Supplemental Guarantor Information

3 Months Ended

Aug. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Cintas Corporation No. 2 (Corp. 2) is the indirectly, wholly-owned principal operating subsidiary of Cintas. Corp. 2 is the issuer of the $139.0 million aggregate principal amount of commercial paper, term loan of $200.0 million and the $2,550.0 million aggregate principal amount of senior notes outstanding as of August 31, 2019, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and certain wholly-owned, direct and indirect domestic subsidiaries.

As allowed by SEC rules, the following consolidating condensed financial statements are provided as an alternative to filing separate financial statements of the guarantors. Each of the subsidiaries presented in the following consolidating condensed financial statements has been fully consolidated in Cintas’ consolidated condensed financial statements. The following consolidating condensed financial statements should be read in conjunction with the consolidated condensed financial statements of Cintas and notes thereto of which this note is an integral part. Consolidating condensed financial statements for Cintas, Corp. 2, the subsidiary guarantors and non-guarantors are presented on the following pages:

Consolidating Condensed Income Statement

Three Months Ended August 31, 2019

(In thousands)



	Cintas Corporation		Corp. 2			Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Revenue:
Uniform rental and facility services	$	—	$	1,158,891		$	190,735		$	105,394		$	(493	)	$	1,454,527
Other	—		582,976			97			23,246			(249,707		)	356,612
Equity in net income of affiliates	250,812		—			—			—			(250,812		)	—
Total revenue	250,812		1,741,867			190,832			128,640			(501,012		)	1,811,139

Costs and expenses (income):
Cost of uniform rental and facility services	—		621,881			111,734			65,595			(30,534		)	768,676
Cost of other	—		403,484			(22,677		)	17,699			(205,185		)	193,321
Selling and administrative expenses	—		599,403			(84,257		)	34,454			(6,604		)	542,996
Operating income	250,812		117,099			186,032			10,892			(258,689		)	306,146

Interest (income) expense	—		(150		)	1			(14		)	1			(162		)
Interest expense (income)	—		27,360			(53		)	14			—			27,321

Income before income taxes	250,812		89,889			186,084			10,892			(258,690		)	278,987
Income taxes	—		8,201			16,978			3,021			(25		)	28,175
Net income	$	250,812	$	81,688		$	169,106		$	7,871		$	(258,665	)	$	250,812

Consolidating Condensed Income Statement

Three Months Ended August 31, 2018

(In thousands)



	Cintas Corporation			Corp. 2			Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Revenue:
Uniform rental and facility services	$	—		$	1,139,129		$	183,163		$	99,683		$	(47,037	)	$	1,374,938
Other	—			491,290			43			24,332			(192,628		)	323,037
Equity in net income of affiliates	212,547			—			—			—			(212,547		)	—
Total revenue	212,547			1,630,419			183,206			124,015			(452,212		)	1,697,975

Costs and expenses (income):
Cost of uniform rental and facility services	—			643,741			109,550			64,013			(70,851		)	746,453
Cost of other	—			341,333			(22,029		)	18,142			(160,636		)	176,810
Selling and administrative expenses	—			544,910			(64,621		)	34,363			(10,018		)	504,634
G&K Services, Inc. integration expenses	—			2,676			1,863			311			—			4,850
Operating income	212,547			97,759			158,443			7,186			(210,707		)	265,228

Interest income	—			(209		)	(272		)	(16		)	1			(496		)
Interest expense (income)	—			24,661			(362		)	5			—			24,304

Income before income taxes	212,547			73,307			159,077			7,197			(210,708		)	241,420
Income taxes	—			10,663			16,044			2,187			(21		)	28,873
Income from continuing operations	212,547			62,644			143,033			5,010			(210,687		)	212,547

Loss from discontinued operations, net of tax	(32		)	(32		)	—			—			32			(32		)

Net income	$	212,515		$	62,612		$	143,033		$	5,010		$	(210,655	)	$	212,515

Consolidating Condensed Statement of Comprehensive Income

Three Months Ended August 31, 2019

(In thousands)



	Cintas Corporation			Corp. 2			Subsidiary Guarantors		Non- Guarantors		Eliminations			Cintas Corporation Consolidated

