UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	November 30, 2022

 OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                                         to

 Commission file number 0-11399

Cintas Corporation

(Exact name of registrant as specified in its charter)

Washington	31-1188630
(State or Other Jurisdiction of Incorporation or Organization)	(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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, no par value	CTAS	The NASDAQ Stock Market LLC
		(NASDAQ Global Select Market)

Indicate by checkmark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑   No ☐

Indicate by checkmark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☑ No ☐

Indicate by checkmark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  ☑               Accelerated Filer ☐                                               Non-Accelerated Filer ☐ 

Smaller Reporting Company ☐           Emerging Growth Company ☐

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. ☐

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding December 31, 2022
Common Stock, no par value	101,620,479

CINTAS CORPORATION

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Financial Statements
	Consolidated Condensed Statements of Income – Three and Six Months Ended November 30, 2022 and 2021	3
	Consolidated Condensed Statements of Comprehensive Income – Three and Six Months Ended November 30, 2022 and 2021	4
	Consolidated Condensed Balance Sheets – November 30, 2022 and May 31, 2022	5
	Consolidated Condensed Statements of Shareholders' Equity - Three and Six Months Ended November 30, 2022 and 2021	6
	Consolidated Condensed Statements of Cash Flows – Six Months Ended November 30, 2022 and 2021	8
	Notes to Consolidated Condensed Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
Part II. Other Information
Item 1.	Legal Proceedings	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6.	Exhibits	36
Signatures		37

Part I. Financial Information

ITEM 1.                             

FINANCIAL STATEMENTS

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended				Six Months Ended
(In thousands except per share data)	November 30, 2022		November 30, 2021		November 30, 2022		November 30, 2021
Revenue:
Uniform rental and facility services	$	1,709,987	$	1,535,271	$	3,407,759	$	3,043,447
Other	464,871		387,010		933,553		775,784
Total revenue	2,174,858		1,922,281		4,341,312		3,819,231
Costs and expenses:
Cost of uniform rental and facility services	906,727		817,261		1,797,493		1,596,562
Cost of other	245,684		219,879		493,260		434,772
Selling and administrative expenses	577,513		503,913		1,165,505		1,012,568
Operating income	444,934		381,228		885,054		775,329
Interest income	(344)		(56)		(499)		(112)
Interest expense	28,920		21,902		56,640		43,756
Income before income taxes	416,358		359,382		828,913		731,685
Income taxes	92,065		64,713		152,931		105,837
Net income	$	324,293	$	294,669	$	675,982	$	625,848
Basic earnings per share	$	3.18	$	2.83	$	6.63	$	6.02
Diluted earnings per share	$	3.12	$	2.76	$	6.51	$	5.87
Dividends declared per share	$	1.15	$	0.95	$	2.30	$	1.90

See accompanying notes.

3

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended				Six Months Ended
(In thousands)	November 30, 2022		November 30, 2021		November 30, 2022		November 30, 2021
Net income	$	324,293	$	294,669	$	675,982	$	625,848
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(9,901)		(7,472)		(29,107)		(31,488)
Change in fair value of interest rate lock    agreements, net of tax expense (benefit)    of $2,531, $3,744, $2,851 and $(8,810),    respectively	7,394		10,940		8,328		(25,739)
Amortization of interest rate lock agreements, net of tax expense of $513, $148, $1,025 and $296, respectively	(1,521)		(460)		(3,042)		(919)
Other comprehensive (loss) income, net of tax    expense (benefit) of $3,044, $3,892, $3,876    and $(8,514), respectively	(4,028)		3,008		(23,821)		(58,146)
Comprehensive income	$	320,265	$	297,677	$	652,161	$	567,702

See accompanying notes.

