0000723254-18-000035.txt : 20181220 0000723254-18-000035.hdr.sgml : 20181220 20181220161641 ACCESSION NUMBER: 0000723254-18-000035 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20181220 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20181220 DATE AS OF CHANGE: 20181220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CINTAS CORP CENTRAL INDEX KEY: 0000723254 STANDARD INDUSTRIAL CLASSIFICATION: MEN'S & BOYS' FURNISHINGS, WORK CLOTHING, AND ALLIED GARMENTS [2320] IRS NUMBER: 311188630 STATE OF INCORPORATION: WA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11399 FILM NUMBER: 181246397 BUSINESS ADDRESS: STREET 1: 6800 CINTAS BLVD STREET 2: P O BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 BUSINESS PHONE: 5134591200 MAIL ADDRESS: STREET 1: 6800 CINTAS BOULEVARD STREET 2: P O BOX 625737 CITY: CINCINNATI STATE: OH ZIP: 45262 8-K 1 ctasform8-k12x18.htm 8-K Document
UNITED STATES
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) December 20, 2018
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 Number)
 
 
 
 
 
 
 
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)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 193 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o



Item 2.02. Results of Operations and Financial Condition.
    
On December 20, 2018, Cintas Corporation issued a press release announcing its financial results for the quarter ended November 30, 2018. A copy of the press release is furnished as Exhibit 99 to this report and is incorporated herein by reference.
 

Item 9.01. Financial Statements and Exhibits.

(d)
Exhibits.

 
Exhibit
Number
 
Description
 
99
 
Press release dated December 20, 2018





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
CINTAS CORPORATION
 
 
 
 
Date:
December 20, 2018
 
By:
 
/s/ J. Michael Hansen
 
 
 
 
 
J. Michael Hansen
 
 
 
 
 
Executive Vice President and Chief Financial Officer





EXHIBIT INDEX


 
Exhibit
Number
 
Description
 
 



EX-99 2 ex9912-18.htm EXHIBIT 99 Exhibit


Exhibit 99
FOR IMMEDIATE RELEASE                             
December 20, 2018


Cintas Corporation Announces
Fiscal 2019 Second Quarter Results


CINCINNATI, December 20, 2018 -- Cintas Corporation (Nasdaq: CTAS) today reported results for its fiscal 2019 second quarter ended November 30, 2018.

Revenue for the second quarter of fiscal 2019 was $1.72 billion, an increase of 7.0% over last year’s second quarter. The organic growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was also 7.0%. The organic growth rate for the Uniform Rental and Facility Services operating segment increased to 6.6% in the second quarter of fiscal 2019 from 4.9% in the first quarter. The First Aid and Safety Services operating segment organic growth rate remained very strong at 10.2% in the second quarter.

Gross margin for the second quarter of fiscal 2019 of $775.2 million increased 8.2% from last year’s second quarter. Gross margin as a percentage of revenue was 45.1% for the second quarter of fiscal 2019 compared to 44.6% in the second quarter of last fiscal year. Uniform Rental and Facility Services gross margin as a percentage of revenue improved to 45.3% for the second quarter of fiscal 2019 from 44.7% in the second quarter of last fiscal year.

Operating income for the second quarter of fiscal 2019 of $275.6 million increased 17.2% from last year’s second quarter operating income of $235.2 million. Operating income was negatively impacted by integration expenses related to the G&K Services, Inc. (G&K) acquisition by $7.8 million in the second quarter of fiscal 2019 and $13.1 million in the second quarter of fiscal 2018. Operating income as a percentage of revenue was 16.0% in the second quarter of fiscal 2019 compared to 14.6% in the second quarter of fiscal 2018. Excluding the integration expenses related to G&K, operating income as a percentage of revenue was 16.5% in the second quarter of fiscal 2019 compared to 15.5% in the second quarter last fiscal year.

