-----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, FmYsdj2gyXiNtuqdofKn+tJQfI60cd/afI9vziG5HkSunTPcMarogsSxPZ4CXnmV 6EgGwhkDNq1k5a/wxr5kJQ== 0000723254-97-000002.txt : 19970115 0000723254-97-000002.hdr.sgml : 19970115 ACCESSION NUMBER: 0000723254-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961130 FILED AS OF DATE: 19970114 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: 97505866 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 November 30, 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 December 31, 1996 Common Stock, no par value 47,472,870 CINTAS CORPORATION INDEX Page No. Part I. Financial Information: Consolidated Condensed Balance Sheets - November 30, 1996 and May 31, 1996 3 Consolidated Condensed Statements of Income - Three Months and Six Months Ended November 30, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended November 30, 1996 and 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 9 -2- CINTAS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands except share data)
November 30, May 31, 1996 1996 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 11,028 $ 9,066 Marketable securities 86,962 73,477 Accounts receivable (net) 88,719 78,244 Inventories 39,274 34,678 Uniforms and other rental items in service 106,705 100,307 Prepaid expenses 1,656 1,730 Total current assets 334,344 297,502 Property, plant and equipment, at cost, net 268,908 252,597 Other assets 117,689 118,663 $720,941 $668,762 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 27,617 $ 19,363 Accrued liabilities 43,456 49,168 Income taxes - Current 4,315 ---- Deferred 31,176 27,471 Long-term debt due within one year 6,424 6,592 Total current liabilities 112,988 102,594 Long-term debt due after one year 113,244 117,924 Deferred income taxes 20,320 18,747 Shareholders' equity: Preferred stock, no par value, 100,000 shares authorized, none outstanding ---- ---- Common stock, no par value, 120,000,000 shares authorized, 47,465,173 shares issued and outstanding (47,199,299 at May 31, 1996) 44,574 43,657 Retained earnings 430,280 386,673 Foreign currency translation adjustment (465) (833) Total shareholders' equity 474,389 429,497 $720,941 $668,762
See accompanying notes. -3- CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) (In thousands except per share data)
Three months ended Six months ended November 30, November 30, 1996 1995 1996 1995 Revenues: Net rentals $ 181,892 $ 159,855 $ 356,391 $ 314,123 Net sales 26,676 22,514 44,963 38,589 208,568 182,369 401,354 352,712 Costs and expenses (income): Cost of rentals 102,379 90,712 200,843 177,988 Cost of sales 22,318 18,698 38,401 32,509 Selling and administrative expenses 46,494 40,252 91,715 80,970 Interest income (1,056) (447) (1,910) (868) Interest expense 2,022 2,293 4,011 4,803 172,157 151,508 333,060 295,402 Income before income taxes 36,411 30,861 68,294 57,310 Income taxes 13,713 12,014 25,899 22,175 Net income $ 22,698 $ 18,847 $ 42,395 $ 35,135 Earnings per share $ .48 $ .40 $ .90 $ .75 Weighted average number of shares outstanding 47,419 47,053 47,343 47,043
See accompanying notes. -4- CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended November 30, 1996 1995 Cash flows from operating activities: Net income $ 42,395 $35,135 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 16,845 14,037 Amortization of deferred charges 5,159 6,275 Deferred income taxes 5,137 4,294 Change in current assets and liabilities, net of acquisitions of businesses: Accounts receivable (10,029) (8,490) Inventories (10,814) (7,112) Prepaid expenses 95 166 Accounts payable 7,951 3,627 Accrued liabilities (5,928) (452) Income taxes payable 4,315 (524) Net cash provided by operating activities 55,126 46,956 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 248 ---- Capital expenditures 31,719) (28,011) Proceeds from sale or redemption of marketable securities 18,608 42,586 Purchase of marketable securities (32,093) (57,588) Acquisitions of businesses, net of cash acquired (3,744) (2,289) Other (876) (628) Net cash used in investing activities (49,576) (45,930) Cash flows from financing activities: Proceeds from issuance of long-term debt ----- 408 Repayment of long-term debt (4,848) (1,935) Issuance of common stock 894 423 Other 366 8 Net cash used in financing activities (3,588) (1,096) Net increase (decrease) in cash and cash equivalents 1,962 (70) Cash and cash equivalents at beginning of period 9,066 6,685 Cash and cash equivalents at end of period $11,028 $ 6,615
