EX-99 2 ex997-17.htm EXHIBIT 99 Exhibit


Exhibit 99
 
FOR IMMEDIATE RELEASE                             
July 20, 2017


Cintas Corporation Announces
Fiscal 2017 Fourth Quarter Results


CINCINNATI, July 20, 2017 -- Cintas Corporation (Nasdaq: CTAS) today reported results for its fiscal 2017 fourth quarter and full fiscal year which ended May 31, 2017.

Revenue for the fourth quarter was $1.53 billion, an increase of 23.1% over last year’s fourth quarter. The organic growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was 8.1%. The organic growth rates for the Uniform Rental and Facility Services and First Aid and Safety Services reportable operating segments were 8.0% and 9.2%, respectively.

Scott D. Farmer, Cintas’ Chairman and Chief Executive Officer, stated, “Our strong finish to the fiscal year helped us to achieve a seventh consecutive year of organic growth in the mid to high single digits. We continue to grow revenue in multiples of gross domestic product and employment growth. I thank our employees, whom we call partners, for the solid execution that enables us to achieve our vision of increasing the number of businesses we help get Ready for the WorkdayTM and of adding greater value to our existing customers by providing them with more of our industry-leading products and services.”

Operating income for the fourth quarter of $177.3 million decreased 11.2% from last year’s fourth quarter operating income of $199.8 million. Fiscal 2017 fourth quarter operating income was negatively impacted by $63.7 million of transaction and integration expenses related to the G&K Services, Inc. (G&K) acquisition.

Net income and earnings per diluted share (EPS) from continuing operations for the fourth quarter were $82.2 million and $0.75, respectively, compared to $115.7 million and $1.06, respectively, in last year’s fourth quarter. Fiscal 2017 fourth quarter EPS included a positive impact of $0.02 from a change in the accounting for equity compensation as required under ASU 2016-09 which was adopted in the first quarter of fiscal 2017. Fiscal 2017 fourth quarter EPS included a negative impact of $0.50 from transaction and integration expenses and certain incremental non-recurring financing fees included in interest expense related to the G&K acquisition.

The following table provides summary financial information including revenue, operating income, net income and EPS from continuing operations for the fourth quarters of fiscal years 2017 and 2016. This information is presented to provide details of consolidation and thus transparency to financial performance because of the significant impacts to the financial results in the fourth quarter of fiscal year 2017 from the G&K acquisition. Note that we will not be able to provide this detail going forward because the G&K business will increasingly be integrated and thus inseparable from Cintas consolidated financial results.





 
 
Q4 Fiscal 2017
 
Q4 Fiscal 2016
 
 
 
 
G&K Acquisition
 
 
 
 
 
 
 
 
Cintas Legacy
(1)
% of
Revenue
G&K Results
(2)
Transaction and Integration
(3)
ASU 2016-09
(4)
Reported
(5)
% of
Revenue
 
Reported
(5)
% of
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
1,342.6

 
$
187.7

$
—

$
—

$
1,530.3

 
 
$
1,243.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
603.3

44.9%
75.4

—

—

678.7

44.4%
 
546.4

43.9%
 
 
 
 
 
 
 
 
 
 
 
 
SG&A
 
383.1

28.5%
51.8

—

2.8

437.7

28.6%
 
346.6

27.9%
 
 
 
 
 
 
 
 
 
 
 
 
G&K transaction and integration expenses
 
—

0.0%
—

63.7

—

63.7

4.2%
 
—

0.0%
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
220.2

16.4%
23.6

(63.7
)
(2.8
)
177.3

11.6%
 
199.8

16.1%
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
13.7

1.0%
14.5

17.1

—

45.3

3.0%
 
15.5

1.2%
 
 
 
 
 
 
 
 
 
 
 
 
Income before
income taxes
 
206.5

15.4%
9.1

(80.8
)
(2.8
)
132.0

8.6%
 
184.3

14.8%
 
 
 
