EX-99 2 ex997-14.htm EXHIBIT Ex 99 7-14


Exhibit 99
 
FOR IMMEDIATE RELEASE                              
July 15, 2014

Cintas Corporation Announces Fiscal 2014 Results and
Gain on the Previously Announced Document Shredding Transaction


CINCINNATI, July 15, 2014 -- Cintas Corporation (Nasdaq: CTAS) today reported results for its fourth quarter and full fiscal year ended May 31, 2014. Revenue for the fourth quarter and for the fiscal year was $1.16 billion and $4.55 billion, respectively. The fiscal year revenue of $4.55 billion is a record level for Cintas. Net income for the fourth quarter and for the fiscal year was $127.2 million and $374.4 million, respectively. Earnings per diluted share (EPS) for the fourth quarter and the fiscal year were $1.03 and $3.05, respectively. Fourth quarter net income and EPS figures included a positive impact of $32.9 million and $0.27, net of tax, respectively, related to the closing of the previously announced partnership transaction with Shred-it International Inc. (the “Shred-it Transaction”), which closed on April 30, 2014. The impact of the Shred-it Transaction will be further explained in the Operating Income and Net Income Results section below.

Revenue Results

Fourth quarter revenue of $1.16 billion grew 2.5% compared to last year’s fourth quarter revenue of $1.13 billion. However, this revenue growth rate was negatively affected by the impact of the Shred-it Transaction. The table below labeled 4th Quarter Revenue Results shows fourth quarter revenue for Cintas, separately presented for revenue unaffected by the Shred-it Transaction and for Document Shredding. With the closing of the Shred-it Transaction effective April 30, 2014, Cintas will no longer include Document Shredding revenue in its reported revenue. As a result, we believe that revenue unaffected by the Shred-it Transaction is more representative of the ongoing revenue stream of Cintas.

For the businesses unaffected by the Shred-it Transaction, fourth quarter revenue grew 4.7% over last year’s fourth quarter. When adjusting for one fewer workday in this year’s fourth quarter compared to last year’s fourth quarter, revenue for the businesses unaffected by the Shred-it Transaction grew 6.3%. Organic growth for those businesses, which adjusts for both the impact of acquisitions and the difference in workdays, was 6.1%. Scott D. Farmer, Chief Executive Officer, stated, “After very challenging weather in our third quarter, we are pleased to see our revenue growth rate rebound in the fourth quarter. Our Rental operating segment organic growth rate, in particular, improved from a third quarter rate of 5.4% to 6.7% in the fourth quarter.”


4th Quarter Revenue Results 
(dollar amounts in millions)
Q4, FY14
Q4, FY13
Growth %
Workday
Adjusted
Growth %
Organic
Growth %
 
 
 
 
 
 
Number of workdays
65
66
 
See Note 1
See Note 2
Rental Uniforms & Ancillary Products
$ 825.0
$ 785.0
5.1%
6.7%
6.7%
Uniform Direct Sales
   118.5
   124.7
(5.0%)
(3.6%)
(3.6%)
First Aid, Safety & Fire Protection
   137.2
   125.4
9.5%
11.1%
10.2%
Document Storage
     23.1
     19.1
20.7%
22.6%
15.4%
Revenue unaffected by Shred-it Transaction
$1,103.8
$1,054.2
4.7%
6.3%
6.1%
Document Shredding - See Note 3
     53.7
     74.9
(28.3%)
(27.2%)
7.8%
Total Cintas Revenue
$1,157.5
$1,129.1
2.5%
4.1%
6.2%

Note 1 - Workday adjusted growth reflects the impact of having one fewer workday in the fourth quarter of fiscal 2014 compared to the fourth quarter of fiscal 2013.
Note 2 - Organic growth reflects the revenue growth when adjusting for the impact of acquisitions and the Shred-it Transaction and of having one fewer workday in the fourth quarter of fiscal 2014 compared to the fourth quarter of fiscal 2013.
Note 3 - Q4, FY14 Document Shredding revenue is for the two month period March 1, 2014 to April 30, 2014. Q3, FY13 Document Shredding revenue is for the three month period March 1, 2013 to May 31, 2013.




