Supplemental Guarantor Information

9 Months Ended

Feb. 29, 2020

Condensed Financial Information Disclosure [Abstract]

Cintas Corporation No. 2 (Corp. 2) is the indirectly, wholly-owned principal operating subsidiary of Cintas. Corp. 2 is the obligor for the term loan of $200.0 million and the $2,550.0 million aggregate principal amount of senior notes outstanding as of February 29, 2020, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and certain wholly-owned, direct and indirect domestic subsidiaries.

As allowed by SEC rules, the following consolidating condensed financial statements are provided as an alternative to filing separate financial statements of the guarantors. Each of the subsidiaries presented in the following consolidating condensed financial statements has been fully consolidated in Cintas’ consolidated condensed financial statements. The following consolidating condensed financial statements should be read in conjunction with the consolidated condensed financial statements of Cintas and notes thereto of which this note is an integral part. Consolidating condensed financial statements for Cintas, Corp. 2, the subsidiary guarantors and non-guarantors are presented on the following pages:

Consolidating Condensed Income Statement

Three Months Ended February 29, 2020

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Revenue:
Uniform rental and facility services	$	—	$	1,150,780	$	189,333	$	108,599	$	(691)	$	1,448,021
Other	—		578,950		64		22,319		(238,706)		362,627
Equity in net income of affiliates	234,520		—		—		—		(234,520)		—
Total revenue	234,520		1,729,730		189,397		130,918		(473,917)		1,810,648

Costs and expenses (income):
Cost of uniform rental and facility services	—		634,638		112,865		70,279		(32,852)		784,930
Cost of other	—		408,832		(25,807)		17,003		(198,705)		201,323
Selling and administrative expenses	—		576,433		(94,155)		35,171		(7,706)		509,743

Operating income	234,520		109,827		196,494		8,465		(234,654)		314,652



Interest income	—		(131)		(195)		(22)		1		(347)
Interest expense (income)	—		26,033		(91)		1		—		25,943

Income before income taxes	234,520		83,925		196,780		8,486		(234,655)		289,056
Income taxes	—		15,717		36,380		2,464		(25)		54,536




Net income	$	234,520	$	68,208	$	160,400	$	6,022	$	(234,630)	$	234,520

Consolidating Condensed Income Statement

Three Months Ended February 28, 2019

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Revenue:
Uniform rental and facility services	$	—	$	1,092,594	$	176,787	$	99,866	$	(10,925)	$	1,358,322
Other	—		519,294		44		21,982		(217,312)		324,008
Equity in net income of affiliates	200,923		—		—		—		(200,923)		—
Total revenue	200,923		1,611,888		176,831		121,848		(429,160)		1,682,330

Costs and expenses (income):
Cost of uniform rental and facility services	—		612,167		111,103		64,976		(39,275)		748,971
Cost of other	—		373,168		(25,811)		15,649		(184,800)		178,206
Selling and administrative expenses	—		527,720		(74,507)		31,042		(8,156)		476,099
G&K Services, Inc. integration expenses	—		(141)		(379)		1,319		—		799
Operating income	200,923		98,974		166,425		8,862		(196,929)		278,255



Interest (income) expense	—		(56)		1		(18)		3		(70)
Interest expense (income)	—		26,872		(104)		2		—		26,770

Income before income taxes	200,923		72,158		166,528		8,878		(196,932)		251,555
Income taxes	—		12,330		35,665		2,656		(19)		50,632
Income from continuing operations	200,923		59,828		130,863		6,222		(196,913)		200,923

Income from discontinued operations, net of tax	2,411		2,411		—		—		(2,411)		2,411

Net income	$	203,334	$	62,239	$	130,863	$	6,222	$	(199,324)	$	203,334

Consolidating Condensed Income Statement

Nine Months Ended February 29, 2020

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Revenue:
Uniform rental and facility services	$	—	$	3,477,631	$	574,536	$	322,188	$	(1,831)	$	4,372,524
Other	—		1,768,466		332		69,925		(745,711)		1,093,012
Equity in net income of affiliates	731,775		—		—		—		(731,775)		—
Total revenue	731,775		5,246,097		574,868		392,113		(1,479,317)		5,465,536

