Prepared by R.R. Donnelley Financial -- Current Report
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
CURRENT REPORT
 
 
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported)
 
  
May 13, 2002
 
 
CINTAS CORPORATION
(Exact name of registrant as specified in its charter)
 
 
Washington
  
0-11399
  
31-1188630
(State or other jurisdiction of
incorporation)
  
(Commission
File Number)
  
(IRS Employer
Identification No.)
 
6800 Cintas Boulevard, P.O. Box 625737 Cincinnati, Ohio
   
45262-5737
(Address of principal executive offices)
 
   
Zip Code
Registrant’s telephone number, including area code
  
(513) 459-1200
 
 
 
(Former name or former address, if changed since last report.)

Table of Contents
Item 2.    Acquisition or Disposition of Assets.
 
On May 13, 2002, the Registrant acquired all of the outstanding stock of Omni Services, Inc. from Filuxel SA for approximately $660 million including debt assumed. The source of funds was a loan of $450 million from Bank One, NA and Merrill Lynch Bank USA in combination with borrowings of $100 million from the Registrant's commercial paper program and $106 million of cash reserves on hand. Omni operates in the uniform rental business and offers other industrial rental items, such as towels, mops and mats under the RUS brand. Omni also derives a small amount of revenue from the direct sale of garments under the brand name RUS Direct and operates a hygiene services business under the Sanis brand. The Registrant intends to continue those businesses. Financial Statements of Omni Services, Inc. and Unaudited Pro Forma Combined Condensed Financial Information are included in this Form 8-K under Item 7(a) or 7(b), respectively.
 
Item 5.    Other Events.
 
The Registrant and its direct and indirect wholly-owned domestic subsidiaries, other than Cintas Corporation No. 2 (“Cintas No. 2”) will be unconditionally guaranteeing, jointly and severally, debt of Cintas No. 2. Cintas No. 2 is an indirect wholly-owned subsidiary of the Registrant. As allowed by SEC rules, the condensed consolidating financial statements presented in the financial statement below are provided as an alternative to filing separate financial statements. Each of the subsidiaries presented in the condensed consolidating financial statements has been fully consolidated in the Registrant’s consolidated financial statements. As such, the condensed consolidating financial statements should be read in conjunction with the financial statements of Cintas and notes thereto of which this note is an integral part.
 
    
Page
Cintas Corporation—Audited Financial Statements as of May 31, 2001 and 2000 and for the
Three Years in the Period Ended May 31, 2001
     
  
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5
  
6
  
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Table of Contents
REPORT OF INDEPENDENT AUDITORS
 
The Board of Directors
Cintas Corporation
 
We have audited the accompanying consolidated balance sheets of Cintas Corporation as of May 31, 2001 and 2000, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended May 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cintas Corporation at May 31, 2001 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended May 31, 2001, in conformity with accounting principles generally accepted in the United States.
 
/s/ ERNST & YOUNG LLP
 
Cincinnati, Ohio
July 6, 2001,
except for Note 16, as to which the date is
May 16, 2002

3

Table of Contents
CINTAS CORPORATION
 
CONSOLIDATED STATEMENTS OF INCOME
Years Ended May 31
(In thousands except per share data)
 
    
2001
     
2000
     
1999
  
Revenue:
                           
Rentals
   
$
1,610,606
 
   
$
1,424,892
 
   
$
1,297,248
 
Other services
   
 
550,094
 
   
 
477,099
 
   
 
454,320
 
    
  
  
    
 
2,160,700
 
   
 
1,901,991
 
   
 
1,751,568
 
Costs and expenses (income):
                           
Cost of rentals
   
 
896,539
 
   
 
807,301
 
   
 
745,142
 
Cost of other services
   
 
367,894
 
   
 
315,138
 
   
 
305,657
 
Selling and administrative expenses
   
 
528,354
 
   
 
455,794
 
   
 
419,487
 
Acquisition-related expenses
   
 
709
 
   
 
834
 
   
 
12,088
 
Special charge
   
 
—
 
   
 
—
 
   
 
28,429
 
Environmental charge
   
 
—
 
   
 
—
 
   
 
5,000
 
Interest income
   
 
(4,369
)
   
 
(4,742
)
   
 
(4,671
)
Interest expense
   
 
15,119
 
   
 
15,907
 
   
 
16,442
 
    
  
  
    
 
1,804,246
 
   
 
1,590,232
 
   
 
1,527,574
 
    
  
  
Income before income taxes
   
 
356,454
 
   
 
311,759
 
   
 
223,994
 
Income taxes
   
 
134,003
 
   
 
118,372
 
   
 
85,055
 
    
  
  
Net income
   
$
222,451
 
   
$
193,387
 
   
$
138,939
 
    
  
  
Basic earnings per share
   
$
1.32
 
   
$
1.16
 
   
$
.84
 
    
  
  
Diluted earnings per share
   
$
1.30
 
   
$
1.14
 
   
$
.82
 
    
  
  
Dividends declared and paid per share
   
$
.22
 
   
$
.19
 
   
$
.15
 
    
  
  
 
See accompanying notes.

4

Table of Contents
CINTAS CORPORATION
 
CONSOLIDATED BALANCE SHEETS
As of May 31
(In thousands except share data)
 
    
2001
     
2000
  
Assets
                  
Current assets:
                  
Cash and cash equivalents
   
$
73,724
 
   
$
52,182
 
Marketable securities
   
 
36,505
 
   
 
57,640
 
Accounts receivable, principally trade, less allowance of $8,765 and $7,364, respectively
   
 
244,450
 
   
 
225,735
 
Inventories
   
 
214,349
 
   
 
164,906
 
Uniforms and other rental items in service
   
 
242,172
 
   
 
213,770
 
Prepaid expenses
   
 
8,470
 
   
 
7,237
 
    
  
Total current assets
   
 
819,670
 
   
 
721,470
 
Property and equipment, at cost, net
   
 
702,132
 
   
 
642,507
 
Other assets
   
 
230,422
 
   
 
217,365
 
    
  
    
$
1,752,224
 
   
$
1,581,342
 
    
  
Liabilities And Shareholders’ Equity
                  
Current liabilities:
                  
Accounts payable
   
$
42,495
 
   
$
50,976
 
Accrued compensation and related liabilities
   
 
35,140
 
   
 
28,140
 
Accrued liabilities
   
 
94,960
 
   
 
90,058
 
Deferred income taxes
   
 
57,703
 
   
 
49,614
 
Long-term debt due within one year
   
 
20,605
 
   
 
16,604
 
    
  
Total current liabilities
   
 
250,903
 
   
 
235,392
 
Long-term debt due after one year
   
 
220,940
 
   
 
254,378
 
Deferred income taxes
   
 
49,066
 
   
 
48,696
 
Shareholders’ equity:
                  
Preferred stock, no par value:
100,000 shares authorized, none outstanding
   
 
—  
 
   
 
—  
 
Common stock, no par value:
425,000,000 shares authorized, 169,370,563 and 168,281,506 shares issued and outstanding, respectively
   
 
62,409
 
   
 
54,738
 
Retained earnings
   
 
1,174,330
 
   
 
992,450
 
Other accumulated comprehensive loss
   
 
(5,424
)
   
 
(4,312
)
    
  
Total shareholders’ equity
   
 
1,231,315
 
   
 
1,042,876
 
    
  
    
$
1,752,224
 
   
$
1,581,342
 
    
  
 
See accompanying notes.

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Table of Contents
CINTAS CORPORATION
 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
 
    
Common Stock
     
Retained Earnings
       
Other Accumulated Comprehensive Loss
     
Total Shareholders’ Equity
  
    
Shares
     
Amount
             
Balance at May 31, 1998
   
164,691
 
   
$
47,062
 
   
$
712,249
 
     
$
(2,516
)
   
$
756,795
 
Net income
   
—  
 
   
 
—  
 
   
 
138,939
 
     
 
—  
 
   
 
138,939
 
Equity adjustment for foreign currency translation
   
—  
 
   
 
—  
 
   
 
—  
 
     
 
(1,303
)
   
 
(1,303
)
                                        
Comprehensive income
                                       
 
137,636
 
                                        
Adjustment to conform Unitog Company’s fiscal year
   
—  
 
   
 
—  
 
   
 
689
 
     
 
—  
 
   
 
689
 
Dividends
   
—  
 
   
 
—  
 
   
 
(24,942
)
     
 
—  
 
   
 
(24,942
)
Effects of acquisitions
   
1,472
 
   
 
13
 
   
 
2,072
 
     
 
—  
 
   
 
2,085
 
Repurchase of common stock
   
(143
)
   
 
—  
 
   
 
(3,739
)
     
 
—  
 
   
 
(3,739
)
Stock options exercised net of shares surrendered
   
404
 
   
 
2,309
 
   
 
—  
 
     
 
—  
 
   
 
2,309
 
Tax benefit resulting from exercise of employee stock options
   
—  
 
   
 
590
 
   
 
—  
 
     
 
—  
 
   
 
590
 
    
  
  
    
  
Balance at May 31, 1999
   
166,424
 
   
 
49,974
 
   
 
825,268
 
     
 
(3,819
)
   
 
871,423
 
    
  
  
    
  
Net income
   
—  
 
   
 
—  
 
   
 
193,387
 
     
 
—  
 
   
 
193,387
 
Equity adjustment for foreign currency translation
   
—  
 
   
 
—  
 
   
 
—  
 
     
 
(493
)
   
 
(493
)
                                        
Comprehensive income
                                       
 
192,894
 
                                        
Dividends
   
—  
 
   
 
—  
 
   
 
(31,249
)
     
 
—  
 
   
 
(31,249
)
Effects of acquisitions
   
1,419
 
   
 
825
 
   
 
5,044
 
     
 
—  
 
   
 
5,869
 
Stock options exercised net of shares surrendered
   
439
 
   
 