 
 
 
 
 
 
 
 
 
Income taxes
 
80.6

6.0%
3.4

(27.5
)
(6.6
)
49.9

3.3%
 
68.6

5.5%
 
 
 
 
 
 
 
 
 
 
 
 
Income, continuing
 operations
 
$
125.9

9.4%
$
5.7

$
(53.3
)
$
3.8

$
82.1

5.4%
 
$
115.7

9.3%
 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS, continuing operations
 
$
1.18

 
$
0.05

$
(0.50
)
$
0.02

$
0.75

 
 
$
1.06

 

(1) Figures represent reported results less the details of consolidation provided in the table related to the G&K acquisition and ASU 2016-09. See notes (2), (3) and (4) for more information.

(2) Figures represent the G&K financial results from the closing of the acquisition on March 21, 2017 to the quarter ended May 31, 2017. These results include in SG&A, amortization expense of $9.6 million resulting from the purchase price accounting (i.e., establishment of intangible assets) for G&K. They also include interest expense on the debt to finance the G&K acquisition.

(3) These expenses relate to the G&K acquisition and include employee separation costs, planned facility reduction activities, and certain incremental non-recurring financing fees included in interest expense.

(4) Figures represent the impact from a change in the accounting for equity compensation as required under ASU 2016-09 which was adopted in the first quarter of fiscal 2017.

(5) On July 11, 2017, Cintas sold a business that was reported as discontinued operations for the quarters ended May 31, 2017 and 2016. Revenue and EPS for the sold business were $26.5 million and $0.01, respectively, in Q4 fiscal 2017 and $27.9 million and $0.02, respectively, in Q4 fiscal 2016.


Revenue for the full fiscal year ending May 31, 2017 was $5.32 billion, an increase of 11.0% over last fiscal year. The organic growth rate, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations, and workday differences, was 6.7%. Operating income for the full fiscal year of $773.7 million increased 0.6% from last fiscal year operating income of $768.9 million. Fiscal 2017 operating income was negatively impacted by $79.2 million of transaction and integration expenses related to the G&K acquisition. Net income and EPS from continuing operations for fiscal 2017 were $457.3 million and $4.17, respectively, compared to $448.6 million and $4.02, respectively, last fiscal year. Fiscal 2017 EPS included a positive impact of $0.19 from a change in the accounting for equity compensation as required under ASU 2016-09. Fiscal 2017 EPS also included a negative impact of $0.60 from transaction and integration expenses and certain incremental non-recurring bank fees included in interest expense related to the G&K acquisition.





The following table provides summary financial information including revenue, operating income, net income and EPS from continuing operations for the full fiscal years 2017 and 2016. This information is presented to provide details of consolidation and transparency to financial performance.
 
 
 
Fiscal 2017
 
Fiscal 2016
 
 
 
 
G&K Acquisition
 
 
 
 
 
 
 
 
Cintas Legacy
(1)
% of
Revenue
G&K Results
(2)
Transaction and Integration
(3)
ASU 2016-09
(4)
Reported
(5)
% of
Revenue
 
Reported
(5)
% of
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
5,135.7

 
$
187.7

$
—

$
—

$
5,323.4

 
 
$
4,795.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin
 
2,304.9

44.9%
75.4

—

—

2,380.3

44.7%
 
2,101.3

43.8%
 
 
 
 
 
 
 
 
 
 
 
 
SG&A
 
1,467.3

28.6%
51.8

—

8.3

1,527.4

28.7%
 
1,332.4

27.8%
 
 
 
 
 
 
 
 
 
 
 
 
G&K transaction and integration expenses
 
—

0.0%
—

79.2

—

79.2

1.5%
 
—

0.0%
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
837.6

16.3%
23.6

(79.2
)
(8.3
)
773.7

14.5%
 
768.9

16.0%
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
54.7

1.1%
14.5

17.1

—

86.3

1.6%
 
63.6

1.3%
 
 
 
