-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HLtv74jLgarem5gFjfTbe/5a36IeeGsgw+5WweGssZbBkMt5jWOapv/uOOT34ZTc A8nQ5/FrZQ80cTk4OXHGsA== 0000723254-96-000004.txt : 19960411 0000723254-96-000004.hdr.sgml : 19960411 ACCESSION NUMBER: 0000723254-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960410 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINTAS CORP CENTRAL INDEX KEY: 0000723254 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 311188630 STATE OF INCORPORATION: WA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11399 FILM NUMBER: 96545809 BUSINESS ADDRESS: STREET 1: 6800 CINTAS BLVD STREET 2: P O BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 BUSINESS PHONE: 5135734016 MAIL ADDRESS: STREET 1: 6800 CINTAS BOULEVARD STREET 2: P O BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 10-Q 1 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 February 29, 1996 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 April 1, 1996 Common Stock, no par value 47,182,798 CINTAS CORPORATION INDEX Page No. Part I. Financial Information: Consolidated Condensed Balance Sheets - February 29, 1996 and May 31, 1995 3 Consolidated Condensed Statements of Income - Three Months and Nine Months Ended February 29, 1996 and February 28, 1995 4 Consolidated Condensed Statements of Cash Flows - Nine Months Ended February 29, 1996 and February 28, 1995 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information 8 Signatures 8 CINTAS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands except share data)
February 29, May 31, 1996 1995 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 11,555 $ 6,685 Marketable securities 65,988 38,797 Accounts receivable (net) 76,878 69,032 Inventories 36,184 36,883 Uniforms and other rental items in service 95,244 88,670 Prepaid expenses 1,748 1,355 Total current assets 287,597 241,422 Property, plant and equipment: Cost 362,015 333,390 Less accumulated depreciation (113,785) (105,393) 248,230 227,997 Other assets 121,700 126,762 $ 657,527 $ 596,181 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 17,408 $ 17,265 Accrued liabilities 49,359 42,158 Income taxes - Current 2,045 2,191 Deferred 24,552 23,368 Long-term debt due within one year 11,485 10,030 Total current liabilities 104,849 95,012 Long-term debt due after one year 114,467 120,275 Deferred income taxes 18,246 16,550 Shareholders' equity: Preferred stock, no par value, 100,000 shares authorized, none out- standing ----- ----- Common stock, no par value, 120,000,000 shares authorized, 47,177,168 shares issued and outstanding (47,005,340 at May 31, 1995) 43,888 42,035 Retained earnings 376,944 323,284 Cumulative translation adjustment (867) (975) Total shareholders' equity 419,965 364,344 $657,527 $596,181
See accompanying notes. PAGE CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) (In thousands except per share data)
Three Months Ended Nine Months Ended February 29, February 28, February 29, February 28, 1996 1995 1996 1995 Revenues: Net rentals $ 162,485 $ 134,279 $ 476,608 $ 394,067 Net sales 20,492 16,938 59,081 50,778 182,977 151,217 535,689 444,845 Costs and expenses (income): Cost of rentals 92,971 77,644 270,959 225,444 Cost of sales 16,884 14,214 49,393 43,059 Selling and administrative expenses 41,319 33,594 122,289 100,652 Interest income (817) (696) (1,685) (1,632) Interest expense 2,320 1,726 7,123 5,071 152,677 126,482 448,079 372,594 Income before income taxes 30,300 24,735 87,610 72,251 Income taxes 11,776 9,420 33,951 27,420 Net income $ 18,524 $ 15,315 $ 53,659 $ 44,831 Earnings per share $ .39 $ .33 $ 1.14 $ .96 Weighted average number of shares outstanding 47,122 46,932 47,069 46,855
See accompanying notes. PAGE CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Nine Months Ended February 29, February 28, 1996 1995 Cash flows from operating activities: Net income $53,659 $44,831 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 21,394 19,529 Amortization of deferred charges 9,350 8,362 Provision for losses on accounts receivable 1,426 735 Change in current assets and liabilities: Accounts receivable (9,272) (7,498) Inventories (5,875) (15,488) Prepaid expenses (393) 69 Accounts payable 143 (368) Accrued liabilities 7,201 2,283 Income taxes payable (146) 486 Deferred income taxes 2,880 1,019 Net cash provided by operating activities 80,367 53,960 Cash flows from investing activities: Capital expenditures (41,629) (40,525) Change in other assets (1,830) (624) Proceeds from sale or redemption of marke- table securities 52,113 75,050 Purchase of marketable securities (79,304) (60,006) Acquisition of businesses net of cash acquired (2,289) (47,177) Net cash used in investing activities (72,939) (73,282) Cash flows from financing activities: Proceeds from issuance of long-term debt 408 41,885 Repayment of long-term debt (4,498) (11,541) Issuance of common stock 682 674 Tax benefit resulting from exercise of employee stock options 850 111 Purchase of treasury stock ---- (7,118) Net cash (used in) provided by financing activities (2,558) 24,011 Net increase in cash and cash equivalents 4,870 4,689 Cash and cash equivalents at beginning of period 6,685 8,449 Cash and cash equivalents at end of period $11,555 $13,138 See accompanying notes.