3,399
 
   
 
—  
 
     
 
—  
 
   
 
3,399
 
Tax benefit resulting from exercise of employee stock options
   
—  
 
   
 
540
 
   
 
—  
 
     
 
—  
 
   
 
540
 
    
  
  
    
  
Balance at May 31, 2000
   
168,282
 
   
 
54,738
 
   
 
992,450
 
     
 
(4,312
)
   
 
1,042,876
 
    
  
  
    
  
Net income
   
—  
 
   
 
—  
 
   
 
222,451
 
     
 
—  
 
   
 
222,451
 
Equity adjustment for foreign currency translation
   
—  
 
   
 
—  
 
   
 
—  
 
     
 
(1,112
)
   
 
(1,112
)
                                        
Comprehensive income
                                       
 
221,339
 
                                        
Dividends
   
—  
 
   
 
—  
 
   
 
(37,173
)
     
 
—  
 
   
 
(37,173
)
Effects of acquisitions
   
459
 
   
 
(11
)
   
 
(3,398
)
     
 
—  
 
   
 
(3,409
)
Stock options exercised net of shares surrendered
   
630
 
   
 
5,992
 
   
 
—  
 
     
 
—  
 
   
 
5,992
 
Tax benefit resulting from exercise of employee stock options
   
—  
 
   
 
1,690
 
   
 
—  
 
     
 
—  
 
   
 
1,690
 
    
  
  
    
  
Balance at May 31, 2001
   
169,371
 
   
$
62,409
 
   
$
1,174,330
 
     
$
(5,424
)
   
$
1,231,315
 
    
  
  
    
  
 
See accompanying notes.

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Table of Contents
CINTAS CORPORATION
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended May 31
(In thousands)
 
    
2001
     
2000
     
1999
  
Cash flows from operating activities:
                           
Net income
   
$
222,451
 
   
$
193,387
 
   
$
138,939
 
Adjustment to conform Unitog Company’s fiscal year
   
 
—  
 
   
 
—  
 
   
 
689
 
Adjustments to reconcile net income to net cash provided by operating activities:
                           
Depreciation
   
 
90,239
 
   
 
78,516
 
   
 
68,779
 
Amortization of deferred charges
   
 
21,850
 
   
 
20,997
 
   
 
21,449
 
Write down of assets
   
 
—  
 
   
 
—  
 
   
 
12,609
 
Deferred income taxes
   
 
8,459
 
   
 
17,379
 
   
 
(1,356
)
Change in current assets and liabilities, net of acquisitions of businesses:
                           
Accounts receivable
   
 
(16,486
)
   
 
(19,259
)
   
 
(14,484
)
Inventories
   
 
(48,693
)
   
 
(22,976
)
   
 
(5,897
)
Uniforms and other rental items in service
   
 
(28,471
)
   
 
(14,425
)
   
 
(17,898
)
Prepaid expenses
   
 
(1,160
)
   
 
(938
)
   
 
(537
)
Accounts payable
   
 
(10,107
)
   
 
(600
)
   
 
(15,089
)
Accrued compensation and related liabilities
   
 
6,666
 
   
 
2,270
 
   
 
3,559
 
Accrued liabilities
   
 
2,210
 
   
 
3,681
 
   
 
12,299
 
    
  
  
Net cash provided by operating activities
   
 
246,958
 
   
 
258,032
 
   
 
203,062
 
Cash flows from investing activities:
                           
Capital expenditures
   
 
(147,444
)
   
 
(161,432
)
   
 
(171,248
)
Proceeds from sale or redemption of marketable securities
   
 
61,609
 
   
 
112,908
 
   
 
235,400
 
Purchase of marketable securities
   
 
(40,474
)
   
 
(98,233
)
   
 
(225,189
)
Acquisitions of businesses, net of cash acquired
   
 
(30,535
)
   
 
(24,982
)
   
 
(15,588
)
Proceeds from divestiture of certain facilities
   
 
1,400
 
   
 
25,722
 
   
 
19,911
 
Other
   
 
(5,965
)
   
 
(10,921
)
   
 
(2,785
)
    
  
  
Net cash used in investing activities
   
 
(161,409
)
   
 
(156,938
)
   
 
(159,499
)
Cash flows from financing activities:
                           
Proceeds from issuance of long-term debt
   
 
230
 
   
 
140,739
 
   
 
65,778
 
Repayment of long-term debt
   
 
(33,634
)
   
 
(177,651
)
   
 
(85,502
)
Stock options exercised
   
 
5,992
 
   
 
3,399
 
   
 
2,309
 
Dividends paid
   
 
(37,173
)
   
 
(31,249
)
   
 
(24,942
)
Other
   
 
578
 
   
 
47
 
   
 
1,174
 
    
  
  
Net cash used in financing activities
   
 
(64,007
)
   
 
(64,715
)
   
 
(41,183
)
Net increase in cash and cash equivalents
   
 
21,542
 
   
 
36,379
 
   
 
2,380
 
Cash and cash equivalents at beginning of year
   
 
52,182
 
   
 
15,803
 
   
 
13,423
 
    
  
  
Cash and cash equivalents at end of year
   
$
73,724
 
   
$
52,182
 
   
$
15,803
 
    
  
  
 
See accompanying notes.

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Table of Contents
CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except per share and share data)
 
1.    Significant Accounting Policies
 
Business description.    Cintas classifies its businesses into two operating segments: Rentals and Other Services. The Rentals operating segment designs and manufactures corporate identity uniforms which it rents, along with other items, to its customers. The Other Services operating segment involves the design, manufacture and direct sale of uniforms to its customers, as well as the sale of ancillary services including sanitation supplies, first aid products and services and cleanroom supplies. All of these services are provided throughout the United States and Canada to businesses of all types—from small service and manufacturing companies to major corporations that employ thousands of people.
 
Principles of consolidation.    The consolidated financial statements include the accounts of Cintas Corporation and its subsidiaries. Intercompany balances and transactions have been eliminated.
 
Use of estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Financial results could differ from those estimates.
 
Cash and cash equivalents.    Cintas considers all highly liquid investments with a maturity of three months or less, at date of purchase, to be cash equivalents.
 
Inventories.    Inventories are valued at the lower of cost (first-in, first-out) or market. Substantially all inventories represent finished goods.
 
Uniforms and other rental items in service.    These items are valued at cost less amortization, calculated using the straight-line method. Uniforms in service (other than cleanroom and flame retardant garments) are amortized over their useful life of eighteen months. Other rental items including shop towels, mats, cleanroom garments, flame retardant garments, linens and hygiene dispensers are amortized over their useful lives of eight to forty-eight months.
 
Property and equipment.    Depreciation is calculated using the straight-line method over the following estimated useful lives, in years:
 
Buildings and Improvements
   
5 to 40
Equipment
   
3 to 10
Leasehold Improvements
   
2 to 5
 
Long-lived assets.    When events or circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the estimated future cash flows (undiscounted) are compared to the carrying amount of the assets. If the estimated future cash flows are less than the carrying amount of the assets, an impairment loss is recorded. The impairment loss is measured by comparing the fair value of the assets with their carrying amounts. Fair value is determined by discounted cash flows or appraised values, as appropriate. Long-lived assets that are held for disposal are reported at the lower of the carrying amount or the fair value, less estimated costs related to disposition.
 
Other assets.    Other assets consist primarily of service contracts and noncompete and consulting agreements obtained through the acquisition of businesses, which are amortized by use of the straight-line method over the estimated lives of the agreements which are generally three to twelve years, and goodwill, which is amortized using the straight-line method over twenty to forty years.

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Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
Stock options.    Cintas applies the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation expense has been reflected in the financial statements as the exercise price of options granted to employees is equal to the fair market value of Cintas’ common stock on the date of grant. Cintas has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123 (SFAS 123), Accounting for Stock Based Compensation.
 
Interest rate swap agreements.    Periodic settlements under interest rate swap agreements are recognized as adjustments to interest expense for the relevant periods.
 
Revenue recognition.    Rental revenue is recognized when services are performed and other services revenue is recognized when products are shipped and the title and risks of ownership pass to the customer. Cintas also establishes an estimate of allowances for uncollectible accounts when revenue is recorded.
 
Fair value of financial instruments.    The following methods and assumptions were used by Cintas in estimating the fair value of financial instruments:
 
Cash and cash equivalents.    The amounts reported approximate market value.
 
Marketable securities.    The amounts reported are at cost, which approximates market value. Market values are based on quoted market prices.
 
Long-term debt.    The amounts reported are at a carrying value which approximates market value. Market values are determined using similar debt instruments currently available to Cintas that are consistent with the terms, interest rates and maturities.
 
Other accounting pronouncements.    In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities. SFAS 133 was subsequently amended by two other statements and was required to be adopted in years beginning after June 15, 2000. Because of Cintas’ minimal use of derivatives, SFAS 133 did not have a significant effect on its financial position or results of operations when the Statement was adopted on June 1, 2001.
 
Effective March 1, 2001, Cintas adopted Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial Statements. SAB 101 provides the Securities and Exchange Commission’s views in applying accounting principles generally accepted in the United States to revenue recognition in the financial statements. The adoption of SAB 101 did not have an effect on the financial statements of Cintas.
 
In September 2000, the Emerging Issues Task Force (EITF) issued EITF 00-10, Accounting for Shipping and Handling Fees and Costs. Under the provisions of EITF 00-10, amounts billed to a customer in a sales transaction related to shipping and handling should be classified as revenue. Effective March 1, 2001, Cintas adopted EITF 00-10, which did not have a significant effect on the amounts classified as revenue or cost of other services. The adoption had no impact on the determination of net income.
 