4

CINTAS CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands except per share data)	November 30, 2022		May 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	89,799	$	90,471
Accounts receivable, net	1,135,833		1,006,220
Inventories, net	514,839		472,150
Uniforms and other rental items in service	986,505		916,706
Income taxes, current	13,657		21,708
Prepaid expenses and other current assets	152,537		124,728
Total current assets	2,893,170		2,631,983
Property and equipment, net	1,340,658		1,323,673
Investments	243,574		242,873
Goodwill	3,037,506		3,042,976
Service contracts, net	367,612		391,638
Operating lease right-of-use assets, net	176,276		170,003
Other assets, net	368,211		344,110
	$	8,427,007	$	8,147,256
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	310,986	$	251,504
Accrued compensation and related liabilities	208,342		236,992
Accrued liabilities	556,211		588,948
Operating lease liabilities, current	42,792		43,872
Debt due within one year	435,406		311,574
Total current liabilities	1,553,737		1,432,890
Long-term liabilities:
Debt due after one year	2,485,277		2,483,932
Deferred income taxes	493,379		473,777
Operating lease liabilities	136,520		129,064
Accrued liabilities	327,556		319,397
Total long-term liabilities	3,442,732		3,406,170
Shareholders’ equity:
Preferred stock, no par value:	—		—
100,000 shares authorized, none outstanding
Common stock, no par value, and paid-in capital:	1,933,145		1,771,917
425,000,000 shares authorized
FY 2023: 191,857,155 shares issued and 101,601,032 shares outstanding
FY 2022: 190,837,921 shares issued and 101,711,215 shares outstanding
Retained earnings	9,160,346		8,719,163
Treasury stock:	(7,747,049)		(7,290,801)
FY 2023: 90,256,123 shares
FY 2022: 89,126,706 shares
Accumulated other comprehensive income	84,096		107,917
Total shareholders’ equity	3,430,538		3,308,196
	$	8,427,007	$	8,147,256

See accompanying notes.

5

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

	Common Stock and Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock			Total Shareholders' Equity
(In thousands)	Shares	Amount						Shares	Amount
Balance at June 1, 2022	190,838	$	1,771,917	$	8,719,163	$	107,917	(89,127)	$	(7,290,801)	$	3,308,196
Net income	—	—		351,689		—		—	—		351,689
Comprehensive loss, net of tax	—	—		—		(19,793)		—	—		(19,793)
Dividends	—	—		(117,461)		—		—	—		(117,461)
Stock-based compensation	—	26,282		—		—		—	—		26,282
Vesting of stock-based compensation awards	273	—		—		—		—	—		—
Stock options exercised	543	80,638		—		—		(193)	(79,591)		1,047
Repurchase of common stock	—	—		—		—		(802)	(320,334)		(320,334)
Balance at August 31, 2022	191,654	$	1,878,837	$	8,953,391	$	88,124	(90,122)	$	(7,690,726)	$	3,229,626
Net income	—	—		324,293		—		—	—		324,293
Comprehensive loss, net of tax	—	—		—		(4,028)		—	—		(4,028)
Dividends	—	—		(117,338)		—		—	—		(117,338)
Stock-based compensation	—	25,255		—		—		—	—		25,255
Vesting of stock-based compensation awards	9	—		—		—		—	—		—
Stock options exercised	194	29,053		—		—		(66)	(27,975)		1,078
Repurchase of common stock	—	—		—		—		(68)	(28,348)		(28,348)
Balance at November 30, 2022	191,857	$	1,933,145	$	9,160,346	$	84,096	(90,256)	$	(7,747,049)	$	3,430,538

6

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

	Common Stock and Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
(In thousands)	Shares	Amount						Shares	Amount
Balance at June 1, 2021	189,071	$	1,516,202	$	7,877,015	$	30,888	(85,010)	$	(5,736,258)	$	3,687,847
Net income	—	—		331,179		—		—	—		331,179
Comprehensive loss, net of tax	—	—		—		(61,154)		—	—		(61,154)
Dividends	—	—		(98,826)		—		—	—		(98,826)
Stock-based compensation	—	36,496		—		—		—	—		36,496
Vesting of stock-based compensation awards	493	—		—		—		—	—		—
Stock options exercised	564	72,896		—		—		—	—		72,896
Repurchase of common stock	—	—		—		—		(1,788)	(659,235)		(659,235)
Balance at August 31, 2021	190,128	$	1,625,594	$	8,109,368	$	(30,266)	(86,798)	$	(6,395,493)	$	3,309,203
Net income	—	—		294,669		—		—	—		294,669
Comprehensive income, net of tax	—	—		—		3,008		—	—		3,008
Dividends	—	—		(98,961)		—		—	—		(98,961)
Stock-based compensation	—	24,397		—		—		—	—		24,397
Vesting of stock-based compensation awards	31	—		—		—		—	—		—
Stock options exercised	317	36,302		—		—		—	—		36,302
Repurchase of common stock	—	—		—		—		(13)	(5,491)		(5,491)
Balance at November 30, 2021	190,476	$	1,686,293	$	8,305,076	$	(27,258)	(86,811)	$	(6,400,984)	$	3,563,127

