SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



~~( X )~~☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	August 31, 2021

~~For the quarterly period ended~~ ~~November 30, 2017~~



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

~~For the transition period from~~ to



~~WASHINGTON~~Washington						31-1188630
(State or ~~other jurisdiction~~Other Jurisdiction of Incorporation or Organization)						(~~I.R.S.~~IRS Employer Identification Number)


~~incorporation or organization)~~6800 Cintas Boulevard		~~Identification No.)~~
P.O. Box 625737
Cincinnati,	Ohio	45262-5737
(Address of Principal Executive Offices)		(Zip Code)

~~6800 CINTAS BOULEVARD~~

~~(Registrant’s telephone number, including area code)~~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 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”~~filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large Accelerated Filer ü☑ Accelerated Filer _ ☐ Non-Accelerated Filer _☐

Smaller Reporting Company _ ☐ Emerging Growth Company _~~(Do not check if a smaller reporting company)~~☐

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

~~November 30, 2017~~August 31, 2021 and May 31, ~~2017~~2021

~~CINTAS CORPORATION~~

Part I. Financial Information

FINANCIAL ~~STATEMENTS.~~STATEMENTS

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands except per share data)

G&K Services, Inc. transaction and

integration expenses

(Loss) income from discontinued operations,

net of tax benefit of $624 and tax expense of

$9,851, $41,103 and $10,992, respectively

See accompanying notes.

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

Change in fair value of interest rate lock agreements, net of tax

(benefit) expense of $(12,554) and $3,672, respectively

Amortization of interest rate lock agreements, net of tax benefit

of $148 and $116, respectively

Other comprehensive (loss) income, net of tax (benefit) expense of

$(12,406) and $3,788, respectively

Three Months Ended Six Months Ended
November 30, 2017 November 30, 2016 November 30, 2017 November 30, 2016

Net income $ 137,109
$ 140,377
$ 354,320
$ 278,468

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments (11,374 ) (7,650 ) 23,810
(7,535 )
Change in fair value of cash flow hedges —
26,390
—
14,353
Amortization of interest rate lock agreements (172 ) 385
(344 ) 770
Change in fair value of available-for-sale securities (20 ) 1
—
—

Other comprehensive (loss) income (11,566 ) 19,126
23,466
7,588

Comprehensive income $ 125,543
$ 159,503
$ 377,786
$ 286,056

See accompanying notes.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands except share data)

See accompanying notes.

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY


	Common Stock and Paid-In Capital			Retained Earnings		Other Accumulated Comprehensive Loss			Treasury Stock				Total Shareholders' Equity
	Shares	Amount						Shares		Amount

Balance at June 1, 2020	186,793	$	1,274,210	$	7,296,509	$	(153,380)		(83,378)		$	(5,182,137)	$	3,235,202
Net income	—	—		300,005		—			—		—		300,005
Comprehensive income, net of tax	—	—		—		37,430			—		—		37,430

Stock-based compensation	—	29,055		—		—			—		—		29,055
Vesting of stock-based compensation awards	568	—		—		—			—		—		—
Stock options exercised, net of shares surrendered	795	72,123		—		—			—		—		72,123
Repurchase of common stock	—	—		—		—			(230)		(69,011)		(69,011)
Balance at August 31, 2020	188,156	$	1,375,388	$	7,596,514	$	(115,950)		(83,608)		$	(5,251,148)	$	3,604,804

See accompanying notes.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

See accompanying notes.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.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 ~~U.S.~~United States generally accepted accounting principles ~~(GAAP)~~(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, ~~2017~~.2021. A summary of our significant accounting policies is presented beginning on page 3840 of that report. There have been no material changes in the accounting policies followed by Cintas during the current fiscal ~~year other than the adoption of new accounting pronouncements discussed in Note 2.~~ 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.

On March 21, 2017, Cintas completed the acquisition of G&K Services, Inc. (G&K) for consideration of approximately $2.1 billion. G&K is now a wholly-owned subsidiary of Cintas that operates within the Uniform Rental and Facility Services operating segment. To finance the G&K acquisition, Cintas used a combination of new senior notes, a term loan, other borrowings under its existing credit facility and cash on hand. G&K's results of operations are included in Cintas' consolidated financial statements as of and from the date of acquisition.

During the three months ended August 31, 2017, Cintas sold a significant business, referred to as "Discontinued Services," and as a result, its operations are classified as discontinued operations for all periods presented. See Note 13 entitled Discontinued Operations for more information.

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

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of ~~$37.5~~$110.2 million and ~~$38.3~~$111.0 million at ~~November 30, 2017~~August 31, 2021 and May 31, ~~2017,~~2021, 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.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. The reclassification has been reflected in the consolidated condensed balance sheet and consolidated condensed statement of shareholders' equity for the fiscal year ended May 31, 2021 and the three months ended August 31, 2020, to combine common stock and paid-in capital for disclosure purposes. These reclassifications had no effect on the Company's reported results of operations.

2.New Accounting Pronouncements

In ~~May 2014,~~December 2019, the Financial Accounting Standards Board (FASB) issued Accounting ~~Standard~~Standards Update (ASU) ~~2014-09, "Revenue from Contracts with Customers~~2019-12, Income Taxes (Topic ~~606),"~~740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is part of the FASB’s overall simplification initiative to ~~clarify revenue recognition principles. This guidance is intended~~reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to ~~improve disclosure requirements and enhance the comparability~~users of ~~revenue recognition practices. Improved disclosures under the amended guidance relate~~financial statements. ASU 2019-12 removes certain exceptions to the ~~nature, amount, timing and uncertainty~~general principles of revenue that is recognized from contracts with customers. This guidance will be effective for reporting periods beginning after December 15, 2017. A cross-functional implementation team has been established consisting of representatives from all of our operating segments. The implementation team is working to analyze the impact of the standard on Cintas' contract portfolio by reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements of the new standard to revenue contracts. In addition, we are in the process of identifying and implementing the appropriate changes to business processes and controls to support recognition and disclosure under the new standard.

Based on our preliminary analysis, we currently do not believe the adoption of this guidance will have a material impact on our consolidated condensed financial statements. Based on our evaluation of each revenue stream, we believe that most revenue transactions will be accounted for in a manner substantially consistent with existing guidance. The majority of our business services revenue transactions represent a series of distinct services over the term of the contract where performance obligations are the same each day. We will continue to evaluate the impact of this guidance on our consolidated condensed financial statements, disclosures, and internal controls. Our preliminary assessments are subject to change. Cintas plans to adopt the standard as of the first quarter of fiscal year 2019 using the modified retrospective adoption alternative under this standard, and therefore, it is anticipated we will record a cumulative adjustment to retained earnings as of June 1, 2018.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. Topic 842 supersedes the previous leases standard, Accounting Standards Codification (ASC) ~~840, "Leases." This guidance is effective for reporting periods beginning after December 15, 2018, however, early adoption is permitted. Entities are required~~740, Income Taxes (ASC 740), in order to ~~use a modified retrospective approach for leases that exist or are entered into after~~reduce the ~~beginning~~cost and complexity of ~~the earliest comparative period~~its application in the ~~financial statements. Cintas is currently evaluating the impact that~~areas of intraperiod tax allocation, deferred tax liabilities related to outside basis differences, year-to-date losses in interim periods and other areas within ASC 740. The Company adopted ASU ~~2016-02 will have~~2019-12 on ~~its consolidated condensed financial statements.~~

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by the difference between a reporting unit's carrying value and its fair value (impairment loss is limited to the carrying value). This standard is effective for annual or any interim goodwill impairment tests beginning after December 15, 2019.June 1, 2021. The adoption of ~~this standard is~~ASU 2019-12 did not ~~expected to~~ have a material impact on the Company’s consolidated condensed financial ~~statements.~~statements currently but may in future periods.

In March 2017, the FASB issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs.” ASU 2017-07 requires the service component of pension and other postretirement benefit costs to be presented in the same line item as other employee compensation costs on the consolidated condensed statement of income; however, the other components of net benefit costs are required to be presented outside of operating income within the consolidated condensed statements of income. Cintas retrospectively adopted ASU 2017-07 on June 1, 2017.

No other new accounting pronouncement recently issued or newly effective had, or is expected to have, a material impact on Cintas' consolidated condensed financial statements.

3.Note 2 - Revenue Recognition

The following table presents Cintas' total revenue disaggregated by operating segment for the three months ended August 31:




(In thousands)	2021				2020


Uniform Rental and Facility Services	$	1,508,176	79.5	%	$	1,394,411	79.8	%
First Aid and Safety Services	199,116		10.5	%	204,481		11.7	%
Fire Protection Services	128,218		6.8	%	108,065		6.2	%
Uniform Direct Sales	61,440		3.2	%	39,618		2.3	%
Total revenue	$	1,896,950	100.0	%	$	1,746,575	100.0	%

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 revenues are derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services, performed by a Cintas employee-partner, at the customer's location of business. Revenues from our route servicing customer contracts represent a single-performance obligation. The Company recognizes revenues 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 months ended August 31, 2021 or 2020. 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 other assets, net on the consolidated condensed balance sheets.

Additionally, certain Uniform Direct Sales operating segment customer contracts contain a provision with an enforceable right of payment, and the underlying product has no alternative use to Cintas. Consequently, when both aforementioned provisions are prevalent in a customer contract, the revenue is recorded for finished goods that the customer is obligated to purchase under the termination terms of the contract.

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 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 ASC 606, "Revenue", 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 August 31, 2021, the current and noncurrent assets related to deferred commissions totaled $80.2 million and $227.2 million, respectively. As of May 31, 2021, the current and noncurrent assets related to deferred commissions totaled $79.4 million and $227.1 million, respectively. We recorded amortization expense related to deferred commissions of $21.4 million and $20.4 million during the three months ended August 31, 2021 and 2020, respectively. These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income.

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 were $18.2 million and $17.1 million for the three months ended August 31, 2021 and 2020, respectively. Short-term lease expense and variable lease costs are included within operating lease costs and immaterial for the three months ended August 31, 2021 and 2020.

