 unchanged sentences

Inventories are valued at the lower of cost (first-in, first-out) or net realizable value.

Inventory is comprised of the following amounts at May 31:

Inventories, net are comprised of the following amounts at May 31:

(In thousands) 2024 2023

6 unchanged sentences

Obsolete inventory reserves are recorded in selling and administrative expenses on the consolidated statements of income.

The judgment applied to record the obsolete inventory reserve as of May 31, 2023 and 2022, beyond our historical policy was deemed to be reasonable and supportable based on the data available as of the consolidated balance sheet dates.

Once a specific inventory item is written down to the lower of cost or net realizable value, a new cost basis has been established, and that inventory item cannot subsequently be marked up.

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Fair value is generally determined by discounted cash flows, prices of similar assets or third-party real estate valuations, as appropriate.

Based on its regular evaluation and the evolving impact of the COVID-19 pandemic, Cintas recognized a long-lived asset impairment loss of $ 5.1 million in the Uniform Direct Sale operating segment during the year ended May 31, 2021.

The long-lived asset impairment in fiscal 2021 was based on the excess of the carrying amount of asset over their respective fair values and were recorded within selling and administrative expenses on the consolidated statements of income.

The undiscounted cash flows were estimated, using Level 2 inputs based on both the cost and market approaches, at the lowest discernible level of cash flows, which is at the location level.

Cintas did not identify any indicators of impairment for the fiscal years ended May 31, 2023 and 2022.

Cintas did not identify any indicators of impairment for the fiscal years ended May 31, 2024, 2023 or 2022.

Goodwill, obtained through acquisitions of businesses, is valued at cost less any impairment.

Cintas completes an annual impairment test, that includes an assessment of quantitative and qualitative factors including, but not limited to, macroeconomic conditions, industry and market conditions and entity specific factors such as strategies and financial performance.

Cintas completes an annual impairment test that includes an assessment of qualitative factors, and quantitative, if necessary, including, but not limited to, macroeconomic conditions, industry and market conditions and entity specific factors such as strategies and financial performance.

We test for goodwill impairment at the reporting unit level.

5 unchanged sentences

Service contracts and other assets, which consist primarily of capitalized contract costs and noncompete and consulting agreements obtained through acquisitions of businesses, are generally amortized by use of the straight-line method, or an accelerated method that represents the estimated economic benefit, over the estimated lives of the agreements, which are generally 5 to 15 years.

Certain noncompete agreements, as well as all service contracts, require that a valuation be determined using a discounted cash flow model.

Service contracts are determined using a discounted cash flow model.

The assumptions and judgments used in these models involve estimates of cash flows and discount rates, among other factors.

Because of the assumptions used to value these intangible assets, actual results over time could vary from original estimates.

Impairment of service contracts and other assets is accomplished through specific identification.

Impairment of service contracts and other assets is determined through specific identification.

No impairment has been recognized by Cintas for the fiscal years ended May 31, 2024, 2023 and 2022.

Capitalized contract costs.

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

As permitted by ASC 606, Revenue 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 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.

The capitalized commissions are amortized on a straight-line basis over the expected period of benefit.

We review capitalized commission balances for impairment on an ongoing basis.

Capitalized commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense.

Business acquisitions.

7 unchanged sentences

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, within the Uniform Rental and Facility Services reportable operating segment, in the fiscal year ended May 31, 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 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.

9 unchanged sentences

Dividends 137,609 117,565

Estimated legal reserves 45,000 27,000

Accrued interest 15,050 15,151

3 unchanged sentences

Insurance reserve.

The insurance reserve represents the estimated ultimate cost of all asserted and unasserted claims incurred, primarily related to workers' compensation, auto liability and other general liability exposure through the consolidated balance sheet dates.

The insurance reserve represents the estimated ultimate cost of all asserted and unasserted claims (incurred but not reported), primarily related to workers' compensation, auto liability and other general liability exposure through the consolidated balance sheet dates.

Our incurred but not reported reserve is estimated through actuarial procedures, with the assistance of third-party actuarial specialists, of the insurance industry and by using industry assumptions, adjusted for specific expectations based on our claims history.