Operating Income and Net Income Results

Fourth quarter operating income was $123.8 million, but was negatively affected by the impact of the Shred-it Transaction. The table below labeled 4th Quarter Operating Income Results shows fourth quarter operating income for Cintas, separately presented for operating income unaffected by the Shred-it Transaction and for Document Shredding related items. With the closing of the Shred-it Transaction effective April 30, 2014, we recognized an asset impairment charge and transaction costs associated with the Shred-it Transaction. As a result, we believe that operating income unaffected by the Shred-it Transaction is more representative of our fourth quarter operating performance.

For the businesses unaffected by the Shred-it Transaction, fourth quarter operating income was $165.4 million and grew 10.3% over last year’s fourth quarter. Fourth quarter operating income as a percent of revenue for these businesses was 15.0%, which was an improvement from the 14.2% in last year’s fourth quarter. Mr. Farmer added, “We continue to see good leveraging of our infrastructure as our revenue grows, and the route capacity added last fiscal year continues to improve in efficiency and allows our service teams to add more products and services for our customers.”
4th Quarter Operating
Income Results
(dollar amounts in millions)
Q4, FY14
% of
Revenue
Q4, FY13
% of
Revenue
Operating
Income
Growth %
 
 
 
 
 
 
Rental Uniforms & Ancillary Products
$ 135.2
16.4%
$ 117.5

15.0%
15.0%
Uniform Direct Sales
     14.9
12.6%
     18.1

14.5%
(17.4%)
First Aid, Safety & Fire Protection
     16.3
11.9%
     13.9

11.1%
17.2%
Document Storage
      (1.0)
(4.3%)
       0.4

2.0%
(350.0%)
Operating Income unaffected by Shred-it Transaction
$ 165.4
15.0%
$ 149.9

14.2%
10.3%
Document Shredding
       0.8
 
       4.0

 
 
Shredding transaction asset impairment charge
    (16.1)
 
—

 
 
Shredding transaction costs
    (26.3)
 
—

 
 
Total Operating Income
$ 123.8
10.7%
$ 153.9

13.6%
(19.6%)

The asset impairment charge primarily related to the write-off of certain Document Shredding information technology assets used specifically in the Document Shredding business. The shredding transaction costs primarily related to legal and professional fees and the early vesting of restricted stock grants and stock options associated with the employees who transferred employment from Cintas to Shred-it. The table below shows the total impact of the Shred-it Transaction on the fourth quarter results and the fiscal year 2014 results.

Cintas Results for 4th Quarter,
Fiscal 2014

(dollar amounts in millions, except EPS)
As Reported
Impact of
Shred-it Transaction
Adjusted for the
Shred-it Transaction
 
 
 
 
Operating Income unaffected by Shred-it Transaction
$ 165.4
—

$ 165.4

Document Shredding Operating Income
0.8
—

0.8

Shredding transaction asset impairment charge
(16.1)

$ (16.1)


—

Shredding transaction costs
(26.3)
(26.3)

—

Operating Income
$ 123.8
$ (42.4)

$ 166.2

Gain on deconsolidation of Shredding
    106.4
    106.4

—

Interest Expense, net
    (16.3)
—

    (16.3)

Income before income taxes
$ 213.9
$ 64.0

$ 149.9

Income Taxes
      86.7
     31.1

      55.6

Net Income
$ 127.2
$ 32.9

$ 94.3

EPS
$ 1.03
$ 0.27

$ 0.76









Cintas Results for Fiscal Year 2014

(dollar amounts in millions, except EPS)
As Reported
Impact of
Shred-it Transaction
Adjusted for the
Shred-it Transaction
 
 
 
 
Operating Income unaffected by Shred-it Transaction
$ 603.5
—

$ 603.5

Document Shredding Operating Income
8.1
—

8.1

Shredding transaction asset impairment charge
(16.1)
$ (16.1)

—

Shredding transaction costs
(28.5)
(28.5)

