Discontinued Operations

9 Months Ended

Feb. 28, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

During fiscal 2016, Cintas sold its investment in Shred-it and, as a result, the impacts from Shred-it are classified as discontinued operations for all periods presented. During fiscal 2015, Cintas sold Storage and, as a result, its operations are also classified as discontinued operations for all periods presented. Shredding and Storage were previously included in the former Document Management Services reportable operating segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of Shredding and Storage have been excluded from both continuing operations and operating segment results for all periods presented.

During the nine months ended February 28, 2017, we received additional proceeds related to contingent consideration on the sale of Shred-it. Cintas realized a pre-tax gain of $25.9 million as a result of the additional consideration received. As of February 28, 2017, Cintas still has the opportunity to receive additional consideration, subject to certain holdback provisions. Because of the uncertainty surrounding the holdback provisions, this opportunity represents a gain contingency that has not been recorded as of February 28, 2017.

In the second quarter of fiscal 2016, we completed the transaction to sell our investment in Shred-it. Cintas’ share of the proceeds from the sale were $578.3 million. We recorded a pre-tax gain on the sale of Shred-it of $349.7 million.

In the three and nine months ended February 29, 2016, Cintas recorded a net loss on the investment in Shred-it of $9.3 million and $24.3 million, respectively. During the nine months ended February 29, 2016, Cintas received additional proceeds related to contingent consideration on the sale of Storage. The Company realized a pre-tax gain of $10.9 million as a result of the additional consideration received. In the first quarter of fiscal 2016, Cintas sold the remaining storage assets classified as held for sale. In connection with the sale of these assets, Cintas received proceeds of $24.4 million and realized a pre-tax gain of $4.8 million.

Following is selected financial information included in net income from discontinued operations for Shred-it and Storage:

	Three Months Ended						Nine Months Ended
(In thousands)	February 28, 2017			February 29, 2016			February 28, 2017			February 29, 2016
Revenue	$	—		$	—		$	—		$	—
Income (loss) before income taxes	456			(679		)	456			403
Gain on Storage transactions	—			—			—			15,786
Gain on Shred-it	—			—			25,876			349,738
Income tax (expense) benefit on net gain	(1,098		)	741			(10,051		)	(142,235		)
Net (loss) income from discontinued operations	$	(642	)	$	62		$	16,281		$	223,692