-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DI2ZfyiNQKvl3YYucn4ckwooW4wNXhtOaGS5FBHKx/TwJhVR9aKEs7nXFk3ocW7h rwqBR7wIWXw/fYLjPPeiJA== 0000723254-94-000002.txt : 19940415 0000723254-94-000002.hdr.sgml : 19940415 ACCESSION NUMBER: 0000723254-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940228 FILED AS OF DATE: 19940414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINTAS CORP CENTRAL INDEX KEY: 0000723254 STANDARD INDUSTRIAL CLASSIFICATION: 2320 IRS NUMBER: 311188630 STATE OF INCORPORATION: WA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11399 FILM NUMBER: 94522744 BUSINESS ADDRESS: STREET 1: 6800 CINTAS BLVD PO BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 BUSINESS PHONE: 5134591200 10-Q 1 THIRD QUARTER 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to ___________________ Commission file number 0-11399 CINTAS CORPORATION (Exact name of registrant as specified in its charter) WASHINGTON 31-1188630 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6800 CINTAS BOULEVARD P.O. BOX 625737 CINCINNATI, OHIO 45262-5737 (Address of principal executive offices) (Zip Code) (513) 459-1200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding April 8, 1994 Common Stock, no par value 46,787,434 (Page 1 of 11) PAGE CINTAS CORPORATION INDEX Page No. Part I. Financial Information: Consolidated Condensed Balance Sheet - February 28, 1994 and May 31, 1993 3 Consolidated Condensed Statement of Income - Three Months and Nine Months Ended February 28, 1994 and 1993 4 Consolidated Condensed Statement of Cash Flows - Nine Months Ended February 28, 1994 and 1993 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information 9 Signatures 10 - 2 - PAGE
CINTAS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (Dollars in Thousands) February 28, May 31, 1994 1993 (Unaudited) (Derived from Audited Financial Statements) ASSETS Current assets: Cash and cash equivalents $ 6,583 $ 14,192 Marketable securities, at cost, which approximates market 57,259 40,777 Accounts receivable (net) 50,935 48,075 Inventories 27,740 21,452 Uniforms and other rental items in service 68,349 61,001 Prepaid expenses 1,876 1,636 Total current assets 212,742 187,133 Property, plant and equipment: Cost 283,879 263,053 Less accumulated depreciation (93,495) (82,206) 190,384 180,847 Investments and other assets 86,471 86,185 $ 489,597 $ 454,165 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 17,402 $ 20,637 Accrued liabilities 29,471 28,638 Income taxes - Current 5,391 1,616 Deferred 19,701 9,823 Long-term debt due within one year 10,162 4,462 Total current liabilities 82,127 65,176 Long-term debt due after one year 90,186 103,611 Deferred income taxes 14,653 20,464 Shareholders' equity: Preferred stock, no par value, 100,000 shares authorized, none outstanding ------ ----- Common stock, no par value, 120,000,000 shares authorized, 46,757,451 shares issued and outstanding(46,578,791 at May 31, 1993) 40,763 39,869 Retained earnings 262,906 225,722 Cumulative translation adjustment (1,038) (677) Total shareholders' equity 302,631 264,914 $ 489,59 $ 454,165
See accompanying notes. - 3 -
CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF INCOME (Unaudited) (Amounts in Thousands Except Per Share Amounts) Three Months Ended Nine Months Ended February 28 February 28 1994 1993 1994 1993 Revenues: Net rentals $115,117 $101,687 $341,313 $294,522 Net sales 14,268 11,117 40,079 33,924 129,385 112,804 381,392 328,446 Costs and expenses (income): Cost of rentals 66,208 57,922 192,813 165,315 Cost of sales 11,353 8,657 33,459 28,911 Selling and administrative expenses 29,668 27,180 89,951 78,434 Interest income (493) (373) (1,246) (948) Interest expense 1,570 1,881 5,137 5,035 108,306 95,267 320,114 276,747 Income before income taxes 21,079 17,537 61,278 51,699 Income taxes 8,018 6,523 24,094 19,473 Net income $ 13,061 $ 11,014 $ 37,184 $ 32,226 Earnings per share $ .28 $ .24 $ .80 $ .70 Weighted average number of shares outstanding 46,717 46,409 46,677 46,356