 
 
 
 
 
 
 
 
 
Income before
income taxes
 
782.9

15.2%
9.1

(96.3
)
(8.3
)
687.4

12.9%
 
705.3

14.7%
 
 
 
 
 
 
 
 
 
 
 
 
Income taxes
 
289.9

5.6%
3.4

(30.7
)
(32.5
)
230.1

4.3%
 
256.7

5.4%
 
 
 
 
 
 
 
 
 
 
 
 
Income-continuing
 operations
 
$
493.0

9.6%
$
5.7

$
(65.6
)
$
24.2

$
457.3

8.6%
 
$
448.6

9.4%
 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS, continuing operations
 
$
4.53

 
$
0.05

$
(0.60
)
$
0.19

$
4.17

 
 
$
4.02

 

(1) Figures represent reported results less the details of consolidation provided in the table related to the G&K acquisition and ASU 2016-09. See notes (2), (3) and (4) for more information.

(2) Figures represent the G&K financial results from the closing of the acquisition on March 21, 2017 to the year ended May 31, 2017. These results include in SG&A, amortization expense of $9.6 million resulting from the purchase price accounting (i.e., establishment of intangible assets) for G&K. They also include interest expense on the debt to finance the G&K acquisition.

(3) These expenses relate to the G&K acquisition and include employee separation costs, planned facility reduction activities, and certain incremental non-recurring financing fees included in interest expense.

(4) Figures represent the impact from a change in the accounting for equity compensation as required under ASU 2016-09 which was adopted in the first quarter of fiscal 2017.

(5) On July 11, 2017, Cintas sold a business that was reported as discontinued operations for the fiscal years ended May 31, 2017 and 2016. Revenue and EPS for the sold business were $105.6 million and $0.07, respectively, in fiscal year 2017 and $109.7 million and $0.07, respectively, in fiscal year 2016.


Mr. Farmer continued, “The financial results of fiscal 2017 were affected by items including a change in accounting standard related to equity compensation and transaction and integration expenses related to the largest acquisition in our history. At the core, however, is a consistently growing and profitable company with a record of success that includes 46 of the past 48 years of growing both revenue and net income and achieving double-digit growth in EPS for 7 consecutive years. We are proud of our accomplishments, but our focus remains on the bright future. Significant opportunities exist in all of our businesses. In addition, long-term investments such as the G&K acquisition and the implementation of an enterprise resource planning system contribute to a long runway for continued growth.”






Mr. Farmer concluded, “Looking ahead to fiscal 2018, we expect revenue to be in the range of $6.27 billion to $6.36 billion and fiscal 2018 EPS from continuing operations to be in the range of $5.15 to $5.25.”

Fiscal 2018 guidance includes the following assumptions related to the acquired G&K business:

•
No transaction and integration expenses
•
Revenue of approximately $870 million to $900 million, compared to a prior year annualized amount of $965 million;
•
Synergies of approximately $50 million to $55 million;
•
Purchase price amortization (specifically related to intangible assets) of $50 million;
•
Interest expense on G&K acquisition debt of approximately $65 million; and
•
EPS contribution of 15 cents to 17 cents, inclusive of all items above.

The table below provides a comparison of fiscal 2017 revenue and EPS to our fiscal 2018 guidance.
 
Fiscal
 2017
 
Fiscal 2018
Low end
of Range
 
Growth
vs. 2017
 
Fiscal 2018
High end
of Range
 
Growth
vs. 2017
 
 
 
 
 
 
 
 
 
 
Revenue Guidance
 
 
 
 
 
 
 
 
 
($s in millions)
 
 
 
 
 
 
 
 
 
Total Revenue
$
5,323.4

 
$
6,270.0

 
17.8%
 
$
6,360.0

 
19.5%
 
 
 
 
 
 
 
 
 
 
Earnings Per Share Guidance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS, continuing operations
$
4.17

 
$
5.15

 
 
 
$
5.25

 
 
 
 
 
 
 
 
 
 
 
 
G&K transaction and integration expenses
0.60

 
—

 
 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
EPS after above items
$
4.77

 
$
5.15

 
8.0%
 
$
5.25

 
10.1%

Fiscal 2018 EPS guidance does not include any G&K transaction and integration expenses. However, we expect that these expenses will be incurred in fiscal 2018 as we continue to integrate this significant acquisition. We estimate that these expenses will range from $50 million to $65 million.