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the three months ended August 31:


(In thousands)	2021		2020


Cash paid for amounts included in the measurement of operating lease liabilities	$	11,913	$	12,254
Operating lease right-of-use assets obtained in exchange for new and renewed operating lease liabilities	$	2,792	$	9,317

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



	August 31, 2021	May 31, 2021

Weighted-average remaining lease term - operating leases	5.22 years	5.33 years
Weighted-average discount rate - operating leases	2.29%	2.32%

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of August 31, 2021:


(In thousands)

2022 (remaining nine months)	$	35,794
2023	40,285
2024	29,941
2025	22,509
2026	16,995
Thereafter	30,336
Total payments	175,860
Less interest	(10,261)
Total present value of lease payments	$	165,599

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 August 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Fair Value

Cash and cash equivalents	$	79,749	$	—	$	—	$	79,749




Other assets, net:
Interest rate lock agreements	—		18,335		—		18,335
Total assets at fair value	$	79,749	$	18,335	$	—	$	98,084

Current accrued liabilities:
Interest rate lock agreements	$	—	$	88,736	$	—	$	88,736
Total liabilities at fair value	$	—	$	88,736	$	—	$	88,736

As of May 31, 2017
(In thousands) Level 1 Level 2 Level 3 Fair Value

Cash and cash equivalents $ 169,266
$ —
$ —
$ 169,266
Marketable securities:
Canadian treasury securities —
22,219
—
22,219
Total assets at fair value $ 169,266
$ 22,219
$ —
$ 191,485

Table of Contents

Cintas’ cash and cash equivalents ~~and marketable securities~~ 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 ~~types~~fair values of ~~financial instruments Cintas classifies within Level 2~~Cintas' interest rate lock agreements are ~~primarily high grade domestic commercial paper~~based on similar exchange traded derivatives (market approach) and ~~Canadian treasury securities (federal). The valuation technique used for Cintas’ marketable securities classified~~are, therefore, included within Level 2 of the fair value ~~hierarchy is primarily the market approach.~~hierarchy. The primary inputs to value Cintas’ marketable securities are the respective instrument's future cash flows based on its stated yield and the amount a market participant would pay for a similar instrument. Primarily all of Cintas’ marketable securities are actively traded and the recorded fair value ~~reflects current market conditions. However, due to~~was determined by comparing the ~~inherent volatility in~~locked rates against the ~~investment market, there is at least a possibility that recorded investment values may change in the near term.~~

~~Interest, realized gains and losses and declines in value determined to be~~benchmarked treasury rate. No other ~~than temporary on available-for-sale securities are~~amounts included in ~~interest income~~other assets, net, current accrued liabilities or ~~expense. The cost of the securities sold is based~~long-term accrued liabilities are recorded at fair value on the specific identification method. The amortized cost basis of marketable securities as of November 30, 2017 and May 31, 2017 was $22.7 million and $22.2 million, respectively. All outstanding marketable securities as of November 30, 2017 and May 31, 2017 had contractual maturities due within one year.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, ~~the Company~~Cintas records assets and liabilities at fair value on a nonrecurring basis as required under U.S. GAAP. The ~~Company's acquisition of G&K in the fourth quarter of fiscal 2017 was recorded~~assets and liabilities measured at fair ~~value. See Note 9 entitled Acquisitions for additional information~~value on ~~the measurement of the G&K~~a nonrecurring basis primarily relate to assets ~~acquired~~ and liabilities ~~assumed. There~~acquired in a business acquisition, which were nonot material ~~acquisitions~~ during the ~~six~~three months ended ~~November 30, 2017.~~August 31, 2021 and 2020.

Note 5 - Investments

4.~~Investments~~Cintas' investments are summarized as follows:

Investments at November 30, 2017 of $175.7 million include the cash surrender value of insurance policies of $151.3 million, equity method investments of $19.4 million and cost method investments of $5.0 million. Investments at May 31, 2017 of $164.8 million include the cash surrender value of insurance policies of $144.0 million, equity method investments of $15.8 million and cost method investments of $5.0 million.



(In thousands)	August 31, 2021		May 31, 2021

Cash surrender value of insurance policies	$	274,721	$	252,061
Equity method investments	18,383		19,388
Cost method investments	2,164		3,167
Total investments	$	295,268	$	274,616

Investments are generally evaluated for impairment on an annual basis or when indicators of impairment exist. For the ~~six~~three months ended ~~November 30, 2017~~August 31, 2021 and ~~2016,~~2020, 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 ~~table sets~~tables set forth the computation of basic and diluted earnings per share ~~from continuing operations~~ using the two-class method for amounts attributable to Cintas’ common ~~shares:~~ shares for the three months ending August 31:


Basic Earnings per Share (In thousands except per share data)	2021		2020



Net income	$	331,179	$	300,005
Less: income allocated to participating securities	1,765		2,173
Income available to common shareholders	$	329,414	$	297,832
Basic weighted average common shares outstanding	103,295		104,110

Basic earnings per share	$	3.19	$	2.86

Three Months Ended Six Months Ended
Basic Earnings per Share from Continuing
Operations (in thousands except per share data)
November 30,
2017 November 30,
2016 November 30,
2017
November 30,
2016

Income from continuing operations $ 137,737
$ 121,950
$ 298,845
$ 258,158
Less: income from continuing operations allocated to participating securities 2,111
1,923
5,298
4,775
Income from continuing operations available to common shareholders $ 135,626
$ 120,027

$ 293,547

$ 253,383
Basic weighted average common shares outstanding 106,340
104,957
106,039
104,719

Basic earnings per share from continuing operations $ 1.27
$ 1.15

$ 2.77
$ 2.42


Diluted Earnings per Share (In thousands except per share data)	2021		2020



Net income	$	331,179	$	300,005
Less: income allocated to participating securities	1,765		2,173
Income available to common shareholders	$	329,414	$	297,832
Basic weighted average common shares outstanding	103,295		104,110
Effect of dilutive securities – employee stock options	2,649		3,019
Diluted weighted average common shares outstanding	105,944		107,129

Diluted earnings per share	$	3.11	$	2.78

Three Months Ended Six Months Ended
Diluted Earnings per Share from Continuing
Operations (in thousands except per share data)
November 30,
2017 November 30,
2016 November 30,
2017 November 30,
2016

Income from continuing operations $ 137,737
$ 121,950
$ 298,845
$ 258,158
Less: income from continuing operations allocated to participating securities 2,111
1,923
5,298
4,775
Income from continuing operations available to common shareholders $ 135,626
$ 120,027
$ 293,547
$ 253,383
Basic weighted average common shares outstanding 106,340
104,957
106,039
104,719
Effect of dilutive securities – employee stock options 3,478
2,690
2,899
2,559
Diluted weighted average common shares outstanding 109,818
107,647
108,938
107,278

Diluted earnings per share from continuing operations $ 1.24
$ 1.12
$ 2.69
$ 2.36

For the three months ended ~~November 30, 2017, both basic~~August 31, 2021 and diluted loss per share from discontinued operations were $0.01. Both basic and diluted earnings per share from discontinued operations were $0.17 for the three months ended November 30, 2016. For the six months ended November 30, 2017, basic and diluted earnings per share from discontinued operations were $0.51 and $0.50, respectively. Both basic and diluted earnings per share from discontinued operations were $0.19 for the six months ended November 30, 2016.

~~For the three months ended November 30, 2017 and 2016,~~2020, options granted to purchase ~~0.5~~0.1 million and ~~0.7~~0.2 million shares of Cintas common stock, respectively, ~~were excluded from the computation of diluted earnings per share. For both the six months ended November 30, 2017 and 2016, options granted to purchase 0.6 million shares of Cintas common stock~~ 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).

On ~~August 2, 2016,~~October 29, 2019, Cintas announced that the Board of Directors authorized a ~~$500.0~~$1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022. From the inception of the October 29, 2019 share buyback program through July 2021, Cintas purchased a total of 2.8 million shares of Cintas common stock at an average price of $358.93 per share for a total purchase price of $1.0 billion. On July 27, 2021, Cintas announced that the Board of Directors authorized a new $1.5 billion share buyback program, which does not have an expiration date. ~~As of November 30, 2017, no~~The following tables summarize the share ~~buybacks have occurred under~~buyback activity by program for the three months ended August ~~2, 2016 program and there~~31:



	2021					2020
Buyback Program (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	—	$	—	$	—

There were no share buybacks ~~under this program~~in the period subsequent to ~~November 30, 2017~~August 31, 2021, through ~~January 5, 2018.~~October 7, 2021 under any share buyback program.

For the ~~six~~three months ended ~~November 30, 2017,~~August 31, 2021, Cintas acquired ~~0.3~~0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that ~~vested during the six months ended November 30, 2017.~~vested. These shares were acquired at an average price of ~~$129.01~~$394.19 per share for a total purchase price of ~~$35.7~~$78.0 million.

For the three months ended August 31, 2020, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested. These shares were acquired at an average price of $300.01 per share for a total purchase price of $69.0 million.

Note 7 - Goodwill, Service Contracts and Other Assets

Changes in the carrying amount of goodwill and service contracts for the ~~six~~three months ended ~~November 30, 2017,~~August 31, 2021, 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, 2021	$	2,547,510	$	248,571	$	116,988	$	2,913,069
Goodwill acquired	24,512		—		41		24,553

Foreign currency translation	(11,565)		(1,024)		(40)		(12,629)
Balance as of August 31, 2021	$	2,560,457	$	247,547	$	116,989	$	2,924,993

Goodwill (in thousands)
Uniform Rental
and Facility Services

First Aid
and Safety Services

All
Other
Total

Balance as of June 1, 2017 $ 2,448,070
$ 243,112
$ 91,153
$ 2,782,335
Goodwill acquired ⁽¹⁾
27,107
73
426
27,606
Foreign currency translation 927
891
37
1,855
Balance as of November 30, 2017 $ 2,476,104
$ 244,076
$ 91,616
$ 2,811,796

⁽¹⁾Adjustments to the G&K preliminary purchase price allocation represent $27.1 million of the acquired goodwill in the Uniform Rental and Facility Services reportable operating segment. See Note 9 entitled Acquisitions for more information.

Service Contracts (in thousands)

and Facility Services

Information regarding Cintas’ service contracts and other assets is as follows:

Capitalized contract

(1) The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of August 31, 2021 and May 31, 2021, is $80.2 million and $79.4 million, respectively.

