Leases

6 Months Ended

Nov. 30, 2023

Cintas has operating leases for certain operating facilities, vehicles and equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. Each new contract is evaluated to determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated condensed balance sheets with a corresponding operating lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the consolidated condensed balance sheets.

Operating lease right-of-use assets, net and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. Both lease expense and variable lease costs are primarily recorded in cost of uniform rental and facility services and other on the Company's consolidated condensed statements of income. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $20.8 million and $20.0 million for the three months ended November 30, 2023 and 2022, respectively. For the six months ended November 30, 2023 and 2022, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $40.5 million and $39.5 million, respectively.

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the six months ended November 30:


(In thousands)	2023		2022


Cash paid for amounts included in the measurement of operating lease liabilities	$	25,321	$	25,108
Operating lease right-of-use assets obtained in exchange for new and renewed operating lease liabilities	$	22,684	$	29,186
Operating lease right-of-use assets acquired in business combinations	$	267	$	—

Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows:



	November 30, 2023	May 31, 2023

Weighted-average remaining lease term	5.20 years	5.28 years
Weighted-average discount rate	3.14%	2.87%

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2023:


(In thousands)

2024 (remaining six months)	$	24,842
2025	45,671
2026	37,932
2027	28,682
2028	23,489
Thereafter	38,400
Total payments	199,016
Less interest	(16,017)
Total present value of lease payments	$	182,999