See accompanying notes. -5- 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, 1996. 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. The Company adopted SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, in the first quarter of fiscal 1997. The adoption of this Statement did not have a material financial impact on the Company. -6- CINTAS CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total revenues increased 14% for the three and six months ended November 30, 1996 over the same periods in fiscal 1996. Net rental revenues increased 14% and 13% for the three and six months ended November 30, 1996, respectively, over the same periods in the prior fiscal year, due primarily to growth in the customer base and price increases in established operations. The first quarter and first six months of fiscal 1997 had one less workday than the similar periods of fiscal 1996. Second quarter revenues from the sale of uniforms and other direct sale items increased 18% over the prior years second quarter. For the six months ended November 30, 1996, sales increased 17% over the same period in fiscal 1996. The increase in revenues from the sale of uniforms and other direct sale items is principally a result of an increase in unit sales. Net income increased 20% and 21% for the three and six months ended November 30, 1996, respectively, over the same periods in fiscal 1996. Net interest expense (interest expense less interest income) was $966,000 and $2,101,000 for the three and six months ended November 30, 1996 compared to $1,846,000 and $3,935,000, respectively, for the same two periods in the prior fiscal year. Net interest expense has decreased primarily due to an increase in interest income (related to a higher level of cash and marketable securities on hand) combined with a decrease in interest expense (related to a lower amount of long-term debt and improved interest rates). The Company=s effective tax rate was 38% in both periods of fiscal 1997 compared to 39% in the same periods in fiscal 1996. Cash, cash equivalents and marketable securities increased by $15 million at November 30, 1996 from May 31, 1996, primarily due to strong cash flow from operations. The cash, cash equivalents and marketable securities will be used to finance future acquisitions and capital expenditures. Net property, plant and equipment increased by $16 million from May 31, 1996 to November 30, 1996. At the end of the second quarter of fiscal 1997, the Company had five uniform rental facilities in various stages of construction. During the first quarter of fiscal 1997, the Companys new distribution center in Montgomery, Alabama began operations. The new distribution center will service the Companys operations in the South, Southeast and Southwest regions of the United States. The expansion into Montgomery, as well as the expansion of the Cincinnati distribution center completed in fiscal 1996, frees up capacity in Cincinnati in order to more effectively service growth in the Midwest, on the East Coast and Canada. Financial Condition At November 30, 1996, the Company had $98 million in cash, cash equivalents and marketable securities. 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. -7- 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 10, 1996, at which the following issues were adopted by shareholders: Issue No. 1 Authority to establish the number of Directors to be elected at the Meeting at eight. FOR 38,857,448 AGAINST 59,343 ABSTAIN 42,893 BROKER NON-VOTES 0 Issue No. 2 Authority to elect eight Directors.
Name Shares For Shares - Shares Broker Withheld Authority Abstained Non-Votes Richard T. Farmer 38,654,421 305,263 0 0 Scott D. Farmer 38,654,193 305,491 0 0 Gerald V. Dirvin 38,713,553 246,131 0 0 James J. Gardner 38,653,293 306,391 0 0 Roger L. Howe 38,713,593 246,091 0 0 Donald P. Klekamp 38,479,183 480,501 0 0 Robert J. Kohlhepp 38,654,415 305,270 0 0 John S. Lillard 38,712,893 246,791 0 0
-8- 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: January 14, 1997 William C. Gale William C. Gale Vice President - Finance (Chief Accounting Officer) -9- CINTAS CORPORATION Part II. Other Information 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: January 14, 1997 William C. Gale Vice President - Finance (Chief Accounting Officer) -9- EX-27 2
5 6-MOS MAY-31-1997 NOV-30-1996 11,028,000 86,962,000 91,547,000 2,828,000 145,979,000 334,344,000 393,133,000 124,225,000 720,941,000 112,988,000 0 0 0 44,574,000 429,815,000 720,941,000 44,963,000 401,354,000 38,401,000 239,244,000 0 0 4,011,000 68,294,000 25,899,000 0 0 0 0 42,395,000 .90 0
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