As of May 31, 2017
(In thousands) Carrying Amount Accumulated Amortization Net

Service contracts $ 911,273
$ 324,285
$ 586,988

Noncompete and consulting agreements $ 40,743
$ 39,244
$ 1,499
Other 34,890
4,422
30,468
Total other assets $ 75,633
$ 43,666
$ 31,967

Amortization expense for service contracts and other assets ~~for continuing operations~~ was ~~$15.6~~$36.5 million and ~~$3.2~~$35.1 million for the three months ended ~~November 30, 2017~~August 31, 2021 and ~~2016,~~2020, respectively. ~~Amortization expense for service contracts~~These expenses are recorded in selling and ~~other assets for continuing operations was $29.8 million and $6.4 million for~~administrative expenses on the ~~six months ended November 30, 2017 and 2016, respectively. Estimated~~consolidated condensed statements of income. As of August 31, 2021, the estimated future amortization expense for service contracts and other assets, excluding any future acquisitions ~~for each~~and commissions to be earned, is as follows:


Fiscal Year (In thousands)

2022 (remaining nine months)	$	104,871
2023	122,464
2024	110,029
2025	96,113
2026	79,013
Thereafter	204,245
Total future amortization expense	$	716,735

7.Note 8 - Debt, Derivatives and Hedging Activities

Cintas' outstanding debt is summarized as follows:

(In thousands)
Interest
Rate

Fiscal Year
Issued

Fiscal Year
Maturity

November 30,
2017

May 31,
2017

Debt due within one year
Senior notes 6.13 % 2008 2018 $ 300,000
$ 300,000
Commercial paper 1.24 %
⁽¹⁾
Various Various —
50,500
Current portion of term loan 2.00 %
⁽¹⁾
2017 2018 —
12,500
Debt issuance costs —
(100 )
Total debt due within one year $ 300,000
$ 362,900

Debt due after one year
Senior notes 4.30 % 2012 2022 $ 250,000
$ 250,000
Senior notes 2.90 % 2017 2022 650,000
650,000
Senior notes 3.25 % 2013 2023 300,000
300,000
Senior notes ⁽²⁾
2.78 % 2013 2023 52,337
52,554
Senior notes ⁽³⁾
3.11 % 2015 2025 52,476
52,645
Senior notes 3.70 % 2017 2027 1,000,000
1,000,000
Senior notes 6.15 % 2007 2037 250,000
250,000
Long-term portion of term loan 2.00 %
⁽¹⁾
2017 2022 —
237,500
Debt issuance costs (20,591 ) (22,075 )
Total debt due after one year $ 2,534,222
$ 2,770,624

⁽¹⁾Variable rate debt instrument. The rate presented is the variable borrowing rate at ~~May~~August 31, ~~2017.~~2021.

⁽²⁾ Cintas assumed these senior notes with the acquisition of G&K Services, Inc. (G&K) in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is $50.0 million with a stated interest rate of 3.73%.

⁽³⁾Cintas assumed these senior notes with the acquisition of G&K in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is $50.0 million with a stated interest rate of 3.88%.

Cintas' senior notes, excluding the G&K senior notes assumed with the acquisition of G&K in fiscal 2017, ~~and term loan~~ are recorded at cost, net of debt issuance costs. The fair value of the long-term debt is estimated using Level 2 inputs based on general market prices. The carrying value and fair value of Cintas' debt as of ~~November 30, 2017~~August 31, 2021 were ~~$2,854.8~~$2,626.0 million and ~~$2,985.2~~$2,863.8 million,, respectively, and as of May 31, ~~2017~~2021 were ~~$3,156.0~~$2,550.0 million and ~~$3,296.8~~$2,788.8 million,, respectively. ~~During the six months ended November 30, 2017, Cintas made payments of $50.5 million, net on commercial paper borrowings and paid off the term loan balance of $250.0 million with cash on hand.~~ On ~~December~~June 1, ~~2017,~~2021, in accordance with the terms of the notes, Cintas paid the ~~$300.0~~$250.0 million aggregate principal amount of its ~~6.13%~~4.30%, 10-year senior notes that matured on that date with cash on ~~hand and $265.0~~hand. During the three months ended August 31, 2021, Cintas issued $326.0 million, ~~in proceeds from the issuance~~net of commercial ~~paper.~~paper borrowings.

The credit agreement that supports our commercial paper program ~~was amended on September 16, 2016. The amendment increased the capacity of the~~has a revolving credit facility ~~from $450.0 million to $600.0 million and added~~with a ~~$250.0 million term loan facility. The existing term loan facility was paid in full as~~capacity of ~~the first quarter of fiscal 2018.~~$1.0 billion. The credit agreement has an accordion feature that provides Cintas the ability to request increases to the borrowing commitments under ~~either~~ the revolving credit facility ~~or a new term loan~~ of up to $250.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit ~~agreement~~facility is ~~September 15, 2021.~~May 23, 2024. As of ~~November~~August 31, 2021, there was $326.0 million of commercial paper outstanding with maturity dates less than 30 ~~2017,~~days and with a weighted average interest rate of 0.20% and there was no borrowings on our revolving credit facility. As of May 31, 2021, there was no commercial paper outstanding and no borrowings on our revolving credit facility. ~~As of May 31, 2017, there was $50.5 million of commercial paper outstanding with a weighted average interest rate of 1.24% and maturity dates less than 30 days and~~ no borrowings on our revolving credit facility. The fair value of the commercial paper is estimated using Level 2 inputs based on general market prices. Given its short-term nature, the carrying value of the outstanding commercial paper approximates fair value.

Cintas uses interest rate locks to manage ~~our~~its overall interest expense as interest rate locks effectively change the interest rate of specific debt issuances. The interest rate locks are entered into to protect against unfavorable movements in the benchmark treasury rate related to forecasted debt issuances. Cintas used interest rate lock agreements to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal ~~2008, fiscal~~ 2012, fiscal 2013 and fiscal 2017. The amortization of the cash flow hedges resulted in a decrease to other comprehensive income of ~~$0.1~~$0.5 million and $0.4 million three months ended August 31, 2021 and 2020, respectively. During fiscal 2020 and fiscal 2019, Cintas entered into interest rate lock agreements with a total

notional value of $950.0 million and $500.0 million, respectively, for forecasted debt issuances in connection with upcoming debt maturities.

The fair values of the outstanding interest rate lock agreements are summarized as follows:


			August 31, 2021				May 31, 2021
Fiscal Year of Issuance (in thousands)	Notional Value		Other assets, net		Current accrued liabilities		Other assets, net		Long-term accrued liabilities

2020	$	950,000	$	18,335	$	10,264	$	40,400	$	—
2019	$	500,000	$	—	$	78,472	$	—	$	61,657

The interest rate locks are also recorded in other comprehensive income (loss), net of tax. These interest rate locks had no impact on net income or cash flows for the three months ended ~~November 30, 2017~~ and an increase to other comprehensive income of $0.4 million for the three months ended November 30, 2016. For the six months ended November 30, 2017 and 2016, the amortization of the cash flow hedges resulted in a decrease to other comprehensive income of $0.3 million and an increase to other comprehensive income of $0.8 million, respectively.August 31, 2021 or 2020.

Cintas has certain covenants related to debt agreements. These covenants limit ~~Cintas’~~Cintas' ability to incur certain liens, to engage in sale-leaseback transactions and to merge, consolidate or sell all or substantially all of ~~Cintas’~~Cintas' assets. These covenants also require Cintas to maintain certain debt to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) and interest coverage ratios. Cross-default provisions exist between certain debt instruments. If a default of a significant covenant were to occur, the default could result in an acceleration of the maturity of the indebtedness, impair liquidity and limit the ability to raise future capital. Cintas was in compliance with all of the debt covenants for all periods presented.

8.Note 9 - Income Taxes

In the normal course of business, Cintas provides for uncertain tax positions and the related interest and adjusts its unrecognized tax benefits and accrued interest accordingly. As of ~~November 30, 2017~~August 31, 2021 and May 31, ~~2017,~~2021, recorded unrecognized tax benefits were ~~$18.7~~$34.6 million and ~~$12.6~~$34.2 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance ~~sheet. The increase in the liability for the six months ended November 30, 2017 is primarily related to an adjustment to the preliminary purchase price allocation for the G&K acquisition.~~sheets.

All U.S. federal income tax returns are closed to audit through fiscal 2013. Cintas is currently in various audits in certain foreign jurisdictions and certain domestic states. The years under foreign and domestic state audits cover fiscal years back to 2013. Based on the resolution of the various audits and other potential regulatory developments, it is reasonably possible that the balance of unrecognized tax benefits would not change for the fiscal year ending May 31, 2018.

The majority of Cintas' operations are in North America. Cintas is required to file federal income tax returns, as well as state income tax returns in a majority of the domestic states and also in certain Canadian provinces. At times, Cintas is subject to audits in these jurisdictions. The audits, by nature, are sometimes complex and can require several years to resolve. The final resolution of any such tax audit could result in either a reduction in Cintas' accruals or an increase in its income tax provision, either of which could have an impact on the consolidated ~~condensed~~ results of operations in any given period.

All United States federal income tax returns are closed to audit through fiscal 2017. Cintas is currently in various audits in certain foreign jurisdictions and certain domestic states. The years under foreign and domestic state audits cover fiscal years back to 2014. Based on the resolution of the various audits and other potential regulatory developments, it is reasonably possible that the balance of unrecognized tax benefits would not change for the fiscal year ending May 31, 2022.

Cintas’ effective tax rate ~~for continuing operations~~ was ~~33.3%~~11.0% and ~~34.9%~~7.8% for the three months ended ~~November 30, 2017~~August 31, 2021 and ~~2016, respectively. For the six months ended November 30, 2017 and 2016, Cintas' effective tax rate for continuing operations was 29.8% and 31.5%,~~2020, respectively. The effective tax rate for all periods was ~~largely~~ impacted by certain discrete items (primarily the tax accounting for stock-based compensation).

On December 22, 2017, the President signed into legislation The Tax Cuts and Jobs Act (the Act). The Act changes existing U.S. tax law and includes numerous provisions that will affect our business, including our income tax accounting, disclosure and tax compliance. We believe the most impactful changes within the Act provision are those that will reduce the U.S. corporate tax rates, business-related exclusions and deductions and credits. ASC 740, "Income Taxes" (Topic 740), requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, as of the date of enactment, and during the three months ended February 28, 2018, we will remeasure all deferred tax assets and liabilities at the newly enacted Corporate U.S. income tax rate. We are currently evaluating the impact of the Act, which will include remeasuring the deferred tax assets and liabilities, the one-time transition tax, as well as evaluating our reinvestment assertion on all future earnings and profits of our foreign entities, and we will disclose the estimated impact upon recognition in the third quarter of fiscal 2018.

On March 21, 2017, Cintas acquired G&K for consideration of approximately $2.1 billion. Pursuant to the merger agreement among Cintas, G&K and Bravo Merger Sub, Inc., a wholly-owned subsidiary of Cintas, each share of common stock of G&K issued and outstanding immediately prior to the effective time of the G&K acquisition was canceled and converted into the right to receive $97.50 in cash. The total purchase price was $2,078.4 million, which was funded using a combination of new senior notes, a term loan, other borrowings under our existing credit facility and cash on hand. The net consideration transferred for G&K consisted of the following items:

(In thousands)

Cash consideration for common stock $ 1,901,845
⁽¹⁾
Cash consideration for share-based awards 62,257
⁽²⁾
Cash consideration for G&K revolving debt 124,180
⁽³⁾
Cash consideration for transaction expenses 24,529
⁽⁴⁾
Total consideration 2,112,811

Cash acquired (34,393 )
⁽⁵⁾
Net consideration transferred $ 2,078,418

Table of Contents

⁽¹⁾ ~~The cash consideration for outstanding shares of G&K common stock is the product of the agreed-upon cash per share price of $97.50 and total G&K outstanding shares of approximately 19.5 million.~~

⁽²⁾ The cash consideration for share-based awards is the product of the agreed-upon cash per share price of $97.50 and the total number of restricted stock outstanding and the “in the money” stock options net of the weighted average exercise price.