Net income	$	250,812		$	81,688		$	169,106	$	7,871	$	(258,665	)	$	250,812

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	6,724			—			—		6,724		(6,724		)	6,724
Change in fair value of interest rate lock agreements	(29,903		)	(29,903		)	—		—		29,903			(29,903		)
Amortization of interest rate lock agreements	(295		)	(295		)	—		—		295			(295		)

Other comprehensive (loss) income	(23,474		)	(30,198		)	—		6,724		23,474			(23,474		)

Comprehensive income	$	227,338		$	51,490		$	169,106	$	14,595	$	(235,191	)	$	227,338

Consolidating Condensed Statement of Comprehensive Income

Three Months Ended August 31, 2018

(In thousands)



	Cintas Corporation			Corp. 2			Subsidiary Guarantors		Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Net income	$	212,515		$	62,612		$	143,033	$	5,010		$	(210,655	)	$	212,515

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(3,019		)	—			—		(3,019		)	3,019			(3,019		)
Change in fair value of interest rate lock agreements	(3,168		)	(3,168		)	—		—			3,168			(3,168		)
Amortization of interest rate lock agreements	(295		)	(295		)	—		—			295			(295		)

Other comprehensive loss	(6,482		)	(3,463		)	—		(3,019		)	6,482			(6,482		)

Comprehensive income	$	206,033		$	59,149		$	143,033	$	1,991		$	(204,173	)	$	206,033

Consolidating Condensed Balance Sheet

As of August 31, 2019

(In thousands)



	Cintas Corporation			Corp. 2			Subsidiary Guarantors		Non- Guarantors			Eliminations			Cintas Corporation Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	61,965		$	14,788	$	25,378		$	—		$	102,131
Accounts receivable, net	—			734,268			113,838		69,429			—			917,535
Inventories, net	—			287,373			28,178		20,739			—			336,290
Uniforms and other rental items in service	—			657,277			91,592		61,534			(14,216		)	796,187
Prepaid expenses and other current assets	—			82,635			35,907		19,133			—			137,675
Total current assets	—			1,823,518			284,303		196,213			(14,216		)	2,289,818

Property and equipment, net	—			958,285			367,853		96,213			—			1,422,351

Investments ⁽¹⁾	321,083			3,588,963			981,713		1,718,870			(6,401,642		)	208,987
Goodwill	—			—			2,589,592		260,133			(112		)	2,849,613
Service contracts, net	—			416,583			—		66,394			—			482,977
Operating lease right-of-use assets, net	—			133,401			13,904		15,784			—			163,089
Other assets, net	2,264,376			216,985			5,606,035		1,507			(7,843,838		)	245,065
	$	2,585,459		$	7,137,735		$	9,843,400	$	2,355,114		$	(14,259,808	)	$	7,661,900

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	(465,247	)	$	(2,099,057	)	$	2,818,307	$	(54,052	)	$	37,291		$	237,242
Accrued compensation and related liabilities	—			59,152			31,311		8,737			—			99,200
Accrued liabilities	—			86,128			290,891		18,397			—			395,416
Income taxes, current	—			235			14,236		(5,233		)	—			9,238
Operating lease liabilities, current	—			34,255			4,320		4,435			—			43,010
Debt due within one year	—			338,776			—		—			—			338,776
Total current liabilities	(465,247		)	(1,580,511		)	3,159,065		(27,716		)	37,291			1,122,882

Long-term liabilities:
Debt due after one year	—			2,538,057			—		—			—			2,538,057
Deferred income taxes	—			306,142			99,774		30,839			—			436,755
Operating lease liabilities	—			103,847			10,093		11,744			—			125,684
Accrued liabilities	—			156,466			214,977		16,373			—			387,816
Total long-term liabilities	—			3,104,512			324,844		58,956			—			3,488,312

Total shareholders’ equity	3,050,706			5,613,734			6,359,491		2,323,874			(14,297,099		)	3,050,706
	$	2,585,459		$	7,137,735		$	9,843,400	$	2,355,114		$	(14,259,808	)	$	7,661,900


⁽¹⁾	Investments include inter-company investment activity. Corp 2 and Subsidiary Guarantors hold $19.6 million and $189.4 million, respectively, of the $209.0 million consolidated net investments.

