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Item 1. Financial Statements

2024-10-04 compared with 2024-04-05 · 111 added, 245 removed, 408 unchanged (47% of the section changed)

2 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

Three Months Ended Nine Months Ended

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

Three Months Ended

(In thousands except per share data) August 31, 2024 August 31, 2023

Uniform rental and facility services $ 1,933,839 $ 1,826,825

18 unchanged sentences

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

(In thousands) February 29,

2024 February 28,

2023 February 29,

2024 February 28,

Three Months Ended

(In thousands) August 31,

2024 August 31,

Net income $ 452,033 $ 385,085

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

( 450 ) ( 7,972 ) 371 ( 37,079 )

Change in fair value of interest rate lock

agreements, net of tax (benefit) expense

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

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

expense of $( 3,408 ) and $ 2,806 , respectively

( 9,956 ) 8,199

Amortization of interest rate lock

agreements, net of tax benefit of

$( 513 ), $( 512 ), $( 1,503 ) and $( 1,537 ),

Amortization of interest rate lock agreements, net of tax benefit of $( 513 ) and $( 487 ), respectively

( 1,523 ) ( 1,442 )

Other, net of tax expense of $ 0 , $ 0 ,

$ 130 and $ 0 , respectively

Other comprehensive (loss) income, net

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

Other comprehensive (loss) income, net of tax (benefit) expense of $( 3,921 )

and $ 2,319 , respectively

4 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands except per share data) February 29,

(In thousands) August 31,

Current assets:

19 unchanged sentences

Operating lease liabilities, current 46,537 45,727

Debt due within one year 615,702 449,595

Total current liabilities 1,984,889 1,828,519

32 unchanged sentences

Net income — — 452,033 — — — 452,033

Comprehensive income, net of tax — — — 9,391 — — 9,391

Dividends — — ( 138,272 ) — — — ( 138,272 )

Stock-based compensation — 30,242 — — — — 30,242

Vesting of stock-based compensation awards 156 — — — — — —

Stock options exercised 303 59,691 — — ( 118 ) ( 59,212 ) 479

Repurchase of common stock — — — — ( 145 ) ( 73,276 ) ( 73,276 )

Balance at August 31, 2023 192,658 $ 2,121,475 $ 9,844,128 $ 87,169 ( 90,730 ) $ ( 7,975,137 ) $ 4,077,635

Net income — — 374,613 — — — 374,613

Comprehensive income, net of tax — — — 6,170 — — 6,170

Dividends — — ( 137,474 ) — — — ( 137,474 )

Stock-based compensation — 22,940 — — — — 22,940

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

Stock options exercised 200 35,536 — — ( 68 ) ( 35,087 ) 449

Repurchase of common stock — — — — ( 716 ) ( 349,852 ) ( 349,852 )

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 — — — ( 7,823 ) — — ( 7,823 )

4 unchanged sentences

Repurchase of common stock — — — — ( 3,476 ) ( 614,802 ) ( 614,802 )

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

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

Balance at August 31, 2024 775,231 $ 2,415,723 $ 10,912,033 $ 83,378 ( 371,972 ) $ ( 9,389,711 ) $ 4,021,423

and Paid-In Capital Retained

6 unchanged sentences

Net income — — 385,085 — — — 385,085

Comprehensive loss, net of tax — — — ( 19,793 ) — — ( 19,793 )

Comprehensive income, net of tax — — — 9,391 — — 9,391

Dividends — — ( 138,272 ) — — — ( 138,272 )

4 unchanged sentences

Balance at August 31, 2023 770,631 $ 2,121,475 $ 9,844,128 $ 87,169 ( 362,921 ) $ ( 7,975,137 ) $ 4,077,635

Net income — — 324,293 — — — 324,293

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

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

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

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

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

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

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

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

Nine Months Ended

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

Three Months Ended

(In thousands) August 31, 2024 August 31, 2023

Cash flows from operating activities:

22 unchanged sentences

Cash flows from financing activities:

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

Issuance of commercial paper, net 166,000 —

Repayment of debt — ( 10,000 )

5 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 250 ) ( 757 )

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

Net decrease in cash and cash equivalents ( 240,642 ) ( 36,023 )

Cash and cash equivalents at beginning of period 342,015 124,149

12 unchanged sentences

In the opinion of management, adjustments (which include only normal recurring adjustments) necessary for a fair statement of the consolidated results of the interim periods shown have been made.

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

Inventory is comprised of the following at:

(In thousands) February 29,

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

Inventories, net are comprised of the following at:

(In thousands) August 31,

Raw materials $ 13,926 $ 16,664

2 unchanged sentences

Inventories, net $ 399,078 $ 410,201

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.