See accompanying notes.

7

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
(In thousands)	November 30, 2022		November 30, 2021
Cash flows from operating activities:
Net income	$	675,982	$	625,848
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	126,561		122,274
Amortization of intangible assets and capitalized contract costs	74,693		74,365
Stock-based compensation	51,537		60,893
Gain on sale of operating assets	—		(12,129)
Deferred income taxes	18,565		29,941
Change in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	(133,897)		(77,343)
Inventories, net	(43,266)		13,406
Uniforms and other rental items in service	(73,475)		(69,513)
Prepaid expenses and other current assets and capitalized contract costs	(85,532)		(47,978)
Accounts payable	61,421		11,400
Accrued compensation and related liabilities	(28,212)		(59,988)
Accrued liabilities and other	(33,352)		(10,519)
Income taxes, current	8,124		(66,875)
Net cash provided by operating activities	619,149		593,782
Cash flows from investing activities:
Capital expenditures	(146,404)		(108,629)
Purchases of investments	(5,182)		(5,967)
Proceeds from sale of operating assets, net of cash disposed	—		15,347
Acquisitions of businesses, net of cash acquired	(15,457)		(45,670)
Other, net	(4,381)		(6,676)
Net cash used in investing activities	(171,424)		(151,595)
Cash flows from financing activities:
Issuance of commercial paper, net	124,046		167,000
Repayment of debt	—		(250,000)
Proceeds from exercise of stock-based compensation awards	2,125		109,198
Dividends paid	(215,017)		(177,949)
Repurchase of common stock	(348,682)		(664,726)
Other, net	(8,840)		(3,399)
Net cash used in financing activities	(446,368)		(819,876)
Effect of exchange rate changes on cash and cash equivalents	(2,029)		(2,781)
Net decrease in cash and cash equivalents	(672)		(380,470)
Cash and cash equivalents at beginning of period	90,471		493,640
Cash and cash equivalents at end of period	$	89,799	$	113,170

See accompanying notes.

8

CINTAS CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited) 

Note 1 - Basis of Presentation

The consolidated condensed financial statements of Cintas Corporation (Cintas, the Company, we, us or our) included herein have been prepared by Cintas, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. While we believe that the disclosures are adequately presented, we suggest that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022 filed with the SEC on July 27, 2022. A summary of our significant accounting policies is presented beginning on page 41 of that report. There have been no material changes in the accounting policies followed by Cintas during the current fiscal year. 

Interim results are subject to variations and are not necessarily indicative of the results of operations for a full fiscal year. In the opinion of management, adjustments (which include only normal recurring adjustments) necessary for a fair statement of the consolidated results of the interim periods shown have been made.

Inventories, net are valued at the lower of cost (first-in, first-out) or net realizable value. Inventory is comprised of the following: 

(In thousands)	November 30, 2022		May 31, 2022
Raw materials	$	18,431	$	19,071
Work in process	48,245		34,280
Finished goods	448,163		418,799
	$	514,839	$	472,150

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $70.2 million and $100.3 million at November 30, 2022 and May 31, 2022, respectively. The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence. Once a specific inventory item is written down to the lower of cost or net realizable value, a new cost basis has been established, and that inventory item cannot subsequently be marked up.

New Accounting Pronouncements

There are no new accounting pronouncements recently issued or newly effective that had, or are expected to have, a material impact on Cintas' consolidated condensed financial statements.

