-----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, WyifkHOfgtM1Um28PhynzmwoYEyRRZiEocmFryOno4lvEfBiT2zvwUzRecuCCZO0 Y3o1KrM36yZjiLUqwhDLow== 0000892251-97-000278.txt : 19971231 0000892251-97-000278.hdr.sgml : 19971231 ACCESSION NUMBER: 0000892251-97-000278 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971130 FILED AS OF DATE: 19971230 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: SEC FILE NUMBER: 000-11399 FILM NUMBER: 97746105 BUSINESS ADDRESS: STREET 1: 6800 CINTAS BLVD STREET 2: P O BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 BUSINESS PHONE: 5134591200 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 - QUARTERLY REPORT 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, 1997 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 22, 1997 - --------------------------------------- ----------------------------- Common Stock, no par value 97,800,753 CINTAS CORPORATION INDEX Page No. Part I. Financial Information: Consolidated Condensed Balance Sheets - November 30, 1997 and May 31, 1997 3 Consolidated Condensed Statements of Income - Three Months and Six Months Ended November 30, 1997 and 1996 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended November 30, 1997 and 1996 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) November 30, May 31, 1997 1997 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 16,020 $ 14,221 Marketable securities 83,825 88,655 Accounts receivable (net) 113,041 95,161 Inventories 51,599 43,076 Uniforms and other rental items in service 125,505 112,844 Prepaid expenses 2,378 2,018 ---------- ----------- Total current assets 392,368 355,975 Property, plant and equipment, at cost, net 313,175 287,446 Other assets 117,453 118,402 ------- ------- $822,996 $761,823 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 28,282 $ 20,719 Accrued liabilities 47,460 55,336 Income taxes - Current 4,941 454 Deferred 39,234 32,889 Long-term debt due within one year 6,872 6,733 ---------- -------- Total current liabilities 126,789 116,131 Long-term debt due after one year 108,964 111,457 Deferred income taxes 23,590 21,859 Shareholders' equity: Preferred stock, no par value, 100,000 shares authorized, none outstanding ----- ----- Common stock, no par value, 120,000,000 shares authorized, 97,573,749 shares issued and outstanding (96,533,578 at May 31, 1997) 45,660 45,039 Retained earnings 519,742 468,411 Foreign currency translation adjustment (1,749) (1,074) --------- -------- Total shareholders' equity 563,653 512,376 -------- -------- $822,996 $761,823 ======== ======== See accompanying notes. CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) (In thousands except per share data)
Three months ended Six months ended November 30, November 30, 1997 1996 1997 1996 Revenues: Net rentals $ 212,302 $181,892 $ 415,301 $ 356,391 Other service revenue 39,682 26,676 72,184 44,963 ------- ------- ------- ------- 251,984 208,568 487,485 401,354 Costs and expenses (income): Cost of rentals 118,979 102,379 231,650 200,843 Cost of other service revenue 30,919 22,318 56,809 38,401 Selling and administrative expenses 56,748 46,494 114,273 91,715 Interest income (1,202) (1,056) (2,310) (1,910) Interest expense 1,644 2,022 3,464 4,011 ----- ----- ----- ----- 207,088 172,157 403,886 333,060 Income before income taxes 44,896 36,411 83,599 68,294 Income taxes 16,920 13,713 31,565 25,899 ------ ------ ------ ------ Net income $ 27,976 $ 22,698 $ 52,034 $ 42,395 ========== ========= ======== ========= Earnings per share $ .29 $ .24 $ .54 $ .45 ========== ========= ======== ========= Weighted average number of shares outstanding 97,472 94,839 97,138 94,685 ========== ========== ======= =========
See accompanying notes. CINTAS CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Six Months Ended November 30, Cash flows from operating activities: 1997 1996 Net income $ 52,034 $ 42,395 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 20,356 16,845 Amortization of deferred charges 5,631 5,159 Deferred income taxes 8,058 5,137 Change in current assets and liabilities, net of acquisitions of businesses: Accounts receivable (13,201) (10,029) Inventories (5,426) (4,596) Uniforms and other rental items in service (12,600) (6,218) Prepaid expenses (290) 95 Accounts payable 3,499 7,951 Accrued liabilities (8,910) (5,928) Income taxes payable 4,487 4,315 ------ ------ Net cash provided by operating activities 53,638 55,126 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 795 248 Capital expenditures (42,823) (31,719) Proceeds from sale or redemption of marketable securities 39,342 18,608 Purchase of marketable securities (34,512) (32,093) Acquisitions of businesses, net of cash acquired (5,445) (3,744) Other 1,207 (876) ----- ----- Net cash used by investing activities (41,436) (49,576) Cash flows from financing activities: Proceeds from issuance of long-term debt 8 ----- Repayment of long-term debt (9,015) (4,848) Issuance of common stock 522 894 Repurchase of common stock (1,282) ----- Other (636) 366 ------- ------ Net cash used in financing activities (10,403) (3,588) Net increase in cash and cash equivalents 1,799 1,962 Cash and cash equivalents at beginning of period 14,221 9,066 ------ ------ Cash and cash equivalents at end of period $16,020 $11,028 ======= ======= 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, 1997. 