10 unchanged sentences

Pension plans.

The Company assumed G&K's noncontributory, defined benefit pension plan (the Pension Plan) covering substantially all employees who were employed as of July 1, 2005, except certain employees who are covered by union-administered plans.

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

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

G&K froze the Pension Plan effective December 31, 2006.

Future growth in benefits will not occur after this date.

The Company's funding policy provides for contributions of an amount between the minimum required and maximum amount that can be deducted for federal income tax purposes.

The Company's funding policy provides for contributions of an

amount between the minimum required and maximum amount that can be deducted for federal income tax purposes.

The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at May 31, the measurement date.

3 unchanged sentences

The fair value of plan assets represents the current market value of assets held by an irrevocable trust fund for the sole benefit of participants.

These valuations reflect the terms of the Pension Plan and use participant-specific information such as compensation, age and years of service, as well as certain assumptions that require significant judgment, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates

and mortality rates.

We recognize, as of a measurement date, any unrecognized actuarial net gains or losses that exceed ten percent of the larger of the projected benefit obligations or the plan assets, defined as the "corridor." Amounts outside the corridor are amortized over the plan participants' life expectancy.

46 unchanged sentences

Cintas' assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

There were no transfers between levels for the years ended May 31, 2023 or 2022.

There were no transfers between levels for the fiscal years ended May 31, 2024 or 2023.

The carrying value of accounts receivable and accounts payable, and other current assets and liabilities, approximate fair value because of the short-term maturity of those instruments.

4 unchanged sentences

The market approach looks at what a market participant would consider valuing an exact or similar asset or liability to that of Cintas, including those traded on exchanges.

Cintas' non-financial assets and liabilities not permitted or required to be measured at fair value on a recurring basis primarily relate to assets revalued in an impairment analysis and to assets and liabilities acquired in a business acquisition unless otherwise noted in Note 3 entitled Fair Value Disclosures.

Cintas' non-financial assets and liabilities not permitted or required to be measured at fair value on a recurring basis primarily relate to assets and liabilities acquired in a business acquisition unless otherwise noted in Note 3 entitled Fair Value Disclosures.

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

3 unchanged sentences

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 financial statements.

In November 2023, the 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 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 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 financial statements.

Revenue Recognition

8 unchanged sentences

The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 14 entitled Operating Segment Information.

Revenue Recognition Policy

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

This generally occurs when the goods are transferred to the customer.

Revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities.

Shipping and handling costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer.

Certain of our customer contracts include pricing terms and conditions that include components of variable consideration.

The variable consideration is typically in the form of consideration paid to a customer based on performance metrics specified within the contract and is not material in any period presented.

When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue.

In making these assessments, the Company considers the likelihood and magnitude of a potential reversal.

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

No constraints on our revenue recognition were applied during the fiscal years ended May 31, 2023, 2022 or 2021.

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

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

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

We update our allowance for credit losses quarterly, considering recent write-offs and collections information and underlying economic expectations.

Costs to Obtain a Contract

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.

The Company also continues to expense certain costs to obtain a contract if those costs do not meet the criteria of the standard or the amortization period of

the asset would have been one year or less.

The deferred commissions are amortized on a straight-line basis over the expected period of benefit.

We review the deferred commission balances for impairment on an ongoing basis.

Deferred commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense.

Capitalized commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense.

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 balance sheets.

As of May 31, 2023, the current and noncurrent assets related to deferred commissions totaled $ 92.5 million and $ 251.6 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 $ 94.8 million, $ 87.4 million and $ 83.1 million during the fiscal years ended May 31, 2023, 2022 and 2021, respectively.

As of May 31, 2024, the current and noncurrent assets related to capitalized commissions totaled $ 94.6 million and $ 262.5 million, respectively.

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

We recorded amortization expense related to capitalized commissions of $ 101.4 million, $ 94.8 million and $ 87.4 million during the fiscal years ended May 31, 2024, 2023 and 2022, respectively.