9

Note 2 - Revenue Recognition

The following table presents Cintas' total revenue disaggregated by operating segment:

	Three Months Ended								Six Months Ended
(In thousands)	November 30, 2022				November 30, 2021				November 30, 2022				November 30, 2021
Uniform Rental and    Facility Services	$	1,709,987	78.6	%	$	1,535,271	79.9	%	$	3,407,759	78.5	%	$	3,043,447	79.7	%
First Aid and Safety    Services	235,974		10.9	%	202,160		10.5	%	470,135		10.8	%	401,276		10.5	%
Fire Protection    Services	146,602		6.7	%	123,254		6.4	%	298,449		6.9	%	251,472		6.6	%
Uniform Direct    Sales	82,295		3.8	%	61,596		3.2	%	164,969		3.8	%	123,036		3.2	%
Total revenue	$	2,174,858	100.0	%	$	1,922,281	100.0	%	$	4,341,312	100.0	%	$	3,819,231	100.0	%

The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 12 entitled Segment Information.

Revenue Recognition Policy

Approximately 95% of the Company's revenue is derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services operating segment customers, performed by a Cintas employee-partner, at the customer's location of business. Revenue from our route servicing customer contracts represent a single-performance obligation. The Company recognizes revenue over time as services are performed, based on the nature of services provided and contractual rates (output method) or at a point in time when the performance obligation under the terms of the contract with a customer are satisfied, at the customer's location of business. The Company's remaining revenue, primarily within the Uniform Direct Sales operating segment, and representing approximately 5% of the Company's total revenue, is recognized when the obligations under the terms of a contract with a customer are satisfied. This generally occurs when the goods are transferred to the customer.

Revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities. Shipping and handling costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Certain of our customer contracts include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration paid to a customer based on performance metrics specified within the contract. Specifically, some contracts contain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company's actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period. When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company's performance period generally corresponds with the monthly invoice period. No constraints on our revenue recognition were applied during the three or six months ended November 30, 2022 or 2021. The Company reassesses these estimates during each reporting period. Cintas maintains a liability for these discounts and rebates within accrued liabilities on the consolidated condensed balance sheets. Variable consideration also includes consideration paid to a customer at the beginning of a contract. Cintas capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue. These assets are included in prepaid expenses and other current assets and in other assets, net on the consolidated condensed balance sheets.

We are exposed to credit losses primarily through our trade receivables. We determine the allowance for credit losses using both an estimate, based on historical rates of collections, and reserves for specific accounts identified as uncollectible. The portion of the allowance that is an estimate based on Cintas' historical rates of collections is recorded for overdue amounts, beginning with a nominal percentage when the account is current and increasing

10

substantially as the account ages. The amount provided as the account ages will differ slightly between the Uniform Rental and Facility Services reportable operating segment, the First Aid and Safety Services reportable operating segment and All Other because of differences in customers served and the nature of each business. We update our estimate of credit loss reserves quarterly, considering recent write-offs and collections information and underlying economic expectations.

Costs to Obtain a Contract

The Company capitalizes commission expenses paid to our employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. As permitted by Accounting Standards Codification 606, "Revenue from Contracts with Customers (Topic 606)", the Company has elected to apply the guidance to a portfolio of contracts (or performance obligations) with similar characteristics because the Company reasonably expects that the effects on the consolidated condensed financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio. The Company also continues to expense certain costs to obtain a contract if those costs do not meet the criteria of the standard or the amortization period of the asset would have been one year or less. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. We review the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense. The current portion is included in prepaid expenses and other current assets and the noncurrent portion is included in other assets, net on the Company's consolidated condensed balance sheets. As of November 30, 2022, the current and noncurrent assets related to deferred commissions totaled $88.2 million and $244.1 million, respectively. As of May 31, 2022, the current and noncurrent assets related to deferred commissions totaled $83.7 million and $232.2 million, respectively. We recorded amortization expense related to deferred commissions of $23.4 million and $21.7 million during the three months ended November 30, 2022 and 2021, respectively. During the six months ended November 30, 2022 and 2021, we recorded amortization expense related to deferred commissions of $45.8 million and $43.1 million, respectively. These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income.