Net income from continuing operations for the second quarter of fiscal 2019 of $243.0 million increased 76.4% from last year’s second quarter net income from continuing operations of $137.7 million. Earnings per diluted share (EPS) from continuing operations for the second quarter of fiscal 2019 were $2.18, an increase of 75.8% from last year’s second quarter EPS from continuing operations of $1.24. Net income from continuing operations and EPS from continuing operations were positively impacted by a lower effective tax rate in this fiscal year’s second quarter compared to last fiscal year’s second quarter primarily from the enactment of The Tax Cuts and Jobs Act (the Tax Act). The effective tax rate for the second quarter of fiscal 2019 was 24.2% compared to an effective tax rate of 33.3% in last year’s second quarter. Additionally, fiscal 2019 second quarter EPS from continuing operations included a one-time, positive impact of $0.47 from a gain on the sale of a cost method investment. Finally, fiscal 2019 and fiscal 2018 second quarter EPS from continuing operations included a negative impact of $0.05 and $0.07, respectively, from integration expenses related to the G&K acquisition.






The following table provides a comparison of fiscal 2019 second quarter EPS to fiscal 2018 second quarter EPS:
 
Three Months Ended
Earnings Per Share Results
November 30,
2018
 
November 30,
2017
 
Growth vs.
FY 2018
 
 
 
 
 
 
EPS - continuing operations
$
2.18

 
$
1.24

 
 
Gain on sale of a cost method investment
(0.47)

 

 
 
G&K integration expenses
0.05

 
0.07

 
 
EPS excluding above items
$
1.76

 
$
1.31

 
34.4
%
 
 
 
 
 
 
 
Six Months Ended
 
November 30,
2018
 
November 30,
2017
 
Growth vs.
FY 2018
 
 
 
 
 
 
EPS - continuing operations
$
4.07

 
$
2.69

 
 
Gain on sale of a cost method investment
(0.47)

 

 
 
G&K integration expenses
0.09

 
0.10

 
 
EPS excluding above items
$
3.69

 
$
2.79

 
32.3
%

Scott D. Farmer, Cintas’ Chairman and Chief Executive Officer, stated, “We are pleased with our second quarter and year-to-date performance. We continue to make significant progress on integrating the G&K acquisition and implementing our enterprise resource planning system. The Company is on pace to achieve another year of strong growth in revenue, earnings, and cash flow generation. I thank our employee-partners for the consistently high execution that helps get our customers Ready for the Workday™.”

Mr. Farmer added, “Earlier this month, on December 7th, we paid an annual dividend of $2.05 per share, an increase of 26.5% over last year’s annual dividend. We have increased the annual dividend for 35 consecutive years. In addition, we increased total shareholder return by executing on the share buyback program. In fiscal 2019, through the end of our second quarter, we have purchased $447 million of Cintas stock under our buyback program.”

Mr. Farmer concluded, “Following our second quarter results, we are increasing our annual guidance for fiscal 2019. We are raising our revenue guidance from a range of $6.80 billion to $6.855 billion to a range of $6.87 billion to $6.91 billion and EPS from continuing operations excluding certain items from a range of $7.19 to $7.29 to a range of $7.30 to $7.38. Fiscal 2019 guidance excludes any future integration expenses related to the acquired G&K business.”

The following table provides a comparison of fiscal 2018 revenue and EPS to our fiscal 2019 revenue and EPS guidance:
 
Fiscal
 2018
 
Fiscal 2019
Low End
of Range
 
Growth
vs. 2018
 
Fiscal 2019
High End
of Range
 
Growth
vs. 2018
 
 
 
 
 
 
 
 
 
 
Fiscal 2019 Revenue Guidance
 
 
 
 
 
 
 
 
 
($s in millions)
 
 
 
 
 
 
 
 
 
Revenue Guidance
$
6,476.6

 
$
6,870.0

 
6.1%
 
$
6,910.0

 
6.7%
 
 
 
 
 
 
 
 
 
 
Fiscal 2019 Earnings Per Share Guidance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS - continuing operations
$
7.03

 
$
7.68

 
 
 
$
7.76

 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of a cost method investment

 
(0.47
)
 
 
 
(0.47
)
 
 
G&K integration expenses
0.26

 
0.09

 
 
 
0.09

 
 
One-time cash payment to employees
0.24

 

 
 
 

 
 
Benefit of enactment of the Tax Act
(1.59
)
 

 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
EPS Guidance
$
5.94

 
$
7.30

 
22.9%
 
$
7.38

 
24.2%






Fiscal 2019 EPS guidance does not include any future G&K integration expenses. However, we expect that these expenses will be incurred in the remainder of fiscal 2019 as we continue to integrate this significant acquisition. We estimate that these expenses will range from $18 million to $22 million for the full fiscal year.