⁽³⁾~~The cash consideration for G&K revolving debt reflects the repayment of the outstanding obligation.~~

⁽⁴⁾ ~~Represents G&K legal and professional fees that were incurred prior to acquisition and were due upon the closing of the transaction.~~

⁽⁵⁾ ~~Represents the G&K cash balance acquired at acquisition.~~

Cintas accounted for the G&K acquisition using the acquisition method. The preliminary allocation of the purchase price was determined by management with the assistance of third-party valuation specialists and was based on estimates of the fair value of assets acquired and liabilities assumed as of March 21, 2017. During the six months ended November 30, 2017, $28.3 million of adjustments related to deferred taxes and $1.2 million of adjustments related to income taxes, current were made to the preliminary purchase price allocation. Cintas is continuing to evaluate information to determine the fair value of acquired assets and liabilities. As of November 30, 2017, the purchase price allocation for the acquisition was preliminary and subject to completion. The components of the preliminary purchase price allocation, at fair value, are as follows:

Assets
Accounts receivable $ 95,846
Inventories 30,254
Uniforms and other rental items in service 93,659
Income taxes, current 15,873
Prepaid expenses and other current assets 43,235
Property and equipment 254,035
Goodwill 1,520,295
Service contracts 519,000
Trade names 17,000
Other assets 15,585
Liabilities
Accounts payable (53,220 )
Accrued compensation and related liabilities (9,594 )
Accrued liabilities (115,109 )
Long-term accrued liabilities (28,380 )
G&K senior notes (105,359 )
Deferred income taxes (214,702 )
Total consideration $ 2,078,418

The preliminary fair value of the intangible assets has been estimated using the income approach through a discounted cash flow analysis (except as noted below with respect to the trade names) with the cash flow projections discounted using a rate of 9.5%. The cash flows are based on estimates used to price the G&K acquisition, and the discount rates applied were benchmarked with reference to the implied rate of return from Cintas’ pricing model and the weighted average cost of capital.

The G&K service contract intangible asset will be amortized over a period of 15 years, which represents the estimated useful life of the economic benefit and the asset amortization is based on the annual economic value of the underlying asset which generally decreases over the 15-year term. The trade names represent the G&K corporate trade name and all of the branded variations thereof. Cintas applied the income approach through a relief from royalty method analysis to determine the preliminary fair value of the trade name assets.

~~The table below sets forth the preliminary valuation and amortization period of identifiable intangible assets:~~

Identifiable intangible assets Preliminary Valuation Amortization Period

Service contracts $ 519,000
15 years
Trade names 17,000
3 years
Total $ 536,000

Cintas estimated the preliminary fair value of the acquired property, plant and equipment using a combination of the cost and market approaches, depending on the type of asset. The preliminary fair value of property, plant and equipment consisted of real property of $141.8 million and personal property of $112.2 million.

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. None of the goodwill is expected to be deductible for income tax purposes. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the G&K acquisition. These benefits include improved service capabilities, an enhanced footprint in the markets that we serve, attractive synergy opportunities and value creation. The goodwill is entirely allocated to the Uniform Rental and Facility Services reportable operating segment.

The following unaudited pro forma information presents the combined financial results for Cintas and G&K as if the G&K acquisition had been completed at the beginning of Cintas’ prior fiscal year, June 1, 2016. Prior to the acquisition, G&K used a 52-week or 53-week fiscal year ending on the Saturday nearest June 30. The pro forma financial information set forth below for the three and six months ended November 30, 2016 includes G&K's quarterly and year to date results, respectively, for the periods of October 2, 2016 through December 31, 2016 and July 2, 2016 through December 31, 2016, adjusted for number of working days in Cintas' first and second quarters of fiscal 2017.

Three Months Ended Six Months Ended
(In thousands except per share data)
November 30,
2016

November 30,
2016

Net sales $ 1,515,222
$ 3,026,600
Net income from continuing operations $ 131,212
$ 277,625

Earnings from continuing operations per common share - diluted $ 1.20
$ 2.54

The information above does not include the pro forma adjustments that would be required under Regulation S-X for pro forma financial information, and does not reflect future events that may occur after November 30, 2017 or any operating efficiencies or inefficiencies that may result from the G&K acquisition and related financing. Therefore, the information is not necessarily indicative of results that would have been achieved had the businesses been combined during the periods presented or the results that Cintas will experience going forward.

Cintas is required to provide additional disclosures about fair value measurements as part of the consolidated financial statements for each major category of assets and liabilities measured at fair value on a nonrecurring basis (including business acquisitions). The working capital assets and liabilities, as well as the property and equipment acquired, were valued using Level 2 inputs which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach). Goodwill, service contracts and other intangibles were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flow using a discount rate of 9.5% (income approach). Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly lower (higher) fair value measurement. Management utilizes third-party valuation firms to assist in the determination of purchase accounting fair values, and specifically those considered Level 3 measurements. Management ultimately oversees the third-party valuation firms to ensure that the transaction-specific assumptions are appropriate for Cintas.

~~10.~~Note 10 - Pension Plans

In conjunction with the acquisition of G&K in fiscal 2017, Cintas assumed G&K's noncontributory ~~frozen~~ defined benefit pension plan (the Pension Plan) that covers substantially all legacy G&K employees who were employed as of July 1, 2005, except certain employees who were covered by union-administered plans. Benefits are based on the number of years of service and each employee’s compensation near retirement. We will make annual contributions to the Pension Plan consistent with federal funding requirements. The Pension Plan was frozen by G&K effective December 31, 2006. Future growth in benefits will not occur beyond this date. Applicable accounting standards require that the consolidated condensed balance ~~sheet~~sheets reflect the funded status of the Pension Plan. The funded status of the Pension Plan is measured as the difference between the plan assets at fair value and the projected benefit ~~obligation.~~obligation (PBO). The PBO represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels. The measurement of the PBO is based on the Company’s estimates and actuarial valuations. The net pension liability ~~at November 30, 2017~~ is included in long-term accrued liabilities on the consolidated condensed balance ~~sheet.~~sheets. Unrecognized differences between actual amounts and estimates based on actuarial assumptions are included in accumulated other comprehensive (loss) income inon our consolidated condensed balance ~~sheet.~~sheets. The difference between actual amounts and estimates based on actuarial assumptions are recognized in other comprehensive (loss) income, net of tax, in the period in which they occur. The Pension Plan assumptions are evaluated annually and are updated as deemed necessary.

The components of net periodic pension ~~cost recognized in other comprehensive income~~benefit are summarized as follows for the ~~Pension Plan are as follows:~~three months ended August 31:


(In thousands)	2021		2020




Interest cost	$	542	$	512
Expected return on assets	(917)		(731)
Amortization of net loss	—		56
Net periodic pension benefit	$	(375)	$	(163)

Three Months Ended Six Months Ended
(In thousands)
November 30,
2017

November 30,
2017

Interest cost $ 711
$ 1,421
Expected return on assets (716 ) (1,432 )
Amortization of net loss —
—
Total net periodic benefit cost $ (5 ) $ (11 )

~~11.~~Note 11 - Accumulated Other Comprehensive Income (Loss)

The following ~~table summarizes~~tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive (loss) income, ~~(loss),~~ net of tax:


(In thousands)	Foreign Currency		Unrealized Loss on Interest Rate Hedges		Other		Total

Balance at June 1, 2021	$	41,839	$	(7,308)	$	(3,643)	$	30,888
Other comprehensive loss before reclassifications	(24,016)		(36,679)		—		(60,695)
Amounts reclassified from accumulated other comprehensive (loss) income	—		(459)		—		(459)
Net current period other comprehensive loss	(24,016)		(37,138)		—		(61,154)
Balance at August 31, 2021	$	17,823	$	(44,446)	$	(3,643)	$	(30,266)

(In thousands) Foreign Currency Unrealized Income on Cash Flow Hedges Other Total

Balance at June 1, 2017 $ (12,726 ) $ 11,382
$ (1,685 ) $ (3,029 )
Other comprehensive income before reclassifications 35,184
—
20
35,204
Amounts reclassified from accumulated other comprehensive income (loss) —
(172 ) —
(172 )
Net current period other comprehensive income (loss) 35,184

(172 )
20

35,032
Balance at August 31, 2017 22,458

11,210

(1,665 )
32,003
Other comprehensive loss before reclassifications (11,374 ) —
(20 ) (11,394 )
Amounts reclassified from accumulated other comprehensive income (loss) —
(172 ) —
(172 )
Net current period other comprehensive loss (11,374 ) (172 ) (20 ) (11,566 )
Balance at November 30, 2017 $ 11,084

$ 11,038

$ (1,685 )
$ 20,437


(In thousands)	Foreign Currency		Unrealized Loss on Interest Rate Hedges		Other		Total

Balance at June 1, 2020	$	(26,343)	$	(112,718)	$	(14,319)	$	(153,380)
Other comprehensive income before reclassifications	26,946		10,842		—		37,788
Amounts reclassified from accumulated other comprehensive (loss) income	—		(358)		—		(358)
Net current period other comprehensive income	26,946		10,484		—		37,430
Balance at August 31, 2020	$	603	$	(102,234)	$	(14,319)	$	(115,950)

(In thousands) Foreign Currency Unrealized Loss on Cash Flow Hedges Other Total

Balance at June 1, 2016 $ (2,474 ) $ (20,830 ) $ (1,570 ) $ (24,874 )
Other comprehensive income (loss) before
reclassifications
115
(12,037 ) (1 ) (11,923 )
Amounts reclassified from accumulated other comprehensive income (loss) —
385
—
385
Net current period other comprehensive income (loss) 115

(11,652 )
(1 )
(11,538 )
Balance at August 31, 2016 (2,359 ) (32,482 ) (1,571 ) (36,412 )
Other comprehensive (loss) income before
reclassifications
(7,650 ) 26,390
1
18,741
Amounts reclassified from accumulated other comprehensive income (loss) —
385
—
385
Net current period other comprehensive (loss) income (7,650 ) 26,775
1
19,126
Balance at November 30, 2016 $ (10,009 ) $ (5,707 ) $ (1,570 ) $ (17,286 )

Table of Contents

The following table summarizes the reclassifications out of accumulated other comprehensive (loss) income ~~(loss):~~for the three months ended August 31:


Details about Accumulated Other Comprehensive (Loss) Income Components	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income				Affected Line in the Consolidated Condensed Statements of Income
(In thousands)	2021		2020



Amortization of interest rate locks	$	607	$	474		Interest expense
Tax expense	(148)		(116)			Income taxes
Amortization of interest rate locks, net of tax	$	459	$	358

Note 12 - Segment Information

Cintas’ reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services reportable operating segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items. In addition to these rental items, restroom cleaning services and supplies, and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas’ operating segments, which consists of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, is included in All Other.