Costs and expenses (income):
Cost of uniform rental and facility services	—		1,891,754		337,104		205,236		(95,551)		2,338,543
Cost of other	—		1,240,092		(75,346)		53,656		(617,337)		601,065
Selling and administrative expenses	—		1,767,258		(277,575)		102,365		(21,382)		1,570,666
Operating income	731,775		346,993		590,685		30,856		(745,047)		955,262



Interest income	—		(438)		(302)		(56)		4		(792)
Interest expense (income)	—		79,657		(231)		15		—		79,441

Income before income taxes	731,775		267,774		591,218		30,897		(745,051)		876,613
Income taxes	—		42,578		94,010		8,336		(86)		144,838
Income from continuing operations	731,775		225,196		497,208		22,561		(744,965)		731,775

Loss from discontinued operations, net of tax	(323)		(323)		—		—		323		(323)

Net income	$	731,452	$	224,873	$	497,208	$	22,561	$	(744,642)	$	731,452

Consolidating Condensed Income Statement

Nine Months Ended February 28, 2019

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Revenue:
Uniform rental and facility services	$	—	$	3,365,841	$	542,826	$	301,379	$	(86,008)	$	4,124,038
Other	—		1,532,665		137		72,232		(630,499)		974,535
Equity in net income of affiliates	656,464		—		—		—		(656,464)		—
Total revenue	656,464		4,898,506		542,963		373,611		(1,372,971)		5,098,573

Costs and expenses (income):
Cost of uniform rental and facility services	—		1,896,767		332,208		194,305		(166,737)		2,256,543
Cost of other	—		1,090,265		(74,973)		53,110		(531,395)		537,007
Selling and administrative expenses	—		1,608,906		(207,745)		97,964		(26,721)		1,472,404
G&K Services, Inc. integration expenses	—		8,508		2,754		2,234		—		13,496
Operating income	656,464		294,060		490,719		25,998		(648,118)		819,123

Gain on sale of a cost method investment	—		—		69,373		—		—		69,373

Interest income	—		(559)		(364)		(39)		5		(957)
Interest expense (income)	—		76,579		(639)		14		—		75,954

Income before income taxes	656,464		218,040		561,095		26,023		(648,123)		813,499
Income taxes	—		42,159		107,497		7,456		(77)		157,035
Income from continuing operations	656,464		175,881		453,598		18,567		(648,046)		656,464

Income from discontinued operations, net of tax	2,398		2,398		—		—		(2,398)		2,398

Net income	$	658,862	$	178,279	$	453,598	$	18,567	$	(650,444)	$	658,862

Consolidating Condensed Statement of Comprehensive Income

Three Months Ended February 29, 2020

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Net income	$	234,520	$	68,208	$	160,400	$	6,022	$	(234,630)	$	234,520

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(4,039)		—		—		(4,039)		4,039		(4,039)
Change in fair value of interest rate lock agreements	(53,582)		(53,582)		—		—		53,582		(53,582)
Amortization of interest rate lock agreements	(358)		(358)		—		—		358		(358)


Other comprehensive loss	(57,979)		(53,940)		—		(4,039)		57,979		(57,979)

Comprehensive income	$	176,541	$	14,268	$	160,400	$	1,983	$	(176,651)	$	176,541

Consolidating Condensed Statement of Comprehensive Income

Three Months Ended February 28, 2019

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Net income	$	203,334	$	62,239	$	130,863	$	6,222	$	(199,324)	$	203,334

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	5,025		—		—		5,025		(5,025)		5,025
Change in fair value of interest rate lock agreements	(8,183)		(8,183)		—		—		8,183		(8,183)
Amortization of interest rate lock agreements	(295)		(295)		—		—		295		(295)


Other comprehensive (loss) income	(3,453)		(8,478)		—		5,025		3,453		(3,453)

Comprehensive income	$	199,881	$	53,761	$	130,863	$	11,247	$	(195,871)	$	199,881

Consolidating Condensed Statement of Comprehensive Income

Nine Months Ended February 29, 2020

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Net income	$	731,452	$	224,873	$	497,208	$	22,561	$	(744,642)	$	731,452