About Cintas
Cintas Corporation helps more than one million businesses of all types and sizes get Ready™ to open their doors with confidence every day by providing a wide range of products and services that enhance our customers’ image and help keep their facilities and employees clean, safe and looking their best. With products and services including uniforms, floor care, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety and compliance training, Cintas helps customers get Ready for the Workday™. Headquartered in Cincinnati, Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of both the Standard & Poor’s 500 Index and the Nasdaq-100 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, risks inherent with the G&K transaction in the achievement of cost synergies and the timing thereof, including whether the transaction will be accretive and within the expected timeframe and the actual amounts of future integration expenses; 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, including G&K; 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; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; 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; the effect of new accounting pronouncements; costs of our SAP system implementation; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; 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; and the reactions of competitors in terms of price and service. 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, 2018 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:
J. Michael Hansen, Executive Vice President and Chief Financial Officer - 513-972-2079
Paul F. Adler, Vice President and Treasurer - 513-972-4195







 Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
 
Three Months Ended
 
November 30,
2018
 
November 30,
2017
 
Change
Revenue:
 

 
 

 
 
Uniform rental and facility services
$
1,390,778

 
$
1,308,038

 
6.3%
Other
327,490

 
298,403

 
9.7%
Total revenue
1,718,268

 
1,606,441

 
7.0%
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 
Cost of uniform rental and facility services
761,119

 
723,960

 
5.1%
Cost of other
181,991

 
166,112

 
9.6%
Selling and administrative expenses
491,671

 
468,084

 
5.0%
G&K Services, Inc. integration expenses
7,847

 
13,074

 
(40.0)%
 
 
 
 
 
 
Operating income
275,640

 
235,211

 
17.2%
 
 
 
 
 
 
Gain on sale of a cost method investment
69,373

 

 
100.0%
 
 
 
 
 
 
Interest income
(391
)
 
(291
)
 
34.4%
Interest expense
24,880

 
29,129

 
(14.6)%
 
 
 
 
 
 
Income before income taxes
320,524

 
206,373

 
55.3%
Income taxes
77,530

 
68,636

 
13.0%
Income from continuing operations
242,994

 
137,737

 
76.4%
Income (loss) from discontinued operations, net of tax
19

 
(628
)
 
(103.0)%
Net income
$
243,013

 
$
137,109

 
77.2%
 
 
 
 
 
 
Basic earnings (loss) per share:
 
 
 
 
 
Continuing operations
$
2.25

 
$
1.27

 
77.2%
Discontinued operations
0.00

 
(0.01
)
 
(100.0)%
Basic earnings per share
$
2.25

 
$
1.26

 
78.6%
 
 
 
 
 
 
Diluted earnings (loss) per share:
 
 
 
 
 
Continuing operations
$
2.18

 
$
1.24

 
75.8%
Discontinued operations
0.00

 
(0.01
)
 
(100.0)%
Diluted earnings per share
$
2.18

 
$
1.23

 
77.2%
 
 
 
 
 
 
Weighted average number of shares outstanding
106,475

 
106,340

 
 
Diluted average number of shares outstanding
109,874

 
109,818

 
 






 





Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
 
Six Months Ended
 
November 30,
2018
 
November 30,
2017
 
Change
Revenue:
 

 
 

 
 
Uniform rental and facility services
$
2,765,716

 
$
2,619,822

 
5.6%
Other
650,527

 
598,122

 
8.8%
Total revenue
3,416,243

 
3,217,944

 
6.2%
 
 
 
 
 
 
Costs and expenses:
 

 
 

 
 
Cost of uniform rental and facility services
1,507,572

 
1,430,823

 
5.4%
Cost of other
358,801

 
331,399

 
8.3%
Selling and administrative expenses
996,305

 
954,367

 
4.4%
G&K Services, Inc. integration expenses
12,697

 
17,045

 
(25.5)%
 
 
 
 
 
 
Operating income
540,868

 
484,310

 
11.7%
 
 
 
 
 
 
Gain on sale of a cost method investment
69,373

 

 
100.0%
 
 
 
 
 
 
Interest income
(887
)
 
(588
)
 
50.9%
Interest expense
49,184

 
59,446

 
(17.3)%
 
 
 
 
 