—

Operating Income
$ 567.0
$ (44.6)

$ 611.6

Gain on deconsolidation of Shredding
    106.4
    106.4

—

Interest Expense, net
    (65.6)
—

    (65.6)

Income before income taxes
$ 607.8
$ 61.8

$ 546.0

Income Taxes
    233.4
     30.3

    203.1

Net Income
$ 374.4
$ 31.5

$ 342.9

EPS
$ 3.05
$ 0.26

$ 2.79


Upon the closing of the Shred-it Transaction, Cintas contributed its Document Shredding business to a partnership with Shred-it International Inc. As a result, Cintas will no longer reflect the assets or liabilities associated with that business in its balance sheet after April 30, 2014. Instead, we will report the investment in the partnership with Shred-it International Inc. in the line item on our balance sheet entitled “Investments.” U.S. generally accepted accounting principles require us to initially record this investment at fair market value, which has resulted in a gain of $106.4 million. Somewhat offsetting this gain are the $16.1 million asset impairment charge and the $28.5 million shredding transaction costs described above. The combined net income and EPS impact of the Shred-it Transaction on the fiscal 2014 results was $31.5 million and $0.26, net of tax, respectively.

Net income was $127.2 million and $374.4 million for the fourth quarter and fiscal 2014, respectively. However, these figures were positively impacted by the Shred-it Transaction as noted above. Net income, adjusted for the Shred-it Transaction, which is more representative of the operating performance of Cintas, was $94.3 million and $342.9 million for the fourth quarter and fiscal 2014, respectively. Net income growth over last fiscal year, adjusted for the Shred-it Transaction, for the fourth quarter and fiscal 2014 was 9.7% and 8.7%, respectively. EPS, adjusted for the Shred-it Transaction, was $0.76 and $2.79 for the fourth quarter and fiscal 2014, respectively. EPS growth over last fiscal year, adjusted for the Shred-it Transaction, for the fourth quarter and fiscal 2014 was 10.1% and 10.7%, respectively.

During the fourth quarter and into June 2014, Cintas purchased 4.1 million shares of common stock at a cost of $250.0 million. This share buyback had an impact of less than $0.01 on fourth quarter EPS since it occurred so late in the quarter. However, it is expected to benefit fiscal year 2015 EPS by approximately $0.09. As of July 15, 2014, the Company has $254.4 million available under the current Board stock repurchase authorization. The total share purchases included acquiring 3.4 million shares at an aggregate cost of approximately $204.2 million during the fourth quarter, and the remaining 0.7 million shares were purchased during June 2014 at an aggregate cost of approximately $45.8 million.

Fiscal Year 2015 Guidance

Mr. Farmer concluded, “As we enter fiscal 2015, we remain encouraged by the performance of our businesses and the execution of our strategies by our employees, who we call partners, but we continue to look for more consistency from the U.S. economy. While the U.S. employment performance has improved during the past few months, we still see narrowness in that performance and are uncertain that the improved performance can continue. We have developed our guidance for fiscal 2015 with the assumption that generally inconsistent U.S. economic performance will continue. We expect fiscal 2015 revenue to be in the range of $4.425 billion to $4.525 billion, and fiscal 2015 EPS to be in the range of $3.06 to $3.15. This guidance assumes no income contribution from the partnership with Shred-it International Inc. due to the expectation of first year integration and transition expenses.”

As mentioned earlier in this press release, upon the closing of the Shred-it Transaction on April 30, 2014, we will no longer include Document Shredding revenue in our reported revenue. The table below shows a comparison of fiscal 2014 revenue to 2015 revenue guidance. 







Revenue Guidance
(dollar amounts in millions)
Fiscal 2014
Fiscal 2015
Low End
of Range
Growth vs.
Fiscal 2014
Fiscal 2015
High End
of Range
Growth vs.
Fiscal 2014
 
 
 
 
 
 
Revenue, excluding Document Shredding
$4,276.1
$4,425.0
3.5%
$4,525.0
5.8%
Document Shredding Revenue
   275.7
 
 
 
 
Total Cintas Revenue
$4,551.8
 
 
 
 

The table below shows a comparison of fiscal 2014 EPS to 2015 EPS guidance.