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

1 unchanged sentence

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 balance sheet dates.

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

As of May 31, 2023

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

Cash and cash equivalents $ 124,149 $ — $ — $ 124,149

Other assets, net:

Interest rate lock agreements — 70,449 — 70,449

Total assets at fair value $ 124,149 $ 70,449 $ — $ 194,598

As of May 31, 2022

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

Cash and cash equivalents $ 90,471 $ — $ — $ 90,471

These financial instruments measured at fair value on a recurring basis are summarized below as of May 31:

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

Cash and cash

equivalents $ 342,015 $ — $ — $ 342,015 $ 124,149 $ — $ — $ 124,149

Other assets, net:

Interest rate lock agreements — 56,877 — 56,877

Total assets at fair value $ 90,471 $ 56,877 $ — $ 147,348

Cintas' cash and cash equivalents are generally classified within Level 1 or Level 2 of the fair value hierarchy.

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.

Interest rate lock

agreements — 94,829 — 94,829 — 70,449 — 70,449

Total assets at fair

value $ 342,015 $ 94,829 $ — $ 436,844 $ 124,149 $ 70,449 $ — $ 194,598

Cintas' cash and cash equivalents are generally classified within Level 1 of the fair value hierarchy.

Financial instruments classified as Level 1 are based on quoted market prices in active markets.

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

7 unchanged sentences

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

See Note 9 entitled Acquisitions.

Property and Equipment

11 unchanged sentences

Included in equipment at May 31, 2024 and 2023, were $ 335.5 million and $ 308.5 million, respectively, of internal use software.

Included in construction in progress at May 31, 2024 and 2023, were $ 39.0 million and $ 11.0 million,

respectively, of certain expenditures for software that are purchased or internally developed for use in business.

Amortization of internal use software begins when the software is ready for service and continues on the straight-line method over the estimated useful life, generally 10 years.

27 unchanged sentences

Balance at May 31, 2024 $ 290,498 $ 16,203 $ 15,201 $ 321,902

Information regarding Cintas' service contracts and other assets is as follows as of May 31:

Information regarding Cintas' service contracts, net and other assets, net is as follows as of May 31:

(In thousands) Carrying

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Debt due within one year

Commercial paper 1.20 % (1)

2022 2023 $ — $ 261,200

Senior notes (1)

3.11 % 2015 2025 $ 50,294 $ —

Senior notes 3.45 % 2022 2025 400,000 —

Debt issuance costs ( 699 ) —

9 unchanged sentences

Total debt due after one year $ 2,025,934 $ 2,486,405

(1) Variable rate debt instrument.

The rate presented is the variable rate at May 31, 2022.

(1) Cintas assumed these senior notes with the acquisition of G&K in the fourth quarter of fiscal 2017, and they were recorded at fair value.

The interest rate shown above is the effective interest rate until repayment in fiscal 2025.

(3) Cintas assumed these senior notes with the acquisition of G&K in the fourth quarter of fiscal 2017, and they were recorded at fair value.

The interest rate shown above is the effective interest rate.

The principal amount of these notes is $ 50.0 million with a stated interest rate of 3.88 %.

The average interest rate for all Cintas debt at May 31, 2024 was 4.0 %, with maturity dates through fiscal year 2037.

2 unchanged sentences

The carrying value and fair value of Cintas' debt as of May 31, 2024 were $ 2,486.6 million and $ 2,392.8 million, respectively, and as of May 31, 2023 were $ 2,500.0 million and $ 2,443.8 million, respectively.

During the fiscal year ended May 31, 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 statement of income for the fiscal year ended May 31, 2024.

During the fiscal year ended May 31, 2023, Cintas paid $ 261.2 million, net of commercial paper.

On April 17, 2023, in accordance with the terms of the notes, Cintas paid the $ 50.0 million aggregate principal amount outstanding of its 3.73 %, private placement, 10-year senior notes that matured on that date with proceeds from short-term commercial paper issuance.

During the fiscal year ended May 31, 2022, Cintas issued $ 261.1 million, net of commercial paper.