In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, Business Combinations, and Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, effective for years beginning after December 15, 2001. Under the new rules, goodwill will no longer be amortized, but will be subject to annual impairment tests in accordance with the

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Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

Statements. Other intangible assets will continue to be amortized over their useful lives. The pooling of interests method is no longer permitted for business combinations initiated after June 30, 2001. Cintas will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of fiscal 2002. Application of the nonamortization provisions of the Statements is expected to result in an increase in net income of approximately $3 million per year. During fiscal 2002, Cintas will perform the first of the required impairment tests of goodwill and has not yet determined what the effect of these tests will be on the earnings and financial position of Cintas.
 
Reclassification. Certain prior year amounts have been reclassified to conform with current year presentation.
 
2.    Marketable Securities
 
All marketable securities are comprised of debt securities and classified as available-for-sale. Realized gains and losses and declines in value determined to be other than temporary on available-for-sale securities are included in interest income. The cost of the securities sold is based on the specific identification method. Interest on securities classified as available-for-sale is included in interest income.
 
The following is a summary of marketable securities:
 
    
2001
   
2000
    
Cost
   
Estimated Fair Value
   
Cost
   
Estimated Fair Value
Obligations of state and political subdivisions
   
$
32,171
   
$
32,468
   
$
44,828
   
$
44,346
U.S. Treasury securities and obligations of U.S. government agencies
   
 
600
   
 
600
   
 
900
   
 
836
Other debt securities
   
 
3,734
   
 
3,794
   
 
11,912
   
 
11,858
    
  
  
  
    
$
36,505
   
$
36,862
   
$
57,640
   
$
57,040
    
  
  
  
 
The gross realized gains on sales of available-for-sale securities totaled $64, $54 and $241 for the years ended May 31, 2001, 2000 and 1999, and the gross realized losses totaled $21, $130 and $25, respectively. Net unrealized gains/(losses) are $357 and $(600) at May 31, 2001 and 2000, respectively.
 
The cost and estimated fair value of debt securities at May 31, 2001, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay the obligations without prepayment penalties.
 
    
Cost
   
Estimated Fair Value
Due in one year or less
   
$
22,139
   
$
22,207
Due after one year through three years
   
 
13,211
   
 
13,496
Due after three years
   
 
1,155
   
 
1,159
    
  
    
$
36,505
   
$
36,862
    
  

10

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
3.    Property and Equipment
 
    
2001
   
2000
Land
   
$
54,743
   
$
49,829
Buildings and improvements
   
 
326,512
   
 
285,510
Equipment
   
 
589,945
   
 
528,467
Leasehold improvements
   
 
12,124
   
 
10,978
Construction in progress
   
 
74,609
   
 
73,217
    
  
    
 
1,057,933
   
 
948,001
Less: accumulated depreciation
   
 
355,801
   
 
305,494
    
  
    
$
702,132
   
$
642,507
    
  
 
4.    Other Assets
 
    
2001
   
2000
Goodwill
   
$
   143,368
   
$
134,445
Service contracts
   
 
118,241
   
 
107,598
Noncompete and consulting agreements
   
 
63,519
   
 
56,872
    
  
    
 
325,128
   
 
298,915
Less: accumulated amortization
   
 
123,759
   
 
103,607
    
  
    
 
201,369
   
 
195,308
Other
   
 
29,053
   
 
22,057
    
  
    
$
230,422
   
$
217,365
    
  
 
5.    Long-term Debt
 
    
2001
   
2000
Secured and unsecured term notes due through 2003 at an average rate of 9.98%
   
$
7,500
   
$
9,500
Unsecured term notes due through 2026 at an average rate of 6.13%
   
 
54,348
   
 
66,846
Unsecured notes due through 2009 at an average rate of 4.67%
   
 
160,156
   
 
172,946
Industrial development revenue bonds due through 2026 at an average rate of 3.91%
   
 
14,489
   
 
15,168
Other
   
 
5,052
   
 
6,522
    
  
    
 
241,545
   
 
270,982
Less: amounts due within one year
   
 
20,605
   
 
16,604
    
  
    
$
   220,940
   
$
254,378
    
  
 
Debt in the amount of $27,041 is secured by assets with a carrying value of $32,024 at May 31, 2001. Cintas has letters of credit outstanding at May 31, 2001 approximating $33,834. Maturities of long-term debt during each of the next five years are $20,605, $158,419, $28,434, $10,339 and $7,007, respectively.

11

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
Cintas has a commercial paper program supported by a $200 million long-term credit facility. As of May 31, 2001, $140 million in commercial paper was outstanding and $60 million was available under the commercial paper or committed credit facility.
 
Cintas has entered into three interest rate swap agreements to manage its exposure to changes in short-term interest rates. The first agreement totaled $10 million, expired in March 2001 and allowed Cintas to pay an effective interest rate of approximately 6.16%. The second agreement totaled $35 million, expired in October 2000 and allowed Cintas to pay an effective interest rate of approximately 4.60%. The third agreement totals $10 million, expires in March 2003 and allows Cintas to pay an effective interest rate of approximately 4.76%.
 
Interest expense is net of capitalized interest of $1,468, $1,257 and $2,081 for the years ended May 31, 2001, 2000 and 1999, respectively. Interest paid, net of amount capitalized, was $15,194, $16,773 and $16,586 for the years ended May 31, 2001, 2000 and 1999, respectively.
 
6.    Leases
 
Cintas conducts certain operations from leased facilities and leases certain equipment. Most leases contain renewal options for periods from one to ten years. The lease agreements provide for increases in rentals if the options are exercised based on increases in certain price level factors or prearranged increases. It is anticipated that expiring leases will be renewed or replaced. The minimum rental payments under noncancelable lease arrangements for each of the next five years and thereafter are: $11,608, $9,391, $7,389, $6,177, $5,000 and $9,642, respectively. Rent expense under operating leases during the years ended May 31, 2001, 2000 and 1999 was $17,063, $16,949 and $13,478, respectively.
 
7.    Income Taxes
 
    
2001
   
2000
   
1999
  
Income taxes consist of the following components:
                       
Current:
                       
Federal
   
$
111,408
   
$
88,842
   
$
75,304
 
State and local
   
 
14,135
   
 
12,151
   
 
11,177
 
    
  
  
    
 
125,543
   
 
100,993
   
 
86,481
 
Deferred
   
 
8,460
   
 
17,379
   
 
(1,426
)
    
  
  
    
$
134,003
   
$
118,372
   
$
85,055
 
    
  
  
 
    
2001
     
2000
     
1999
  
Reconciliation of income tax expense using the statutory rate and actual Income tax expense is as follows:
                           
Income taxes at the U.S. federal statutory rate
   
$
124,760
 
   
$
109,109
 
   
$
78,398
 
State and local income taxes, net of federal benefit
   
 
9,710
 
   
 
9,727
 
   
 
8,156
 
Other
   
 
(467
)
   
 
(464
)
   
 
(1,499
)
    
  
  
    
$
134,003
 
   
$
118,372
 
   
$
85,055
 
    
  
  

12

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
The components of deferred income taxes included on the balance sheets are as follows:
 
    
2001
   
2000
Deferred tax assets:
              
Employee benefits
   
$
11,574
   
$
9,240
Inventory obsolescence
   
 
7,603
   
 
8,235
Allowance for bad debts and other
   
 
15,317
   
 
21,782
    
  
    
 
34,494
   
 
39,257
Deferred tax liabilities:
              
In service inventory
   
 
84,579
   
 
77,501
Depreciation
   
 
50,078
   
 
50,481
Other
   
 
6,606
   
 
9,585
    
  
    
 
141,263
   
 
137,567
    
  
Net deferred tax liability
   
$
106,769
   
$
98,310
    
  
 
Income taxes paid were $112,307, $85,509 and $77,381 for the years ended May 31, 2001, 2000 and 1999, respectively.
 
Undistributed earnings of foreign subsidiaries, which are intended to be indefinitely reinvested, aggregated $8,434 as of May 31, 2001.
 
8.    Acquisitions
 
During the years ended May 31, 2001, 2000 and 1999, Cintas completed several acquisitions. In fiscal year ended 1999, there was one acquisition that was significant and required restatement.
 
Pooling of Interests
 
In March 1999, Cintas acquired Unitog Company (Unitog), a rental and direct sale uniform provider. Cintas exchanged 7,608,186 shares of its common stock for all the outstanding stock of Unitog.
 
The acquisition was treated as a pooling of interests for accounting purposes and the consolidated financial statements were restated at that time to include the financial position and operating results of Unitog for all periods prior to the merger. In accordance with the pooling of interests method of accounting, no adjustment has been made to the historical carrying amount of assets and liabilities of Unitog. As Cintas and Unitog had different year-ends at the time of the acquisition, the consolidated statements combine the consolidated financial position of Cintas at May 31, 1999, and the consolidated results of its operations and its cash flows for the fiscal year ended May 31, 1999 with the financial position of Unitog at May 31, 1999 and the recasted results of its operations for the fiscal year ended April 30, 1999 and its cash flows for the period ended May 31, 1999.
 
Due to the different fiscal year-ends, retained earnings includes an adjustment to record Unitog’s net income for the month ended May 31, 1999, which is not included in the consolidated financial statements for any fiscal period. For this period, Unitog had revenue of $19,544, operating expenses of $17,944, including $1,424 of depreciation and amortization, and net income of $689.

13

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
In accordance with accounting rules for pooling of interests transactions, charges to operating income for acquisition-related expenses relating to this merger approximated $11,000 ($7,000 after tax). They primarily consisted of investment banking fees, a pre-established retention program for certain employees and professional service fees.
 
Purchases
 
For all acquisitions accounted for as purchases, including insignificant acquisitions, the purchase price paid for each has been allocated to the fair value of the assets acquired and liabilities assumed. The following summarizes the aggregate purchase price for all businesses acquired which have been accounted for as purchases:
 
    
2001
   
2000
Fair value of assets acquired
   
$
32,286
   
$
32,577
Liabilities assumed and incurred
   
 
2,379
   
 
1,969
    
  
Total cash paid for acquisitions
   
$
29,907
   
$
30,608
    
  
 
The results of operations for the acquired businesses are included in the consolidated statements of income from the dates of acquisition. The pro forma revenue, net income and earnings per share information relating to acquired businesses are not presented because they are not material.
 