EPS Guidance
Fiscal 2014
Fiscal 2015
Low End
of Range
Growth vs.
Fiscal 2014
Fiscal 2015
High End
of Range
Growth vs.
Fiscal 2014
 
 
 
 
 
 
EPS, excluding Document Shredding
$ 2.75
$ 3.06
11.3%
$ 3.15
14.5%
Impact of Shredding business
  0.04
 
 
 
 
Impact of Shred-it Transaction
  0.26
 
 
 
 
Total Cintas EPS
$ 3.05
 
 
 
 

The fiscal 2015 EPS guidance incorporates the impact of the share buybacks that occurred in May and June 2014. It does not assume any additional share buybacks.

About Cintas
Headquartered in Cincinnati, Cintas Corporation provides highly specialized services to businesses of all types primarily throughout North America. Cintas designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom supplies, first aid, safety, fire protection products and services and document management services for over one million businesses. Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of the Standard & Poor’s 500 Index.





CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release. Factors that might cause such a difference include, but are not limited to, the Shred-it partnership’s ability to promptly and effectively integrate the Cintas Document Shredding business with Shred-it’s Document Shredding business; the Shred-it partnership’s ability to realize any synergies from the combination of the Cintas Document Shredding business with Shred-it’s Document Shredding business; the ability to successfully explore strategic opportunities for the Cintas Global Document Storage and Imaging business; the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions; fluctuations in costs of materials and labor including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; the cost, results and ongoing assessment of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002; disruptions caused by the inaccessibility of computer systems data; the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; the reactions of competitors in terms of price and service; the ultimate impact of the Affordable Care Act; and the finalization of our financial statements for the year ended May 31, 2014. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2013 and in our reports on Forms 10-Q and 8-K. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us or that we currently believe to be immaterial may also harm our business.

For additional information, contact:
William C. Gale, Sr. Vice President-Finance and Chief Financial Officer - 513-573-4211
J. Michael Hansen, Vice President and Treasurer - 513-701-2079





 Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
 
 
Three Months Ended
 
 
May 31,
2014
 
May 31,
2013
 
% Change
Revenue:
 
 

 
 

 
 
Rental uniforms and ancillary products
 
$
825,046

 
$
785,018

 
5.1%
Other services
 
332,433

 
344,068

 
(3.4)%
Total revenue
 
$
1,157,479

 
$
1,129,086

 
2.5%
 
 
 
 
 
 
 
Costs and expenses:
 
 

 
 

 
 
Cost of rental uniforms and ancillary products
 
$
465,498

 
$
454,438

 
2.4%
Cost of other services
 
199,619

 
207,433

 
(3.8)%
Selling and administrative expenses
 
326,090

 
313,344

 
4.1%
Shredding transaction asset impairment charge
 
16,143

 
—

 
100.0%
Shredding transaction costs
 
26,323

 
—

 
100.0%
 
 
 
 
 
 
 
Operating income
 
$
123,806

 
$
153,871

 
(19.5)%
 
 
 
 
 
 
 
Gain on deconsolidation of Shredding
 
$
106,441

 
$
—

 
100.0%
 
 
 
 
 
 
 
Interest income
 
(33
)
 
(51
)
 
(35.3)%
Interest expense
 
16,396

 
16,518

 
(0.7)%
 
 
 
 
 
 
 
Income before income taxes
 
$
213,884

 
$
137,404

 
55.7%
Income taxes
 
86,660

 
51,427

 
68.5%
Net income
 
$
127,224

 
$
85,977

 
48.0%
 
 
 
 
 
 
 
Per share data:
 
 

 
 

 
 
Basic earnings per share
 
$
1.04

 
$
0.69

 
50.7%
Diluted earnings per share
 
$
1.03

 
$
0.69

 
49.3%
 
 
 
 
 
 
 