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $ 65.2 million and $ 63.1 million at August 31, 2024 and May 31, 2024, respectively.

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

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.

On May 2, 2024, the Company announced a four -for-one split of its common stock (the Stock Split), in the form of a stock dividend.

Shareholders of record, as of September 4, 2024, received three additional common stock shares for each common share held, which were distributed after market close on September 11, 2024.

The Company's common stock shares began trading on a post Stock-Split basis after the market opening on September 12, 2024.

All references made to common stock shares, equity awards, common stock per share amounts and treasury stock shares in the accompanying consolidated condensed financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the Stock Split.

New Accounting Pronouncements

6 unchanged sentences

and foreign jurisdictions.

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

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.

1 unchanged sentence

Note 2 - Revenue Recognition

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

Three Months Ended Nine Months Ended

(In thousands) February 29,

2024 February 28,

2023 February 29,

2024 February 28,

Uniform Rental and

Facility Services $ 1,876,642 78.0 % $ 1,716,165 78.4 % $ 5,554,009 78.0 % $ 5,123,924 78.5 %

First Aid and Safety

Services 262,602 10.9 % 231,605 10.6 % 789,696 11.1 % 701,740 10.7 %

Fire Protection

Services 182,410 7.6 % 155,762 7.1 % 530,676 7.4 % 454,211 7.0 %

Uniform Direct

Sales 84,519 3.5 % 86,454 3.9 % 251,299 3.5 % 251,423 3.8 %

The following table presents Cintas' total revenue disaggregated by operating segment for the three months ended August 31:

(In thousands) 2024 2023

Uniform Rental and Facility Services $ 1,933,839 77.3 % $ 1,826,825 78.0 %

First Aid and Safety Services 292,567 11.7 % 260,693 11.1 %

Fire Protection Services 197,497 7.9 % 174,316 7.5 %

Uniform Direct Sales 77,684 3.1 % 80,496 3.4 %

Total revenue $ 2,501,587 100.0 % $ 2,342,330 100.0 %

4 unchanged sentences

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 performance period generally corresponds with the monthly invoice period.

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 reversal.

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

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.

1 unchanged sentence

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 operating segment.

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

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.

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.

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 condensed balance sheets.

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.

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.

As of August 31, 2024, the current and noncurrent assets related to capitalized commissions totaled $ 95.0 million and $ 265.9 million, respectively.

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

The Company recorded amortization expense related to capitalized commissions of $ 25.9 million and $ 24.4 million during the three months ended August 31, 2024 and 2023, 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 $ 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

Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $ 21.8 million and $ 19.7 million for the three months ended August 31, 2024 and 2023, respectively.

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the three months ended August 31:

(In thousands) 2024 2023

Cash paid for amounts included in the measurement of operating lease liabilities $ 13,328 $ 12,696

1 unchanged sentence

operating lease liabilities $ 13,973 $ 14,286

Operating lease right-of-use assets acquired in business combinations $ 334 $ —

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

1 unchanged sentence

Weighted-average discount rate 3.64 % 3.48 %

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

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of August 31, 2024:

(In thousands)

2024 (remaining three months)

2025 (remaining nine months)

Thereafter 36,546

5 unchanged sentences

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

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

As of August 31, 2024 As of May 31, 2024

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

5 unchanged sentences

value $ 101,373 $ 81,465 $ — $ 182,838 $ 342,015 $ 94,829 $ — $ 436,844

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.

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.

4 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

Cintas uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of restricted stock awards.

The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares:

Three Months Ended Nine Months Ended

The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares for the three months ended August 31 (in each case as adjusted to reflect the Stock Split):

Basic Earnings per Share

(In thousands except per share data)

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

Net income $ 452,033 $ 385,085

4 unchanged sentences

Basic earnings per share $ 1.12 $ 0.94

Three Months Ended Nine Months Ended

Diluted Earnings per Share

(In thousands except per share data)

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

Net income $ 452,033 $ 385,085

4 unchanged sentences

Effect of dilutive securities – employee stock options

1,710 1,704 1,666 1,774

Diluted weighted average common shares outstanding

1 unchanged sentence

Diluted earnings per share $ 1.10 $ 0.93

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.

For the three months ended August 31, 2024 and 2023, options granted to purchase 0.3 million and 0.6 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share.

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

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

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 share buyback activity by program and period:

Three Months Ended Nine Months Ended

February 29, 2024 February 29, 2024

Cintas announced on July 27, 2021, July 26, 2022, and July 23, 2024, that the Board of Directors (the Board) authorized share buyback programs for $ 1.5 billion, $ 1.0 billion and $ 1.0 billion, respectively.