9.    Defined Contribution Plans
 
Cintas’ Partners’ Plan is a non-contributory profit sharing plan and ESOP for the benefit of certain Cintas employees who have completed one year of service. The plan also includes a 401(k) savings feature covering substantially all employees. The amount of contributions to the profit sharing plan and ESOP, as well as the matching contribution to the 401(k), are made at the discretion of Cintas. Total contributions, including Cintas’ matching contributions, were $18,385, $15,600 and $12,100 for the years ended May 31, 2001, 2000 and 1999, respectively.
 
As a result of previous mergers and acquisitions, Cintas also sponsors contributory thrift plans covering certain salaried and clerical employees and certain employees subject to collective bargaining agreements. Under the provisions of these thrift plans, employees are permitted to contribute a maximum of 6% of their earnings and Cintas makes matching contributions of 25% to 50%. Employees may make additional unmatched contributions to these plans of up to 9% of their earnings. Cintas’ contributions to these thrift plans were $355, $596 and $1,191 for the years ended May 31, 2001, 2000 and 1999, respectively.
 
10.    Earnings Per Share
 
Earnings per share are computed in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share. The basic computations are computed based on the weighted average number of common shares outstanding during each period. The diluted computations reflect the potential dilution that could occur if stock options were exercised into common stock, under certain circumstances, that then would share in the earnings of Cintas.

14

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
The following table represents a reconciliation of the shares used to calculate basic and diluted earnings per share for the respective years:
 
    
2001
   
2000
   
1999
Numerator:
                     
Net income
   
$
222,451
   
$
193,387
   
$
138,939
    
  
  
Denominator:
                     
Denominator for basic earnings per share—weighted average shares (000’s)
   
 
168,779
   
 
167,067
   
 
165,603
Effect of dilutive securities—employee stock options (000’s)
   
 
2,850
   
 
2,920
   
 
3,738
    
  
  
Denominator for diluted earnings per share—adjusted weighted average shares and assumed conversions (000’s)
   
 
171,629
   
 
169,987
   
 
169,341
    
  
  
Basic earnings per share
   
$
1.32
   
$
1.16
   
$
.84
    
  
  
Diluted earnings per share
   
$
1.30
   
$
1.14
   
$
.82
    
  
  
 
On January 18, 2000, the Board of Directors approved a three-for-two common stock split effective  March 7, 2000. All share and per share information have been adjusted to retroactively reflect the effect of this stock split for all periods presented.
 
11.    Stock Based Compensation
 
Under the stock option plan adopted by Cintas in fiscal 2000, Cintas may grant officers and key employees incentive stock options and/or non-qualified stock options to purchase an aggregate of 9,000,000 shares of Cintas’ common stock. Options are granted at the fair market value of the underlying common stock on the date of grant and generally vest and become exercisable at the rate of 20% per year commencing five years after grant, so long as the holder remains an employee of Cintas.
 
As a result of the Unitog acquisition in March 1999, Cintas retained a non-qualified stock option plan for certain of its employees. The exercise price of the options granted under this plan is the fair market value at date of grant and the options vest ratably over four years and expire ten years after the date of grant. Certain provisions of the plan required immediate vesting and a cash settlement, as opposed to the issuance of common stock, upon termination of the option holders’ employment prior to March 24, 2000. The total compensation expense under this arrangement recorded during the fourth quarter of fiscal 1999 was $5,100, which has been paid.

15

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
The information presented in the following table relates primarily to stock options granted and outstanding under either the plan adopted in fiscal 2000 or under similar plans:
 
    
Shares
       
Weighted Average Exercise Price
Outstanding May 31, 1998 (668,919 shares exercisable)
   
6,193,860
 
     
$
15.49
Granted
   
620,175
 
     
 
32.90
Cancelled
   
(299,972
)
     
 
20.15
Exercised
   
(592,886
)
     
 
11.72
    
    
Outstanding May 31, 1999 (623,280 shares exercisable)
   
5,921,177
 
     
 
17.46
Granted
   
760,825
 
     
 
41.39
Cancelled
   
(249,575
)
     
 
25.72
Exercised
   
(493,736
)
     
 
10.71
    
    
Outstanding May 31, 2000 (671,391 shares exercisable)
   
5,938,691
 
     
 
20.74
Granted
   
691,500
 
     
 
42.88
Cancelled
   
(241,175
)
     
 
30.87
Exercised
   
(662,823
)
     
 
11.03
    
    
Outstanding May 31, 2001 (555,544 shares exercisable)
   
5,726,193
 
     
$
24.11
    
    
 
The following table summarizes the information related to stock options outstanding at May 31, 2001:
 
             
Outstanding Options
     
Exercisable Options
Range of Exercise Price
     
Number Outstanding
     
Average Remaining Option Life
     
Weighted Average Exercise Price
     
Number Exercisable
     
Weighted Average Exercise Price
$  7.13—$12.79
     
999,524
     
2.44
     
$
9.76
     
397,094
     
$
9.34
12.92—  18.58
     
1,561,560
     
4.75
     
 
15.23
     
125,340
     
 
13.92
19.25—  34.17
     
1,761,409
     
6.45
     
 
25.70
     
27,109
     
 
26.07
34.31—  53.19
     
1,403,700
     
8.64
     
 
42.23
     
6,001
     
 
36.32
    
    
    
    
    
$  7.13—$53.19
     
5,726,193
     
5.82
     
$
24.11
     
555,544
     
$
11.48
    
    
    
    
    
 
At May 31, 2001, 8,304,800 shares of common stock are reserved for future issuance under the 2000 plan.
 
Pro forma information regarding earnings and earnings per share is required by SFAS 123 and has been determined as if Cintas had accounted for its stock options granted subsequent to May 31, 1995 under the fair value method of that Statement. The weighted average fair value of stock options granted during fiscal 2001, 2000 and 1999 was $21.40, $21.29 and $14.09, respectively. The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
 
      
2001
       
2000
       
1999
  
Risk free interest rate
     
5.50
%
     
6.25
%
     
5.50
%
Dividend yield
     
0.50
%
     
0.50
%
     
0.32
%
Expected volatility of Cintas’ common stock
     
34
%
     
32
%
     
27
%
Expected life of the option in years
     
9
 
     
9
 
     
9
 

16

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are freely transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because Cintas’ options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in Cintas’ opinion existing models do not necessarily provide a reliable single measure of the fair value of its stock options.
 
For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options’ vesting period. Cintas’ pro forma information is as follows:
 
    
2001
   
2000
   
1999
Net income:
                     
As reported
   
$
222,451
   
$
193,387
   
$
138,939
Pro forma for SFAS 123
   
$
218,665
   
$
190,386
   
$
136,796
Earnings per share:
                     
Pro forma basic earnings per share for SFAS 123
   
$
1.30
   
$
1.14
   
$
.83
Pro forma diluted earnings per share for SFAS 123
   
$
1.27
   
$
1.12
   
$
.81
 
The effects of providing pro forma disclosure are not representative of earnings to be reported for future years.
 
12.    Litigation and Environmental Matters
 
Cintas is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such actions will not have a material adverse effect on the financial position or results of operations of Cintas.
 
In December 1992, Cintas was served with an “Imminent and Substantial Endangerment and Remediation Order” by the California Department of Toxic Substances Control (DTSC) relating to the facility leased by Cintas in San Leandro, California. This order requires Cintas and three other allegedly responsible parties to respond to soil and groundwater contamination at and around the San Leandro facility. Based on Cintas’ prior experience in remediation at similar sites, and based on all available data, the estimated cost associated with the required remediation is approximately $750. More precise estimates will not be available until DTSC makes a final decision about remediation activities at the site. Cintas has adequately provided in the financial statements for the potential costs of this remediation.
 
In acquiring Unitog in March 1999, Cintas became a potentially responsible party, and thus faces the possibility of joint and several liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in connection with alleged environmental contamination in an area near a rental facility in Tempe, Arizona. This facility, located near the South Indian Bend Wash (SIBW) Federal Superfund site, has been tested for soil and groundwater contamination. Soil testing at Cintas’ facility detected volatile organic compounds, and Cintas promptly took steps to remediate the contamination. Groundwater testing in the area of Cintas’ property has detected a very low level of volatile organic compound contamination. The United States Environmental Protection Agency (EPA) in March 1999 issued a Record of Decision to the effect that groundwater contamination in the vicinity of Cintas’ plant does not warrant remediation at this time. Instead, the low levels of groundwater contamination near Cintas’ facility will be monitored and allowed to attenuate

17

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

naturally. The Record of Decision requires active groundwater remediation in other parts of the SIBW site, which are believed to be unrelated to Cintas. According to the Record of Decision, the EPA estimates that the 30 year net present value of costs to be incurred to remediate and monitor groundwater contamination at the SIBW site is $22,000. It is possible that the EPA will attempt to recover from the potentially responsible parties the costs it has incurred to date with respect to the SIBW site as well as the costs it expects to incur going forward.
 
As part of the Agreement and Plan of Merger dated January 9, 1999 between Unitog and Cintas, Cintas performed environmental testing at nine previously untested Unitog laundry facilities. The testing resulted in the discovery of soil and groundwater contamination at certain of these sites. As a result of all of the environmental matters noted above, Cintas recorded a charge to operating expense of $5,000 during the third quarter of fiscal 1999 to reflect its current estimate of the additional costs to be incurred relative to these sites. At May 31, 2001, Cintas has an undiscounted liability of $4,614 for these environmental matters.
 