Cintas evaluates the performance of each operating segment based on several factors of which the primary financial measures are operating segment revenue and income before income taxes. The accounting policies of the operating segments are the same as those described in Note 1 entitled Basis of Presentation. Information related to the operations of Cintas’ reportable operating segments and All Other is set forth below:


(In thousands)	Uniform Rental and Facility Services		First Aid and Safety Services		All Other		Corporate (1)		Total









As of and for the three months ended August 31, 2021

Revenue	$	1,508,176	$	199,116	$	189,658	$	—	$	1,896,950
Income (loss) before income taxes	$	329,382	$	25,728	$	38,991	$	(21,798)	$	372,303
Total assets	$	6,770,296	$	636,829	$	370,876	$	79,749	$	7,857,750

As of and for the three months ended August 31, 2020

Revenue	$	1,394,411	$	204,481	$	147,683	$	—	$	1,746,575
Income (loss) before income taxes	$	315,028	$	18,527	$	16,151	$	(24,486)	$	325,220
Total assets	$	6,628,127	$	620,169	$	373,543	$	421,542	$	8,043,381

Reclassifications out of Accumulated Other Comprehensive Income (Loss)

Details about Accumulated Other Comprehensive Income (Loss) Components
Amount Reclassified from Accumulated Other
Comprehensive Income (Loss)
Affected Line in the Consolidated Condensed Statements of Income

Three Months Ended Six Months Ended
(In thousands) November 30, 2017 November 30, 2016 November 30, 2017 November 30, 2016

Amortization of interest rate locks $ 278
$ (615 ) $ 556
$ (1,229 ) Interest expense
Tax (expense) benefit (106 ) 230
(212 ) 459
Income taxes
Amortization of interest rate locks, net of tax $ 172
$ (385 )
$ 344

$ (770 ) Net income

Table of Contents

ITEM 2.

~~12.Segment Information~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Strategy

Cintas helps more than one million businesses of all types and sizes, primarily in the United States (U.S.), as well as Canada and Latin America, 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, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training, Cintas helps customers get Ready for the Workday®. Cintas is also the creator of the Total Clean Program™ — a first-of-its-kind service that includes scheduled delivery of essential cleaning supplies, hygienically clean laundering, and sanitizing and disinfecting projects and services.

We are North America’s leading provider of corporate identity uniforms through rental and sales programs, as well as a significant provider of related business services, including entrance mats, restroom cleaning services and supplies, first aid and safety services and fire protection products and services.

Cintas’ principal objective is “to exceed customers’ expectations in order to maximize the long-term value of Cintas for shareholders and working partners,” and it provides the framework and focus for Cintas’ business strategy. This strategy is to achieve revenue growth for all our products and services by increasing our penetration at existing customers and by broadening our customer base to include market segments to which we have not historically served. We will also continue to identify additional product and service opportunities for our current and future customers.

To pursue the strategy of increasing penetration, we have a highly talented and diverse team of service professionals visiting our customers on a regular basis. This frequent contact with our customers enables us to develop close personal relationships. The combination of our distribution system and these strong customer relationships provides a platform from which we launch additional products and services.

We pursue the strategy of broadening our customer base in several ways. Cintas has a national sales organization introducing all its products and services to prospects in all market segments. Our broad range of products and services allows our sales organization to consider any type of business a prospect. We also broaden our customer base through geographic expansion. Finally, we evaluate strategic acquisitions as opportunities arise.

Results of Operations

Cintas classifies its business into two reportable operating segments and places the remainder of its operating segments in an All Other category. Cintas’ two reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services reportable operating segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items. In addition to these rental items, restroom cleaning services and supplies ~~carpet and tile cleaning services~~ and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas’ business, which consists of the Fire Protection Services operating segment and ~~its~~the Uniform Direct Sale ~~business, is included in All Other.~~

~~Cintas evaluates the performance of each~~ operating segment, based on several factors of which the primary financial measures are operating segment revenue and income before income taxes. The accounting policies of the operating segments are the same as those described in Note 1 entitled Basis of Presentation. Information related to the operations of Cintas’ operating segments is set forth below:

(In thousands)
Uniform Rental
and Facility Services

First Aid
and Safety Services

All
Other

Corporate⁽¹⁾
Total

For the three months ended
November 30, 2017

Revenue $ 1,308,038
$ 139,090
$ 159,313
$ —
$ 1,606,441
Income (loss) before income taxes $ 203,814
$ 17,975
$ 13,422
$ (28,838 ) $ 206,373

For the three months ended
November 30, 2016

Revenue $ 1,000,015
$ 124,797
$ 146,265
$ —
$ 1,271,077
Income (loss) before income taxes $ 176,947
$ 14,779
$ 8,730
$ (13,236 ) $ 187,220

As of and for the six months ended
November 30, 2017

Revenue $ 2,619,822
$ 279,672
$ 318,450
$ —
$ 3,217,944
Income (loss) before income taxes $ 422,724
$ 37,386
$ 24,200
$ (58,858 ) $ 425,452
Total assets $ 5,899,010
$ 467,902
$ 353,155
$ 258,734
$ 6,978,801

As of and for the six months ended
November 30, 2016
Revenue $ 1,994,297
$ 249,636
$ 293,794
$ —
$ 2,537,727
Income (loss) before income taxes $ 361,735
$ 26,290
$ 16,368
$ (27,343 ) $ 377,050
Total assets $ 3,262,448
$ 443,151
$ 326,039
$ 182,941
$ 4,214,579

⁽¹⁾Corporate assets include cash and marketable securities in all periods. Corporate assets as of November 30, 2016 include the assets of Discontinued Services, which were classified as held for sale at May 31, 2017 and sold during the six months ended November 30, 2017.

~~13.Discontinued Operations~~

In fiscal 2018, Cintas sold a significant business referred to as Discontinued Services and received proceeds from the sale of $127.8 million. The results of Discontinued Services are included in discontinued operations for all periods presented. In accordance with the applicable accounting guidance for the disposal of long-lived assets and discontinued operations, the results of Discontinued Services have been excluded from both continuing operations and operating segment results for all periods presented.

During the three months ended November 30, 2016, we received additional proceeds related to contingent consideration on the sale of Shred-it. Cintas realized a pre-tax gain of $25.9 million as a result of the additional consideration received. As of November 30, 2017, Cintas still has the opportunity to receive additional consideration, subject to certain holdback provisions. Because of the uncertainty surrounding the holdback provision, this opportunity represents a gain contingency that has not been recorded.

~~Following is selected financial information included in net income from discontinued operations for Discontinued Services and Shred-it:~~

Three Months Ended Six Months Ended
(In thousands) November 30, 2017
November 30, 2016 ⁽¹⁾
November 30, 2017
November 30, 2016 ⁽¹⁾

Revenue $ —
$ 25,845
$ 10,773
$ 53,326

(Loss) income before income taxes (43 ) 2,402
(2,482 ) 5,426
Income tax benefit (expense) 18
(898 ) 920
(2,039 )
(Loss) gain on sale of business (1,209 ) —
99,060
—
Gain on Shred-it —
25,876
—
25,876
Income tax benefit (expense) on net gain 606
(8,953 ) (42,023 ) (8,953 )
Net (loss) income from discontinued operations $ (628 ) $ 18,427

$ 55,475

$ 20,310

⁽¹⁾~~The results of Discontinued Services for the three and six months ended November 30, 2016 were previously included in continuing operations.~~

~~14.G&K Services, Inc. Transaction and Integration Expenses~~

As a result of the acquisition of G&K in fiscal 2017, the Company incurred $13.1 million and $3.3 million in transaction and integration expenses during the three months ended November 30, 2017 and 2016, respectively, and $17.0 million and $6.1 million during the six months ended November 30, 2017 and 2016, respectively. The $13.1 million of costs incurred in the three months ended November 30, 2017 related to integration expenses directly related to the acquisition. During the six months ended November 30, 2017, the costs incurred related to $16.0 million of integration expenses directly related to the acquisition and $1.0 million of employee termination expenses recognized under ASC Topic 712, "Compensation - Nonretirement Postemployment Benefits." The costs incurred in the three and six months ended November 30, 2016 related to legal and professional fees directly related to the acquisition. As of November 30, 2017 and May 31, 2017, employee termination benefits included in accrued compensation and related liabilities on the consolidated condensed balance sheet was $15.7 million~~and$24.3 million, respectively. The amount of employee termination benefits paid during the three and six months ended November 30, 2017 was $3.6 million and $9.6 million, respectively.~~

~~15.Supplemental Guarantor Information~~

~~Cintas Corporation No. 2 (Corp. 2) is the indirectly, wholly-owned principal operating subsidiary of Cintas. Corp. 2 is the issuer of the aggregate principal amount of the~~ ~~$2,857.5 million~~ aggregate principal amount of senior notes outstanding as of November 30, 2017, 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. During fiscal 2018, the Company sold Discontinued Services (see Note 13) previously included in Cintas Corporation and Corp. 2. The sale of Discontinued Services has been reflected as discontinued operations as of the beginning of the earliest period presented herein. 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 November 30, 2017~~

~~(In thousands)~~

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

Revenue:

Uniform rental and facility services $ —
$ 1,086,667
$ 170,320
$ 100,933
$ (49,882 ) $ 1,308,038
Other —
435,539
(313 ) 21,982
(158,805 ) 298,403
Equity in net income of affiliates 137,737
—
—
—
(137,737 ) —
137,737
1,522,206
170,007
122,915
(346,424 ) 1,606,441
Costs and expenses (income):

Cost of uniform rental and facility services —
628,123
105,954
65,220
(75,337 ) 723,960
Cost of other —
302,065
(25,046 ) 15,438
(126,345 ) 166,112
Selling and administrative expenses —
528,369
(85,417 ) 31,211
(6,079 ) 468,084
G&K Services, Inc. transaction and
integration expenses
—
4,192
8,319
563
—
13,074
Operating income 137,737
59,457
166,197
10,483
(138,663 ) 235,211

Interest income —
(45 ) (59 ) (187 ) —
(291 )
Interest expense (income) —
29,444
(313 ) (2 ) —
29,129

Income before income taxes 137,737

30,058

166,569

10,672

(138,663 )
206,373
Income taxes —
11,449
54,414
2,798
(25 ) 68,636
Income from continuing operations 137,737