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	4,098		—		—		4,098		(4,098)		4,098
Change in fair value of interest rate lock agreements	(60,724)		(60,724)		—		—		60,724		(60,724)
Amortization of interest rate lock agreements	(1,011)		(1,011)		—		—		1,011		(1,011)

Other comprehensive (loss) income	(57,637)		(61,735)		—		4,098		57,637		(57,637)

Comprehensive income	$	673,815	$	163,138	$	497,208	$	26,659	$	(687,005)	$	673,815

Consolidating Condensed Statement of Comprehensive Income

Nine Months Ended February 28, 2019

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Net income	$	658,862	$	178,279	$	453,598	$	18,567	$	(650,444)	$	658,862

Other comprehensive loss, net of tax:
Foreign currency translation adjustments	(8,617)		—		—		(8,617)		8,617		(8,617)
Change in fair value of interest rate lock agreements	(6,430)		(6,430)		—		—		6,430		(6,430)
Amortization of interest rate lock agreements	(884)		(884)		—		—		884		(884)

Other comprehensive loss	(15,931)		(7,314)		—		(8,617)		15,931		(15,931)

Comprehensive income	$	642,931	$	170,965	$	453,598	$	9,950	$	(634,513)	$	642,931

Consolidating Condensed Balance Sheet

As of February 29, 2020

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	56,577	$	152,528	$	25,336	$	—	$	234,441

Accounts receivable, net	—		744,013		127,338		71,502		—		942,853
Inventories, net	—		304,972		27,382		20,570		—		352,924
Uniforms and other rental items in service	—		678,365		95,211		62,178		(17,268)		818,486
Income taxes, current	—		2,135		17,456		3,894		—		23,485
Prepaid expenses and other current assets	—		85,754		37,876		1,887		—		125,517
Total current assets	—		1,871,816		457,791		185,367		(17,268)		2,497,706

Property and equipment, net	—		980,850		351,800		102,216		—		1,434,866

Investments ⁽¹⁾	321,083		3,755,219		984,460		1,344,134		(6,192,098)		212,798
Goodwill	—		—		2,615,570		258,538		(112)		2,873,996
Service contracts, net	—		402,393		—		62,459		—		464,852
Operating lease right-of-use assets, net	—		136,339		15,547		13,283		—		165,169
Other assets, net	2,537,979		226,623		5,782,580		1,078		(8,295,667)		252,593
	$	2,859,062	$	7,373,240	$	10,207,748	$	1,967,075	$	(14,505,145)	$	7,901,980

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	(465,247)	$	(2,100,124)	$	2,821,104	$	(49,552)	$	37,067	$	243,248
Accrued compensation and related liabilities	—		97,236		41,698		9,978		—		148,912
Accrued liabilities	—		85,636		329,595		15,412		—		430,643

Operating lease liabilities, current	—		35,108		4,784		4,151		—		44,043
Debt due within one year	—		199,800		—		—		—		199,800
Total current liabilities	(465,247)		(1,682,344)		3,197,181		(20,011)		37,067		1,066,646

Long-term liabilities:
Debt due after one year	—		2,539,156		—		—		—		2,539,156
Deferred income taxes	—		295,861		96,423		31,393		—		423,677
Operating lease liabilities	—		105,948		11,494		9,552		—		126,994
Accrued liabilities	—		189,728		214,926		16,544		—		421,198
Total long-term liabilities	—		3,130,693		322,843		57,489		—		3,511,025

Total shareholders’ equity	3,324,309		5,924,891		6,687,724		1,929,597		(14,542,212)		3,324,309
	$	2,859,062	$	7,373,240	$	10,207,748	$	1,967,075	$	(14,505,145)	$	7,901,980

⁽¹⁾Investments include inter-company investment activity. Corp 2 and Subsidiary Guarantors hold $20.6 million and $192.2 million, respectively, of the $212.8 million consolidated net investments.