13.    Special Charge
 
As a result of the acquisition of Unitog in March 1999, Cintas developed a plan during the fourth quarter of fiscal 1999 to integrate Unitog into Cintas and close duplicate facilities. The intention of the plan was to position Cintas to improve service to its customers and achieve higher profitability. This plan was completed in fiscal 2000.
 
The plan primarily addressed: (1) exiting certain rental and manufacturing duplicate facilities resulting in asset write downs to estimated fair value, lease abandonments and costs to terminate employees and (2) selling the Unitog headquarters in Kansas City, Missouri resulting in asset write downs to their fair value upon sale and costs to terminate employees. Accordingly, Cintas recognized a special charge of $28,429, or $17,626 after income taxes, and $.11 per share during 1999. Details of the special charge and related activity for fiscal years 1999 and 2000 are as follows:
 
    
Special Charge
   
1999 Activity
     
Accrual at May 31, 1999
   
2000 Activity
       
Accrual at May 31, 2000
Severance
   
$
15,820
   
$
(9,772
)
   
$
6,048
   
$
(6,048
)
     
$
—  
Asset write downs
   
 
12,609
   
 
(12,609
)
   
 
—  
   
 
—  
 
     
 
—  
    
  
  
  
    
Total
   
$
28,429
   
$
(22,381
)
   
$
6,048
   
$
(6,048
)
     
$
—  
    
  
  
  
    
 
Severance costs included the cost of separation payments to certain employees who have been terminated. Asset write downs associated with the exit of certain redundant rental and manufacturing facilities related to the consolidation of facilities in areas where Cintas had sufficient capacity in existing facilities to meet anticipated requirements. The asset write down associated with the sale of the Unitog headquarters related to the closure of the facility and relocation of business functions to Cintas’ headquarters in Cincinnati, Ohio.
 
14.    Segment Information
 
Cintas classifies its businesses into two operating segments: Rentals and Other Services. The Rentals operating segment designs and manufactures corporate identity uniforms which it rents, along with other items, to its customers. The Other Services operating segment involves the design, manufacture and direct sale of uniforms to its customers, as well as the sale of ancillary services including sanitation supplies, first aid products and services and cleanroom supplies. All of these services are provided throughout the United States and Canada

18

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

to businesses of all types—from small service and manufacturing companies to major corporations that employ thousands of people.
 
Information as to the operations of Cintas’ different business segments is set forth below based on the distribution of products and services offered. Cintas evaluates performance based on several factors of which the primary financial measures are business segment revenue and income before income taxes. The accounting policies of the business segments are the same as those described in the Significant Accounting Policies (Note 1).
 
    
Rentals
   
Other Services
   
Corporate
     
Total
  
May 31, 2001
                                
Revenue
   
$
1,610,606
   
$
550,094
   
$
—  
 
   
$
2,160,700
 
    
  
  
  
Gross margin
   
$
714,067
   
$
182,200
   
$
—  
 
   
$
896,267
 
Selling and administrative expenses
   
 
390,992
   
 
137,362
   
 
—  
 
   
 
528,354
 
Acquisition-related expenses
   
 
—  
   
 
—  
   
 
709
 
   
 
709
 
Interest income
   
 
—  
   
 
—  
   
 
(4,369
)
   
 
(4,369
)
Interest expense
   
 
—  
   
 
—  
   
 
15,119
 
   
 
15,119
 
    
  
  
  
Income before income taxes
   
$
323,075
   
$
44,838
   
$
(11,459
)
   
$
356,454
 
    
  
  
  
Depreciation and amortization
   
$
95,957
   
$
16,132
   
$
—  
 
   
$
112,089
 
    
  
  
  
Capital expenditures
   
$
133,786
   
$
13,658
   
$
—  
 
   
$
147,444
 
    
  
  
  
Total assets
   
$
1,362,298
   
$
279,697
   
$
110,229
 
   
$
1,752,224
 
    
  
  
  
May 31, 2000
                                
Revenue
   
$
1,424,892
   
$
477,099
   
$
—  
 
   
$
1,901,991
 
    
  
  
  
Gross margin
   
$
617,591
   
$
161,961
   
$
—  
 
   
$
779,552
 
Selling and administrative expenses
   
 
338,887
   
 
116,907
   
 
—  
 
   
 
455,794
 
Acquisition-related expenses
   
 
—  
   
 
—  
   
 
834
 
   
 
834
 
Interest income
   
 
—  
   
 
—  
   
 
(4,742
)
   
 
(4,742
)
Interest expense
   
 
—  
   
 
—  
   
 
15,907
 
   
 
15,907
 
    
  
  
  
Income before income taxes
   
$
278,704
   
$
45,054
   
$
(11,999
)
   
$
311,759
 
    
  
  
  
Depreciation and amortization
   
$
86,270
   
$
13,243
   
$
—  
 
   
$
99,513
 
    
  
  
  
Capital expenditures
   
$
129,838
   
$
31,594
   
$
—  
 
   
$
161,432
 
    
  
  
  
Total assets
   
$
1,214,318
   
$
257,202
   
$
109,822
 
   
$
1,581,342
 
    
  
  
  

19

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
    
Rentals
   
Other Services
   
Corporate
     
Total
  
May 31, 1999
                                
Revenue
   
$
1,297,248
   
$
454,320
   
$
—  
 
   
$
1,751,568
 
    
  
  
  
Gross margin
   
$
552,106
   
$
148,663
   
$
—  
 
   
$
700,769
 
Selling and administrative expenses
   
 
314,127
   
 
105,360
   
 
—  
 
   
 
419,487
 
Acquisition-related expenses
   
 
—  
   
 
—  
   
 
12,088
 
   
 
12,088
 
Special charge
   
 
—  
   
 
—  
   
 
28,429
 
   
 
28,429
 
Environmental charge
   
 
—  
   
 
—  
   
 
5,000
 
   
 
5,000
 
Interest income
   
 
—  
   
 
—  
   
 
(4,671
)
   
 
(4,671
)
Interest expense
   
 
—  
   
 
—  
   
 
16,442
 
   
 
16,442
 
    
  
  
  
Income before income taxes
   
$
237,979
   
$
43,303
   
$
(57,288
)
   
$
223,994
 
    
  
  
  
Depreciation and amortization
   
$
80,550
   
$
9,678
   
$
—  
 
   
$
90,228
 
    
  
  
  
Capital expenditures
   
$
150,007
   
$
21,241
   
$
—  
 
   
$
171,248
 
    
  
  
  
Total assets
   
$
1,080,194
   
$
239,506
   
$
88,118
 
   
$
1,407,818
 
    
  
  
  
 
15.    Quarterly Financial Data (Unaudited)
 
The following is a summary of the results of operations for each of the quarters within the years ended  May 31, 2001 and 2000:
 
May 31, 2001
   
First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter
Revenue
   
$
521,959
   
$
539,052
   
$
536,723
   
$
562,966
Gross margin
   
$
217,265
   
$
223,377
   
$
219,916
   
$
235,709
Net income
   
$
50,849
   
$
56,533
   
$
54,910
   
$
60,159
Basic earnings per share
   
$
.30
   
$
.34
   
$
.32
   
$
.36
Diluted earnings per share
   
$
.30
   
$
.33
   
$
.32
   
$
.35
Weighted average number of shares outstanding (000’s)
   
 
168,366
   
 
168,660
   
 
168,890
   
 
169,206
May 31, 2000
   
First Quarter
   
Second Quarter
   
Third Quarter
   
Fourth Quarter
Revenue
   
$
457,375
   
$
465,849
   
$
473,929
   
$
504,838
Gross margin
   
$
184,289
   
$
190,166
   
$
194,575
   
$
210,522
Net income
   
$
43,165
   
$
48,335
   
$
49,062
   
$
52,825
Basic earnings per share
   
$
.26
   
$
.29
   
$
.29
   
$
.32
Diluted earnings per share
   
$
.25
   
$
.29
   
$
.29
   
$
.31
Weighted average number of shares outstanding (000’s)
   
 
166,502
   
 
166,898
   
 
167,368
   
 
167,498

20

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)

 
16.    Subsequent Event—Supplemental Guarantor Information
 
On May 13, 2002, Cintas completed the acquisition of Omni Services, Inc. (Omni) a wholly-owned subsidiary of Filuxel SA for approximately $660,000. For the twelve months ended January 31, 2002, Omni had total revenue of approximately $300,000. In order to finance the transaction, Cintas entered into a $500,000 Bridge Loan Agreement (the Bridge Facility) with Bank One, NA and Merrill Lynch Bank USA. The purchase price for Omni was funded with $450,000 of borrowings under the Bridge Facility, $100,000 of borrowings under a commercial paper program and approximately $106,000 in cash.
 
Effective June 1, 2000, Cintas reorganized and created Cintas Corporation No. 2 (Corp. 2) as its principal operating subsidiary. Cintas Corporation and its wholly-owned, direct and indirect domestic subsidiaries, other than Corp. 2 will be unconditionally guaranteeing, jointly and severally, debt of Corp. 2. Corp. 2 is an indirect wholly-owned subsidiary of Cintas Corporation. As allowed by the SEC rules, the following condensed consolidating financial statements are provided as an alternative to filing separate financial statements. Each of the subsidiaries presented in the condensed consolidating financial statements has been fully consolidated in the Company’s consolidated financial statements. As such, the condensed consolidating financial statements should be read in conjunction with the financial statements of Cintas and notes thereto of which this note is an integral part.
 