Weighted average number of shares outstanding
 
119,541

 
122,392

 
 
Diluted average number of shares outstanding
 
120,886

 
123,103

 
 
 
 
 
 
 
 
 









 Cintas Corporation
Consolidated Condensed Statements of Income
(In thousands except per share data)
 
 
Twelve Months Ended
 
 
May 31,
2014
 
May 31,
2013
 
% Change
Revenue:
 
 

 
 

 
 
Rental uniforms and ancillary products
 
$
3,223,930

 
$
3,044,587

 
5.9%
Other services
 
1,327,882

 
1,271,884

 
4.4%
Total revenue
 
$
4,551,812

 
$
4,316,471

 
5.5%
 
 
 
 
 
 
 
Costs and expenses:
 
 

 
 

 
 
Cost of rental uniforms and ancillary products
 
$
1,829,427

 
$
1,756,297

 
4.2%
Cost of other services
 
807,999

 
773,107

 
4.5%
Selling and administrative expenses
 
1,302,752

 
1,221,856

 
6.6%
Shredding transaction asset impairment charge
 
16,143

 
—

 
100.0%
Shredding transaction costs
 
28,481

 
—

 
100.0%
 
 
 
 
 
 
 
Operating income
 
$
567,010

 
$
565,211

 
0.3%
 
 
 
 
 
 
 
Gain on deconsolidation of Shredding
 
$
106,441

 
$
—

 
100.0%
 
 
 
 
 
 
 
Interest income
 
(229
)
 
(409
)
 
(44.0)%
Interest expense
 
65,822

 
65,712

 
0.2%
 
 
 
 
 
 
 
Income before income taxes
 
$
607,858

 
$
499,908

 
21.6%
Income taxes
 
233,416

 
184,466

 
26.5%
Net income
 
$
374,442

 
$
315,442

 
18.7%
 
 
 
 
 
 
 
Per share data:
 
 

 
 

 
 
Basic earnings per share
 
$
3.08

 
$
2.53

 
21.7%
Diluted earnings per share
 
$
3.05

 
$
2.52

 
21.0%
 
 
 
 
 
 
 
Weighted average number of shares outstanding
 
120,377

 
123,956

 
 
Diluted average number of shares outstanding
 
121,640

 
124,531

 
 
 
 
 
 
 
 
 




CINTAS CORPORATION SUPPLEMENTAL DATA
 
 
Three Months Ended
 
 
May 31,
2014
 
May 31,
2013
Rental uniforms and ancillary products gross margin
 
43.6
%
 
42.1
%
Other services gross margin
 
40.0
%
 
39.7
%
Total gross margin
 
42.5
%
 
41.4
%
Net margin
 
11.0
%
 
7.6
%
 
 
 
 
 
Depreciation and amortization
 
$
45,577

 
$
48,251

Capital expenditures
 
$
31,965

 
$
44,687

 
 
 
 
 
 
 
Twelve Months Ended
 
 
May 31,
2014
 
May 31,
2013
Rental uniforms and ancillary products gross margin
 
43.3
%
 
42.3
%
Other services gross margin
 
39.2
%
 
39.2
%
Total gross margin
 
42.1
%
 
41.4
%
Net margin
 
8.2
%
 
7.3
%
 
 
 
 
 
Depreciation and amortization
 
$
190,862

 
$
189,377

Capital expenditures
 
$
145,580

 
$
196,486

 
 
 
 
 
Debt / EBITDA
 
1.6

 
1.9

 
 
 
 
 


Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

The press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To supplement its consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides additional measures of revenue and related growth, operating income and related growth, net income, earnings per diluted share, debt and cash flow. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance. Reconciliations of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP are shown in the tables within the narrative of the press release or below.