Consolidating Condensed Balance Sheet

As of May 31, 2019

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	54,963	$	13,151	$	28,531	$	—	$	96,645

Accounts receivable, net	—		719,914		121,803		68,403		—		910,120
Inventories, net	—		278,666		35,081		20,842		—		334,589
Uniforms and other rental items in service	—		645,862		90,458		60,061		(12,248)		784,133
Income taxes, current	—		(9,728)		11,722		5,481		—		7,475
Prepaid expenses and other current assets	—		81,117		20,334		1,867		—		103,318
Total current assets	—		1,770,794		292,549		185,185		(12,248)		2,236,280

Property and equipment, net	—		948,830		369,006		112,849		—		1,430,685

Investments ⁽¹⁾	321,083		3,589,234		964,802		1,716,870		(6,399,643)		192,346
Goodwill	—		—		2,586,406		256,147		(112)		2,842,441
Service contracts, net	—		427,437		—		67,158		—		494,595
Other assets, net	2,216,391		211,102		5,424,413		1,716		(7,613,307)		240,315
	$	2,537,474	$	6,947,397	$	9,637,176	$	2,339,925	$	(14,025,310)	$	7,436,662

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	(465,247)	$	(2,090,954)	$	2,793,558	$	(48,769)	$	37,432	$	226,020
Accrued compensation and related liabilities	—		117,404		26,870		11,235		—		155,509
Accrued liabilities	—		84,296		328,267		21,377		—		433,940

Debt due within one year	—		312,264		—		—		—		312,264
Total current liabilities	(465,247)		(1,576,990)		3,148,695		(16,157)		37,432		1,127,733

Long-term liabilities:
Debt due after one year	—		2,537,507		—		—		—		2,537,507
Deferred income taxes	—		307,334		100,162		30,683		—		438,179
Accrued liabilities	—		116,469		197,934		16,119		—		330,522
Total long-term liabilities	—		2,961,310		298,096		46,802		—		3,306,208

Total shareholders’ equity	3,002,721		5,563,077		6,190,385		2,309,280		(14,062,742)		3,002,721
	$	2,537,474	$	6,947,397	$	9,637,176	$	2,339,925	$	(14,025,310)	$	7,436,662

⁽¹⁾Investments include inter-company investment activity. Corp 2 and Subsidiary Guarantors hold $19.8 million and $172.5 million, respectively, of the $192.3 million consolidated net investments.

Consolidating Condensed Statement of Cash Flows

Nine Months Ended February 29, 2020

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Cash flows from operating activities:
Net income	$	731,452	$	224,873	$	497,208	$	22,561	$	(744,642)	$	731,452
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	—		115,229		49,181		10,851		—		175,261
Amortization of intangible assets and capitalized contract costs	—		97,267		3,838		6,127		—		107,232
Stock-based compensation	96,428		—		—		—		—		96,428



Deferred income taxes	—		8,319		(3,735)		429		—		5,013
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—		(23,027)		(5,536)		(2,572)		—		(31,135)
Inventories, net	—		(25,914)		8,346		(212)		—		(17,780)
Uniforms and other rental items in service	—		(32,368)		(4,754)		(1,630)		5,020		(33,732)
Prepaid expenses and other current assets and capitalized contract costs	—		(77,609)		(17,543)		(17)		—		(95,169)
Accounts payable	—		24,315		(9,136)		(543)		(365)		14,271
Accrued compensation and related liabilities	—		(20,168)		14,343		1,033		—		(4,792)
Accrued liabilities and other	—		(7,377)		13,777		(2,974)		—		3,426
Income taxes, current	—		(11,863)		(5,733)		1,670		—		(15,926)
Net cash provided by operating activities	827,880		271,677		540,256		34,723		(739,987)		934,549

Cash flows from investing activities:
Capital expenditures	—		(140,144)		(32,026)		(17,209)		—		(189,379)

Purchases of investments	—		(793)		(9,668)		—		—		(10,461)

Proceeds from sale of assets	—		—		—		13,300		—		13,300
Acquisitions of businesses, net of cash acquired	—		(47,777)		—		(73)		—		(47,850)
Other, net	(380,159)		31,121		(359,185)		(33,854)		739,987		(2,090)
Net cash used in investing activities	(380,159)		(157,593)		(400,879)		(37,836)		739,987		(236,480)

