-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TKXHmCHKA7/j2811vlXayb/U6kU8/oUo36DreT6ZUnpW744gQioffmwjwJBUIp44 cMz3QVapefNemDn/KxltJg== 0000723254-96-000001.txt : 19960112 0000723254-96-000001.hdr.sgml : 19960112 ACCESSION NUMBER: 0000723254-96-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960111 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINTAS CORP CENTRAL INDEX KEY: 0000723254 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [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: 96502844 BUSINESS ADDRESS: STREET 1: 6800 CINTAS BLVD STREET 2: P O BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 BUSINESS PHONE: 5134591200 MAIL ADDRESS: STREET 1: 6800 CINTAS BOULEVARD STREET 2: P O BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 10-Q 1 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 November 30, 1995 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 January 9, 1996 Common Stock, no par value 47,105,294 -1- CINTAS CORPORATION INDEX Page No. Part I. Financial Information: Consolidated Condensed Balance Sheet - November 30, 1995 and May 31, 1995 3 Consolidated Condensed Statement of Income - Three Months and Six Months Ended November 30, 1995 and 1994 4 Consolidated Condensed Statement of Cash Flows - Six Months Ended November 30, 1995 and 1994 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- CINTAS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (In thousands except share data) November 30, May 31, 1995 1995 (Unaudited)
ASSETS Current assets: Cash and cash equivalents $ 6,615 $ 6,685 Marketable securities 53,799 38,797 Accounts receivable (net) 77,522 69,032 Inventories 37,384 36,883 Uniforms and other rental items in service 95,281 88,670 Prepaid expenses 1,189 1,355 Total current assets 271,790 241,422 Property, plant and equipment: Cost 353,613 333,390 Less accumulated depreciation (111,642) (105,393) 241,971 227,997 Other assets 124,900 126,762 $ 638,661 $ 596,181 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 20,892 $ 17,265 Accrued liabilities 41,706 42,158 Income taxes - Current 1,667 2,191 Deferred 26,123 23,368 Long-term debt due within one year 11,276 10,030 Total current liabilities 101,664 95,012 Long-term debt due after one year 118,366 120,275 Deferred income taxes 18,089 16,550 Shareholders' equity: Preferred stock, no par value, 100,000 shares authorized, none outstanding ----- ----- Common stock, no par value, 120,000,000 shares authorized, 47,070,545 shares issued and outstanding (47,005,340 at May 31, 1995) 42,466 42,035 Retained earnings 358,420 323,284 Cumulative translation adjustment (344) (975) Total shareholders' equity 400,542 364,344 $638,661 $596,181
See accompanying notes. -3- CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF INCOME (Unaudited) (In thousands except per share data)
Three months ended Six Months ended November 30 November 30 1995 1994 1995 1994 Revenues: Net rentals $ 159,855 $ 132,494 $ 314,123 $ 259,788 Net sales 22,514 19,097 38,589 33,840 182,369 151,591 352,712 293,628 Costs and expenses (income): Cost of rentals 90,712 75,610 177,988 147,800 Cost of sales 18,698 16,479 32,509 28,845 Selling and administrative expenses 40,252 32,793 80,970 67,058 Interest income (447) (438) (868) (936) Interest expense 2,293 1,824 4,803 3,345 151,508 126,268 295,402 246,112 Income before income taxes 30,861 25,323 57,310 47,516 Income taxes 12,014 9,567 22,175 18,000 Net income $ 18,847 $ 15,756 $ 35,135 $ 29,516 Earnings per share $ .40 $ .34 $ .75 $ .63 Weighted average number of shares outstanding 47,053 46,829 47,043 46,815