Note 3 - Leases

Cintas has operating leases for certain operating facilities, vehicles and equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. Each new contract is evaluated to determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated condensed balance sheet with a corresponding operating lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the consolidated condensed balance sheet.

Operating lease right-of-use assets, net and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. Both lease expense and variable lease costs are primarily recorded in cost of uniform rental and facility services and other on the Company's consolidated condensed statements of income. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $20.0 million and $18.0 million for the three months ended November 30, 2022 and 2021, respectively. For the six months ended November 30, 2022 and 2021, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $39.5 million and $36.2 million, respectively.

11

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the six months ended November 30:

(In thousands)	2022		2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	25,108	$	24,301
Operating lease right-of-use assets obtained in exchange for new and renewed    operating lease liabilities	$	29,186	$	10,609

Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows:

	November 30, 2022	May 31, 2022
Weighted-average remaining lease term - operating leases	5.37 years	5.40 years
Weighted-average discount rate - operating leases	2.50%	2.20%

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2022:

(In thousands)
2023 (remaining six months)	$	23,932
2024	43,081
2025	35,080
2026	28,347
2027	20,682
Thereafter	40,859
Total payments	191,981
Less interest	(12,669)
Total present value of lease payments	$	179,312

12

Note 4 - Fair Value Measurements

All financial instruments that are measured at fair value on a recurring basis (at least annually) have been classified within the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the consolidated condensed balance sheet date. These financial instruments measured at fair value on a recurring basis are summarized below: 

	As of November 30, 2022
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Cash and cash equivalents	$	89,799	$	—	$	—	$	89,799
Other assets, net:
Interest rate lock agreements	—		68,057		—		68,057
Total assets at fair value	$	89,799	$	68,057	$	—	$	157,856

	As of May 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Fair Value
Cash and cash equivalents	$	90,471	$	—	$	—	$	90,471
Other assets, net:
Interest rate lock agreements	—		56,877		—		56,877
Total assets at fair value	$	90,471	$	56,877	$	—	$	147,348

Cintas’ cash and cash equivalents are generally classified within Level 1 or Level 2 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets, and financial instruments classified as Level 2 are based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. The types of financial instruments Cintas classifies within Level 1 include most bank deposits and money market securities. Cintas does not adjust the quoted market price for such financial instruments.

The fair values of Cintas' interest rate lock agreements are based on similar exchange traded derivatives (market approach) and are, therefore, included within Level 2 of the fair value hierarchy. The fair value was determined by comparing the locked rates against the benchmarked treasury rate. No other amounts included in other assets, net, are recorded at fair value on a recurring basis.

The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated condensed balance sheet dates.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, Cintas records assets and liabilities at fair value on a nonrecurring basis as required under U.S. GAAP. The assets and liabilities measured at fair value on a nonrecurring basis primarily relate to assets and liabilities acquired in a business acquisition. The Company's acquisition of the remaining interest of an equity method investment during fiscal 2022 was recorded at fair value. See Note 10 entitled Acquisitions for additional information.

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Note 5 - Investments

Cintas' investments are summarized as follows:

(In thousands)	November 30, 2022		May 31, 2022
Cash surrender value of insurance policies	$	238,637	$	237,136
Other investments	4,937		5,737
Total investments	$	243,574	$	242,873

Investments are generally evaluated for impairment on an annual basis or when indicators of impairment exist. For the three and six months ended November 30, 2022 and 2021, no impairment losses were recorded.