18,609

112,155

7,874

(138,638 ) 137,737

Loss from discontinued operations, net of tax (628 ) (628 ) —
—
628
(628 )

Net income $ 137,109
$ 17,981
$ 112,155
$ 7,874
$ (138,010 ) $ 137,109

~~Consolidating Condensed Income Statement~~

~~Three Months Ended November 30, 2016~~

~~(In thousands)~~

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

Revenue:

Uniform rental and facility services $ —
$ 835,892
$ 149,886
$ 57,610
$ (43,373 ) $ 1,000,015
Other —
390,963
633
18,162
(138,696 ) 271,062
Equity in net income of affiliates 121,950
—
—
—
(121,950 ) —
121,950
1,226,855
150,519
75,772
(304,019 ) 1,271,077
Costs and expenses (income):

Cost of uniform rental and facility services —
483,399
94,323
37,603
(63,827 ) 551,498
Cost of other —
271,812
(19,549 ) 13,636
(111,538 ) 154,361
Selling and administrative expenses —
398,592
(48,256 ) 18,703
(7,624 ) 361,415
G&K Services, Inc. transaction and
integration expenses
—
—
3,347
—
—
3,347
Operating income 121,950
73,052
120,654
5,830
(121,030 ) 200,456

Interest income —
—
(7 ) (25 ) 1
(31 )
Interest expense (income) —
14,528
(1,176 ) (85 ) —
13,267

Income before income taxes 121,950
58,524
121,837
5,940
(121,031 ) 187,220
Income taxes —
20,635
42,652
2,011
(28 ) 65,270
Income from continuing operations 121,950

37,889

79,185

3,929

(121,003 )
121,950

Income from discontinued operations, net of tax 18,427
17,115
—
1,941
(19,056 ) 18,427

Net income $ 140,377

$ 55,004

$ 79,185

$ 5,870

$ (140,059 )
$ 140,377

~~Consolidating Condensed Income Statement~~

~~Six Months Ended November 30, 2017~~

~~(In thousands)~~

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

Revenue:

Uniform rental and facility services $ —
$ 2,186,536
$ 335,215
$ 197,528
$ (99,457 ) $ 2,619,822
Other —
862,841
(6 ) 42,290
(307,003 ) 598,122
Equity in net income of affiliates 298,845
—
—
—
(298,845 ) —
298,845
3,049,377
335,209
239,818
(705,305 ) 3,217,944
Costs and expenses (income):

Cost of uniform rental and facility services —
1,250,271
204,973
125,737
(150,158 ) 1,430,823
Cost of other —
590,984
(44,715 ) 30,173
(245,043 ) 331,399
Selling and administrative expenses —
1,039,324
(132,955 ) 61,117
(13,119 ) 954,367
G&K Services, Inc. transaction and
integration expenses
—
5,713
10,754
578
—
17,045
Operating income 298,845
163,085
297,152
22,213
(296,985 ) 484,310

Interest income —
(76 ) (158 ) (354 ) —
(588 )
Interest expense (income) —
60,005
(452 ) (107 ) —
59,446

Income before income taxes 298,845
103,156
297,762
22,674
(296,985 ) 425,452
Income taxes —
31,019
89,537
6,095
(44 ) 126,607
Income from continuing operations 298,845

72,137

208,225

16,579

(296,941 )
298,845

Income (loss) from discontinued
operations, net of tax
55,475
64,374
(8,899 ) —
(55,475 ) 55,475

Net income $ 354,320

$ 136,511

$ 199,326

$ 16,579

$ (352,416 )
$ 354,320

~~Consolidating Condensed Income Statement~~

~~Six Months Ended November 30, 2016~~

~~(In thousands)~~

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

Revenue:

Uniform rental and facility services $ —
$ 1,667,852
$ 299,034
$ 115,273
$ (87,862 ) $ 1,994,297
Other —
779,045
1,601
37,037
(274,253 ) 543,430
Equity in net income of affiliates 258,158
—
—
—
(258,158 ) —
258,158
2,446,897
300,635
152,310
(620,273 ) 2,537,727
Costs and expenses (income):

Cost of uniform rental and facility services —
958,620
184,995
74,717
(129,737 ) 1,088,595
Cost of other —
535,538
(34,480 ) 27,464
(221,035 ) 307,487
Selling and administrative expenses —
806,203
(98,990 ) 38,968

(15,063 ) 731,118
G&K Services, Inc. transaction and
integration expenses
—
—
6,134
—
—
6,134
Operating income 258,158
146,536
242,976
11,161
(254,438 ) 404,393

Interest income —
—
(24 ) (73 ) 1
(96 )
Interest expense (income) —
29,355
(1,878 ) (38 ) —
27,439

Income before income taxes 258,158
117,181
244,878
11,272
(254,439 ) 377,050
Income taxes —
37,304
78,178
3,464
(54 ) 118,892
Income from continuing operations 258,158

79,877

166,700

7,808

(254,385 )
258,158

Income from discontinued operations,
net of tax
20,310
18,998
—
1,941
(20,939 ) 20,310

Net income $ 278,468

$ 98,875

$ 166,700

$ 9,749

$ (275,324 )
$ 278,468

~~Consolidating Condensed Statement of Comprehensive Income~~

~~Three Months Ended November 30, 2017~~

~~(In thousands)~~

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

Net income $ 137,109
$ 17,981
$ 112,155
$ 7,874
$ (138,010 ) $ 137,109

Other comprehensive loss,
net of tax:

Foreign currency translation adjustments (11,374 ) —
—
(11,374 ) 11,374
(11,374 )
Amortization of interest rate lock agreements (172 ) (172 ) —
—
172
(172 )
Change in fair value of available-for-sale securities (20 ) —
—
(20 ) 20
(20 )

Other comprehensive loss (11,566 ) (172 ) —
(11,394 ) 11,566
(11,566 )

Comprehensive income (loss) $ 125,543
$ 17,809
$ 112,155
$ (3,520 ) $ (126,444 ) $ 125,543

~~Consolidating Condensed Statement of Comprehensive Income~~

~~Three Months Ended November 30, 2016~~

~~(In thousands)~~

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

Net income $ 140,377
$ 55,004
$ 79,185
$ 5,870
$ (140,059 ) $ 140,377

Other comprehensive (loss) income,
net of tax:

Foreign currency translation adjustments (7,650 ) —
—
(7,650 ) 7,650
(7,650 )
Change in fair value of cash
flow hedges
26,390
26,390
—
—
(26,390 ) 26,390
Amortization of interest rate lock agreements 385
385
—
—
(385 ) 385
Change in fair value of available-for-sale securities 1
—
—
1
(1 ) 1

Other comprehensive income (loss) 19,126
26,775
—
(7,649 ) (19,126 ) 19,126

Comprehensive income (loss) $ 159,503
$ 81,779
$ 79,185
$ (1,779 ) $ (159,185 ) $ 159,503

~~Consolidating Condensed Statement of Comprehensive Income~~

~~Six Months Ended November 30, 2017~~

~~(In thousands)~~

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

Net income $ 354,320
$ 136,511
$ 199,326
$ 16,579
$ (352,416 ) $ 354,320

Other comprehensive income (loss),
net of tax:

Foreign currency translation adjustments 23,810
—
—
23,810
(23,810 ) 23,810
Amortization of interest rate lock agreements (344 ) (344 ) —
—
344
(344 )

Other comprehensive income (loss) 23,466
(344 ) —
23,810
(23,466 ) 23,466

Comprehensive income $ 377,786
$ 136,167
$ 199,326
$ 40,389
$ (375,882 ) $ 377,786

~~Consolidating Condensed Statement of Comprehensive Income~~

~~Six Months Ended November 30, 2016~~

~~(In thousands)~~

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

Net income $ 278,468
$ 98,875
$ 166,700
$ 9,749
$ (275,324 ) $ 278,468

Other comprehensive (loss) income,
net of tax:

Foreign currency translation adjustments (7,535 ) —
—
(7,535 ) 7,535
(7,535 )
Change in fair value of cash flow
hedges
14,353
14,353
—
—
(14,353 ) 14,353
Amortization of interest rate lock agreements 770
770
—
—
(770 ) 770

Other comprehensive income (loss) 7,588
15,123
—
(7,535 ) (7,588 ) 7,588

Comprehensive income $ 286,056
$ 113,998
$ 166,700
$ 2,214
$ (282,912 ) $ 286,056

~~Consolidating Condensed Balance Sheet~~

~~As of November 30, 2017~~

~~(In thousands)~~

Cintas
Corporation
Corp. 2
Subsidiary
Guarantors

Non-
Guarantors
Eliminations
Cintas
Corporation
Consolidated
Assets

Current assets:

Cash and cash equivalents $ —
$ 42,126
$ 83,515
$ 110,361
$ —
$ 236,002
Marketable securities —
—
—
22,732
—
22,732
Accounts receivable, net —
586,992
117,106
59,457
—
763,555
Inventories, net —
224,217
31,994
16,620
(1 ) 272,830
Uniforms and other rental items
    in service
—
562,724
81,459
49,025
(18,636 ) 674,572
Income taxes, current —
(16,790 ) 47,940
4,550
—
35,700
Prepaid expenses and other
    current assets
—
7,837
29,222
999
—
38,058
Total current assets —
1,407,106
391,236
263,744
(18,637 ) 2,043,449

Property and equipment, net —
875,883
366,041
111,235
—
1,353,159

Investments ⁽¹⁾
321,083
3,598,267
947,722
1,713,070
(6,404,479 ) 175,663
Goodwill —
—
2,770,504
41,403
(111 ) 2,811,796
Service contracts, net —
483,985
—
81,589
—
565,574
Other assets, net 1,766,703
557
3,489,627
13,866
(5,241,593 ) 29,160
$ 2,087,786
$ 6,365,798
$ 7,965,130
$ 2,224,907
$ (11,664,820 ) $ 6,978,801

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable $ (465,247 ) $ (1,458,658 ) $ 2,162,751
$ (113,813 ) $ 37,948
$ 162,981
Accrued compensation and
   related liabilities
—
101,379
6,141
5,910
—
113,430
Accrued liabilities —
187,828
368,784
21,348
—
577,960
Debt due within one year —
300,000
—
—
—
300,000
Total current liabilities (465,247 ) (869,451 ) 2,537,676
(86,555 ) 37,948
1,154,371

Long-term liabilities:

Debt due after one year —
2,533,832
—
390
—
2,534,222
Deferred income taxes —
—
492,999
46,044
—
539,043
Accrued liabilities —
32,998
163,863
1,271
—
198,132
Total long-term liabilities —
2,566,830
656,862
47,705
—
3,271,397

