Investments

Investments at May 31, 2015 of $329.7 million include the cash surrender value of insurance policies of $101.8 million, equity method investments of $225.7 million, and cost method investments of $2.2 million. Investments at May 31, 2014 of $458.4 million include the cash surrender value of insurance policies of $86.5 million, equity method investments of $371.1 million, and cost method investments of $0.8 million.

Investments are evaluated for impairment on an annual basis or when indicators of impairment exist. For fiscal years 2015, 2014, and 2013, no losses due to impairment were recorded.

On April 30, 2014, Cintas completed the Shredding Transaction to combine Cintas’ Shredding with Shred-it’s shredding business. Under the agreement, Cintas and Shred-it each contributed its shredding business to the newly formed Shred-it Partnership owned 42% by Cintas and 58% by Shred-it. The resulting equity method investment (Level 3) in the Shred-it Partnership was initially recorded at fair value at $339.4 million derived with a primary reliance upon the income approach utilizing various discounted cash flow models. Fair value was determined by an independent valuation specialist. Management ultimately oversees the independent valuation specialist to ensure that the transaction-specific assumptions are appropriate for Cintas. The following table details quantitative information about significant unobservable inputs used in the initial valuation of Cintas' investment in the Shred-it Partnership:



					Range
(Dollars in millions)	Fair Value at April 30, 2014		Valuation Technique	Input	Low		High
Equity method investment - Shred-it Partnership	$	339.4	Discounted Cash Flow	EBITDA margin	20.0	%	22.0	%
				Ratio of capital expenditures to revenues	4.5	%	5.5	%
				Long-term revenue growth	1.5	%	2.0	%
				WACC rate	9.0	%	9.0	%

The carrying value of the investment in the Shred-it Partnership was $210.1 million and $341.4 million at May 31, 2015 and 2014, respectively. In May 2015, the Company received a dividend on our investment in the Shred-it Partnership of $113.4 million, which reduced the carrying value of the investment. As of May 31, 2015, Cintas’ carrying value of its investment in the Shred-it Partnership exceeded its share of the underlying equity in the net assets of the Shred-it Partnership by approximately $94.0 million (basis difference). The remaining basis difference is being amortized over the weighted average estimated useful lives of the underlying assets which generated the basis difference (approximately 9 years) and is recorded as a reduction in the income (loss) on the investment in the Shred-it Partnership, net of tax. Cintas records its share of the partnership's income on a one month lag. For the fiscal year ended May 31, 2015, Cintas recorded a net loss on the investment in the Shred-it Partnership of $5.5 million, which included amortization of basis differences of approximately $11.0 million. For the fiscal year ended May 31, 2014, Cintas recorded a net gain on the investment in the Shred-it Partnership of $1.2 million.

Cintas provides the following unaudited summary information regarding the Shred-it Partnership's financial position and results of operations as of and for the twelve months ended April 30, 2015:



Summary Balance Sheet Information	As of		As of
(in thousands)	April 30, 2015		April 30, 2014

Assets
Current assets	$	150,792	$	108,377
Non-current assets	$	968,956	$	924,196

Liabilities
Current liabilities	$	73,971	$	57,241
Non-current liabilities	$	532,673	$	427,569



Summary Income Statement Information	For the 12 Months Ended
(in thousands)	April 30, 2015

Net sales	$	695,628
Gross profit	$	432,532
Net income	$	10,385

Also during fiscal 2015, Cintas sold stock in an equity method investment. In conjunction with the sale of the equity method investment, Cintas also received a cash dividend of $5.2 million. Total cash received from the transaction was $35.2 million. The sale resulted in the recording of a gain, net of tax, of approximately $13.6 million in the fiscal year ended May 31, 2015. As a result, the Company no longer has the ability to exercise significant influence over the investee. Therefore, effective July 1, 2014, the remaining investment retained by Cintas is accounted for under the cost method.