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

On April 1, 2022, in accordance with the terms of the notes, Cintas paid the $ 650.0 million aggregate principal amount outstanding of its 2.90 %, 5-year senior notes that matured on that date with proceeds from short-term borrowings.

On May 1, 2022, Cintas redeemed at par value the $ 300.0 million aggregate principal amount outstanding of its 3.25 %, 10-year senior notes 30 days in advance of the maturation date with proceeds from short-term borrowings.

On May 3, 2022, Cintas issued $ 400.0 million aggregate principal amount of senior notes that bear an interest rate of 3.45 % and mature on May 1, 2025.

On May 3, 2022, Cintas also issued $ 800.0 million aggregate principal amount of senior notes that bear an interest rate of 4.00 % and mature on May 1, 2032.

The net proceeds from these issuances were utilized for general business purposes, including reducing Cintas’ short-term borrowings.

Letters of credit outstanding were $ 118.0 million and $ 99.6 million at May 31, 2024 and 2023, respectively.

Maturities of debt during each of the next five years are $ 0.0 million , $ 450.0 million, $ 0.0 million , $ 1,000.0 million and $ 0.0 million , respectively.

Maturities of debt during each of the next five fiscal years are $ 450.0 million, $ 0.0 million, $ 1,000.0 million, $ 0.0 million and $ 0.0 million, respectively.

Interest paid was $ 100.8 million, $ 111.5 million and $ 97.8 million for the fiscal years ended May 31, 2024, 2023 and 2022, respectively.

2 unchanged sentences

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

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

As of May 31, 2022, there was $ 261.2 million commercial paper outstanding and no borrowings on our revolving credit facility.

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

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

1 unchanged sentence

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

Cintas used interest rate 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 $ 6.0 million, $ 6.1 million and $ 2.1 million for the fiscal years ended May 31, 2024, 2023 and 2022, respectively.

1 unchanged sentence

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

The fair values of the outstanding interest rate locks, for forecasted debt issuances, are summarized as follows at May 31:

The fair values of the outstanding interest rate locks, for forecasted debt issuances, which are included in other assets, net, are summarized as follows at May 31:

Fiscal Year of Issuance

(in thousands)

assets, net Other

2022 $ 56,717 $ 44,803

1 unchanged sentence

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

In conjunction with the issuance of long-term debt in fiscal 2022, Cintas settled interest rate lock agreements, which were in an asset position of $ 58.9 million at the date of settlement, with the cash received recorded within operating cash flows, in accordance with Company's accounting policy.

The balance recorded in other comprehensive income (loss) will be amortized as a reduction to interest expense beginning in the fourth quarter of fiscal 2022 through the remaining life of the debt.

Cintas has certain covenants related to debt agreements.

These covenants limit Cintas' ability to incur certain liens, to engage in sale-leaseback transactions and to merge, consolidate or sell all or substantially all of Cintas' assets.

The interest rate locks had no impact on net income or cash flows for the fiscal years ended May 31, 2024 or 2023.

Cintas' debt agreements contain certain covenants.

These covenants limit Cintas' ability to incur certain liens and priority debt, to engage in sale-leaseback transactions and to merge, consolidate or sell all or substantially all of Cintas' assets.

These covenants also require Cintas to maintain certain debt to consolidated EBITDA and interest coverage ratios.

7 unchanged sentences

Operating lease right-of-use assets, net and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised.

The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date.

Lease expense for operating leases is recorded on a straight-line basis over the lease term

and variable lease costs are recorded as incurred.

The present value of lease payments is

determined primarily using the incremental borrowing rate based on the information available at lease commencement date.

Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred.

Both lease expense and variable lease costs are primarily recorded in cost of uniform rental and facility services and other on the Company's consolidated statements of income.