Cash flows from financing activities:
Payments of commercial paper, net	—		(112,500)		—		—		—		(112,500)


Proceeds from exercise of stock-based compensation awards	81,547		—		—		—		—		81,547
Dividends paid	(267,941)		—		—		(101)		—		(268,042)
Repurchase of common stock	(261,327)		—		—		—		—		(261,327)
Other, net	—		30		—		—		—		30
Net cash used in financing activities	(447,721)		(112,470)		—		(101)		—		(560,292)

Effect of exchange rate changes on cash and cash equivalents	—		—		—		19		—		19

Net increase (decrease) in cash and cash equivalents	—		1,614		139,377		(3,195)		—		137,796
Cash and cash equivalents at beginning of period	—		54,963		13,151		28,531		—		96,645
Cash and cash equivalents at end of period	$	—	$	56,577	$	152,528	$	25,336	$	—	$	234,441

Consolidating Condensed Statement of Cash Flows

Nine Months Ended February 28, 2019

(In thousands)


	Cintas Corporation		Corp. 2		Subsidiary Guarantors		Non- Guarantors		Eliminations		Cintas Corporation Consolidated

Cash flows from operating activities:
Net income	$	658,862	$	178,279	$	453,598	$	18,567	$	(650,444)	$	658,862
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation	—		106,577		47,116		10,687		—		164,380
Amortization of intangible assets and capitalized contract costs	—		91,912		3,801		6,236		—		101,949
Stock-based compensation	105,553		—		—		—		—		105,553
Gain on sale of a cost method investment	—		—		(69,373)		—		—		(69,373)
Gain on sale of business	—		(2,419)		—		—		—		(2,419)
Deferred income taxes	—		16,059		5,654		3,366		—		25,079
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—		(51,317)		2,522		(8,027)		(4,280)		(61,102)
Inventories, net	—		(64,014)		1,395		(4,317)		(3,780)		(70,716)
Uniforms and other rental items in service	—		(51,696)		(12,329)		(8,311)		—		(72,336)
Prepaid expenses and other current assets and capitalized contract costs	—		(74,606)		(10,067)		(450)		—		(85,123)
Accounts payable	—		(205,528)		204,336		1,632		(361)		79
Accrued compensation and related liabilities	—		1,832		(4,143)		(1,555)		—		(3,866)
Accrued liabilities and other	—		(274)		4,567		(679)		—		3,614
Income taxes, current	—		7,059		(24,957)		(5,966)		—		(23,864)
Net cash provided by (used in) operating activities	764,415		(48,136)		602,120		11,183		(658,865)		670,717

Cash flows from investing activities:
Capital expenditures	—		(147,744)		(44,151)		(15,910)		—		(207,805)

Purchases of investments	—		(1,938)		(16,356)		—		750		(17,544)
Proceeds from sale of a cost method investment	—		—		73,342		—		—		73,342
Proceeds from sale of business	—		3,200		—		—		—		3,200
Acquisitions of businesses, net of cash acquired	—		(7,403)		—		—		—		(7,403)
Other, net	10,201		(5,216)		(663,791)		(6,113)		658,115		(6,804)
Net cash provided by (used in) investing activities	10,201		(159,101)		(650,956)		(22,023)		658,865		(163,014)

Cash flows from financing activities:
Issuance of commercial paper, net	—		217,500		—		—		—		217,500


Proceeds from exercise of stock-based compensation awards	54,274		—		—		—		—		54,274
Dividends paid	(220,666)		—		—		(94)		—		(220,760)
Repurchase of common stock	(608,224)		—		—		—		—		(608,224)
Other, net	—		(8,088)		—		—		—		(8,088)
Net cash (used in) provided by financing activities	(774,616)		209,412		—		(94)		—		(565,298)

Effect of exchange rate changes on cash and cash equivalents	—		—		—		(270)		—		(270)

Net increase (decrease) in cash and cash equivalents	—		2,175		(48,836)		(11,204)		—		(57,865)
Cash and cash equivalents at beginning of period	—		44,499		60,310		33,915		—		138,724
Cash and cash equivalents at end of period	$	—	$	46,674	$	11,474	$	22,711	$	—	$	80,859