Note 6 - Earnings Per Share 

Cintas uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of restricted stock awards. The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common shares:

	Three Months Ended				Six Months Ended
Basic Earnings per Share (In thousands except per share data)	November 30, 2022		November 30, 2021		November 30, 2022		November 30, 2021
Net income	$	324,293	$	294,669	$	675,982	$	625,848
Less: net income allocated to participating securities	1,372		1,495		2,859		3,179
Net income available to common    shareholders	$	322,921	$	293,174	$	673,123	$	622,669
Basic weighted average common shares outstanding	101,637		103,646		101,530		103,463
Basic earnings per share	$	3.18	$	2.83	$	6.63	$	6.02

	Three Months Ended				Six Months Ended
Diluted Earnings per Share (In thousands except per share data)	November 30, 2022		November 30, 2021		November 30, 2022		November 30, 2021
Net income	$	324,293	$	294,669	$	675,982	$	625,848
Less: net income allocated to participating securities	1,372		1,495		2,859		3,179
Net income available to common    shareholders	$	322,921	$	293,174	$	673,123	$	622,669
Basic weighted average common shares outstanding	101,637		103,646		101,530		103,463
Effect of dilutive securities – employee stock options	1,719		2,476		1,813		2,563
Diluted weighted average common shares outstanding	103,356		106,122		103,343		106,026
Diluted earnings per share	$	3.12	$	2.76	$	6.51	$	5.87

For the three months ended November 30, 2022 and 2021, options granted to purchase 1.1 million and 0.1 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. For the six months ended November 30, 2022 and 2021, options granted to purchase 0.9 million and 0.1 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. The exercise prices of these options were greater than the average market price of the common stock (anti-dilutive).

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On October 29, 2019, we announced that the Board of Directors authorized a $1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022. On July 27, 2021, Cintas announced that the Board of Directors authorized a $1.5 billion share buyback program, which does not have an expiration date. From the inception of the July 27, 2021 share buyback program through November 30, 2022, Cintas purchased a total of 2.7 million shares of Cintas common stock at an average price of $385.62 per share for a total purchase price of $1.0 billion. On July 26, 2022, Cintas announced that the Board of Directors authorized a new $1.0 billion share buyback program, which does not have an expiration date. The following tables summarize the share buyback activity by program and period:

	Three Months Ended					Six Months Ended
	November 30, 2022					November 30, 2022
Buyback Activity (In thousands except per share data)	Shares	Avg. Price per Share		Purchase Price		Shares	Avg. Price per Share		Purchase Price
July 27, 2021	12	$	377.66	$	4,683	544	$	395.97	$	215,434
July 26, 2022	—	—		—		—	—		—
	12	$	377.66	$	4,683	544	$	395.97	$	215,434
Shares acquired for taxes due (1)	56	$	423.64	$	23,665	326	$	408.97	$	133,248
Total repurchase of Cintas common stock				$	28,348				$	348,682

	Three Months Ended					Six Months Ended
	November 30, 2021					November 30, 2021
Buyback Activity (In thousands except per share data)	Shares	Avg. Price per Share		Purchase Price		Shares	Avg. Price per Share		Purchase Price
October 29, 2019	—	$	—	$	—	1,590	$	365.41	$	581,220
July 27, 2021	—	—		—		—	—		—
	—	$	—	$	—	1,590	$	365.41	$	581,220
Shares acquired for taxes due (1)	13	$	420.87	$	5,483	211	$	395.84	$	83,506
Total repurchase of Cintas common stock				$	5,483				$	664,726

(1) Shares of Cintas common stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards.

In addition to the share buyback activity presented above, Cintas acquired shares of Cintas common stock, via non-cash transactions, in connection with net-share settlements of option exercises. During the three months ended November 30, 2022, Cintas acquired 0.1 million shares of Cintas common stock via such non-cash transactions at an average price of $421.85 for a total non-cash value of $28.0 million. During the six months ended November 30, 2022, Cintas acquired 0.3 million shares of Cintas common stock via such non-cash transactions at an average price of $414.46 for a total non-cash value of $107.6 million. During the three and six months ended November 30, 2021, there were no shares of Cintas common stock acquired via non-cash transactions, in connection with net-share settlements of option exercises.

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Note 7 - Goodwill, Service Contracts and Other Assets, Net

Changes in the carrying amount of goodwill and service contracts for the six months ended November 30, 2022, by reportable operating segment and All Other, are as follows:

Goodwill (in thousands)	Uniform Rental  and Facility Services		First Aid  and Safety Services		All Other		Total
Balance as of June 1, 2022	$	2,635,099	$	285,769	$	122,108	$