Condensed consolidating financial statements for Cintas Corporation, Corp. 2, the subsidiary guarantors and non-guarantors are presented below:
 
CONDENSED CONSOLIDATING INCOME STATEMENT
YEAR ENDED MAY 31, 2001
 
    
Cintas Corporation
   
Corp. 2
     
Subsidiary Guarantors
       
Non-Guarantors
     
Eliminations
     
Cintas Corporation Consolidated
  
Revenue:
                                                      
Rentals
   
$
—  
   
$
1,188,257
 
   
$
356,184
 
     
$
66,308
 
   
$
(143
)
   
$
1,610,606
 
Other services
   
 
—  
   
 
961,260
 
   
 
172,736
 
     
 
8,997
 
   
 
(592,899
)
   
 
550,094
 
Equity in net income of affiliates
   
 
222,451
   
 
—  
 
   
 
—  
 
     
 
—  
 
   
 
(222,451
)
   
 
—  
 
    
  
  
    
  
  
    
 
222,451
   
 
2,149,517
 
   
 
528,920
 
     
 
75,305
 
   
 
(815,493
)
   
 
2,160,700
 
Costs and expenses (income):
                                                      
Cost of rentals
   
 
—  
   
 
751,096
 
   
 
217,907
 
     
 
40,288
 
   
 
(112,752
)
   
 
896,539
 
Cost of other services
   
 
—  
   
 
718,262
 
   
 
120,694
 
     
 
5,693
 
   
 
(476,755
)
   
 
367,894
 
Selling and administrative expenses
   
 
—  
   
 
588,237
 
   
 
(71,751
)
     
 
20,360
 
   
 
(8,492
)
   
 
528,354
 
Acquisition related expenses
   
 
—  
   
 
—  
 
   
 
600
 
     
 
109
 
   
 
—  
 
   
 
709
 
Special charge
   
 
—  
   
 
—  
 
   
 
—  
 
     
 
—  
 
   
 
—  
 
   
 
—  
 
Environmental charge
   
 
—  
   
 
—  
 
   
 
—  
 
     
 
—  
 
   
 
—  
 
   
 
—  
 
Interest income
   
 
—  
   
 
(3,619
)
   
 
(2,585
)
     
 
(337
)
   
 
2,172
 
   
 
(4,369
)
Interest expense
   
 
—  
   
 
15,211
 
   
 
(505
)
     
 
413
 
   
 
—  
 
   
 
15,119
 
    
  
  
    
  
  
    
 
—  
   
 
2,069,187
 
   
 
264,360
 
     
 
66,526
 
   
 
(595,827
)
   
 
1,804,246
 
    
  
  
    
  
  
Income before income taxes
   
 
222,451
   
 
80,330
 
   
 
264,560
 
     
 
8,779
 
   
 
(219,666
)
   
 
356,454
 
Income taxes
   
 
—  
   
 
30,760
 
   
 
    100,532
 
     
 
2,711
 
   
 
—  
 
   
 
134,003
 
    
  
  
    
  
  
Net income
   
$
222,451
   
$
49,570
 
   
$
164,028
 
     
$
6,068
 
   
$
(219,666
)
   
$
222,451
 
    
  
  
    
  
  

21

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)
 
CONDENSED CONSOLIDATING INCOME STATEMENT
YEAR ENDED MAY 31, 2000
    
Cintas Corporation
   
Corp. 2
  
Subsidiary
Guarantors
       
Non-Guarantors
     
Eliminations
    
Cintas Corporation Consolidated
  
Revenue:
                                                  
Rentals
   
$
—  
   
$
—  
  
$
1,366,660
 
     
$
58,261
 
   
$
(29
)
  
$
1,424,892
 
Other services
   
 
—  
   
 
—  
  
 
986,699
 
     
 
4,387
 
   
 
(513,987
)
  
 
477,099
 
Equity in net income of affiliates
   
 
193,387
   
 
—  
  
 
—  
 
     
 
—  
 
   
 
(193,387
)
  
 
—  
 
    
  
 
    
  
 
    
 
193,387
   
 
—  
  
 
2,353,359
 
     
 
62,648
 
   
 
(707,403
)
  
 
1,901,991
 
Costs and expenses (income):
                                                  
Cost of rentals
   
 
—  
   
 
—  
  
 
869,879
 
     
 
36,453
 
   
 
(99,031
)
  
 
807,301
 
Cost of other services
   
 
—  
   
 
—  
  
 
717,390
 
     
 
2,047
 
   
 
(404,299
)
  
 
315,138
 
Selling and administrative expenses
   
 
—  
   
 
—  
  
 
442,844
 
     
 
22,862
 
   
 
(9,912
)
  
 
455,794
 
Acquisition-related expenses
   
 
—  
   
 
—  
  
 
813
 
     
 
21
 
   
 
—  
 
  
 
834
 
Special charge
   
 
—  
   
 
—  
  
 
—  
 
     
 
—  
 
   
 
—  
 
  
 
—  
 
Environmental charge
   
 
—  
   
 
—  
  
 
—  
 
     
 
—  
 
   
 
—  
 
  
 
—  
 
Interest income
   
 
—  
   
 
—  
  
 
(6,689
)
     
 
(283
)
   
 
2,230
 
  
 
(4,742
)
Interest expense
   
 
—  
   
 
—  
  
 
15,032
 
     
 
876
 
   
 
(1
)
  
 
15,907
 
    
  
 
    
  
 
    
 
—  
   
 
—  
  
 
2,039,269
 
     
 
61,976
 
   
 
(511,013
)
  
 
1,590,232
 
    
  
 
    
  
 
Income before income taxes
   
 
193,387
   
 
—  
  
 
314,090
 
     
 
672
 
   
 
(196,390
)
  
 
311,759
 
Income taxes
   
 
—  
   
 
—  
  
 
116,007
 
     
 
2,365
 
   
 
—  
 
  
 
118,372
 
    
  
 
    
  
 
Net income
   
$
193,387
   
$
—  
  
$
198,083
 
     
$
(1,693
)
   
$
(196,390
)
  
$
193,387
 
    
  
 
    
  
 
 
CONDENSED CONSOLIDATING INCOME STATEMENT
YEAR ENDED MAY 31, 1999
 
    
Cintas Corporation
   
Corp. 2
  
Subsidiary
Guarantors
       
Non-Guarantors
     
Eliminations
    
Cintas Corporation Consolidated
  
Revenue:
                                                  
Rentals
   
$
—  
   
$
—  
  
$
1,250,480
 
     
$
46,781
 
   
$
(13
)
  
$
1,297,248
 
Other services
   
 
—  
   
 
—  
  
 
864,560
 
     
 
2,245
 
   
 
(412,485
)
  
 
454,320
 
Equity in net income of affiliates
  
 
138,939
   
 
—  
  
 
—  
 
     
 
—  
 
   
 
(138,939
)
  
 
—  
 
    
  
 
    
  
 
    
 
138,939
   
 
—  
  
 
2,115,040
 
     
 
49,026
 
   
 
(551,437
)
  
 
1,751,568
 
Costs and expenses (income):
                                                  
Cost of rentals
   
 
—  
   
 
—  
  
 
788,790
 
     
 
26,625
 
   
 
(70,273
)
  
 
745,142
 
Cost of other services
   
 
—  
   
 
—  
  
 
636,906
 
     
 
1,758
 
   
 
(333,007
)
  
 
305,657
 
Selling and administrative expenses
   
 
—  
   
 
—  
  
 
411,244
 
     
 
13,101
 
   
 
(4,858
)
  
 
419,487
 
Acquisition-related expenses
   
 
—  
   
 
—  
  
 
11,998
 
     
 
90
 
   
 
—  
 
  
 
12,088
 
Special charge
   
 
—  
   
 
—  
  
 
28,429
 
     
 
—  
 
   
 
—  
 
  
 
28,429
 
Environmental charge
   
 
—  
   
 
—  
  
 
5,000
 
     
 
—  
 
   
 
—  
 
  
 
5,000
 
Interest income
   
 
—  
   
 
—  
  
 
(6,472
)
     
 
(258
)
   
 
2,059
 
  
 
(4,671
)
Interest expense
   
 
—  
   
 
—  
  
 
15,240
 
     
 
1,202
 
   
 
—  
 
  
 
16,442
 
    
  
 
    
  
 
    
 
—  
   
 
—  
  
 
1,891,135
 
     
 
42,518
 
   
 
(406,079
)
  
 
1,527,574
 
    
  
 
    
  
 
Income before income taxes
   
 
138,939
   
 
—  
  
 
223,905
 
     
 
6,508
 
   
 
(145,358
)
  
 
223,994
 
Income taxes
   
 
—  
   
 
—  
  
 
82,903
 
     
 
2,152
 
   
 
—  
 
  
 
85,055
 
    
  
 
    
  
 
Net income
   
$
138,939
   
$
—  
  
$
141,002
 
     
$
4,356
 
   
$
(145,358
)
  
$
138,939
 
    
  
 
    
  
 

22

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)
 
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MAY 31, 2001
    
Cintas Corporation
   
Corp. 2
   
Subsidiary Guarantors
     
Non-Guarantors
   
Eliminations
     
Cintas Corporation Consolidated
Assets
                                              
Current assets:
                                              
Cash and cash equivalents
   
$
—  
   
$
57,629
   
$
8,792
 
   
$
7,303
   
$
—  
 
   
$
73,724
Marketable securities
   
 
—  
   
 
35,055
   
 
—  
 
   
 
1,450
   
 
—  
 
   
 
36,505
Accounts receivable, net
   
 
—  
   
 
157,895
   
 
89,082
 
   
 
10,343
   
 
(12,870
)
   
 
244,450
Inventories
   
 
—  
   
 
202,773
   
 
14,564
 
   
 
3,088
   
 
(6,076
)
   
 
214,349
Uniforms and other rental items in service
   
 
—  
   
 
189,026
   
 
57,800
 
   
 
10,168
   
 
(14,822
)
   
 
242,172
Prepaid expenses
   
 
—  
   
 
6,170
   
 
1,827
 
   
 
476
   
 
(3
)
   
 
8,470
    
  
  
  
  
  
Total current assets
   
 
—  
   
 
648,548
   
 
172,065
 
   
 
