-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lgHOx9c6qAByWLE6g/e/GIrhXEgdR2o+P+C7qYROi4240psGxSWJMv885yfNMfhv VdxxsD8biuhsfUdoUf/8hw== 0000723254-94-000001.txt : 19940114 0000723254-94-000001.hdr.sgml : 19940114 ACCESSION NUMBER: 0000723254-94-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931130 FILED AS OF DATE: 19940112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINTAS CORP CENTRAL INDEX KEY: 0000723254 STANDARD INDUSTRIAL CLASSIFICATION: 2320 IRS NUMBER: 311188630 STATE OF INCORPORATION: WA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 000-11399 FILM NUMBER: 94501157 BUSINESS ADDRESS: STREET 1: 6800 CINTAS BLVD PO BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 BUSINESS PHONE: 5134591200 10-Q 1 2ND QTR 93 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 1993 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________________ to ___________________ Commission file number 0-11399 CINTAS CORPORATION (Exact name of registrant as specified in its charter) WASHINGTON 31- 1188630 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 6800 CINTAS BOULEVARD P.O. BOX 625737 CINCINNATI, OHIO 45262-5737 (Address of principal executive offices) (Zip Code) (513) 459-1200 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding January 8, 1994 Common Stock, no par value 46,706,146 (Page 1 of 10) PAGE CINTAS CORPORATION INDEX Page No. Part I. Financial Information: Consolidated Condensed Balance Sheet - November 30, 1993 and May 31, 1993 3 Consolidated Condensed Statement of Income - Three Months and Six Months Ended November 30, 1993 and 1992 4 Consolidated Condensed Statement of Cash Flows - Six Months Ended November 30, 1993 and 1992 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information 9 Signatures 10 - 2 - PAGE
CINTAS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET (Dollars in Thousands) November 30, May 31, 1993 1993 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 9,266 $ 14,192 Marketable securities, at cost, which approximates market 51,201 40,777 Accounts receivable (net) 56,294 48,075 Inventories 25,940 21,452 Uniforms and other rental items in service68,332 61,001 Prepaid expenses 2,104 1,636 Total current assets 213,137 187,133 Property, plant and equipment: Cost 274,742 263,053 Less accumulated depreciation (90,204) (82,206) 184,538 180,847 Investments and other assets 84,771 86,185 $ 482,446 $ 454,165 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 26,586 $ 20,637 Accrued liabilities 18,885 28,638 Income taxes - Current 7,322 1,616 Deferred 20,952 9,823 Long-term debt due within one year 9,643 4,462 Total current liabilities 83,388 65,176 Long-term debt due after one year 95,956 103,611 Deferred income taxes 13,747 20,464 Shareholders' equity: Preferred stock, no par value, 100,000 shares authorized, none outstanding ------ ---- - - Common stock, no par value, 120,000,000 shares authorized, 46,692,022 shares issued and outstanding (46,578,791 at May 31, 1993) 40,458 39,869 Retained earnings 249,845 225,722 Cumulative translation adjustment (948) (677) Total shareholders' equity 289,355 264,914 $ 482,446 $ 454,165 See accompanying notes
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CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF INCOME (Unaudited) (Amounts in Thousands Except Per Share Amounts) Three months ended Six Months ended November 30 November 30 1993 1992 1993 1992 Revenues: Net rentals $ 114,280 $ 97,329 $ 226,196 $ 192,835 Net sales 15,503 13,651 25,811 22,807 129,783 110,980 252,007 215,642 Costs and expenses (income): Cost of rentals 63,877 53,807 126,605 107,393 Cost of sales 12,827 11,929 22,106 20,254 Selling and administrative expenses29,866 25,057 60,283 51,254 Interest income (447) (341) (753) (575) Interest expense 1,754 1,777 3,567 3,154 107,877 92,229 211,808 181,480 Income before income taxes 21,906 18,751 40,199 34,162 Income taxes 8,326 7,104 16,076 12,950 Net income $ 13,580 $ 11,647 $ 24,123 $ 21,212 Earnings per share $ .29 $ .25 $ .52 $ .46 Weighted average number of shares outstanding 46,680 46,316 46,658 46,266 See accompanying notes.
