Acquisitions and Divestitures (Tables)

12 Months Ended

May 31, 2018

Schedule of Aggregate Purchase Price for Businesses Acquired

The following summarizes the aggregate purchase price and fair value allocations for all businesses acquired:



(In thousands)	2018		2017

Fair value of tangible assets acquired	$	421	$	550,491
Fair value of service contracts acquired	9,271		529,235
Fair value of other intangibles acquired	892		17,556
Net goodwill recognized	12,094		1,507,554
Total fair value of assets acquired	22,678		2,604,836
Fair value of liabilities assumed	3,332		502,465
Total cash paid for acquisitions, net of cash acquired	$	19,346	$	2,102,371

The components of the final purchase price allocation, at fair value, are as follows:



Assets:	2018
Accounts receivable	$	95,710
Inventories	28,813
Uniforms and other rental items in service	93,659
Income taxes, current	15,873
Prepaid expenses and other current assets	43,235
Property and equipment	253,346
Goodwill	1,545,905
Service contracts	519,000
Trade names	17,000
Other assets	15,585
Liabilities:
Accounts payable	(53,220		)
Accrued compensation and related liabilities	(9,594		)
Accrued liabilities	(108,198		)
Long term accrued liabilities	(85,688		)
G&K senior notes	(105,359		)
Deferred income taxes	(187,649		)
Total consideration	$	2,078,418

The net consideration transferred for G&K consisted of the following items:



(In thousands)

Cash consideration for common stock	$	1,901,845		⁽¹⁾
Cash consideration for share-based awards	62,257			⁽²⁾
Cash consideration for G&K revolving debt	124,180			⁽³⁾
Cash consideration for transaction expenses	24,529			⁽⁴⁾
Total consideration	2,112,811
Cash acquired	(34,393		)	⁽⁵⁾
Net consideration transferred	$	2,078,418

⁽¹⁾ The cash consideration for outstanding shares of G&K common stock is the product of the agreed-upon cash per share price of $97.50 and total G&K outstanding shares of approximately 19.5 million.

⁽²⁾ The cash consideration for share-based awards is the product of the agreed-upon cash per share price of $97.50 and the total number of restricted stock outstanding and the “in the money” stock options net of the weighted average exercise price.

⁽³⁾ The cash consideration for G&K revolving debt reflects the repayment of the outstanding obligation.

⁽⁴⁾ Represents G&K legal and professional fees that were incurred prior to acquisition and were due upon the closing of the transaction.

⁽⁵⁾ Represents the G&K cash balance acquired at acquisition.

Schedule of Preliminary Valuation and Amortization Period of Identifiable Intangible Assets

The table below sets forth the valuation and amortization period of identifiable intangible assets:



Identifiable intangible assets:	Valuation		Amortization Period

Service contracts	$	519,000	15 years
Trade names	17,000		3 years
Total	$	536,000

Schedule of Pro Forma Financial Information

The following unaudited pro forma information presents the combined financial results for Cintas and G&K as if the G&K acquisition had been completed at the beginning of Cintas’ fiscal 2016, June 1, 2015. Prior to the acquisition, G&K used a 52-week or 53-week fiscal year ending on the Saturday nearest June 30. The pro forma financial information set forth below for the year ended May 31, 2016 includes G&K's annual results for the period of June 28, 2015 through July 2, 2016 adjusted for number of working days in Cintas' fiscal 2016. The pro forma financial information for the year ended May 31, 2017 includes G&K's publicly reported results for the period of July 2, 2016 through December 31, 2016 annualized and adjusted for the number of work days in the stub period of June 1, 2016 through March 21, 2017 and the actual results from March 22, 2017 through May 31, 2017. Actual net sales and net income of the acquired G&K business included in reported fiscal 2017 results were $187.7 million and $5.7 million, respectively.



In thousands except per share data	2017		2016

Net sales	$	6,107,109	$	5,762,741
Net income	$	488,482	$	520,224

Earnings per common share - diluted	$	4.45	$	4.66