See accompanying notes. - 4 - [CAPTION] CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS NINE MONTHS ENDED FEBRUARY 28, 1994 and 1993 (Unaudited) (Dollars in thousands) Nine Months Ended February 28 Cash flows from operating activities: 1994 1993 [S] [C] [C] Net income $37,184 $32,226 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 18,034 15,990 Amortization of deferred charges 8,043 6,317 Provision for losses on accounts receivable 989 1,324 Change in current assets and liabilities: Accounts receivable (3,214) (3,070) Inventories (12,940) (1,622) Prepaid expenses (240) (471) Accounts payable (3,235) 132 Accrued liabilities 833 2,434 Income taxes payable 3,775 2,246 Deferred income taxes 4,067 3,209 Net cash provided by operating activities 53,296 58,715 Cash flows from investing activities: Capital expenditures (27,504) (19,353) Additions to investments and other assets (2,731) (3,237) Proceeds from sale or redemption of marketable securities 27,412 40,989 Purchase of marketable securities (43,894) (70,713) Acquisition of businesses net of cash acquired (7,357) (36,666) Net cash used by investing activities(54,074) (88,980) Cash flows from financing activities: Proceeds from issuance of long-term debt 263 35,665 Repayment of long-term debt (7,988) (6,690) Increase in common stock 585 594 Tax benefit resulting from exercise of employee stock options 309 721 Net cash (used) provided by financing activities (6,831) 30,290 Net (decrease) increase in cash and cash equivalents (7,609) 25 Cash and cash equivalents at beginning of period 14,192 8,757 Cash and cash equivalents at end of period $ 6,583 $ 8,782 [/TABLE] See accompanying notes. - 5 - PAGE CINTAS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated condensed financial statements of Cintas Corporation (the "Company") included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidate condensed financial statements be read in conjunction with the financial statements and notes included in the Company's most recent annual report. 2. Interim results are subject to variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, except as discussed in Note 3., all adjustments (which include only normal recurring adjustments) necessary for a fair statement of the results of the interim periods shown have been made. 3. The Company's net income and earnings per share for the nine months ended February 28, 1994, were adversely impacted by one-time tax adjustments relating to the Omnibus Budget Reconciliation Act of 1993, a new tax law enacted on August 10, 1993. The reported tax expense includes one-time charges of approximately $274,000 to retroactively apply the new tax rates to January 1, 1993. This one-time charge was partially offset by jobs tax credits of $201,000, which the new tax law extended retroactive to June 30, 1992. In addition, during the first quarter of 1994, the Company adopted SFAS No. 109, Accounting for Income Taxes, which necessitated the reclassification of certain deferred tax balances and resulted in a charge to earnings of approximately $789,000. The effect of these one-time tax adjustments reduced earnings per share by $.02 per share. 4. Stock Options: In fiscal year 1993, the Company adopted a stock option plan for officers and key employees which provides for the issuance of 2,300,000 shares of common stock. This plan replaced a similar plan adopted in 1983 which expired in June, 1993. Options are generally granted at the fair market value of the underlying Common Stock on the date of the grant and generally become exercisable at the rate of 20% per year commencing five years after grant, so long as the holder remains an employee of the Company. At May 31, 1993, options as to 1,317,476 shares were outstanding at prices ranging from $2.67 - $28.75 per share. Of these options outstanding, 297,654 were exercisable at May 31, 1993. On July 13, 1993, additional options as to 206,250 shares exercisable at $26.50 per share were granted under the plan. During the first quarter of fiscal 1994, options as to 101,681 shares were exercised ranging in price from $2.67 to $11.00 per share. During the second quarter of fiscal 1994, options as to 22,919 shares were exercised ranging in price from $3.46 to $11.42. Options as to 71,022 shares were exercised in the third quarter ranging in price from $3.46 to $11.00 per share. 