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CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS SIX MONTHS ENDED NOVEMBER 30, 1993 and 1992 (Unaudited) (Dollars in thousands) Six Months Ended November 30 Cash flows from operating activities: 1993 1992 Net income $ 24,123 $ 21,212 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 11,965 10,565 Amortization of deferred charges 5,348 3,898 Provision for losses on accounts receivable 587 774 Change in current assets and liabilities: Accounts receivable (8,224) (5,170) Inventories (11,132) 263 Prepaid expenses (468) 34 Accounts payable 5,949 6,018 Accrued liabilities (9,753) (2,050) Income taxes payable 5,706 609 Deferred income taxes 4,412 3,355 Net cash provided by operating activities 28,513 39,508 Cash flows from investing activities: Capital expenditures (15,595) (13,238) Additions to investments and other assets 540 (3,665) Proceeds from sale or redemption of marketable securities 14,965 11,388 Purchase of marketable securities (25,389) (41,147) Acquisition of businesses net of cash acquired (6,075) (4,250) Net cash used by investing activities (31,554) (50,912) Cash flows from financing activities: Proceeds from issuance of long-term debt 63 15,665 Repayment of long-term debt (2,537) (4,735) Increase in common stock 227 91 Tax benefit resulting from exercise of employee stock options 362 248 Net cash (used by) provided from financing activities (1,885) 11,269 Net decrease in cash and cash equivalents (4,926) (135) Cash and cash equivalents at beginning of period 14,192 8,757 Cash and cash equivalents at end of period $ 9,266 $ 8,622 See accompanying notes. - 5 - PAGE CINTAS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated condensed financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and notes included in the Company's most recent annual report. 2. In the opinion of the Company, the accompanying consolidated condensed financial statements contain all adjustments necessary to present fairly the financial position as of November 30, 1993 and May 31, 1993, the results of operations for the three months and six months ended November 30, 1993 and 1992, and cash flows for the six months ended November 30, 1993 and 1992. 3. The results of operations for the six months ended November 30, 1993 are not necessarily indicative of the results to be expected for the full year. 4. The Company's net income and earnings per share for the six months ended November 30, 1993 were adversely impacted by one-time tax adjustments relating to the Omnibus Budget Reconciliation Act of 1993, a new tax law enacted on August 10, 1993. The reported tax expense includes one-time charges of approximately $274,000 to retroactively apply the new tax rates to January 1, 1993. This one-time charge was partially offset by jobs tax credits of $201,000 which the new tax law extended retroactive to June 30, 1992. In addition, during the first quarter of 1994, the Company adopted SFAS No. 109, Accounting for Income Taxes, which necessitated the reclassification of certain deferred tax balances and resulted in a charge to earnings of approximately $789,000. The effect of these one-time tax adjustments reduced earnings per share by $.02 per share. 5. Stock Options: In fiscal year 1993, the Company adopted a new incentive stock option plan for officers and key employees which provides for the issuance of 2,300,000 shares of common stock. This plan replaces a similar plan adopted in 1983 which expired in June, 1993. Options may be granted at 100% to 110% of the market value of the underlying Common Stock on the date of the grant and generally become exercisable at the rate of 20% per year commencing five years after grant, so long as the holder remains an employee of the Company. At May 31, 1993, options as to 1,317,476 shares were outstanding and exercisable at prices ranging from $2.67 - $28.75 per share. On July 13, 1993, additional options as to 206,250 shares exercisable at $26.50 per share were granted under the plan. During the first quarter of fiscal 1994, options as to 101,681 shares were exercised ranging in price from $2.67 to $11.17 per share. During the second quarter of fiscal 1994, options as to 22,919 shares were exercised ranging in price from $3.46 to $11.17. In fiscal year 1991, the Company adopted a stock option plan for the non-employee members of its Board of Directors, and granted options for 30,000 shares of common stock. Options were granted at 100% of the market value of the underlying Common Stock on the date immediately prior to the grant and become exercisable at a rate of 25% per year commencing two years after grant, so long as the holder remains on the Board of Directors. - 6 - 6. Inventories: Inventories are valued at the lower of cost (first-in, first-out) or market. Substantially all inventories represent finished goods. 