Computation of Workday Adjusted Revenue Growth
 
 
Three Months Ended
 
Twelve Months Ended
 
 
May 31, 2014
 
May 31, 2013
 
Growth %
 
May 31, 2014
 
May 31, 2013
 
Growth %
 
 
A
 
B
 
G
 
I
 
J
 
O
Revenue
 
$1,157,479
 
$1,129,086
 
2.5%
 
$4,551,812
 
$4,316,471
 
5.5%
 
 
 
 
 
 
G=(A-B)/B
 
 
 
 
 
O=(I-J)/J
 
 
C
 
D
 
 
 
K
 
L
 
 
Workdays in the period
 
65
 
66
 
 
 
260
 
261
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
E
 
F
 
H
 
M
 
N
 
P
Revenue adjusted for workday difference
 
$1,175,286
 
$1,129,086
 
4.1%
 
$4,569,319
 
$4,316,471
 
5.9%
 
 
 
 
 
 
H=(E-F)/F
 
 
 
 
 
P=(M-N)/N
 
 
E=(A/C)*D
 
F=(B/D)*D
 
 
 
M=(I/K)*L
 
N=(J/L)*L
 
 
Management believes that Workday Adjusted Revenue Growth is valuable to investors because it reflects the revenue performance compared to a prior period with the same number of revenue generating days.







Computation of Debt to EBITDA
 
As of
 
May 31,
2014
 
May 31,
2013
Long-term debt
$
1,300,980

 
$
1,309,166

Letters of credit
85,115

 
85,775

Debt
$
1,386,095

 
$
1,394,941

 
 
 
 
 
Twelve Months Ended
 
May 31,
2014
 
May 31,
2013
Net Income
$
374,442

 
$
315,442

 
 
 
 
Add back:
 
 
 
Interest expense
65,822

 
65,712

Taxes
233,416

 
184,466

Depreciation
168,220

 
165,664

Amortization
22,642

 
23,713

EBITDA
$
864,542

 
$
754,997

 
 
 
 
Debt / EBITDA
1.6

 
1.9

Management believes the ratio of debt to earnings before interest, taxes, depreciation and amortization (EBITDA) is valuable to investors, particularly investors of the company's debt, because it is a common metric that reflects the company's earnings and cash flow available for debt service payments.


Computation of Free Cash Flow
 
 
Twelve Months Ended
 
 
May 31,
2014
 
May 31,
2013
Net Cash Provided by Operations
 
$
607,969

 
$
552,748

Capital Expenditures
 
$
(145,580
)
 
$
(196,486
)
Free Cash Flow
 
$
462,389

 
$
356,262

Management uses free cash flow to assess the financial performance of the Company.  Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.




SUPPLEMENTAL SEGMENT DATA
 
Rental
Uniforms and
Ancillary
Products
 
Uniform
Direct Sales
 
First Aid,
Safety and
Fire
Protection
 
Document
Management
 
Corporate
 
Total
For the three months ended May 31, 2014
 
 

 
 

 
 

 
 

 
 

 
 

Revenue
 
$
825,046

 
$
118,462

 
$
137,226

 
$
76,745

 
$
—

 
$
1,157,479

Gross margin
 
$
359,548

 
$
35,508

 
$
61,158

 
$
36,148

 
$
—

 
$
492,362

Selling and administrative expenses
 
$
224,334

 
$
20,598

 
$
44,891

 
$
36,267

 
$
—

 
$
326,090

Gain on deconsolidation of Shredding, net of impairment charges and other Shredding transaction costs
 
$
—

 
$
—

 
$
—

 
$
63,975

 
$
—

 
$
63,975

Interest income
 
$
—

 
$
—

 
$
—

 
$
—

 
$
(33
)
 
$
(33
)
Interest expense
 
$
—

 
$
—

 
$
—

 
$
—

 
$
16,396

 
$
16,396

Income (loss) before income taxes
 
$
135,214

 
$
14,910

 
$
16,267

 
$
63,856

 
$
(16,363
)
 
$
213,884

 
 
 
 
 
 
 
 
.