 
Income before income taxes
561,944

 
425,452

 
32.1%
Income taxes
106,403

 
126,607

 
(16.0)%
Income from continuing operations
455,541

 
298,845

 
52.4%
(Loss) income from discontinued operations, net of tax
(13
)
 
55,475

 
(100.0)%
Net income
$
455,528

 
$
354,320

 
28.6%
 
 
 
 
 
 
Basic earnings per share:
 
 
 
 
 
Continuing operations
$
4.21

 
$
2.77

 
52.0%
Discontinued operations
0.00

 
0.51

 
(100.0)%
Basic earnings per share
$
4.21

 
$
3.28

 
28.4%
 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 
Continuing operations
$
4.07

 
$
2.69

 
51.3%
Discontinued operations
0.00

 
0.50

 
(100.0)%
Diluted earnings per share
$
4.07

 
$
3.19

 
27.6%
 
 
 
 
 
 
Weighted average number of shares outstanding
106,652

 
106,039

 
 
Diluted average number of shares outstanding
110,257

 
108,938

 
 












CINTAS CORPORATION SUPPLEMENTAL DATA
 
Three Months Ended
 
November 30,
2018
 
November 30,
2017
 
 
 
 
Uniform rental and facility services gross margin
45.3
%
 
44.7
%
Other gross margin
44.4
%
 
44.3
%
Total gross margin
45.1
%
 
44.6
%
Net income margin, continuing operations
14.1
%
 
8.6
%
 
 
 
 
 
Six Months Ended
 
November 30,
2018
 
November 30,
2017
 
 
 
 
Uniform rental and facility services gross margin
45.5
%
 
45.4
%
Other gross margin
44.8
%
 
44.6
%
Total gross margin
45.4
%
 
45.2
%
Net income margin, continuing operations
13.3
%
 
9.3
%


Computation of Diluted Earnings Per Share from Continuing Operations
 
Three Months Ended
 
November 30,
2018
 
November 30,
2017
Income from continuing operations
$
242,994

 
$
137,737

Less: income from continuing operations allocated to participating securities
3,376

 
2,111

Income from continuing operations available to common shareholders
$
239,618

 
$
135,626

 
 
 
 
Basic weighted average common shares outstanding
106,475

 
106,340

Effect of dilutive securities - employee stock options
3,399

 
3,478

Diluted weighted average common shares outstanding
109,874

 
109,818

 
 
 
 
Diluted earnings per share from continuing operations
$
2.18

 
$
1.24

 
 
 
 
 
Six Months Ended
 
November 30,
2018
 
November 30,
2017
Income from continuing operations
$
455,541

 
$
298,845

Less: income from continuing operations allocated to participating securities
6,308

 
5,298

Income from continuing operations available to common shareholders
$
449,233

 
$
293,547

 
 
 
 
Basic weighted average common shares outstanding
106,652

 
106,039

Effect of dilutive securities - employee stock options
3,605

 
2,899

Diluted weighted average common shares outstanding
110,257

 
108,938

 
 
 
 
Diluted earnings per share from continuing operations
$
4.07

 
$
2.69








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 condensed financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides the additional non-GAAP financial measures of earnings per diluted share 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. A reconciliation 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.


Earnings Per Share Results
 
Three Months Ended
 
November 30,
2018
 
November 30,
2017
 
Growth vs.
 FY 2018
EPS - continuing operations
$
2.18

 
$
1.24

 
 
Gain on sale of a cost method investment
(0.47
)
 

 
 
G&K Services, Inc. integration expenses
0.05

 
0.07

 
 
EPS excluding above items
$
1.76

 
$
1.31

 
34.4
%
 
 
 
 
 
 
 
Six Months Ended
 
November 30,
2018
 
November 30,
2017
 
Growth vs.
 FY 2018
EPS - continuing operations
$
4.07

 
$
2.69

 
 
Gain on sale of a cost method investment
(0.47
)
 

 
 
G&K Services, Inc. integration expenses
0.09

 
0.10

 
 
EPS excluding above items
$
3.69

 
$
2.79

 
32.3
%



Computation of Free Cash Flow
 
Six Months Ended
 
November 30,
2018
 
November 30,
2017
Net cash provided by operations
$
344,567

 
$
379,009

Capital expenditures
(137,614
)
 
