-----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, RrsIcW2WpbNzOFLFpqNfEYAXd0/00j75MQ0vk1cOerKy6CmmOBL3mpoL+mJi7oq8 QCkFoT2ll0l7L9NckqGWxQ== 0000723254-97-000003.txt : 19970411 0000723254-97-000003.hdr.sgml : 19970411 ACCESSION NUMBER: 0000723254-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970410 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: 97577642 BUSINESS ADDRESS: STREET 1: 6800 CINTAS BLVD STREET 2: P O BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 BUSINESS PHONE: 5135734016 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 February 28, 1997 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 March 31, 1997 Common Stock, no par value 48,260,627 CINTAS CORPORATION INDEX Page No. Part I. Financial Information: Consolidated Condensed Balance Sheets- February 28, 1997 and May 31, 1996 3 Consolidated Condensed Statements of Income- Three Months and Nine Months Ended February 28, 1997 and February 29, 1996 4 Consolidated Condensed Statements of Cash Flows- Nine Months Ended February 28, 1997 and February 29, 1996 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information 8 Signatures 8 -2- CINTAS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands except share data)
February 28, May 31, 1997 1996 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 8,003 $ 9,066 Marketable securities 98,436 73,477 Accounts receivable (net) 85,642 78,244 Inventories 42,504 34,678 Uniforms and other rental items in service 107,141 100,307 Prepaid expenses 1,869 1,730 Total current assets 343,595 297,502 Property, plant and equipment, at cost, net 277,130 252,597 Other assets 121,122 118,663 $741,847 $668,762 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 20,321 $ 19,363 Accrued liabilities 50,599 49,168 Income taxes: Current 4,997 ---- Deferred 30,385 27,471 Long-term debt due within one year 6,666 6,592 Total current liabilities 112,968 102,594 Long-term debt due after one year 112,449 117,924 Deferred income taxes 19,616 18,747 Shareholders' equity: Preferred stock, no par value; 100,000 shares authorized, none outstanding ---- ---- Common stock, no par value; 120,000,000 shares authorized, 48,130,488 shares issued and outstanding (47,199,299 at May 31, 1996) 44,706 43,657 Retained earnings 452,735 386,673 Foreign currency translation adjustment (627) (833) Total shareholders' equity 496,814 429,497 $741,847 $668,762
See accompanying notes. -3- CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) (In thousands except per share data)
Three months ended Nine months ended February 28, February 29, February 28, February 29, 1997 1996 1997 1996 Revenues: Net rentals $ 185,439 $ 162,485 $ 541,830 $ 476,608 Net sales 24,513 20,492 69,476 59,081 209,952 182,977 611,306 535,689 Costs and exp enses (income): Cost of rentals 105,133 92,971 305,976 270,959 Cost of sales 20,220 16,884 58,621 49,393 Selling and administrative expenses 47,439 41,319 139,154 122,289 Interest income (1,161) (817) (3,071) (1,685) Interest expense 2,007 2,320 6,018 7,123 173,638 152,677 506,698 448,079 Income before income taxes 36,314 30,300 104,608 87,610 Income taxes 13,860 11,776 39,759 33,951 Net income $ 22,454 $ 18,524 $ 64,849 $53,659 Earnings per share $ 0.47 $ 0.39 $ 1.37 $ 1.14 Weighted average number of shares outstanding 47,584 47,122 47,420 47,069
See accompanying notes. -4- CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended February 28, February 29, Cash flows from operating activities: 1997 1996 Net income $ 64,849 $ 53,659 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 25,950 21,394 Amortization of deferred charges 8,838 9,350 Deferred income taxes 3,642 2,880 Change in current assets and liabilities, net of acquisitions of businesses: Accounts receivable (6,952) (7,846) Inventories (14,480) (5,875) Prepaid expenses (118) (393) Accounts payable 655 143 Accrued liabilities 1,169 7,201 Income taxes payable 4,997 (146) Net cash provided by operating activities 88,550 80,367 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 299 ---- Capital expenditures (49,006) (41,629) Proceeds from sale or redemption of marketable securities 25,820 52,113 Purchase of marketable securities (50,778) (79,304) Acquisitions of businesses, net of cash acquired (8,570) (2,289) Other (3,208) (1,830) Net cash used in investing activities (85,443) (72,939) Cash flows from financing activities: Proceeds from issuance of long-term debt ---- 408 Repayment of long-term debt (5,401) (4,498) Issuance of common stock 1,026 682 Other 205 850 Net cash used in financing activities (4,170) (2,558) Net increase (decrease) in cash and cash equivalents (1,063) 4,870 Cash and cash equivalents at beginning of period 9,066 6,685 Cash and cash equivalents at end of period $ 8,003 $11,555