22 unchanged sentences

$ 1,973,635 $ 1,693,148 $ 1,498,768

Income tax expense (benefit) consists of the following components for the fiscal years ended May 31:

Income tax expense consists of the following components for the fiscal years ended May 31:

(In thousands) 2024 2023 2022

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State and local income taxes, net of federal benefit 49,560 46,245 33,547

Capital loss carryback — — ( 14,072 )

Other 5,330 2,834 136

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Stock-based compensation 71,146 63,186

Net operating loss and foreign related carry-forwards 2,169 —

Operating lease liabilities 48,964 46,258

1 unchanged sentence

314,610 282,519

Valuation allowance ( 2,129 ) —

312,481 282,519

Deferred tax liabilities:

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however, the unrecorded tax is not material to the consolidated financial statements.

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 fiscal years ended May 31:

Uniform Rental and Facility Services 7 4

First Aid and Safety Services 1 6

All Other 8 9

The following summarizes the aggregate purchase price and fair value allocations for all businesses acquired during the fiscal years ended May 31:

(In thousands) 2024 2023

Fair value of tangible assets acquired $ 14,350 $ 6,133

Fair value of service contracts acquired 29,416 10,998

Fair value of other intangibles acquired 5,278 1,561

Net goodwill recognized 157,239 31,847

Total fair value of assets acquired 206,283 50,539

Total fair value of liabilities assumed — ( 61 )

Total fair value of net assets acquired, net of cash acquired 206,283 50,478

Deferred purchase price consideration ( 19,446 ) ( 4,121 )

Total cash consideration for acquisitions, net of cash acquired $ 186,837 $ 46,357

Goodwill was 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 goodwill were based on strategic benefits that are expected to be realized from the acquisitions.

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

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 financial statements.

Employee Benefit Plans

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

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

Unrecognized differences between actual amounts

and estimates based on actuarial assumptions are included in accumulated other comprehensive income (loss) on our consolidated balance sheets.

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

The estimated amortization from accumulated other comprehensive income (loss) into net periodic benefit cost during fiscal year 2024 is not material.

Obligations and Funded Status at May 31:

The estimated amortization from accumulated other comprehensive income (loss) into net periodic benefit cost (benefit) during fiscal year 2025 is not material.

Information on the Pension Plan obligations and funded status are presented in the following table at May 31:

(In thousands)

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Benefits paid ( 3,128 ) ( 3,340 )

Plan settlements (1)

Projected benefit obligation, end of year $ 64,311 $ 77,739

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Fair value of plan assets, beginning of year $ 60,038 $ 66,723

Actual loss on plan assets ( 3,345 ) ( 8,322 )

Actual gain (loss) on plan assets 1,212 ( 3,345 )

Employer contributions 821 —

Benefits paid ( 3,128 ) ( 3,340 )

Plan settlements (1)

Fair value of plan assets, end of year $ 48,272 $ 60,038

Funded status-net amount recognized $ ( 16,039 ) $ ( 17,701 )

(1) Plan settlements in fiscal 2024 are the result of lump-sum payments to participants exiting the Pension Plan.

The net pension liability of $ 16.0 million and $ 17.7 million was included in long-term accrued liabilities on the consolidated balance sheets as of May 31, 2024 and 2023, respectively.

An unrecognized net actuarial loss of $ 0.8 million and $ 3.0 million related to the Pension Plan was included in other within the accumulated other comprehensive income (loss) on the consolidated balance sheets at May 31, 2024 and 2023, respectively.

The components of net periodic pension benefit are summarized as follows for the fiscal years ended May 31:

The components of net periodic pension cost (benefit) are summarized as follows for the fiscal years ended May 31:

(In thousands)

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Expected return on assets ( 2,521 ) ( 3,350 )

Net periodic pension benefit $ ( 261 ) $ ( 1,503 )

The following weighted average assumptions were used to determine benefit obligations for the Pension Plan for the fiscal years ended May 31:

Plan settlements loss 461 —

Net periodic pension cost (benefit) $ 1,363 $ ( 261 )

The following weighted average assumptions were used to determine the PBO for the Pension Plan for the fiscal years ended May 31:

Discount rate 5.36 % 4.89 %

The following weighted average assumptions were used to determine net periodic pension benefit for the Pension Plan for the fiscal years ended May 31:

The following weighted average assumptions were used to determine net periodic pension cost (benefit) for the Pension Plan for the fiscal years ended May 31:

Discount rate 4.89 % 4.11 %

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

Furthermore, while we believe our 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 fair value measurement at the consolidated balance sheet dates.