(132,466
)
Free cash flow
$
206,953

 
$
246,543


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
 
 
Uniform Rental
and Facility Services
 
First Aid
 and Safety Services
 
All
Other
 
Corporate
 
Total
 
 
 
 
 
 
 
 
 
 
 
For the three months ended November 30, 2018
 
 
 
 
 
 
 
 
Revenue
 
$
1,390,778

 
$
153,348

 
$
174,142

 
$

 
$
1,718,268

Gross margin
 
$
629,659

 
$
73,670

 
$
71,829

 
$

 
$
775,158

Selling and administrative expenses
 
$
378,921

 
$
52,342

 
$
60,408

 
$

 
$
491,671

G&K Services, Inc. integration expenses
 
$
7,847

 
$

 
$

 
$

 
$
7,847

Gain on sale of a cost method investment
 
$

 
$

 
$

 
$
69,373

 
$
69,373

Interest income
 
$

 
$

 
$

 
$
(391
)
 
$
(391
)
Interest expense
 
$

 
$

 
$

 
$
24,880

 
$
24,880

Income before income taxes
 
$
242,891

 
$
21,328

 
$
11,421

 
$
44,884

 
$
320,524

 
 
 
 
 
 
 
 
 
 
 
For the three months ended November 30, 2017
 
 
 
 
 
 
 
 
Revenue
 
$
1,308,038

 
$
139,090

 
$
159,313

 
$

 
$
1,606,441

Gross margin
 
$
584,078

 
$
65,260

 
$
67,031

 
$

 
$
716,369

Selling and administrative expenses
 
$
367,190

 
$
47,285

 
$
53,609

 
$

 
$
468,084

G&K Services, Inc. integration expenses
 
$
13,074

 
$

 
$

 
$

 
$
13,074

Interest income
 
$

 
$

 
$

 
$
(291
)
 
$
(291
)
Interest expense
 
$

 
$

 
$

 
$
29,129

 
$
29,129

Income (loss) before income taxes
 
$
203,814

 
$
17,975

 
$
13,422


$
(28,838
)
 
$
206,373

 
 
 
 
 
 
 
 
 
 
 
For the six months ended November 30, 2018
 
 
 
 
 
 
 
 
Revenue
 
$
2,765,716

 
$
306,765

 
$
343,762

 
$

 
$
3,416,243

Gross margin
 
$
1,258,144

 
$
147,155

 
$
144,571

 
$

 
$
1,549,870

Selling and administrative expenses
 
$
771,022

 
$
103,844

 
$
121,439

 
$

 
$
996,305

G&K Services, Inc. integration expenses
 
$
12,697

 
$

 
$

 
$

 
$
12,697

Gain on sale of a cost method investment
 
$

 
$

 
$

 
$
69,373

 
$
69,373

Interest income
 
$

 
$

 
$

 
$
(887
)
 
$
(887
)
Interest expense
 
$

 
$

 
$

 
$
49,184

 
$
49,184

Income before income taxes
 
$
474,425

 
$
43,311

 
$
23,132

 
$
21,076

 
$
561,944

 
 
 
 
 
 
 
 
 
 
 
For the six months ended November 30, 2017
 
 
 
 
 
 
 
 
Revenue
 
$
2,619,822

 
$
279,672

 
$
318,450

 
$

 
$
3,217,944

Gross margin
 
$
1,188,999

 
$
132,035

 
$
134,688

 
$

 
$
1,455,722

Selling and administrative expenses
 
$
749,230

 
$
94,649

 
$
110,488

 
$

 
$
954,367

G&K Services, Inc. integration expenses
 
$
17,045

 
$

 
$

 
$

 
$
17,045

Interest income
 
$

 
$

 
$

 
$
(588
)
 
$
(588
)
Interest expense
 
$

 
$

 
$

 
$
59,446

 
$
59,446

Income (loss) before income taxes
 
$
422,724

 
$
37,386

 
$
24,200

 
$
(58,858
)
 
$
425,452








Cintas Corporation
Consolidated Condensed Balance Sheets
(In thousands except share data)
 
November 30,
2018
 
May 31,
2018
 
(Unaudited)
 
 
ASSETS
 
 
 

Current assets:
 

 
 