Consolidating Condensed Balance Sheet

As of May 31, 2019

(In thousands)



	Cintas Corporation			Corp. 2			Subsidiary Guarantors		Non- Guarantors			Eliminations			Cintas Corporation Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	54,963		$	13,151	$	28,531		$	—		$	96,645
Accounts receivable, net	—			719,914			121,803		68,403			—			910,120
Inventories, net	—			278,666			35,081		20,842			—			334,589
Uniforms and other rental items in service	—			645,862			90,458		60,061			(12,248		)	784,133
Income taxes, current	—			(9,728		)	11,722		5,481			—			7,475
Prepaid expenses and other current assets	—			81,117			20,334		1,867			—			103,318
Total current assets	—			1,770,794			292,549		185,185			(12,248		)	2,236,280

Property and equipment, net	—			948,830			369,006		112,849			—			1,430,685

Investments ⁽¹⁾	321,083			3,589,234			964,802		1,716,870			(6,399,643		)	192,346
Goodwill	—			—			2,586,406		256,147			(112		)	2,842,441
Service contracts, net	—			427,437			—		67,158			—			494,595
Other assets, net	2,216,391			211,102			5,424,413		1,716			(7,613,307		)	240,315
	$	2,537,474		$	6,947,397		$	9,637,176	$	2,339,925		$	(14,025,310	)	$	7,436,662

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	(465,247	)	$	(2,090,954	)	$	2,793,558	$	(48,769	)	$	37,432		$	226,020
Accrued compensation and related liabilities	—			117,404			26,870		11,235			—			155,509
Accrued liabilities	—			84,296			328,267		21,377			—			433,940
Debt due within one year	—			312,264			—		—			—			312,264
Total current liabilities	(465,247		)	(1,576,990		)	3,148,695		(16,157		)	37,432			1,127,733

Long-term liabilities:
Debt due after one year	—			2,537,507			—		—			—			2,537,507
Deferred income taxes	—			307,334			100,162		30,683			—			438,179
Accrued liabilities	—			116,469			197,934		16,119			—			330,522
Total long-term liabilities	—			2,961,310			298,096		46,802			—			3,306,208

Total shareholders’ equity	3,002,721			5,563,077			6,190,385		2,309,280			(14,062,742		)	3,002,721
	$	2,537,474		$	6,947,397		$	9,637,176	$	2,339,925		$	(14,025,310	)	$	7,436,662


⁽¹⁾	Investments include inter-company investment activity. Corp 2 and Subsidiary Guarantors hold $19.8 million and $172.5 million, respectively, of the $192.3 million consolidated net investments.

Consolidating Condensed Statement of Cash Flows

Three Months Ended August 31, 2019

(In thousands)



	Cintas Corporation			Corp. 2			Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated
Cash flows from operating activities:
Net income	$	250,812		$	81,688		$	169,106		$	7,871		$	(258,665	)	$	250,812
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation	—			37,056			16,032			3,638			—			56,726
Amortization of intangible assets and capitalized contract costs	—			31,949			1,279			2,040			—			35,268
Stock-based compensation	40,395			—			—			—			—			40,395
Deferred income taxes	—			8,652			(382		)	(360		)	—			7,910
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—			(14,317		)	7,965			(284		)	—			(6,636		)
Inventories, net	—			(8,686		)	7,359			(399		)	—			(1,726		)
Uniforms and other rental items in service	—			(11,416		)	(1,135		)	(722		)	1,968			(11,305		)
Prepaid expenses and other current assets and capitalized contract costs	—			(26,355		)	(15,462		)	(111		)	—			(41,928		)
Accounts payable	—			(8,103		)	28,923			(7,322		)	(141		)	13,357
Accrued compensation and related liabilities	—			(58,252		)	2,120			(2,586		)	—			(58,718		)
Accrued liabilities and other	—			5,833			(27,074		)	(2,841		)	—			(24,082		)
Income taxes, current	—			(9,493		)	25,974			347			—			16,828
Net cash provided by (used in) operating activities	291,207			28,556			214,705			(729		)	(256,838		)	276,901