32,828
   
 
(33,771
)
   
 
819,670
Property and equipment, at cost, net
   
 
—  
   
 
546,578
   
 
127,148
 
   
 
28,406
   
 
—  
 
   
 
702,132
Goodwill
   
 
—  
   
 
71,913
   
 
51,550
 
   
 
290
   
 
—  
 
   
 
123,753
Other assets
   
 
1,427,562
   
 
245,980
   
 
713,033
 
   
 
39,492
   
 
(2,319,398
)
   
 
106,669
    
  
  
  
  
  
    
$
1,427,562
   
$
1,513,019
   
$
1,063,796
 
   
$
101,016
   
$
(2,353,169
)
   
$
1,752,224
    
  
  
  
  
  
Liabilities and Shareholders’ Equity
                                              
Current liabilities:
                                              
Accounts payable
   
$
190,823
   
$
89,451
   
$
(294,324
)
   
$
17,296
   
$
39,249
 
   
$
42,495
Accrued compensation and related liabilities
   
 
—  
   
 
27,055
   
 
6,907
 
   
 
1,178
   
 
—  
 
   
 
35,140
Accrued liabilities
   
 
—  
   
 
129,144
   
 
(35,578
)
   
 
2,694
   
 
(1,300
)
   
 
94,960
Deferred income taxes
   
 
—  
   
 
50,748
   
 
5,350
 
   
 
1,605
   
 
—  
 
   
 
57,703
Long-term debt due within one year
   
 
—  
   
 
17,328
   
 
3,450
 
   
 
1
   
 
(174
)
   
 
20,605
    
  
  
  
  
  
Total current liabilities
   
 
190,823
   
 
313,726
   
 
(314,195
)
   
 
22,774
   
 
37,775
 
   
 
250,903
Long-term debt due after one year
   
 
—  
   
 
227,231
   
 
5,733
 
   
 
20,286
   
 
(32,310
)
   
 
220,940
Deferred income taxes
   
 
—  
   
 
41,444
   
 
6,714
 
   
 
908
   
 
—  
 
   
 
49,066
Total shareholders’ equity
   
 
1,236,739
   
 
930,618
   
 
1,365,544
 
   
 
57,048
   
 
(2,358,634
)
   
 
1,231,315
    
  
  
  
  
  
    
$
1,427,562
   
$
1,513,019
   
$
1,063,796
 
   
$
101,016
   
$
(2,353,169
)
   
$
1,752,224
    
  
  
  
  
  

23

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)
 
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF MAY 31, 2000
    
Cintas Corporation
     
Corp. 2
   
Subsidiary Guarantors
     
Non-Guarantors
   
Eliminations
     
Cintas Corporation Consolidated
Assets
                                                
Current assets:
                                                
Cash and cash equivalents
   
$
—  
 
   
$
—  
   
$
46,278
     
$
5,904
   
$
—  
 
   
$
52,182
Marketable securities
   
 
—  
 
   
 
—  
   
 
55,285
     
 
2,355
   
 
—  
 
   
 
57,640
Accounts receivable, net
   
 
—  
 
   
 
—  
   
 
238,789
     
 
2,482
   
 
(15,536
)
   
 
225,735
Inventories
   
 
—  
 
   
 
—  
   
 
171,160
     
 
—  
   
 
(6,254
)
   
 
164,906
Uniforms and other rental items in service
   
 
—  
 
   
 
—  
   
 
223,592
     
 
9,778
   
 
(19,600
)
   
 
213,770
Prepaid expenses
   
 
—  
 
   
 
—  
   
 
6,841
     
 
399
   
 
(3
)
   
 
7,237
    
  
  
    
  
  
Total current assets
   
 
—  
 
   
 
—  
   
 
741,945
     
 
20,918
   
 
(41,393
)
   
 
721,470
Property and equipment, at cost, net
   
 
—  
 
   
 
—  
   
 
617,945
     
 
24,562
   
 
—  
 
   
 
642,507
Goodwill
            
 
—  
   
 
116,147
     
 
4,340
   
 
—  
 
   
 
120,487
Other assets
   
 
828,108
 
   
 
—  
   
 
46,199
     
 
43,034
   
 
(820,463 
)
   
 
96,878
    
  
  
    
  
  
    
$
828,108
 
   
$
—  
   
$
1,522,236
     
$
92,854
   
$
(861,856 
)
   
$
1,581,342
    
  
  
    
  
  
Liabilities and Shareholders’ Equity
                                                
Current liabilities:
                                                
Accounts payable
   
$
(219,080
)
   
$
—  
   
$
244,591
     
$
1,185
   
$
24,280
 
   
$
50,976
Accrued compensation and related liabilities
   
 
—  
 
   
 
—  
   
 
27,372
     
 
768
   
 
—  
 
   
 
28,140
Accrued liabilities
   
 
—  
 
   
 
—  
   
 
86,926
     
 
3,561
   
 
(429
)
   
 
90,058
Deferred income taxes
   
 
—  
 
   
 
—  
   
 
48,065
     
 
1,549
   
 
—  
 
   
 
49,614
Long-term debt due within one year
   
 
—  
 
   
 
—  
   
 
16,677
     
 
—  
   
 
(73
)
   
 
16,604
    
  
  
    
  
  
Total current liabilities
   
 
(219,080
)
   
 
—  
   
 
423,631
     
 
7,063
   
 
23,778
 
   
 
235,392
Long-term debt due after one year
   
 
—  
 
   
 
—  
   
 
243,143
     
 
32,760
   
 
(21,525
)
   
 
254,378
Deferred income taxes
   
 
—  
 
   
 
—  
   
 
48,361
     
 
335
   
 
—  
 
   
 
48,696
Total shareholders’ equity
   
 
1,047,188
 
   
 
—  
   
 
807,101
     
 
52,696
   
 
(864,109 
)
   
 
1,042,876
    
  
  
    
  
  
    
$
828,108
 
   
$
—  
   
$
1,522,236
     
$
92,854
   
$
(861,856
)
   
$
1,581,342
    
  
  
    
  
  

24

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)
 
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED MAY 31, 2001

 
   
Cintas Corporation
    
Corp. 2
    
Subsidiary Guarantors
     
Non-Guarantors
    
Eliminations
     
Cintas Corporation Consolidated
  
Cash flows from operating activities:
                                      
Net income
  
$
222,451
 
  
$
49,570
 
  
$
164,028
 
   
$
6,068
 
  
$
(219,666
)
   
$
222,451
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
                                                  
Depreciation
  
 
—  
 
  
 
71,082
 
  
 
15,832
 
   
 
3,325
 
  
 
—  
 
   
 
90,239
 
Amortization of deferred charges
  
 
—  
 
  
 
12,528
 
  
 
3,152
 
   
 
6,170
 
  
 
—  
 
   
 
21,850
 
Write down of assets
  
 
—  
 
  
 
—  
 
  
 
—  
 
   
 
—  
 
  
 
—  
 
         
Deferred income taxes
  
 
—  
 
  
 
92,192
 
  
 
(84,362
)
   
 
629
 
  
 
—  
 
   
 
8,459
 
Changes in current assets and liabilities, net of acquisitions of businesses:
                                                  
Accounts receivable
  
 
—  
 
  
 
(156,917
)
  
 
150,343
 
   
 
(7,246
)
  
 
(2,666
)
   
 
(16,486
)
Inventories
  
 
—  
 
  
 
(202,704
)
  
 
156,790
 
   
 
(2,601
)
  
 
(178
)
   
 
(48,693
)
Uniforms and other rental items in service
  
 
—  
 
  
 
(189,095
)
  
 
165,792
 
   
 
(390
)
  
 
(4,778
)
   
 
(28,471
)
Prepaid expenses
  
 
—  
 
  
 
(6,173
)
  
 
5,055
 
   
 
(42
)
  
 
—  
 
   
 
(1,160
)
Accounts payable
  
 
409,903
 
  
 
88,845
 
  
 
(539,607
)
   
 
15,783
 
  
 
14,969
 
   
 
(10,107
)
Accrued compensation and related liabilities
  
 
—  
 
  
 
26,765
 
  
 
(20,503
)
   
 
404
 
  
 
—  
 
   
 
6,666
 
Accrued liabilities
  
 
—  
 
  
 
128,231
 
  
 
(123,212
)
   
 
(1,938
)
  
 
(871
)
   
 
2,210
 
   
 
 
  
 
  
Net cash provided by (used in) operating activities
  
 
632,354
 
  
 
(85,676
)
  
 
(106,692
)
   
 
20,162
 
  
 
(213,190
)
   
 
246,958
 
Cash flows from investing activities:
                                      
Capital expenditures
  
 
—  
 
  
 
(616,834
)
  
 
475,467
 
   
 
(6,077
)
  
 
—  
 
   
 
(147,444
)
Proceeds from sale or redemption of marketable securities
  
 
—  
 
  
 
59,021
 
  
 
—  
 
   
 
2,588
 
  
 
—  
 
   
 
61,609
 
Purchase of marketable securities
  
 
—  
 
  
 
(94,076
)
  
 
55,285
 
   
 
(1,683
)
  
 
—  
 
   
 
(40,474
)
Acquisitions of businesses, net of cash acquired
  
 
—  
 
  
 
(18,709
)
  
 
(11,348
)
   
 
(478
)
  
 
—  
 
   
 
(30,535
)
Proceeds from divestiture of certain facilities
  
 
—  
 
  
 
1,400
 
  
 
—  
 
   
 
—  
 
  
 
—  
 
   
 
1,400
 
Other
  
 
(601,751
)
  
 
608,550
 
  
 
(236,609
)
   
 
(231
)
  
 
224,076
 
   
 
(5,965
)
   
 
 
  
 
  
Net cash (used in) provided by investing activities
  
 
(601,751
)
  
 
(60,648
)
  
 
282,795
 
   
 