 
 
 
 
For the three months ended May 31, 2013
 
 

 
 

 
 

 
 

 
 

 
 

Revenue
 
$
785,018

 
$
124,717

 
$
125,360

 
$
93,991

 
$
—

 
$
1,129,086

Gross margin
 
$
330,580

 
$
38,472

 
$
54,593

 
$
43,570

 
$
—

 
$
467,215

Selling and administrative expenses
 
$
213,044

 
$
20,421

 
$
40,716

 
$
39,163

 
$
—

 
$
313,344

Interest income
 
$
—

 
$
—

 
$
—

 
$
—

 
$
(51
)
 
$
(51
)
Interest expense
 
$
—

 
$
—

 
$
—

 
$
—

 
$
16,518

 
$
16,518

Income (loss) before income taxes
 
$
117,536

 
$
18,051

 
$
13,877

 
$
4,407

 
$
(16,467
)
 
$
137,404

 
 
 
 
 
 
 
 
 
 
 
 
 
For the twelve months ended May 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
3,223,930

 
$
455,485

 
$
514,429

 
$
357,968

 
$
—

 
$
4,551,812

Gross margin
 
$
1,394,503

 
$
130,018

 
$
225,238

 
$
164,627

 
$
—

 
$
1,914,386

Selling and administrative expenses
 
$
887,444

 
$
83,309

 
$
176,286

 
$
155,713

 
$
—

 
$
1,302,752

Gain on deconsolidation of Shredding, net of impairment charges and other Shredding transaction costs
 
$
—

 
$
—

 
$
—

 
$
61,817

 
$
—

 
$
61,817

Interest income
 
$
—

 
$
—

 
$
—

 
$
—

 
$
(229
)
 
$
(229
)
Interest expense
 
$
—

 
$
—

 
$
—

 
$
—

 
$
65,822

 
$
65,822

Income (loss) before income taxes
 
$
507,059

 
$
46,709

 
$
48,952

 
$
70,731

 
$
(65,593
)
 
$
607,858

Assets
 
$
2,875,014

 
$
142,033

 
$
422,015

 
$
510,102

 
$
513,288

 
$
4,462,452

 
 
 
 
 
 
 
 
 
 
 
 
 
For the twelve months ended May 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
3,044,587

 
$
461,328

 
$
460,592

 
$
349,964

 
$
—

 
$
4,316,471

Gross margin
 
$
1,288,290

 
$
134,985

 
$
199,314

 
$
164,478

 
$
—

 
$
1,787,067

Selling and administrative expenses
 
$
835,249

 
$
81,739

 
$
156,232

 
$
148,636

 
$
—

 
$
1,221,856

Interest income
 
$
—

 
$
—

 
$
—

 
$
—

 
$
(409
)
 
$
(409
)
Interest expense
 
$
—

 
$
—

 
$
—

 
$
—

 
$
65,712

 
$
65,712

Income (loss) before income taxes
 
$
453,041

 
$
53,246

 
$
43,082

 
$
15,842

 
$
(65,303
)
 
$
499,908

Assets
 
$
2,830,941

 
$
152,551

 
$
398,614

 
$
605,573

 
$
357,953

 
$
4,345,632

 
 
 
 
 
 
 
 
 
 
 
 
 




Cintas Corporation
Consolidated Balance Sheets
(In thousands except share data)
 
 
May 31,
2014
 
May 31,
2013
 
 
 
 
 
ASSETS
 
 

 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
513,288

 
$
352,273

Marketable securities
 
—

 
5,680

Accounts receivable, net
 
508,427

 
496,049

Inventories, net
 
251,239

 
240,440

Uniforms and other rental items in service
 
506,537

 
496,752

Income taxes, current
 
—

 
9,102

Prepaid expenses and other current assets
 
26,190

 
24,530

Total current assets
 
1,805,681

 
1,624,826

 
 
 
 
 
Property and equipment, at cost, net
 
855,702

 
986,703

 
 
 
 
 
Investments
 
458,357

 
101,525

Goodwill
 
1,267,411

 
1,517,560

Service contracts, net
 
55,675

 
92,153

Other assets, net
 
19,626

 
22,865

 
 