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. On October 22, 1997, the Company announced a 2-for-1 split of its common stock. The stock split was distributed on November 18, 1997 to shareholders of record on November 3, 1997. All share and per share data contained herein has been adjusted to reflect the stock split. CINTAS CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Total revenues increased 21% for the three and six months ended November 30, 1997 over the same periods in fiscal 1997. Net rental revenue increased 17% for the three and six months ended November 30, 1997 over the same periods in the prior fiscal year, due primarily to growth in the customer base. Second quarter revenues from other services increased 49% over the prior year=s second quarter. For the six months ended November 30, 1997 these revenues increased 61% over the same period in fiscal 1997. These increases are a result of the addition of first aid supplies to the Company=s product offerings in addition to increased catalog and national account sales. Net income increased 23% for the three and six months ended November 30, 1997, over the same period in fiscal 1997. Earnings per share increased 21% and 20% respectively, for the three and six months ended November 30, 1997, over the same periods in fiscal 1997. Net interest expense (interest expense less interest income) was $442,000 and $1,154,000 respectively, for the three and six months ended November 30, 1997 compared to $966,000 and $2,101,000 respectively, for the same 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 from the prior year) 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 1998 as well as fiscal 1997. Cash, cash equivalents and marketable securities decreased by $3 million at November 30, 1997 from May 31, 1997 primarily due to higher capital expenditures. The cash, cash equivalents and marketable securities will be used to finance future acquisitions and capital expenditures. Net property, plant and equipment increased by $26 million from May 31, 1997 to November 30, 1997. At the end of the second quarter of fiscal 1998, the Company had eleven uniform rental facilities in various stages of construction. Financial Condition At November 30, 1997, the Company had $100 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. CINTAS CORPORATION Part II. Other Information Item 2. Changes in Securities (c.) During the quarterly period ended November 30, 1997, the registrant issued 307,376 shares of Common Stock for companies being acquired in four separate transactions to the owners of those companies numbering one, two, one and one, respectively. These issuances were exempt from the registration requirements of the Securities Act of 1933 as private offerings pursuant to Section 4.2 of that Act. . Item 4. Submission of matters to a vote of security holders The Annual Shareholder's meeting of the Company was held on October 22, 1997, at which the following issues were voted upon by shareholders: Issue No. 1 Authority to establish the number of Directors to be elected at the Meeting at eight. FOR 43,783,112 AGAINST 58,488 ABSTAIN 66,155 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 43,538,624 369,131 0 0 Scott D. Farmer 43,538,819 368,936 0 0 Gerald V. Dirvin 43,538,744 369,011 0 0 James J. Gardner 43,538,459 369,296 0 0 Roger L. Howe 43,538,759 368,996 0 0 Donald P. Klekamp 43,538,359 369,396 0 0 Robert J. Kohlhepp 43,538,819 368,936 0 0 John S. Lillard 43,538,859 368,896 0 0 - -------------------- --------------- ------------------- ---------- ----------- Issue No. 3 Shareholder proposal regarding "soft dollar" political contributions. FOR 1,814,319 AGAINST 36,350,077 ABSTAIN 721,805 BROKER NON-VOTES 5,021,554 --------- ---------- ------- --------- 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: December 29, 1997 /s/ William C. Gale ------------------------- William C. Gale Vice President and Chief Financial Officer (Chief Accounting Officer) EX-27 2 FDS --
5 3-mos MAY-31-1998 NOV-30-1997 16,020,000 83,825,000 117,107,000 4,066,000 177,104,000 392,368,000 466,530,000 153,355,000 822,996,000 126,789,000 0 0 0 45,660,000 517,993,000 822,996,000 39,682,000 251,984,000 30,919,000 149,898,000 56,748,000 0 1,644,000 44,896,000 16,920,000 0 0 0 0 27,976,000 0.29 0
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