See accompanying notes -4- CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (Unaudited) (In thousands) Six Months Ended November 30 Cash flows from operating activities: 1995 1994 Net income $35,135 $29,516 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 14,037 12,954 Amortization of deferred charges 6,275 5,538 Provision for losses on accounts receivable 973 363 Change in current assets and liabilities: Accounts receivable (9,463) (9,440) Inventories (7,112) (12,037) Prepaid expenses 166 (18) Accounts payable 3,627 (417) Accrued liabilities (452) 101 Income taxes payable (524) 2,173 Deferred income taxes 4,294 2,064 Net cash provided by operating activities 46,956 30,797 Cash flows from investing activities: Capital expenditures (28,011) (25,346) Change in other assets (628) (319) Proceeds from sale or redemption of marketable securities 42,586 32,469 Purchase of marketable securities (57,588) (15,707) Acquisition of businesses net of cash acquired (2,289) (5,911) Net cash used by investing activities (45,930) (14,814) Cash flows from financing activities: Proceeds from issuance of long-term debt 408 ----- Repayment of long-term debt (1,935) (8,659) Issuance of common stock 423 457 Tax benefit resulting from exercise of employee stock options 8 74 Purchase of treasury stock ---- (7,044) Net cash used in financing activities (1,096) (15,172) Net (decrease) increase in cash and cash equivalents (70) 811 Cash and cash equivalents at beginning of period 6,685 8,449 Cash and cash equivalents at end of period $ 6,615 $ 9,260
See accompanying notes. -5- 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 consolidated condensed financial statements be read in conjunction with the financial statements and notes included in the Company's most recent annual report for the fiscal year ended May 31, 1995. 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, 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. Stock Options: Under a stock option plan adopted by the Company in fiscal 1993 (the"1993 Plan"), the Company may grant officers and key employees incentive stock options and/or non-qualified stock options to purchase an aggregate of 2,300,000 shares of the Company's common stock. 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 November 30, 1995, options as to 1,448,619 shares granted under the 1993 Plan and a previous plan, were outstanding at prices ranging from $5.92 - $38.75 per share. Of these options outstanding, 167,109 were exercisable at May 31, 1995. During the first quarter of fiscal 1996, options as to 39,426 shares were exercised ranging in price from $5.92 to $13.33 per share. During the second quarter of fiscal 1996, options as to 28,371 shares were exercised ranging in price from $7.96 to $13.33. In fiscal year 1991, Shareholders adopted a stock option plan for the non-employee members of its Board of Directors, and granted options for 30,000 shares of common stock (the "1991 Directors' Plan"). Options were granted at 100% of the market value of the underlying Common Stock on the date immediately prior to the grant and become exercisable at a rate of 25% per year commencing two years after grant, so long as the holder remains on the Board of Directors. In fiscal 1995, shareholders voted to adopt the 1994 Directors' Stock Option Plan (the "1994 Directors' Plan"). The 1994 Directors' Plan provides for each non-employee Director of the Company to be granted an option to purchase 1,000 shares of Cintas Common Stock, and, upon each subsequent election as a Director, another option for 1,000 shares. The total number of shares which may be granted under this Plan is 30,000 shares. Options under the 1994 Directors' Plan are granted at 100% of the market value of the underlying Common Stock on the date of grant and become exercisable at a rate of 25% per year commencing one year after grant, so long as the holder remains on the Board of Directors. As of November 30, 1995, under both Directors' plans, options for 37,000 shares are outstanding, ranging in price from $13.33 to $43.25, of which 26,000 shares are exercisable. 4. Inventories: Inventories are valued at the lower of cost (first-in, first-out) or market. Substantially all inventories represent finished goods. 5. Supplemental Cash Flow Disclosures: Cash paid during the six months ended November 30, 1995 and 1994. 1995 1994 Interest, net of amount capitalized $ 4,183,000 $ 3,299,000 Income taxes $19,103,000 $13,588,000