Total shareholders’ equity 2,553,033
4,668,419
4,770,592
2,263,757
(11,702,768 ) 2,553,033
$ 2,087,786
$ 6,365,798
$ 7,965,130
$ 2,224,907
$ (11,664,820 ) $ 6,978,801

⁽¹⁾~~Investments include inter company investment activity. Corp 2 and Subsidiary Guarantors hold $20.3 million and $155.4 million, respectively, of the $175.7 million consolidated net investments.~~

~~Consolidating Condensed Balance Sheet~~

~~As of May 31, 2017~~

~~(In thousands)~~

Cintas
Corporation
Corp. 2
Subsidiary
Guarantors

Non-
Guarantors
Eliminations
Cintas
Corporation
Consolidated
Assets

Current assets:

Cash and cash equivalents $ —
$ 48,658
$ 17,302
$ 103,306
$ —
$ 169,266
Marketable securities —
—
—
22,219
—
22,219
Accounts receivable, net —
543,769
137,881
54,358
—
736,008
Inventories, net —
243,677
21,466
14,461
(1,386 ) 278,218
Uniforms and other rental items
    in service
—
531,295
78,012
45,388
(18,993 ) 635,702
Income taxes, current —
16,173
25,138
3,009
—
44,320
Prepaid expenses and other
   current assets
—
13,234
16,188
710
—
30,132
Assets held for sale —
23,095
15,518
—
—
38,613
Total current assets —
1,419,901
311,505
243,451
(20,379 ) 1,954,478

Property and equipment, net —
851,018
364,724
107,759
—
1,323,501

Investments ⁽¹⁾
321,083
3,605,457
929,657
1,711,070
(6,402,479 ) 164,788
Goodwill —
—
2,742,898
39,549
(112 ) 2,782,335
Service contracts, net —
505,698
—
81,290
—
586,988
Other assets, net 1,516,463
14,705
3,489,653
11,983
(5,000,837 ) 31,967
$ 1,837,546
$ 6,396,779
$ 7,838,437
$ 2,195,102
$ (11,423,807 ) $ 6,844,057

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable $ (465,247 ) $ (1,596,731 ) $ 2,292,388
$ (91,467 ) $ 38,108
$ 177,051
Accrued compensation and
  related liabilities
—
94,505
42,866
12,264
—
149,635
Accrued liabilities —
191,819
219,303
18,687
—
429,809
Debt due within one year —
362,900
—
—
—
362,900
Liabilities held for sale —
11,457
—
—
—
11,457
Total current liabilities (465,247 ) (936,050 ) 2,554,557
(60,516 ) 38,108
1,130,852

Long-term liabilities:

Debt due after one year —
2,770,234
—
390
—
2,770,624
Deferred income taxes —
—
436,613
32,715
—
469,328
Accrued liabilities —
28,384
140,923
1,153
—
170,460
Total long-term liabilities —
2,798,618
577,536
34,258
—
3,410,412

Total shareholders’ equity 2,302,793
4,534,211
4,706,344
2,221,360
(11,461,915 ) 2,302,793
$ 1,837,546
$ 6,396,779
$ 7,838,437
$ 2,195,102
$ (11,423,807 ) $ 6,844,057

⁽¹⁾~~Investments include inter company investment activity. Corp 2 and Subsidiary Guarantors hold $29.0 million and $135.8 million, respectively, of the $164.8 million consolidated net investments.~~

~~Consolidating Condensed Statement of Cash Flows~~

~~Six Months Ended November 30, 2017~~

~~(In thousands)~~

Cintas
Corporation
Corp. 2
Subsidiary
Guarantors

Non-
Guarantors
Eliminations
Cintas
Corporation
Consolidated

Cash flows from operating activities:

Net income $ 354,320
$ 136,511
$ 199,326
$ 16,579
$ (352,416 ) $ 354,320
Adjustments to reconcile net income to net
   cash provided by operating activities

Depreciation —
65,942
34,789
6,847
—
107,578
Amortization of intangible assets —
24,522
2,547
4,192
—
31,261
Stock-based compensation 55,204
—
—
—
—
55,204
Gain on sale of business —
(114,581 ) 15,521
—
—
(99,060 )
Deferred income taxes —
—
40,555
1,607
—
42,162
Changes in current assets and liabilities, net of acquisitions of businesses:

Accounts receivable, net —
(42,881 ) 20,790
(2,709 ) —
(24,800 )
Inventories, net —
17,728
(13,863 ) 115
(1,385 ) 2,595
Uniforms and other rental items
   in service
—
(29,520 ) (112 ) (3,305 ) (357 ) (33,294 )
Prepaid expenses and other
   current assets
—
(5,428 ) (13,609 ) 464
—
(18,573 )
Accounts payable —
155,461
(153,831 ) (10,176 ) (160 ) (8,706 )
Accrued compensation and related liabilities —
6,341
(39,311 ) (3,510 ) —
(36,480 )
Accrued liabilities and other —
(26,847 ) 26,373
(1,466 ) —
(1,940 )
Income taxes, current —
32,963
(22,794 ) (1,427 ) —
8,742
Net cash provided by operating activities 409,524
220,211
96,381
7,211
(354,318 ) 379,009

Cash flows from investing activities:

Capital expenditures —
(90,497 ) (36,875 ) (5,094 ) —
(132,466 )
Proceeds from redemption of marketable securities and investments —
12,400
—
87,859
—
100,259
Purchase of marketable securities and investments —
5,510
(20,064 ) (87,323 ) 2,000
(99,877 )
Proceeds from sale of business —
127,835
—
—
—
127,835
Acquisitions of businesses —
(1,099 ) —
—
—
(1,099 )
Other, net (402,385 ) 21,470
26,771
956
352,318
(870 )
Net cash (used in) provided by investing
    activities
(402,385 ) 75,619
(30,168 ) (3,602 ) 354,318
(6,218 )

Cash flows from financing activities:

Payments of commercial paper, net —
(50,500 ) —
—
—
(50,500 )
Repayment of debt —
(250,000 ) —
—
—
(250,000 )
Proceeds from exercise of stock-based compensation awards 28,558
—
—
—
—
28,558
Repurchase of common stock (35,697 ) —
—
—
—
(35,697 )
Other, net —
(1,862 ) —
(20 ) —
(1,882 )
Net cash used in financing activities (7,139 ) (302,362 ) —
(20 ) —
(309,521 )

Effect of exchange rate changes on cash
    and cash equivalents
—
—
—
3,466
—
3,466

Net (decrease) increase in cash and cash
    equivalents
—
(6,532 ) 66,213
7,055
—
66,736
Cash and cash equivalents at beginning of period —
48,658
17,302
103,306
—
169,266
Cash and cash equivalents at end of period $ —
$ 42,126
$ 83,515
$ 110,361
$ —
$ 236,002

~~Consolidating Condensed Statement of Cash Flows~~

~~Six Months Ended November 30, 2016~~

~~(In thousands)~~

Cintas
Corporation
Corp. 2
Subsidiary
Guarantors

Non-
Guarantors
Eliminations
Cintas
Corporation
Consolidated

Cash flows from operating activities:

Net income $ 278,468
$ 98,875
$ 166,700
$ 9,749
$ (275,324 ) $ 278,468
Adjustments to reconcile net income to net
    cash provided by operating activities

Depreciation —
52,259
22,412
4,919
—
79,590
Amortization of intangible assets —
6,847
175
438
—
7,460
Stock-based compensation 39,582
—
—
—
—
39,582
Gain on Shred-it —
(23,935 ) —
(1,941 ) —
(25,876 )
Deferred income taxes —
(9,578 ) 5,395
350
—
(3,833 )
Changes in current assets and liabilities, net of acquisitions of businesses:

Accounts receivable, net —
(36,939 ) (6,813 ) (1,168 ) —
(44,920 )
Inventories, net —
(14,038 ) 2,871
(1,593 ) (1,856 ) (14,616 )
Uniforms and other rental items in service —
754
(4,182 ) 511
(1,398 ) (4,315 )
Prepaid expenses and other current
    assets
—
412
(2,411 ) 47
—
(1,952 )
Accounts payable —
23,367
(10,857 ) 2,831
110
15,451
Accrued compensation and related liabilities 2,819
(12,734 ) (8,935 ) (86 ) —
(18,936 )
Accrued liabilities and other 139,766
3,711
(148,384 ) 41
—
(4,866 )
Income taxes, current —
(1,635 ) 1,460
659
—
484
Net cash provided by operating activities 460,635
87,366
17,431
14,757
(278,468 ) 301,721

Cash flows from investing activities:

Capital expenditures —
(85,207 ) (60,837 ) (9,129 ) —
(155,173 )
Proceeds from redemption of marketable securities —
—
—
172,968
—
172,968
Purchase of marketable securities and investments —
(4,560 ) (28,751 ) (102,692 ) 17,733
(118,270 )
Proceeds from sale of investment in Shred-it —
23,935
—
1,941
—
25,876
Acquisitions of businesses, net of cash acquired —
(7,245 ) —
(10,533 ) —
(17,778 )
Other, net (460,630 ) 177,446
21,190
1,591
260,735
332
Net cash (used in) provided by investing activities (460,630 ) 104,369
(68,398 ) 54,146
278,468
(92,045 )

Cash flows from financing activities:

Issuance of commercial paper, net —
66,000
—
—
—
66,000
Proceeds from issuance of debt —
—
(2,000 ) 2,000
—
—
Repayment of debt —
(250,000 ) —
—
—
(250,000 )
Prepaid short-term debt financing fees —
(13,495 ) —
—
—
(13,495 )
Proceeds from exercise of stock-based compensation awards 19,225
—
—
—
—
19,225
Repurchase of common stock (19,230 ) —
—
—
—
(19,230 )
Other, net —
(5,572 ) —
—
—
(5,572 )
Net cash (used in) provided by financing activities (5 ) (203,067 ) (2,000 ) 2,000
—
(203,072 )

Effect of exchange rate changes on cash and cash equivalents —
—
—
(2,388 ) —
(2,388 )

Net (decrease) increase in cash and cash
    equivalents
—
(11,332 ) (52,967 ) 68,515
—
4,216
Cash and cash equivalents at beginning of period —
57,893
55,392
26,072
—
139,357
Cash and cash equivalents at end of period $ —
$ 46,561
$ 2,425
$ 94,587
$ —
$ 143,573

~~CINTAS CORPORATION~~

~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~

~~BUSINESS STRATEGY~~

~~Cintas helps more than one million businesses of all types and sizes, primarily in North America, as well as Latin America, Europe and Asia, 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™~~.

We are North America’s leading provider of corporate identity uniforms through rental and sales programs, as well as a significant provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, first aid and safety services and fire protection products and services.