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, 1996. 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, 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 adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", in the first quarter of fiscal 1997. The adoption of this statement did not have a material financial impact on the Company. -6- CINTAS CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total revenues increased 15% and 14% for the three and nine months ended February 28, 1997 respectively, over the same periods in fiscal 1996. Net rental revenues increased 14% for the three and nine months ended February 28, 1997 over the same periods in the prior fiscal year, due primarily to growth in the customer base. The first nine months of fiscal 1997 had one less workday than the similar period of fiscal 1996. Third quarter revenues from the sale of uniforms and other direct sale items increased 20% over the prior year's third quarter. For the nine months ended February 28, 1997, sales increased 18% over the same period in fiscal 1996. The increase in revenues from the sale of uniforms and other direct sale items is principally a result of an increase in unit sales. Net income increased 21% for the three and nine months ended February 28, 1997, over the same periods in fiscal 1996. Net interest expense (interest expense less interest income) was $846,000 and $2,947,000 for the three and nine months ended February 28, 1997 compared to $1,503,000 and $5,438,000, respectively, for the same two periods in the prior fiscal year. Net interest expense has decreased primarily due to an increase in interest income (related to a higher level of cash and marketable securities on hand) combined with a decrease in interest expense (related to a lower amount of long-term debt and improved interest rates). The Company's effective tax rate was 38% in both periods of fiscal 1997 compared to 39% in the same periods in fiscal 1996. Cash, cash equivalents and marketable securities increased by $24 million at February 28, 1997 from May 31, 1996, primarily due to strong cash flow from operations. The cash, cash equivalents and marketable securities will be used to finance future acquisitions and capital expenditures. Net property, plant and equipment increased by $25 million from May 31, 1996 to February 28, 1997. At the end of the third quarter of fiscal 1997, the Company had five uniform rental facilities in various stages of construction. During the first quarter of fiscal 1997, the Company's new distribution center in Montgomery, Alabama began operations. 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 the expansion of the Cincinnati distribution center completed in fiscal 1996, frees up capacity in Cincinnati in order to more effectively service growth in the Midwest, on the East Coast and Canada. Financial Condition At February 28, 1997, the Company had $106 million in cash, cash equivalents and marketable securities. The Company believes that its current cash position, funds anticipated to be generated form operations and the strength of its banking relationships are sufficient to meet its anticipated operational and capital needs requirements. -7- CINTAS CORPORATION Part II. Other Information Item 2. Changes in Securities (c.) During the quarterly period ended February 28, 1997, the registrant issued 644,160 shares of Common Stock for companies being acquired. These issuances were exempt from the registration requirements of the Securities Act of 1933 as private offerings pursuant to Section 4.7 of that Act. Item 5. Other Information On February 18, 1997, the registrant declared an annual cash dividend of $.30 per share on outstanding common stock, a 20% increase over the dividend paid in the prior year. The dividend was payable on April 4, 1997, to shareholders of record as of March 7, 1997. 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: April 9, 1997 William C. Gale William C. Gale Vice President - Finance (Chief Accounting Officer) -8- EX-27 2
5 9-MOS MAY-31-1997 FEB-28-1997 8,003,000 98,436,000 88,931,000 3,289,000 149,645,000 343,595,000 404,139,000 127,010,000 741,847,000 112,968,000 0 0 0 44,706,000 452,108,000 741,847,000 69,476,000 611,306,000 58,621,000 364,597,000 0 0 6,018,000 104,608,000 39,759,000 0 0 0 0 64,849,000 1.37 0
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