-7- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total revenues increased 20% in the three months and six months ended November 30, 1995 over the same periods in the prior fiscal year. Net rental revenue increased 21% for both the three months and six months ended November 30, 1995. Growth in the customer base and price increases in established operations accounted for a 16% increase and the remaining 5% was due primarily to acquisitions. Second quarter revenues from the sale of uniforms and other direct sale items increased 18% over the prior year's second quarter. For the six months ended November 30, 1995, sales increased 14% over the same period in fiscal 1995. The increase in revenues from the sale of uniforms and other direct sale items is attributable to an increase in unit sales and was not significantly affected by acquisitions. Net income increased 20% and 19% for the three months and six months ended November 30, 1995, respectively, over the same periods in fiscal 1995. The increase in net income for the six months ended November 30, 1995, over the same period in the prior year was primarily the result of increased revenues. Net interest expense (interest expense less interest income) was $1,846,000 and $3,935,000 for the three months and six months ended November 30, 1995, respectively, compared to $1,386,000 and $2,409,000, respectively, for the same two periods in the prior fiscal year. Net interest expense has increased primarily due to an increase in the amount of long-term debt associated with the acquisition of Cadet Uniform Services, Ltd. in the third quarter of fiscal 1995. During the first quarter of fiscal 1996, the Company announced plans to open a new distribution center in Montgomery, Alabama. The new distribution center will service the Company's operations in the South, Southeast and Southwest regions of the United States. The expansion into Montgomery, as well as an expansion of the Cincinnati distribution center, will allow the Company to free up capacity in Cincinnati in order to more effectively service growth in the Midwest, on the East Coast and Canada. During the second quarter of fiscal 1996, the Company entered eight new markets and continued construction of new uniform rental facilities in Austin, Texas; Denver, Colorado; Indianapolis, Indiana; and Las Vegas, Nevada. Financial Condition Marketable securities have increased since May 31, 1995, primarily due to an increase in cash generated from internal operations. Property, plant and equipment have increased from May 31, 1995, primarily due to the construction of new uniform rental facilities previously mentioned as well as the expansion of other existing uniform rental facilities in several U.S. cities. The Company believes that its current cash position, funds anticipated to be generated from operations and the strength of its banking relationships are sufficient to meet its anticipated operational and capital needs requirements. -8- CINTAS CORPORATION Part II. Other Information Item 4. Submission of matters to a vote of security holders The Annual Shareholders' meeting of the Company was held on October 19, 1995, at which the following issues were adopted by shareholders: Issue No. 1 Authority to amend the 1992 Stock Option Plan. FOR 36,476,709 AGAINST 1,416,708 ABSTAIN 109,282 BROKER NON-VOTES 0 Issue No. 2 Authority to elect eight (8) Directors. Name Shares For Shares - Shares Broker Withheld Authority Abstained Non-Votes Richard T. Farmer 37,599,265 242,637 0 0 Scott D. Farmer 37,583,876 238,027 0 0 Gerald V. Dirvin 37,665,803 156,009 0 0 James J. Gardner 37,583,318 238,585 0 0 Roger L. Howe 37,681,918 159,985 0 0 Donald P. Klekamp 37,582,984 220,918 0 0 Robert J. Kohlhepp 37,599,116 242,787 0 0 John S. Lillard 37,680,969 160,933 0 0
-9- Item 6.Exhibits and Reports on Form 8-K (a.) Exhibit Index Exhibit Number Description of Exhibit 27 Financial Data Schedule (b.) No reports were filed on Form 8-K during the quarter. 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: January 9, 1996 William C. Gale William C. Gale Vice President - Finance (Chief Accounting Officer) EX-27 2
5 6-MOS MAY-31-1996 NOV-30-1995 6,615,000 53,799,000 80,524,000 3,002,000 132,665,000 271,790,000 353,613,000 111,642,000 638,661,000 101,664,000 0 42,466,000 0 0 358,076,000 638,661,000 38,589,000 352,712,000 32,509,000 210,497,000 0 0 4,803,000 57,310,000 22,175,000 0 0 0 0 35,135,000 0.75 0
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