Cash and cash equivalents
$
88,479

 
$
138,724

Accounts receivable, net
904,062

 
804,583

Inventories, net
321,874

 
280,347

Uniforms and other rental items in service
758,246

 
702,261

Income taxes, current
36,595

 
19,634

Prepaid expenses and other current assets
106,614

 
32,383

Total current assets
2,215,870

 
1,977,932

 
 
 
 
Property and equipment, net
1,410,530

 
1,382,730

 
 
 
 
Investments
183,548

 
175,581

Goodwill
2,845,244

 
2,846,888

Service contracts, net
521,505

 
545,768

Other assets, net
228,386

 
29,315

 
$
7,405,083

 
$
6,958,214

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
211,900

 
$
215,074

Accrued compensation and related liabilities
117,645

 
140,654

Accrued liabilities
611,641

 
420,129

Debt due within one year
173,500

 

Total current liabilities
1,114,686

 
775,857

 
 
 
 
Long-term liabilities:
 

 
 

Debt due after one year
2,536,408

 
2,535,309

Deferred income taxes
435,461

 
352,581

Accrued liabilities
291,284

 
277,941

Total long-term liabilities
3,263,153

 
3,165,831

 
 
 
 
Shareholders’ equity:
 

 
 

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

 

Common stock, no par value:
425,000,000 shares authorized
FY19: 184,152,836 issued and 105,123,513 outstanding
FY18: 182,723,471 issued and 106,326,383 outstanding
804,234

 
618,464

Paid-in capital
166,837

 
245,211

Retained earnings
6,261,756

 
5,837,827

Treasury stock:
FY19: 79,029,323 shares
FY18: 76,397,088 shares
(4,209,448
)
 
(3,701,319
)
Accumulated other comprehensive income
3,865

 
16,343

Total shareholders’ equity
3,027,244

 
3,016,526

 
 
 
 
 
$
7,405,083

 
$
6,958,214






Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
 
Six Months Ended
 
November 30,
2018
 
November 30,
2017
Cash flows from operating activities:
 

 
 

Net income
$
455,528

 
$
354,320

 
 
 
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation
107,112

 
107,578

Amortization of intangible assets and capitalized costs
67,559

 
31,261

Stock-based compensation
74,784

 
55,204

Gain on sale of a cost method investment
(69,373
)
 

Gain on sale of business

 
(99,060
)
Deferred income taxes
19,227

 
42,162

Change in current assets and liabilities, net of acquisitions of businesses:
 
 
 
Accounts receivable, net
(85,748
)
 
(24,800
)
Inventories, net
(53,227
)
 
2,595

Uniforms and other rental items in service
(57,684
)
 
(33,294
)
Prepaid expenses and other current assets and other assets
(58,161
)
 
(18,573
)
Accounts payable
(1,955
)
 
(8,706
)
Accrued compensation and related liabilities
(20,969
)
 
(36,480
)
Accrued liabilities and other
(15,322
)
 
(1,940
)
Income taxes, current
(17,204
)
 
8,742

Net cash provided by operating activities
344,567

 
379,009

 
 
 
 
Cash flows from investing activities:
 

 
 

Capital expenditures
(137,614
)
 
(132,466
)
Proceeds from redemption of marketable securities and investments

 
100,259

Purchase of marketable securities and investments
(14,071
)
 
(99,877
)
Proceeds from sale of a cost method investment
73,342

 

Proceeds from sale of business

 
127,835

Acquisitions of businesses, net of cash acquired
(6,580
)
 
(1,099
)
Other, net
(1,717
)
 
(870
)
Net cash used in investing activities
(86,640
)
 
(6,218
)
 
 
 
 
Cash flows from financing activities:
 
 
 

Issuance (payments) of commercial paper, net
173,500

 
(50,500
)
Repayment of debt

 
(250,000
)
Proceeds from exercise of stock-based compensation awards
32,612

 
28,558

Repurchase of common stock
(508,129
)
 
(35,697
)
Other, net
(5,362
)
 
(1,882
)
Net cash used in financing activities
(307,379
)
 
(309,521
)
 


 


Effect of exchange rate changes on cash and cash equivalents
(793
)
 
3,466

 
 
 
 
Net (decrease) increase in cash and cash equivalents
(50,245
)
 
66,736

Cash and cash equivalents at beginning of period
138,724

 
169,266

Cash and cash equivalents at end of period
$
88,479

 
$
236,002