Cash flows from investing activities:
Capital expenditures	—			(46,605		)	(14,916		)	(3,222		)	—			(64,743		)
Redemptions (purchases) of investments	—			271			(9,662		)	—			—			(9,391		)
Acquisitions of businesses, net of cash acquired	—			(3,896		)	—			—			—			(3,896		)
Other, net	(72,292		)	3,368			(188,490		)	467			256,838			(109		)
Net cash used in investing activities	(72,292		)	(46,862		)	(213,068		)	(2,755		)	256,838			(78,139		)

Cash flows from financing activities:
Issuance of commercial paper, net	—			26,500			—			—			—			26,500
Proceeds from exercise of stock-based compensation awards	37,915			—			—			—			—			37,915
Repurchase of common stock	(256,830		)	—			—			—			—			(256,830		)
Other, net	—			(1,192		)	—			—			—			(1,192		)
Net cash (used in) provided by financing activities	(218,915		)	25,308			—			—			—			(193,607		)

Effect of exchange rate changes on cash and cash equivalents	—			—			—			331			—			331

Net increase (decrease) in cash and cash equivalents	—			7,002			1,637			(3,153		)	—			5,486
Cash and cash equivalents at beginning of period	—			54,963			13,151			28,531			—			96,645
Cash and cash equivalents at end of period	$	—		$	61,965		$	14,788		$	25,378		$	—		$	102,131

Consolidating Condensed Statement of Cash Flows

Three Months Ended August 31, 2018

(In thousands)



	Cintas Corporation			Corp. 2			Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Cash flows from operating activities:
Net income	$	212,515		$	62,612		$	143,033		$	5,010		$	(210,655	)	$	212,515
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation	—			33,866			15,427			3,452			—			52,745
Amortization of intangible assets and capitalized contract costs	—			30,156			1,278			2,116			—			33,550
Stock-based compensation	46,172			—			—			—			—			46,172
Deferred income taxes	—			5,388			2,122			1,512			—			9,022
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—			(12,891		)	3,381			(5,541		)	—			(15,051		)
Inventories, net	—			(37,207		)	2,700			660			(782		)	(34,629		)
Uniforms and other rental items in service	—			(10,800		)	(7,904		)	(2,936		)	(1,379		)	(23,019		)
Prepaid expenses and other current assets and capitalized contract costs	—			(25,060		)	(21,838		)	(32		)	—			(46,930		)
Accounts payable	—			41,784			(37,657		)	(4,758		)	302			(329		)
Accrued compensation and related liabilities	—			(41,910		)	(10,982		)	(3,294		)	—			(56,186		)
Accrued liabilities and other	—			2,305			(26,295		)	(3,566		)	—			(27,556		)
Income taxes, current	—			5,022			8,474			(815		)	—			12,681
Net cash provided by (used in) operating activities	258,687			53,265			71,739			(8,192		)	(212,514		)	162,985

Cash flows from investing activities:
Capital expenditures	—			(43,966		)	(17,979		)	(2,583		)	—			(64,528		)
Proceeds from redemption of marketable securities	—			1,554			4			—			—			1,558
Acquisitions of businesses, net of cash acquired	—			(7,613		)	—			—			—			(7,613		)
Other, net	(146,731		)	(4,048		)	(65,509		)	2,582			213,504			(202		)
Net cash used in investing activities	(146,731		)	(54,073		)	(83,484		)	(1		)	213,504			(70,785		)

Cash flows from financing activities:
Proceeds from exercise of stock-based compensation awards	27,512			—			—			—			—			27,512
Repurchase of common stock	(139,468		)	—			—			—			—			(139,468		)
Other, net	—			2,909			—			(2,471		)	(990		)	(552		)
Net cash (used in) provided by financing activities	(111,956		)	2,909			—			(2,471		)	(990		)	(112,508		)

Effect of exchange rate changes on cash and cash equivalents	—			—			—			(60		)	—			(60		)

Net increase (decrease) in cash and cash equivalents	—			2,101			(11,745		)	(10,724		)	—			(20,368		)
Cash and cash equivalents at beginning of period	—			44,499			60,310			33,915			—			138,724
Cash and cash equivalents at end of period	$	—		$	46,600		$	48,565		$	23,191		$	—		$	118,356