About Cintas
Cintas Corporation helps more than one million businesses of all types and sizes get Ready™ to open their doors with confidence every day by providing a wide range of products and services that enhance our customers’ image and help keep their facilities and employees clean, safe and looking their best. With products and services including uniforms, floor care, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety and compliance training, Cintas helps customers get Ready for the Workday™. Headquartered in Cincinnati, Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of both the Standard & Poor’s 500 Index and the Nasdaq-100 Index.





 
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements.  Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used.  Such statements are based upon current expectations of Cintas and speak only as of the date made.  You should not place undue reliance on any forward-looking statement.  We cannot guarantee that any forward-looking statement will be realized.  These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release.  Factors that might cause such a difference include, but are not limited to, risks inherent with the G&K transaction in the achievement of cost synergies and the timing thereof, including whether the transaction will be accretive and within the expected timeframe; the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions, including G&K; fluctuations in costs of materials and labor including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; the cost, results and ongoing assessment of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002; costs of our SAP system implementation; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made.  A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2016 and in our reports on Forms 10-Q and 8-K.  The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us or that we currently believe to be immaterial may also harm our business.



For additional information, contact:
J. Michael Hansen, Sr. VP-Finance and Chief Financial Officer - 513-701-2079
Paul F. Adler, Vice President and Treasurer - 513-573-4195





 Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
 
 
Three Months Ended
 
 
May 31, 2017
 
May 31, 2016
 
% Change
Revenue:
 
 

 
 

 
 
Uniform rental and facility services
 
$
1,220,015

 
$
959,721

 
27.1%
Other
 
310,272

 
283,827

 
9.3%
Total revenue
 
1,530,287

 
1,243,548

 
23.1%
 
 
 
 
 
 
 
Costs and expenses:
 
 

 
 

 
 
Cost of uniform rental and facility services
 
676,389

 
533,543

 
26.8%
Cost of other
 
175,172

 
163,634

 
7.1%
Selling and administrative expenses
 
437,672

 
346,610

 
26.3%
G&K Services, Inc. transaction and integration expenses
 
63,746

 
—

 
100.0%
 
 
 
 
 
 
 
Operating income
 
177,308

 
199,761

 
(11.2)%
 
 
 
 
 
 
 
Interest income
 
(130
)
 
(331
)
 
(60.7)%
Interest expense
 
45,389

 
15,776

 
187.7%
 
 
 
 
 
 
 
Income before income taxes
 
132,049

 
184,316

 
(28.4)%
Income taxes
 
49,875

 
68,605

 
(27.3)%
Income from continuing operations
 
82,174

 
115,711

 
(29.0)%
Income from discontinued operations, net of tax
 
2,063

 
15,187

 
(86.4)%
Net income
 
$
84,237

 
$
130,898

 
(35.6)%
 
 
 
 
 
 
 
Basic earnings per share:
 
 
 
 
 
 
Continuing operations
 
$
0.76

 
$
1.07

 
(29.0)%
Discontinued operations
 
0.02

 
0.14

 
(85.7)%
Basic earnings per share
 
$
0.78

 
$
1.21

 
(35.5)%
 
 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 
 
Continuing operations
 
$
0.75

 
$
1.06

 
(29.2)%
Discontinued operations
 
0.01

 
0.14

 
(92.9)%
Diluted earnings per share
 
$
0.76

 
$
1.20

 
(36.7)%
 
 
 