Furthermore, while we believe our 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 fair value measurement at the consolidated balance sheet dates.

Information on the Pension Plan assets, using the fair value hierarchy discussed in Note 1 entitled Significant Accounting Polices, is as follows as of May 31:

8 unchanged sentences

Total $ 27,642 $ 20,630 $ — $ 48,272 $ 36,170 $ 23,868 $ — $ 60,038

Cintas’ Pension Plan assets are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources, primarily matrix pricing, with reasonable levels of price transparency.

Matrix pricing, primarily used for marketable debt securities, is based on quoted prices for securities with similar coupons, ratings and maturities, rather than on specific bids and offers for the specific security.

The types of financial instruments based on quoted market prices in active markets generally include cash equivalents (money market securities), certain U.S government securities and mutual funds.

Such instruments are generally classified within Level 1 of the fair value hierarchy.

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

The types of financial instruments valued based on quoted market prices in markets that are not active, broker or dealer quotations, or alternative pricing sources, including matrix pricing, with reasonable levels of price transparency include marketable debt securities, such as U.S.

government securities and corporate bonds.

Such financial instruments are generally classified within Level 2 of the fair market value hierarchy.

All the Company’s marketable debt securities are actively traded, and the recorded fair value reflects current market conditions.

However, due to the inherent volatility in the investment market, there is at least a reasonable possibility that recorded investment values may change by a material amount in the near term.

We expect to make contributions of approximately $ 5.1 million to the Pension Plan during the next 12 months.

The Pension Plan benefit payments expected to be paid for each of the next five years and thereafter are $ 4.4 million, $ 4.6 million, $ 4.8 million, $ 4.9 million, $ 5.0 million and $ 54.0 million, respectively.

Future changes in plan asset returns, assumed discount rates and various other factors related to the Pension Plan will impact future net periodic pension benefit (cost) and liabilities, however, any changes would not have a material impact on our consolidated results of operations and consolidated financial position.

The Pension Plan benefit payments expected to be paid for each of the next five fiscal years and thereafter are $ 3.7 million, $ 3.9 million, $ 4.1 million, $ 4.2 million, $ 4.4 million and $ 44.0 million, respectively.

Future changes in plan asset returns, assumed discount rates and various other factors related to the Pension Plan will impact future net periodic pension cost (benefit) and liabilities, however, any changes would not have a material impact on our consolidated results of operations and consolidated financial position.

Cintas also administers a pension plan that was assumed in a previous acquisition and is immaterial for detailed disclosure purposes.

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employee-partners.

The amounts of contributions to the Plan and ESOP, as well as the matching contribution to the 401(k), are made at the discretion of the Board of Directors.

The amounts of contributions to the Plan and ESOP, as well as the matching contribution to the 401(k), are made at the discretion of the Board of Directors (the Board).

Total contributions, including Cintas' matching contributions, which approximate cost, were $ 115.1 million, $ 99.1 million and $ 85.0 million for the fiscal years ended May 31, 2024, 2023 and 2022, respectively.

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Cintas has a non-contributory deferred profit sharing plan (DPSP), which covers substantially all Canadian employee-partners.

In addition, a registered retirement savings plan (RRSP) is offered to those employees.

The amounts of contributions to the DPSP, as well as the matching contribution to the RRSP, are made at the discretion of the Board of Directors.

In addition, a registered retirement savings plan (RRSP) is offered to those employee-partners.

The amounts of contributions to the DPSP, as well as the matching contribution to the RRSP, are made at the discretion of the Board.

Total contributions, which approximate cost, were $ 4.2 million, $ 3.7 million and $ 3.4 million for the fiscal years ended May 31, 2024, 2023 and 2022, respectively.

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The SERP allows participants to defer the receipt of compensation which would otherwise become payable to them.

Matching contributions are made at the discretion of the Board of Directors.

Matching contributions are made at the discretion of the Board.