5. Inventories: Inventories are valued at the lower of cost (first-in, first-out) or market. Substantially, all inventories represent finished goods. - 6 - 6. Supplemental Cash Flow Disclosures: Cash paid through the nine months ended February 28, 1994 and 1993: 1994 1993 Interest, net of amount capitalized $4,837,000 $4,250,000 Income taxes $10,284,000 $13,956,000 - 7 - PAGE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total revenues increased 15% and 16% for the three months and nine months ended February 28, 1994, over the same periods in the prior fiscal year. Net rental revenue increased 13% and 16% for the three months and nine months ended February 28, 1994, over the same periods in the prior fiscal year. Growth in the customer base and price increases in established operations for the nine months ended February 28, 1994, accounted for a 9% increase in rental revenues and the remaining 7% was due primarily to acquisitions. Third quarter revenues from the sale of uniforms and other direct sale items increased 28% over the prior year's third quarter principally as a result of an increase in unit sales and other direct sale items. In the nine months ended February 28, 1994, sales increased 18% over the same period in fiscal 1993. The increases in revenues from the sale of uniforms and other direct sale items were not significantly affected by acquisitions. Pre-tax income increased 20% and 19% for the three months and nine months ended February 28, 1994, respectively, over the same periods in fiscal 1993. Net income and earnings per share were adversely impacted by one-time tax adjustments relating to the Omnibus Budget Reconciliation Act of 1993, a new tax law enacted on August 10, 1993. The reported tax expense for the nine months ended February 28, 1994, includes one-time charges of approximately $274,000 to retroactively apply the new tax rates to January 1, 1993. This one-time charge was partially offset jobs tax credits of $201,000 which the new tax law extended retroactive to June 30, 1992. In addition, during the first quarter of 1994, the Company adopted SFAS No. 109, Accounting for Income Taxes, which necessitated the reclassification of certain deferred tax balances and resulted in a charge to earnings of approximately $789,000. The effect of these one-time tax adjustments reduced earnings per share in fiscal 1994 by $.02 per share. Income from operations, which excludes interest income and interest expense, as a percent of revenues was 17% for the three months and nine months ended February 28, 1994 and 1993. Net interest expense (interest expense less interest income) was $1,077,000 and $3,891,000 for the third quarter and nine months ended February 28, 1994 respectively, compared to $1,508,000 and $4,087,000 respectively, for the same two periods in the prior fiscal year. Net interest expense has decreased primarily due to an increase in interest income. - 8 - During the third quarter of fiscal 1994, the Company's operations were impacted by the Midwestern and Northeastern snowstorms and earthquake in Los Angeles. Although the Company did not sustain any physical damage to its facilities, these unusual events caused a temporary interruption in business. As a result, the Company sustained a one-time loss in both sales and net income of $500,000. Earnings per share were adversely impacted by $.01 per share. There is no ongoing negative impact to the Company from these events. Financial Condition The Company believes that its capital requirements for operations, capital improvements, repayment of long-term debt and dividends can be made from funds on hand and funds generated from operations. - 9 - CINTAS CORPORATION Part II. Other Information Item 5. Other Information On February 17, 1994, the Registrant declared an annual cash dividend of $.17 per share on outstanding Common Stock, a 21% increase over the dividend paid in the prior year. The dividend was payable on April 5, 1994, to shareholders of record as of March 11, 1994. Item 6. No reports were filed on Form 8-K during the quarter. - 10 - PAGE CINTAS CORPORATION Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CINTAS CORPORATION (Registrant) Date: April 8, 1994 David T. Jeanmougin David T. Jeanmougin Senior Vice President - Finance (Chief Financial Officer) - 11 - -----END PRIVACY-ENHANCED MESSAGE-----