(5,881
)
  
 
224,076
 
   
 
(161,409
)
Cash flows from financing activities:
                                      
Proceeds from issuance of long-term debt
  
 
—  
 
  
 
257,982
 
  
 
(247,032
)
   
 
786
 
  
 
(11,506
)
   
 
230
 
Repayment of long-term debt
  
 
—  
 
  
 
(14,029
)
  
 
(6,557
)
   
 
(13,668
)
  
 
620
 
   
 
(33,634
)
Stock options exercised
  
 
5,992
 
  
 
—  
 
  
 
—  
 
   
 
—  
 
  
 
—  
 
   
 
5,992
 
Dividends paid
  
 
(37,173
)
  
 
(40,000
)
  
 
40,000
 
   
 
—  
 
  
 
—  
 
   
 
(37,173
)
Other
  
 
578
 
  
 
—  
 
  
 
—  
 
   
 
—  
 
  
 
—  
 
   
 
578
 
   
 
 
  
 
  
Net cash (used in) provided by financing activities
  
 
(30,603
)
  
 
203,953
 
  
 
(213,589
)
   
 
(12,882
)
  
 
(10,886
)
   
 
(64,007
)
   
 
 
  
 
  
Net increase (decrease) in cash and cash equivalents
  
 
—  
 
  
 
57,629
 
  
 
(37,486
)
   
 
1,399
 
  
 
—  
 
   
 
21,542
 
Cash and cash equivalents at beginning of period
  
 
—  
 
  
 
—  
 
  
 
46,278
 
   
 
5,904
 
  
 
—  
 
   
 
52,182
 
   
 
 
  
 
  
Cash and cash equivalents at end of period
  
$
—  
 
  
$
57,629
 
  
$
8,792
 
   
$
7,303
 
  
$
—  
 
   
$
73,724
 
   
 
 
  
 
  

25

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)
 
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED MAY 31, 2000

 
    
Cintas Corporation
     
Corp. 2
   
Subsidiary Guarantors
       
Non-Guarantors
     
Eliminations
     
Cintas Corporation Consolidated
  
Cash flows from operating activities:
                                                      
Net income
   
$
193,387
 
   
$
—  
   
$
198,083
 
     
$
(1,693
)
   
$
(196,390
)
   
$
193,387
 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
                                                      
Depreciation
   
 
—  
 
   
 
—  
   
 
76,302
 
     
 
2,214
 
   
 
—  
 
   
 
78,516
 
Amortization of deferred charges
   
 
—  
 
   
 
—  
   
 
13,031
 
     
 
7,966
 
   
 
—  
 
   
 
20,997
 
Write down of assets
   
 
—  
 
   
 
—  
   
 
—  
 
     
 
—  
 
   
 
—  
 
   
 
—  
 
Deferred income taxes
   
 
—  
 
   
 
—  
   
 
17,831
 
     
 
(452
)
   
 
—  
 
   
 
17,379
 
Changes in current assets and liabilities, net of acquisitions of businesses:
                                                      
Accounts receivable
   
 
—  
 
   
 
—  
   
 
(25,172
)
     
 
5,188
 
   
 
725
 
   
 
(19,259
)
Inventories
   
 
—  
 
   
 
—  
   
 
(25,436
)
     
 
3
 
   
 
2,457
 
   
 
(22,976
)
Uniforms and other rental items in service
   
 
—  
 
   
 
—  
   
 
(13,325
)
     
 
585
 
   
 
(1,685
)
   
 
(14,425
)
Prepaid expenses
   
 
—  
 
   
 
—  
   
 
(951
)
     
 
10
 
   
 
3
 
   
 
(938
)
Accounts payable
   
 
(409,903
)
   
 
—  
   
 
404,862
 
     
 
4,784
 
   
 
(343
)
   
 
(600
)
Accrued compensation and related liabilities
   
 
—  
 
   
 
—  
   
 
2,113
 
     
 
157
 
   
 
—  
 
   
 
2,270
 
Accrued liabilities
   
 
—  
 
   
 
—  
   
 
3,577
 
     
 
207
 
   
 
(103
)
   
 
3,681
 
    
  
  
    
  
  
Net cash (used in) provided by operating activities
   
 
(216,516
)
   
 
—  
   
 
650,915
 
     
 
18,969
 
   
 
(195,336
)
   
 
258,032
 
Cash flows from investing activities:
                                                      
Capital expenditures
   
 
—  
 
   
 
—  
   
 
(153,180
)
     
 
(8,252
)
   
 
—  
 
   
 
(161,432
)
Proceeds from sale or redemption of marketable securities
   
 
—  
 
   
 
—  
   
 
100,558
 
     
 
12,350
 
   
 
—  
 
   
 
112,908
 
Purchase of marketable securities
   
 
—  
 
   
 
—  
   
 
(88,260
)
     
 
(9,973
)
   
 
—  
 
   
 
(98,233
)
Acquisitions of businesses, net of cash acquired
   
 
—  
 
   
 
—  
   
 
(24,561
)
     
 
(421
)
   
 
—  
 
   
 
(24,982
)
Proceeds from divestiture of certain facilities
   
 
—  
 
   
 
—  
   
 
25,722
 
     
 
—  
 
   
 
—  
 
   
 
25,722
 
Other
   
 
244,319
 
   
 
—  
   
 
(451,665
)
     
 
684
 
   
 
195,741
 
   
 
(10,921
)
    
  
  
    
  
  
Net cash provided by (used in) investing activities
   
 
244,319
 
   
 
—  
   
 
(591,386
)
     
 
(5,612
)
   
 
195,741
 
   
 
(156,938
)
Cash flows from financing activities:
                                                      
Proceeds from issuance of long-term debt
   
 
—  
 
   
 
—  
   
 
147,946
 
     
 
(6,428
)
   
 
(779
)
   
 
140,739
 
Repayment of long-term debt
   
 
—  
 
   
 
—  
   
 
(171,708
)
     
 
(6,317
)
   
 
374
 
   
 
(177,651
)
Stock options exercised
   
 
3,399
 
   
 
—  
   
 
—  
 
     
 
—  
 
   
 
—  
 
   
 
3,399
 
Dividends paid
   
 
(31,249
)
   
 
—  
   
 
—  
 
     
 
—  
 
   
 
—  
 
   
 
(31,249
)
Other
   
 
47
 
   
 
—  
   
 
—  
 
     
 
—  
 
   
 
—  
 
   
 
47
 
    
  
  
    
  
  
Net cash (used in) financing activities
   
 
(27,803
)
   
 
—  
   
 
(23,762
)
     
 
(12,745
)
   
 
(405
)
   
 
(64,715
)
Net increase in cash and cash equivalents
   
 
—  
 
   
 
—  
   
 
35,767
 
     
 
612
 
   
 
—  
 
   
 
36,379
 
Cash and cash equivalents at beginning of period
   
 
—  
 
   
 
—  
   
 
10,511
 
     
 
5,292
 
   
 
—  
 
   
 
15,803
 
    
  
  
    
  
  
Cash and cash equivalents at end of period
   
$
—  
 
   
$
—  
   
$
46,278
 
     
$
5,904
 
   
$
—  
 
   
$
52,182
 
    
  
  
    
  
  

26

Table of Contents

CINTAS CORPORATION
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Amounts in thousands except per share and share data)
 
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED MAY 31, 1999

 
    
Cintas Corporation
     
Corp. 2
  
Subsidiary Guarantors
       
Non-Guarantors
    
Eliminations
     
Cintas Corporation Consolidated
  
Cash flows from operating activities:
                                                    
Net income
   
$
138,939
 
   
$
—  
  
$
141,002
 
     
$
4,356
 
  
$
(145,358
)
   
$
138,939
 
Adjustment to conform net income to Unitog Company’s fiscal year
   
 
—  
 
   
 
—  
  
 
689
 
     
 
—  
 
  
 
—  
 
   
 
689
 
Adjustments to reconcile net income to net cash provided by operating activities:
                                                    
Depreciation
   
 
—  
 
   
 
—  
  
 
67,182
 
     
 
1,597
 
  
 
—  
 
   
 
68,779
 
Amortization of deferred charges
   
 
—  
 
   
 
—  
  
 
18,604
 
     
 
2,845
 
  
 
—  
 
   
 
21,449
 
Write down of assets
   
 
—  
 
   
 
—  
  
 
12,609
 
     
 
—  
 
  
 
—  
 
   
 
12,609
 
Deferred income taxes
   
 
—  
 
   
 
—  
  
 
(2,102
)
     
 
746
 
  
 
—  
 
   
 
(1,356
)
Changes in current assets and liabilities, net of acquisitions of businesses:
                                                    
Accounts receivable
   
 
—  
 
   
 
—  
  
 
(25,619
)
     
 
(409
)
  
 
11,544
 
   
 
(14,484
)
Inventories
   
 
—  
 
   
 
—  
  
 
(5,540
)
     
 
—  
 
  
 
(357
)
   
 
(5,897
)
Uniforms and other rental items in service
   
 
—  
 
   
 
—  
  
 
(19,905
)
     
 
(3,954
)
  
 
5,961
 
   
 
(17,898
)
Prepaid expenses
   
 
—  
 
   
 
—  
  
 
(279
)
     
 
(258
)
  
 
—  
 
   
 
(537
)
Accounts payable
   
 
—  
 
   
 
—  
  
 
(21,966
)
     
 
6,611
 
  
 
266
 
   
 
(15,089
)
Accrued compensation and related liabilities
   
 
—  
 
   
 
—  
  
 
2,948
 
     
 
611
 
  
 
—  
 
   
 
3,559
 
Accrued liabilities
   
 
—  
 
   
 
—  
  
 
11,649
 
     
 
(1,417
)
  
 
2,067
 
   
 
12,299
 
    
  
 
    
 
  
Net cash provided by (used in) operating activities