Total matching contributions, which approximates cost, were $ 13.1 million, $ 12.3 million and $ 10.5 million for the fiscal years ended May 31, 2024, 2023 and 2022, respectively.

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

On October 30, 2018, we 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 the Board of Directors authorized a $ 1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022.

On July 27, 2021, we 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 May 31, 2023, Cintas purchased a total of 2.7 million shares of Cintas common stock at an average price of $ 385.80 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 table summarizes the buyback activity by program and fiscal year ended May 31:

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

On July 27, 2021, we announced that the Board authorized a $ 1.5 billion share buyback program, which was completed during the fourth quarter of fiscal 2024.

From the inception of the July 27, 2021 share buyback program through May, 2024, Cintas has purchased a total of 3.6 million shares of Cintas common stock at an average price of $ 421.77 per share for a total purchase price of

$ 1.5 billion.

On July 26, 2022, Cintas announced that the Board authorized a new $ 1.0 billion share buyback program, which does not have an expiration date.

The following table summarizes the buyback activity by program and fiscal years ended May 31:

2024 2023 2022

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

October 29, 2019 — — — 1,590 365.41 581,220 1,196 350.31 418,779

July 27, 2021 856 535.21 458,284 550 396.69 218,288 2,150 383.01 823,429

6 unchanged sentences

common stock $ 700,033 $ 398,865 $ 1,525,873

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

There were no share buybacks in the period subsequent to May 31, 2023, through July 27, 2023, under any share buyback program.

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

In addition to the share buyback activity presented above, beginning in fiscal 2022, Cintas acquired shares of Cintas common stock, via non-cash transactions, in connection with net-share settlements of option exercises.

The following table summarizes Cintas' non-cash share buyback activity for the fiscal year ended May 31:

The following table summarizes Cintas' non-cash share buyback activity for the fiscal years ended May 31:

2024 2023 2022

Buyback Program

(In thousands except per share data)

Shares Average Price

per Share Non-Cash

Value Shares Average Price

per Share Non-Cash

Shares Average Price per Share Non-Cash

Value Shares Average Price per Share Non-Cash

Non-cash transaction activity 283 $ 548.74 $ 155,403 360 $ 424.86 $ 152,983 71 $ 402.73 $ 28,670

In the period subsequent to May 31, 2024, through July 25, 2024, under the July 26, 2022 share buyback plan, we purchased 0.7 million shares of Cintas common stock at an average price of $ 693.58 for a total purchase price of $ 473.6 million.

From the inception of the July 26, 2022 share buyback program through July 25, 2024, Cintas has purchased 0.8 million shares of Cintas common stock in the aggregate, at an average price of $ 691.40 per share, for a total purchase price of $ 530.7 million.

Common Stock Split

On May 2, 2024, the Company announced a 4 -for-1 split of its common stock.

Shareholders of record, as of September 4, 2024, will receive three additional shares for each share held, which will be distributed after market close on September 11, 2024.

The Company's shares are expected to begin trading on a post-split basis at the market open on September 12, 2024.

The following table presents unaudited proforma earnings per share on a post-split basis for the fiscal years ended May 31:

(In thousands except per share data)

2024 2023 2022

Net income allocated to common shareholders, as reported $ 1,565,664 $ 1,342,547 $ 1,229,625

Proforma basic weighted average common shares outstanding 406,612 406,580 412,688

Proforma effect of dilutive securities - employee stock options 6,856 6,928 9,404

Proforma diluted weighted average common shares outstanding 413,468 413,508 422,092

Proforma basic earnings per share $ 3.85 $ 3.30 $ 2.98

Proforma diluted earnings per share $ 3.79 $ 3.25 $ 2.91

Stock-Based Compensation

On August 2, 2016, the Board of Directors approved and adopted the Cintas Corporation 2016 Equity and Incentive Compensation Plan (the 2016 Plan) to replace the Cintas' 2005 Equity Compensation Plan, as amended (the 2005 Plan).