8. Supplemental Cash Flow Disclosures: Supplemental disclosure with respect to cash flow information and non- cash investing and financing activities is as follows: Cash paid through the six months ended November 30, 1993 and 1992. 1993 1992 Interest, net of amounts capitalized$3,542,000$2,682,000 Income Taxes $6,079,000 $9,222,000 - 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Total revenues increased 17% for the three months and six months ended November 30, 1993 over the same periods in the prior fiscal year. Net rental revenue also increased 17% in the three months and six months ended November 30, 1993, over the same periods in the prior fiscal year. Growth in the customer base and price increases in established operations accounted for a 9% increase in rental revenues and the remaining 8% was due primarily to acquisitions. Second quarter revenues from the sale of uniforms and other direct sale items increased 14% over the prior year's second quarter. For the six months ended November 30, 1993, sales increased 13% over the same period in fiscal 1993. The increases in revenues from the sale of uniforms and other direct sale items is attributable to an increase in unit sales and was not significantly affected by acquisitions. Pre-tax income increased 17% and 18% for the three months and six months ended November 30, 1993, respectively, over the same periods in fiscal 1993. Net income and earnings per share were adversely impacted by one- time tax adjustments relating to the Omnibus Budget Reconciliation Act of 1993, a new tax law enacted on August 10, 1993. The reported tax expense for the six months ended November 30, 1993 includes one-time charges of approximately $274,000 to retroactively apply the new tax rates to January 1, 1993. This one-time charge was partially offset by jobs tax credits of $201,000 which the new tax law extended retroactive to June 30, 1992. In addition, during the first quarter of 1994, the Company adopted SFAS No. 109, Accounting for Income Taxes, which necessitated the reclassification of certain deferred tax balances and resulted in a charge to earnings of approximately $789,000. The effects of these one-time tax adjustments reduced earnings per share in fiscal 1994 by $.02 per share. Income from operations, which excludes interest income and interest expense, as a percent of revenues was 18% for both the second quarter of fiscal 1994 and 1993. Year-to-date, this percentage is 17% for both the six months ended November 30, 1993 and 1992. Net interest expense (interest expense less interest income) was $1,307,000 and $2,814,000 for the second quarter and six months ended November 30, 1993, respectively, compared to $1,436,000 and $2,579,000, respectively, for the same two periods in the prior fiscal year. Net interest expense for the second quarter has decreased primarily due to an increase in interest income. Net interest expense has increased for the six months ended November 30, 1993 over the same period in the prior fiscal year primarily due to debt associated with the acquisition of Maryatt Industries in December, 1992. On November 1, 1993, the Company acquired the Career Apparel Division of Palm Beach Co., Inc. (Palm Beach). Palm Beach was a wholly-owned subsidiary of Plaid Clothing Group headquartered in New York. The acquisition of Palm Beach did not have a significant effect on the second quarter sale of uniforms. Financial Condition The Company believes that its capital requirements for operations, capital improvements, repayment of long-term debt and dividends can be made from funds on hand and funds generated from operations. - 8 - CINTAS CORPORATION Part II. Other Information Item 4. Submission of matters to a vote of security holders. The Annual Shareholders' Meeting of the Company was held on October 21, 1993 at which the number of Directors to be elected was established and the Directors of the Company were elected. The number of Directors to be elected was established at seven and all persons nominated as Directors were elected. Issue No. 1 Authority to establish the number of Directors to be elected at the meeting at seven (7). FOR 38,382,204 AGAINST 142,377 ABSTAIN 22,035 BROKER NON-VOTES 0 Issue No. 2 Authority to elect seven (7) nominees listed below. Name Shares For Shares - Withheld Authority Shares Abstaine d Broker Non-Votes Richard T. Farmer 38,347,258 199,358 0 0 Gerald V. Dirvin 38,481,758 64,858 0 0 James J. Gardner 38,346,838 199,778 0 0 Roger L. Howe 38,484,828 61,788 0 0 Donald P. Klekamp 38,347,398 199,218 0 0 Robert J. Kohlhepp 38,346,468 200,148 0 0 John S. Lillard 38,484,358 62,258 0 0 No reports were filed on Form 8-K during the quarter. - 9 - PAGE CINTAS CORPORATION Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CINTAS CORPORATION (Registrant) Date: January 8, 1994 David T. Jeanmougin David T. Jeanmougin Senior Vice President - Finance (Chief Financial Officer)
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