 
 
 
 
Weighted average number of shares outstanding
 
105,325

 
106,136

 
 
Diluted average number of shares outstanding
 
109,023

 
107,797

 
 




 Cintas Corporation
Consolidated Condensed Statements of Income
(In thousands except per share data)
 
 
Twelve Months Ended
 
 
May 31, 2017
 
May 31, 2016
 
% Change
Revenue:
 
 

 
 

 
 
Uniform rental and facility services
 
$
4,202,490

 
$
3,759,524

 
11.8%
Other
 
1,120,891

 
1,036,248

 
8.2%
Total revenue
 
5,323,381

 
4,795,772

 
11.0%
 
 
 
 
 
 
 
Costs and expenses:
 
 

 
 

 
 
Cost of uniform rental and facility services
 
2,307,774

 
2,092,833

 
10.3%
Cost of other
 
635,312

 
601,599

 
5.6%
Selling and administrative expenses
 
1,527,380

 
1,332,399

 
14.6%
G&K Services, Inc. transaction and integration expenses
 
79,224

 
—

 
100.0%
 
 
 
 
 
 
 
Operating income
 
773,691

 
768,941

 
0.6%
 
 
 
 
 
 
 
Interest income
 
(237
)
 
(896
)
 
(73.5)%
Interest expense
 
86,524

 
64,522

 
34.1%
 
 
 
 
 
 
 
Income before income taxes
 
687,404

 
705,315

 
(2.5)%
Income taxes
 
230,118

 
256,710

 
(10.4)%
Income from continuing operations
 
457,286

 
448,605

 
1.9%
Income from discontinued operations, net of tax
 
23,422

 
244,915

 
(90.4)%
Net income
 
$
480,708

 
$
693,520

 
(30.7)%
 
 
 
 
 
 
 
Basic earnings per share:
 
 
 
 
 
 
Continuing operations
 
$
4.27

 
$
4.08

 
4.7%
Discontinued operations
 
0.22

 
2.22

 
(90.1)%
Basic earnings per share
 
$
4.49

 
$
6.30

 
(28.7)%
 
 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 
 
Continuing operations
 
$
4.17

 
$
4.02

 
3.7%
Discontinued operations
 
0.21

 
2.19

 
(90.4)%
Diluted earnings per share
 
$
4.38

 
$
6.21

 
(29.5)%
 
 
 
 
 
 
 
Weighted average number of shares outstanding
 
104,964

 
108,221

 
 
Diluted average number of shares outstanding
 
107,783

 
109,956

 
 











CINTAS CORPORATION SUPPLEMENTAL DATA
 
 
Three Months Ended
 
 
May 31, 2017
 
May 31, 2016
Uniform rental and facility services gross margin
 
44.6
%
 
44.4
%
Other gross margin
 
43.5
%
 
42.3
%
Total gross margin
 
44.4
%
 
43.9
%
Net income margin, continuing operations
 
5.4
%
 
9.3
%
 
 
 
 
 
 
 
Twelve Months Ended
 
 
May 31, 2017
 
May 31, 2016
Uniform rental and facility services gross margin
 
45.1
%
 
44.3
%
Other gross margin
 
43.3
%
 
41.9
%
Total gross margin
 
44.7
%
 
43.8
%
Net income margin, continuing operations
 
8.6
%
 
9.4
%

Computation of Diluted Earnings Per Share from Continuing Operations
 
 
Three Months Ended
 
 
May 31, 2017
 
May 31, 2016
Income from continuing operations
 
$
82,174

 
$
115,711

Less: income from continuing operations allocated to participating securities
 
951

 
1,882

Income from continuing operations available to common shareholders
 
$
81,223

 
$
113,829

 
 
 
 
 
Basic weighted average common shares outstanding
 
105,325

 
106,136

Effect of dilutive securities - employee stock options
 
3,698

 
1,661

Diluted weighted average common shares outstanding
 
109,023

 
107,797

 
 