On August 2, 2016, the Board approved and adopted the Cintas Corporation 2016 Equity and Incentive Compensation Plan (the 2016 Plan) to replace the Cintas' 2005 Equity Compensation Plan, as amended (the 2005 Plan).

The 2016 Plan was approved by Cintas shareholders at its Annual Meeting on October 18, 2016, at which time the 2016 Plan became effective.

7 unchanged sentences

Stock options are granted at the fair market value of the underlying common stock on the date of grant.

The option terms are determined by the Compensation Committee of the Board of Directors, but no stock option may be exercised later than 10 years after the date of the grant.

The option terms are determined by the Compensation Committee of the Board, but no stock option may be exercised later than 10 years after the date of the grant.

The option awards generally have 10-year terms with graded vesting in years 3 through 5 based on continuous service during that period.

30 unchanged sentences

Granted 408,497 662.31

Canceled ( 1,710 ) 65.79

Forfeited ( 110,593 ) 411.35

26 unchanged sentences

Restricted Stock Awards

Restricted stock awards consist of Cintas' common stock that is subject to such conditions, restrictions and limitations as the Compensation Committee of the Board of Directors determines to be appropriate.

Restricted stock awards consist of Cintas' common stock that is subject to such conditions, restrictions and limitations as the Compensation Committee of the Board determines to be appropriate.

The vesting period is generally three years after the grant date.

22 unchanged sentences

Currency Unrealized

(Loss) Income

Rate Locks Other Total

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The remainder of Cintas’ operating segments, which consists of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, is included in All Other.

Cintas evaluates the performance of each operating segment based on several factors of which the primary ---financial measures are operating segment revenue and operating income.

Cintas evaluates the performance of each operating segment based on several factors of which the primary financial measures are revenue and operating income.

The accounting policies of the operating segments are the same as those described in Note 1 entitled Significant Accounting Policies.

6 unchanged sentences

Selling and administrative expenses 1,940,627 353,503 323,653 — 2,617,783

Interest expense, net — — — 109,516 109,516

Income before income taxes $ 1,478,757 $ 180,690 $ 143,217 $ ( 109,516 ) $ 1,693,148

Operating income $ 1,659,501 $ 239,153 $ 169,979 $ — $ 2,068,633

Depreciation and amortization $ 340,426 $ 81,342 $ 20,616 $ — $ 442,384

4 unchanged sentences

Selling and administrative expenses 1,786,198 301,398 283,108 — 2,370,704

Interest expense, net — — — 88,602 88,602

Income before income taxes $ 1,353,490 $ 106,763 $ 127,117 $ ( 88,602 ) $ 1,498,768

Operating income $ 1,478,757 $ 180,690 $ 143,217 $ — $ 1,802,664

Depreciation and amortization $ 326,185 $ 62,059 $ 20,918 $ — $ 409,162

4 unchanged sentences

Selling and administrative expenses 1,557,057 265,430 222,389 — 2,044,876

Interest expense, net — — — 97,743 97,743

Income before income taxes $ 1,225,840 $ 81,183 $ 78,469 $ ( 97,743 ) $ 1,287,749

Operating income $ 1,353,490 $ 106,763 $ 127,117 $ — $ 1,587,370

Depreciation and amortization $ 329,473 $ 48,656 $ 21,572 $ — $ 399,701

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

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, 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 balance sheet at May 31, 2024.

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

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

These future investments are not expected to 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 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.

1 unchanged sentence

The lawsuit asserts that the defendants improperly managed the costs of the employee retirement plan, breached their fiduciary duties in failing to investigate and select lower cost alternative funds and failed to monitor and control the employee retirement plan’s recordkeeping costs.

The defendants deny liability and a legal contingency is neither probable nor estimable at this time.

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 May 31, 2023 and 2022, Cintas did not accrue any additional sums in excess of its other legal contingency accruals for adverse jury verdicts arising in the ordinary course of its business.

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

Any estimated liability relating to these proceedings is not determinable at this time.

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.

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 final approval of the U.S.

District Court for the Southern District of Ohio.

Changes in and Disagreements with

1 unchanged sentence

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 8. Financial Statements and Supplementary Data