$
4,462,452

 
$
4,345,632

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Accounts payable
 
$
150,070

 
$
121,029

Accrued compensation and related liabilities
 
85,026

 
78,050

Accrued liabilities
 
299,727

 
271,821

Income taxes, current
 
5,960

 
—

Deferred tax liability
 
88,845

 
77,169

Long-term debt due within one year
 
503

 
8,187

Total current liabilities
 
630,131

 
556,256

 
 
 
 
 
Long-term liabilities:
 
 

 
 

Long-term debt due after one year
 
1,300,477

 
1,300,979

Deferred income taxes
 
246,044

 
210,483

Accrued liabilities
 
92,942

 
76,422

Total long-term liabilities
 
1,639,463

 
1,587,884

 
 
 
 
 
Shareholders’ equity:
 
 

 
 

Preferred stock, no par value:
         100,000 shares authorized, none outstanding
 
—

 
—

Common stock, no par value:
425,000,000 shares authorized
FY14: 176,378,412 issued and 117,037,784 outstanding
FY13: 174,786,010 issued and 122,281,507 outstanding
 
251,753

 
186,332

Paid-in capital
 
134,939

 
109,822

Retained earnings
 
3,998,893

 
3,717,771

Treasury stock:
FY14: 59,340,628 shares
FY13: 52,504,503 shares
 
(2,221,155
)
 
(1,850,556
)
Accumulated other comprehensive income
 
28,428

 
38,123

Total shareholders’ equity
 
2,192,858

 
2,201,492

 
 
 
 
 
 
 
$
4,462,452

 
$
4,345,632






Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(In thousands)
 
 
 
Twelve Months Ended
 
 
May 31,
 2014
 
May 31,
 2013
Cash flows from operating activities:
 
 

 
 

Net income
 
$
374,442

 
$
315,442

 
 
 
 
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation
 
168,220

 
165,664

Amortization of intangible assets
 
22,642

 
23,713

Stock-based compensation
 
29,875

 
23,310

Gain on deconsolidation of Shredding
 
(106,441
)
 
—

Shredding transaction asset impairment charge
 
16,143

 
—

Shredding transaction costs
 
26,057

 
—

Deferred income taxes
 
47,109

 
48,023

Change in current assets and liabilities, net of acquisitions of businesses:
 
 
 
 
Accounts receivable, net
 
(56,231
)
 
(42,704
)
Inventories, net
 
(11,062
)
 
10,997

Uniforms and other rental items in service
 
(11,435
)
 
(44,179
)
Prepaid expenses
 
(2,177
)
 
(3,281
)
Accounts payable
 
30,446

 
25,023

Accrued compensation and related liabilities
 
10,931

 
(13,161
)
Accrued liabilities
 
54,237

 
31,873

Income taxes payable
 
15,213

 
12,028

Net cash provided by operating activities
 
607,969

 
552,748

 
 
 
 
 
Cash flows from investing activities:
 
 

 
 

Capital expenditures
 
(145,580
)
 
(196,486
)
Proceeds from redemption of marketable securities
 
54,196

 
161,478

Purchase of marketable securities and investments
 
(65,858
)
 
(178,464
)
Proceeds from Shredding transaction, net of cash contributed
 
179,359

 
—

Acquisitions of businesses, net of cash acquired
 
(33,441
)
 
(69,370
)
Other, net
 
(5,219
)
 
(1,339
)
Net cash used in investing activities
 
(16,543
)
 
(284,181
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 

Proceeds from issuance of debt
 
—

 
250,000

Repayment of debt
 
(8,187
)
 
(225,636
)
Proceeds from exercise of stock-based compensation awards
 
41,902

 
14,807

Dividends paid
 
(93,320
)
 
(79,744
)
Repurchase of common stock
 
(370,599
)
 
(215,681
)
Other, net
 
469

 
196

Net cash used in financing activities
 
(429,735
)
 
(256,058
)
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 
(676
)
 
(61
)
 
 
 
 
 
Net increase in cash and cash equivalents
 
161,015

 
12,448

Cash and cash equivalents at beginning of period
 
352,273

 
339,825

Cash and cash equivalents at end of period
 
$
513,288

 
$
352,273