 
 
 
Diluted earnings per share from continuing operations
 
$
0.75

 
$
1.06

 
 
 
 
 
 
 
Twelve Months Ended
 
 
May 31, 2017
 
May 31, 2016
Income from continuing operations
 
$
457,286

 
$
448,605

Less: income from continuing operations allocated to participating securities
 
8,168

 
7,131

Income from continuing operations available to common shareholders
 
$
449,118

 
$
441,474

 
 
 
 
 
Basic weighted average common shares outstanding
 
104,964

 
108,221

Effect of dilutive securities - employee stock options
 
2,819

 
1,735

Diluted weighted average common shares outstanding
 
107,783

 
109,956

 
 
 
 
 
Diluted earnings per share from continuing operations
 
$
4.17

 
$
4.02






Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

The press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To supplement its consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides additional non-GAAP financial measures of revenue and related growth and cash flow. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance. Reconciliations of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP are shown below.


Computation of Workday Adjusted Revenue Growth

 
Twelve Months Ended
 
May 31, 2017
 
May 31, 2016
 
Growth %
 
A
 
B
 
G
Revenue
$5,323,381
 
$4,795,772
 
11.0%
 
 
 
 
 
G=(A-B)/B
 
C
 
D
 
 
Workdays in the period
261
 
262
 
 
 
 
 
 
 
 
 
E
 
F
 
H
Revenue adjusted for workday
   difference
$5,343,777
 
$4,795,772
 
11.4%
 
 
 
 
 
H=(E-F)/F
 
E=(A/C)*D
 
F=(B/D)*D
 
 
Management believes that workday adjusted revenue growth is valuable to investors because it reflects the revenue performance compared to a prior period with the same number of revenue generating days.


Computation of Free Cash Flow

 
 
Twelve Months Ended
 
 
May 31, 2017
 
May 31, 2016
Net cash provided by operations
 
$
763,887

 
$
465,845

Capital expenditures
 
(273,317
)
 
(275,385
)
Free cash flow
 
$
490,570

 
$
190,460


Management uses free cash flow to assess the financial performance of the Company. Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.





SUPPLEMENTAL SEGMENT DATA
 
 
Uniform Rental
and Facility Services
 
First Aid
 and Safety Services
 
All
Other
 
Corporate
 
Total
 
 
 
 
 
 
 
 
 
 
 
For the three months ended May 31, 2017
 
 
 
 
 
 
 
 
Revenue
 
$
1,220,015

 
$
134,358

 
$
175,914

 
$
—

 
$
1,530,287

Gross margin
 
$
543,626

 
$
59,814

 
$
75,286

 
$
—

 
$
678,726

Selling and administrative expenses
 
$
336,400

 
$
45,551

 
$
55,721

 
$
—

 
$
437,672

G&K Services, Inc. transaction
and integration expenses
 
$
63,746

 
$
—

 
$
—

 
$
—

 
$
63,746

Interest income
 
$
—

 
$
—

 
$
—

 
$
(130
)
 
$
(130
)
Interest expense
 
$
—

 
$
—

 
$
—

 
$
45,389

 
$
45,389

Income (loss) before income taxes
 
$
143,480

 
$
14,263

 
$
19,565

 
$
(45,259
)
 
$
132,049

 
 
 
 
 
 
 
 
 
 
 
For the three months ended May 31, 2016
 
 
 
 
 
 
 
 
Revenue
 
$
959,721

 
$
122,793

 
$
161,034

 
$
—

 
$
1,243,548

Gross margin
 
$
426,178

 
$
52,631

 
$
67,562

 
$
—

 
$
546,371

Selling and administrative expenses
 
$
255,870

 
$
39,197

 
$
51,543

 
$
—

 
$
346,610

Interest income
 
$
—

 
$
—

 
$
—

 
$
(331
)
 