None of the share buyback programs have an expiration date.

The following table summarizes the share buyback activity by program and period for the three months ended August 31:

Buyback Activity

4 unchanged sentences

July 27, 2021 (1)

July 26, 2022 — — — — — —

— $ — $ — — $ — $ —

Shares acquired for taxes due (1)

74 $ 604.51 $ 45,018 277 $ 533.65 $ 147,880

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

Three Months Ended Nine Months Ended

February 28, 2023 February 28, 2023

Buyback Activity

(In thousands except per share data)

per Share Purchase

Price Shares Avg.

per Share Purchase

July 26, 2022 2,732 173.40 473,617 — — —

4 unchanged sentences

Total repurchase of Cintas common stock $ 614,802 $ 73,276

(1) The July 27, 2021 share buyback program was completed during the fourth quarter of fiscal 2024.

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

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

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

Three Months Ended Nine Months Ended

February 29, 2024 February 29, 2024

The following table summarizes Cintas' non-cash share buyback activity for the three months ended August 31:

(In thousands except per share data)

3 unchanged sentences

Non-cash transaction activity 407 $ 188.68 $ 76,824 472 $ 125.56 $ 59,212

Three Months Ended Nine Months Ended

February 28, 2023 February 28, 2023

per Share Non-Cash

Value Shares Avg.

per Share Non-Cash

Non-cash transaction activity 54 $ 445.60 $ 23,852 313 $ 419.78 $ 131,418

There were no share buybacks in the period subsequent to August 31, 2024, through October 4, 2024.

From the inception of the July 26, 2022 share buyback program through October 4, 2024, Cintas has purchased 3.1 million shares of Cintas common stock in the aggregate, at an average price of $ 172.85 per share, for a total purchase price of $ 530.7 million.

Cintas has made no purchases under the July 23, 2024 share buyback program.

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

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:

Changes in the carrying amount of goodwill and service contracts by reportable operating segment and All Other for the three months ended August 31, 2024, are as follows:

(In thousands)

5 unchanged sentences

Foreign currency translation 2,378 211 8 2,597

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

Balance as of August 31, 2024 $ 2,778,423 $ 294,330 $ 150,775 $ 3,223,528

Service Contracts

7 unchanged sentences

Foreign currency translation 361 17 — 378

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 February 29, 2024 As of May 31, 2023

Balance as of August 31, 2024 $ 279,784 $ 15,069 $ 16,346 $ 311,199

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

As of August 31, 2024 As of May 31, 2024

(In thousands) Carrying

9 unchanged sentences

and other 225,380 71,934 153,446 233,334 70,877 162,457

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 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.

Other assets $ 1,032,193 $ 612,861 $ 419,332 $ 1,010,869 $ 585,918 $ 424,951

(1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of August 31, 2024 and May 31, 2024, is $ 95.0 million and $ 94.6 million, respectively.

Amortization expense for service contracts and other assets was $ 40.7 million and $ 38.5 million for the three months ended August 31, 2024 and 2023, respectively.

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

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:

As of August 31, 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 three months) $ 40,005

2025 (remaining nine months) $ 116,518

Thereafter 158,770

5 unchanged sentences

Issued Fiscal Year

Maturity February 29,

Debt due after one year

Maturity August 31,

Debt due within one year

Commercial paper 5.44 % (1)

2025 2025 $ 166,000 $ —

Senior notes (2)

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Senior notes 3.45 % 2022 2025 400,000 400,000

Debt issuance costs ( 508 ) ( 699 )

Total debt due within one year $ 615,702 $ 449,595

Debt due after one year

Senior notes 3.70 % 2017 2027 $ 1,000,000 $ 1,000,000

3 unchanged sentences

Total debt due after one year $ 2,026,448 $ 2,025,934

(1) Variable rate debt instrument.

The rate presented is the variable borrowing rate at August 31, 2024.

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

(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 senior notes is $ 50.0 million with a stated interest rate of 3.88 %.

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

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 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 carrying value and fair value of Cintas' debt as of August 31, 2024 were $ 2,486.6 million and $ 2,464.5 million, respectively, and as of May 31, 2024 were $ 2,486.6 million and $ 2,392.8 million, respectively.

During the three months ended August 31, 2024, Cintas issued $ 166.0 million, net of commercial paper.

During the three months ended August 31, 2023, Cintas repurchased, and subsequently retired, $ 10.0 million of its 6.15 %, 30-year senior notes.

In conjunction with these transactions Cintas recognized a loss of $ 0.8 million, which is recorded in interest expense on the consolidated condensed statements of income for the thre e months ended Au gust 31, 2023.