CINTAS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated condensed financial statements of Cintas Corporation (the "Company") 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 for the fiscal year ended May 31, 1995. 2. Interim results are subject to variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, adjustments (which include only normal recurring adjustments) necessary for a fair statement of the results of the interim periods shown have been made. 3. Stock Options: Under a stock option plan adopted by the Company in fiscal 1993 (the"1993 Plan"), the Company may grant officers and key employees incentive stock options and/or non-qualified stock options to purchase an aggregate of 2,300,000 shares of the Company's common stock. Options are generally granted at the fair 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 February 29, 1996, options as to 1,235,558 shares granted under the 1993 Plan and a previous plan, were outstanding at prices ranging from $7.96 - $48.75 per share. Of these options outstanding, 221,138 were exercisable at February 29, 1996. During the nine months ended February 29, 1996, options as to 217,841 shares were exercised ranging in price from $5.92 to $22.50 per share. In fiscal year 1991, Shareholders 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 (the "1991 Directors' Plan"). 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. In fiscal 1995, shareholders voted to adopt the 1994 Directors' Stock Option Plan (the "1994 Directors' Plan"). The 1994 Directors' Plan provides for each non-employee Director of the Company to be granted an option to purchase 1,000 shares of Cintas Common Stock, and, upon each subsequent election as a Director, another option for 1,000 shares. The total number of shares which may be granted under this Plan is 30,000 shares. Options under the 1994 Directors' Plan are granted at 100% of the market value of the underlying Common Stock on the date of grant and become exercisable at a rate of 25% per year commencing one year after grant, so long as the holder remains on the Board of Directors. As of February 29, 1996, under both Directors' plans, options for 37,000 shares are outstanding, ranging in price from $13.33 to $43.25, of which 26,000 shares are exercisable. 4. Inventories: Inventories are valued at the lower of cost (first-in, first-out) or market. Substantially all inventories represent finished goods. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total revenues increased 21% and 20% in the three months and nine months ended February 29, 1996, respectively, over the same periods in the prior fiscal year. These periods in fiscal 1996 included an extra work day in February due to the leap year. Net rental revenue increased 21% for both the three months and nine months ended February 29, 1996. For the nine months ended February 29, 1996, growth in the customer base and price increases in established operations accounted for a 16% increase and the remaining 5% was due primarily to acquisitions. Third quarter revenues from the sale of uniforms and other direct sale items increased 21% over the prior year's third quarter. For the nine months ended February 29, 1996, such sales increased 16% over the same period in fiscal 1995. The increase 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. Net income increased 21% and 20% for the three months and nine months ended February 29, 1996, respectively, over the same periods in fiscal 1995. The increase in net income for the nine months ended February 29, 1996, over the same period in the prior year was primarily the result of increased revenues. Net interest expense (interest expense less interest income) was $1,503,000 and $5,438,000 for the three months and nine months ended February 29, 1996, respectively, compared to $1,030,000 and $3,439,000, respectively, for the same periods in the prior fiscal year. Net interest expense has increased primarily due to an increase in the amount of long-term debt associated with the acquisition of Cadet Uniform Services, Ltd. in the third quarter of fiscal 1995. The Company's previously announced new distribution center in Montgomery, Alabama is expected to begin operations in the first quarter of fiscal 1997. The new distribution center will service the Company's operations in the South, Southeast and Southwest regions of the United States. The expansion into Montgomery, as well as an expansion of the Cincinnati distribution center, will allow the Company to free up capacity in Cincinnati in order to more effectively service growth in the Midwest, on the East Coast and Canada. At the end of the third quarter of fiscal 1996, the Company had eight uniform rental facilities in various stages of construction. Financial Condition Marketable securities have increased since May 31, 1995, primarily due to an increase in cash generated from operations. Property, plant and equipment have increased from May 31, 1995, primarily due to the construction of new uniform rental facilities and the expansion of several existing uniform rental facilities in the U.S. The Company believes that its current cash position, funds anticipated to be generated from operations and the strength of its banking relationships are sufficient to meet its anticipated operational and capital needs requirements. CINTAS CORPORATION Part II. Other Information Item 5. Other Information. On February 14, 1996, the registrant declared an annual cash dividend of $.25 per share on outstanding common stock, a 25% increase over the dividend paid in the prior year. The dividend was payable on April 2, 1996, to shareholders of record as of March 8, 1996. Item 6. Exhibits and Reports on Form 8-K (a.) Exhibit Index Exhibit Number Description of Exhibit 27 Financial Data Schedule (b.) No reports were filed on Form 8-K during the quarter. 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: April 10, 1996 William C. Gale William C. Gale Vice President - Finance (Chief Accounting Officer) EX-27 2
5 9-MOS MAY-31-1996 FEB-29-1996 11,555,000 65,988,000 80,333,000 3,455,000 131,428,000 287,597,000 362,015,000 113,785,000 657,527,000 104,849,000 0 0 0 43,888,000 376,077,000 657,527,000 59,081,000 535,689,000 49,393,000 320,352,000 0 0 7,123,000 87,610,000 33,951,000 0 0 0 0 53,659,000 1.14 0
-----END PRIVACY-ENHANCED MESSAGE-----