$
(331
)
Interest expense
 
$
—

 
$
—

 
$
—

 
$
15,776

 
$
15,776

Income (loss) before income taxes
 
$
170,308

 
$
13,434

 
$
16,019

 
$
(15,445
)
 
$
184,316

 
 
 
 
 
 
 
 
 
 
 
For the twelve months ended May 31, 2017
 
 
 
 
 
 
 
 
Revenue
 
$
4,202,490

 
$
508,233

 
$
612,658

 
$
—

 
$
5,323,381

Gross margin
 
$
1,894,716

 
$
230,166

 
$
255,413

 
$
—

 
$
2,380,295

Selling and administrative expenses
 
$
1,138,345

 
$
177,378

 
$
211,657

 
$
—

 
$
1,527,380

G&K Services, Inc. transaction
and integration expenses
 
$
79,224

 
$
—

 
$
—

 
$
—

 
$
79,224

Interest income
 
$
—

 
$
—

 
$
—

 
$
(237
)
 
$
(237
)
Interest expense
 
$
—

 
$
—

 
$
—

 
$
86,524

 
$
86,524

Income (loss) before income taxes
 
$
677,147

 
$
52,788

 
$
43,756

 
$
(86,287
)
 
$
687,404

 
 
 
 
 
 
 
 
 
 
 
For the twelve months ended May 31, 2016
 
 
 
 
 
 
 
 
Revenue
 
$
3,759,524

 
$
461,783

 
$
574,465

 
$
—

 
$
4,795,772

Gross margin
 
$
1,666,691

 
$
197,010

 
$
237,639

 
$
—

 
$
2,101,340

Selling and administrative expenses
 
$
994,590

 
$
147,503

 
$
190,306

 
$
—

 
$
1,332,399

Interest income
 
$
—

 
$
—

 
$
—

 
$
(896
)
 
$
(896
)
Interest expense
 
$
—

 
$
—

 
$
—

 
$
64,522

 
$
64,522

Income (loss) before income taxes
 
$
672,101

 
$
49,507

 
$
47,333

 
$
(63,626
)
 
$
705,315







Cintas Corporation
Consolidated Condensed Balance Sheets
(In thousands except share data)
 
 
May 31, 2017
 
May 31, 2016
 
 
 
 
 
ASSETS
 
 
 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
169,266

 
$
139,357

Marketable securities
 
22,219

 
70,405

Accounts receivable, net
 
736,008

 
546,488

Inventories, net
 
278,218

 
249,362

Uniforms and other rental items in service
 
635,702

 
538,286

Income taxes, current
 
44,320

 
1,712

Prepaid expenses and other current assets
 
30,132

 
25,948

Assets held for sale
 
38,613

 
19,021

Total current assets
 
1,954,478

 
1,590,579

 
 
 
 
 
Property and equipment, at cost, net
 
1,323,501

 
993,692

 
 
 
 
 
Investments
 
164,788

 
124,952

Goodwill
 
2,782,335

 
1,276,076

Service contracts, net
 
586,988

 
78,194

Other assets, net
 
31,967

 
14,283

Long-term assets held for sale
 
—

 
21,039

 
 
$
6,844,057

 
$
4,098,815

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Accounts payable
 
$
177,051

 
$
110,940

Accrued compensation and related liabilities
 
149,635

 
101,391

Accrued liabilities
 
429,809

 
343,266

Debt due within one year
 
362,900

 
250,000

Liabilities held for sale
 
11,457

 
9,958

Total current liabilities
 
1,130,852

 
815,555

 
 
 
 
 
Long-term liabilities:
 
 

 
 

Debt due after one year
 
2,770,624

 
1,044,422

Deferred income taxes
 
469,328

 
259,475

Accrued liabilities
 
170,460

 
136,704

Total long-term liabilities
 
3,410,412

 
1,440,601

 
 
 
 
 
Shareholders’ equity:
 
 

 
 