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

As of August 31, 2024, there was $ 166.0 million of commercial paper outstanding with a weighted average interest rate of 5.44 % and no borrowings on our revolving credit facility.

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

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

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

1 unchanged sentence

Cintas used interest rate locks, which represent cash flow hedges, to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 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 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.

For the three months ended August 31, 2024 and 2023, the amortization of the interest rate locks resulted in a decrease to other comprehensive income (loss) of $ 1.5 million and $ 1.4 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 February 29, 2024 and May 31, 2023.

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

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

February 29, 2024 May 31, 2023

August 31, 2024 May 31, 2024

Fiscal Year of Issuance

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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 nine months ended February 29, 2024 or February 28, 2023.

These interest rate locks had no impact on net income or cash flows for the three months ended August 31, 2024 or 2023.

Cintas has certain covenants related to debt agreements.

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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 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.

As of August 31, 2024 and May 31, 2024, recorded unrecognized tax benefits were $ 35.2 million and $ 32.7 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.

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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, 2025.

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.

Cintas’ effective tax rate was 15.8 % and 19.2 % for the three months ended August 31, 2024 and 2023, 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 9 - Accumulated Other Comprehensive Income (Loss)

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Balance at June 1, 2024 $ ( 18,292 ) $ 108,893 $ 600 $ 91,201

Other comprehensive income before reclassifications 2,634 8,199 — 10,833

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 1,442 ) — ( 1,442 )

Net current period other comprehensive income 2,634 6,757 — 9,391

Balance at August 31, 2023 ( 14,367 ) 103,471 ( 1,935 ) 87,169

Other comprehensive (loss) income before

Other comprehensive income (loss) before

reclassifications 3,656 ( 9,956 ) — ( 6,300 )

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— ( 1,523 ) — ( 1,523 )

Net current period other comprehensive (loss) income ( 1,813 ) 7,604 379 6,170

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

Net current period other comprehensive income (loss) 3,656 ( 11,479 ) — ( 7,823 )

Balance at August 31, 2024 $ ( 14,636 ) $ 97,414 $ 600 $ 83,378

(In thousands) Foreign

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Balance at June 1, 2023 $ ( 17,001 ) $ 96,714 $ ( 1,935 ) $ 77,778

Other comprehensive (loss) income before

reclassifications ( 19,206 ) 934 — ( 18,272 )

Other comprehensive income before reclassifications 2,634 8,199 — 10,833

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 1,442 ) — ( 1,442 )

Net current period other comprehensive loss ( 19,206 ) ( 587 ) — ( 19,793 )

Net current period other comprehensive income 2,634 6,757 — 9,391

Balance at August 31, 2023 $ ( 14,367 ) $ 103,471 $ ( 1,935 ) $ 87,169

Other comprehensive (loss) income before

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

Amounts reclassified from accumulated other comprehensive income (loss)

— ( 1,521 ) — ( 1,521 )

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

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

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):

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

Details about Accumulated

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Statements of Income

Three Months Ended Nine Months Ended

(In thousands) February 29,

2024 February 28,

2023 February 29,

2024 February 28,

Amortization of interest

rate locks $ 2,037 $ 2,033 $ 5,964 $ 6,100 Interest expense

(In thousands) 2024 2023

Amortization of interest rate locks $ 2,036 $ 1,929 Interest expense

Tax expense ( 513 ) ( 487 ) Income taxes

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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 income before income taxes.

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 Basis of Presentation.

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Other Corporate (1)

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 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 nine months ended February 29, 2024

As of and for the three months ended August 31, 2024

Revenue $ 1,933,839 $ 292,567 $ 275,181 $ — $ 2,501,587

Income (loss) before income taxes $ 1,226,547 $ 175,828 $ 118,664 $ ( 74,543 ) $ 1,446,496

Operating income $ 446,438 $ 71,288 $ 43,305 $ — $ 561,031

Total assets $ 7,588,895 $ 756,833 $ 621,606 $ 101,373 $ 9,068,707

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

As of and for the three months ended August 31, 2023

Revenue $ 1,826,825 $ 260,693 $ 254,812 $ — $ 2,342,330

Income (loss) before income taxes $ 1,093,861 $ 133,612 $ 104,393 $ ( 84,587 ) $ 1,247,279

Operating income $ 406,529 $ 59,580 $ 34,447 $ — $ 500,556

Total assets $ 7,346,364 $ 723,687 $ 561,504 $ 88,126 $ 8,719,681

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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.

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 condensed balance sheet at August 31, 2024.

The amount reserved 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.

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.

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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 approval of the U.S.

District Court for the Southern District of Ohio.

The settlement received final approval by the U.S.

District Court for the Southern District of Ohio in August 2024.

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