Preferred stock, no par value:
         100,000 shares authorized, none outstanding
 
—

 
—

Common stock, no par value:
425,000,000 shares authorized
FY17: 180,992,605 issued and 105,400,629 outstanding
FY16: 179,598,516 issued and 104,213,479 outstanding
 
485,068

 
409,682

Paid-in capital
 
223,924

 
205,260

Retained earnings
 
5,170,830

 
4,805,867

Treasury stock:
FY17: 75,591,976 shares
FY16: 75,385,037 shares
 
(3,574,000
)
 
(3,553,276
)
Accumulated other comprehensive loss
 
(3,029
)
 
(24,874
)
Total shareholders’ equity
 
2,302,793

 
1,842,659

 
 
 
 
 
 
 
$
6,844,057

 
$
4,098,815





Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(In thousands)
 
 
Twelve Months Ended
 
 
May 31, 2017
 
May 31, 2016
Cash flows from operating activities:
 
 

 
 

Net income
 
$
480,708

 
$
693,520

 
 
 
 
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation
 
171,565

 
149,691

Amortization of intangible assets
 
25,030

 
15,588

Stock-based compensation
 
88,868

 
79,293

Gain on Storage
 
(1,460
)
 
(15,786
)
Gain on Shred-it
 
(25,457
)
 
(354,071
)
Asset impairment charge
 
23,331

 
—

G&K Services, Inc. transaction and integration expenses
 
31,445

 
—

Short-term debt financing fees included in net income
 
17,062

 
—

Settlement of interest rate hedge
 
30,194

 
—

Deferred income taxes
 
3,902

 
(59,302
)
Change in current assets and liabilities, net of acquisitions of businesses:
 
 
 
 
Accounts receivable, net
 
(93,557
)
 
(52,762
)
Inventories, net
 
(668
)
 
(17,917
)
Uniforms and other rental items in service
 
(8,732
)
 
(6,306
)
Prepaid expenses and other current assets
 
24,201

 
(965
)
Accounts payable
 
13,726

 
(564
)
Accrued compensation and related liabilities
 
13,654

 
13,512

Accrued liabilities and other
 
(501
)
 
22,714

Income taxes, current
 
(29,424
)
 
(800
)
Net cash provided by operating activities
 
763,887

 
465,845

 
 
 
 
 
Cash flows from investing activities:
 
 

 
 

Capital expenditures
 
(273,317
)
 
(275,385
)
Proceeds from redemption of marketable securities
 
218,324

 
434,179

Purchase of marketable securities and investments
 
(181,065
)
 
(494,146
)
Proceeds from Storage transactions
 
2,400

 
35,338

Proceeds from sale of investment in Shred-it
 
25,876

 
580,837

Acquisitions of businesses, net of cash acquired
 
(2,102,371
)
 
(156,579
)
Other, net
 
(196
)
 
4,137

Net cash (used in) provided by investing activities
 
(2,310,349
)
 
128,381

 
 
 
 
 
Cash flows from financing activities:
 
 
 
 

Proceeds from issuance of commercial paper, net
 
50,500

 
—

Proceeds from issuance of debt, net
 
1,932,229

 
—

Repayment of debt
 
(250,000
)
 
(16
)
Payment of short-term debt financing fees
 
(17,062
)
 
—

Proceeds from exercise of stock-based compensation awards
 
31,870

 
28,226

Dividends paid
 
(142,433
)
 
(115,273
)
Repurchase of common stock
 
(20,724
)
 
(780,151
)
Other, net
 
(5,878
)
 
490

Net cash provided by (used in) financing activities
 
1,578,502

 
(866,724
)
 
 


 


Effect of exchange rate changes on cash and cash equivalents
 
(2,131
)
 
(5,218
)
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
29,909

 
(277,716
)
Cash and cash equivalents at beginning of year
 
139,357

 
417,073

Cash and cash equivalents at end of year
 
$
169,266

 
$
139,357