Cintas’ principal objective is “to exceed customers’ expectations in order to maximize the long-term value of Cintas for shareholders and working partners,” and it provides the framework and focus for Cintas’ business strategy. This strategy is to achieve revenue growth for all of our products and services by increasing our penetration at existing customers and by broadening our customer base to include business segments to which we have not historically served. We will also continue to identify additional product and service opportunities for our current and future customers.

We pursue the strategy of broadening our customer base in several ways. Cintas has a national sales organization introducing all of its products and services to prospects in all business segments. Our broad range of products and services allows our sales organization to consider any type of business a prospect. We also broaden our customer base through geographic expansion, especially in our first aid and safety service reportable operating segment and fire protection businesses. Finally, we evaluate strategic acquisitions as opportunities arise.

~~RESULTS OF OPERATIONS~~

Cintas classifies its business into two reportable operating segments and places the remainder of its operating segments in an All Other category. Cintas’ two reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services operating segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops, and shop towels and other ancillary items. In addition to these rental items, restroom cleaning services and supplies and carpet and tile cleaning services are also provided within this operating segment. The First Aid and Safety Services operating segment consists of first aid and safety services. The remainder of Cintas’ business, which consists of Fire Protection Services and its Uniform Direct Sale business, is included in All Other. These operating segments consist of fire protection products and services and the direct sale of uniforms and related items. Cintas evaluates operating segment performance based on revenue and income before income taxes. Revenue and income before income taxes for the ~~six~~three months ended~~November 30, 2017~~ August 31, 2021 and ~~2016~~2020, for the two reportable operating segments and All Other isare presented in Note 12 entitled Segment Information of “Notes to Consolidated Condensed Financial Statements.”

~~On March 21, 2017,~~We have operations throughout the U.S. and Canada and participate in a global supply chain. During most of fiscal 2021, the existence of the novel strain of coronavirus (COVID-19) pandemic, the fear associated with the COVID-19 pandemic and the reactions of governments around the world in response to the COVID-19 pandemic to regulate the flow of labor and products and impede the business of our customers, impacted our ability to conduct normal business operations, which had an adverse effect on our business. Many of Cintas' customers were also impacted by the COVID-19 pandemic, and we saw an impact on some customer's ability to pay timely. While there was

Table of Contents

minimal disruption to our supply chain, Cintas ~~completed~~did increase inventory, primarily personal protective equipment and facility services inventory, in response to the ~~acquisition~~customer needs and demand associated with the safety and cleanliness requirements of ~~G&K Services, Inc. (G&K)~~COVID-19. The increase in inventory resulted in additional inventory reserves during fiscal 2021 and could result in future inventory reserve increases if demand for ~~consideration~~personal protective equipment materially declines. The on-going roll out of ~~approximately $2.1 billion. G&K~~the COVID-19 vaccines and gradual lifting of COVID-19 restrictions had a positive impact on our business during the three months ended August 31, 2021. The impact of the COVID-19 pandemic is ~~now a wholly-owned subsidiary of Cintas that operates within~~fluid and continues to evolve, and therefore, we cannot predict the Uniform Rental and Facility Services operating segment. To finance the G&K acquisition, Cintas used a combination of new senior notes, a term loan, other borrowings under its existing credit facility and cash on hand. G&K'sextent to which our business, consolidated results of operations, ~~are included in Cintas'~~ consolidated financial ~~statements as of and from the date of acquisition. See Note 9 entitled Acquisitions of “Notes to Consolidated Condensed Financial Statements” for additional information.~~condition or liquidity will ultimately be impacted.

During the first quarter of the current fiscal year, Cintas sold a significant business, referred to as "Discontinued Services," and as a result, its operations are classified as discontinued operations for all periods presented. See Note 13 entitled Discontinued Operations of “Notes to Consolidated Condensed Financial Statements” for more information.

Consolidated Results

Three Months Ended~~November 30, 2017~~ August 31, 2021 Compared to Three Months Ended~~November 30, 2016~~ August 31, 2020

Total revenue increased ~~26.4%~~8.6% to $1,897.0 million for the three months ended ~~November 30, 2017 over~~August 31, 2021, compared to $1,746.6 million for the ~~same period in the prior fiscal year, from $1,271.1 million to $1,606.4 million. Revenue increased organically by 7.7% as a result of increased sales volume. Organic~~three months ended August 31, 2020. The organic revenue growth rate, which adjusts for the impact of acquisitions, divestitures and foreign currency exchange rate ~~fluctuations. Total revenue~~fluctuations, was 8.6%. Revenue growth was negatively impacted by a net 0.5% due to acquisitions and divestitures and positively impacted by ~~0.3%~~0.5% due to foreign currency exchange rate ~~fluctuations and by 18.4% due to acquisitions, primarily the acquisition of G&K.~~fluctuations.

Uniform Rental and Facility Services reportable operating segment revenue ~~increased 30.8%~~was $1,508.2 million for the three months ended ~~November 30, 2017 over~~August 31, 2021, compared to $1,394.4 million for the same period in the prior fiscal year, ~~from $1,000.0 million to $1,308.0 million. Revenue increased organically by 7.3%~~which was an increase of 8.2%. The organic revenue grow rate for this reportable operating segment was 8.2%. Revenue growth in the Uniform Rental and Facility Services reportable operating segment was ~~positively~~negatively impacted ~~23.2%~~by a net 0.5% due to acquisitions ~~primarily G&K. Foreign~~and divestitures and positively impacted by 0.5% due to foreign currency exchange rate ~~fluctuations positively impacted~~fluctuations. Revenue growth ~~by 0.3%. Growth~~ was ~~driven by many factors including~~a result of new business, ~~sold by sales representatives,~~the penetration of additional products and services into existing customers and ~~strong customer retention.~~price increases, partially offset by lost business. New business growth resulted from an increase in the number of sales representatives.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased ~~10.1%~~10.4% for the three months ended ~~November 30, 2017~~August 31, 2021, compared to the same period in the prior fiscal year, from ~~$271.1~~$352.2 million to ~~$298.4 million. Revenue increased organically by 9.2%~~$388.8 million. The organic revenue grow rate for other revenue was 10.3%. Revenue growth was positively impacted by ~~0.2%~~0.1% due to foreign currency exchange rate ~~fluctuations and by 0.7% due to growth derived through acquisitions in our First Aid and Safety Services reportable operating segment and our Fire Protection business, which is included in All Other.~~fluctuations.

Cost of uniform rental and facility services consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, shop towels and other ancillary items. Cost of uniform rental and facility services increased ~~$172.5~~$63.9 million, or ~~31.3%~~8.9%, for the three months ended ~~November 30, 2017,~~August 31, 2021, compared to the three months ended ~~November 30, 2016.~~August 31, 2020. This ~~increase~~change from prior fiscal year was primarily due to higher Uniform Rental and Facility Services reportable operating segment sales volume, ~~including the newly acquired G&K sales volume.~~as well as increased labor and energy costs.

Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, personal protective equipment, uniforms, and fire protection products), delivery expenses and distribution expenses in the First Aid and Safety Services reportable operating segment and All Other. Cost of other increased ~~$11.8~~$9.9 million,, or ~~7.6%~~4.8%, for the three months ended ~~November 30, 2017~~,August 31, 2021, compared to the three months ended ~~November 30, 2016~~.August 31, 2020. Cost of other improved as a percentage of revenue, decreasing from 58.2% for three months ended August 31, 2020 to 55.3% for the three months ended August 31, 2021. The ~~increase~~decrease in cost of sales as a percent to revenue was primarily due to ~~higher~~a favorable change sales ~~volume~~mix, including a decrease in the ~~First Aid and Safety Services reportable operating segment and All Other.~~proportion of sales related to personal protective equipment.

Selling and administrative expenses increased ~~$106.7~~$32.2 million, or 6.7%, or ~~29.5%~~,in the three months ended August 31, 2021, compared to the same period of the prior fiscal year. The increase in expense was due to increases in selling labor and increased travel and meeting expenses, partially offset by a gain on the sale of certain operating assets within the Uniform Direct Sales operating segment. Selling and administrative expenses as a percent of revenue were 26.8% for the three months ended ~~November 30, 2017~~,August 31, 2021, which is a 50 basis point improvement compared to 27.3% for the same period in the prior fiscal year. The ~~increase~~improvement as a percent of revenue was primarily due to ~~higher sales volume, increased labor and other employee-partner related expenses as a result~~revenue growth outpacing the growth in expenses.

Table of ~~the acquisition~~Contents

Operating income was $394.1 million, or 20.8% of G&K, increased amortization expense related to intangible assets acquired as a result of the G&K acquisition and increased costs related to investments in a new enterprise resource planning system. Operating incomerevenue, for the three months ended ~~November 30, 2017 was negatively impacted by $13.1~~August 31, 2021, compared to $349.7 million, or 20.0% of ~~transaction and integration expenses incurred in connection with the G&K acquisition. For~~revenue, for the three months ended ~~November 30, 2017,~~August 31, 2020. The 80 basis point increase in operating income as a percent of revenue was due to both cost of sales and selling and administrative expenses decreasing as a percent of revenue for the ~~after-tax effect of these transaction and integration expenses represents a negative impact of $0.07 per share on diluted earnings per share.~~three months ended August 31, 2021.

Net interest expense (interest expense less interest income) was ~~$28.8~~$21.8 million for the three months ended ~~November 30, 2017,~~August 31, 2021, compared to ~~$13.2~~$24.5 million for the three months ended ~~November 30, 2016.~~August 31, 2020. The ~~increase~~change was primarily due to the ~~additional~~refinancing of $250.0 million from senior debt ~~issued to finance the G&K acquisition.~~with an interest rate of 4.30% which matured on June 1, 2021, into commercial paper which had an interest rate of 0.20% at August 31, 2021.

Cintas’ effective tax rate for continuing operations was ~~33.3%~~11.0% and ~~34.9%~~7.8% for the three months ended ~~November 30, 2017~~August 31, 2021 and ~~2016,~~2020, respectively. The effective tax rate ~~for~~in both periods was ~~largely~~ impacted by certain discrete items, ~~(primarily~~primarily the tax accounting impact for stock-based ~~compensation).~~compensation.

Net income ~~from continuing operations~~ for the three months ended ~~November 30, 2017~~August 31, 2021 increased ~~$15.8~~$31.2 million, or ~~12.9%~~10.4%, compared to the three months ended ~~November 30, 2016.~~August 31, 2020. Diluted earnings per share ~~from continuing operations was $1.24~~were $3.11 for the three months ended ~~November 30, 2017~~,August 31, 2021, which was an increase of ~~10.7%~~11.9% compared to the same period in the prior fiscal year. Diluted earnings per share ~~from continuing operations~~ increased primarily due to the increase in ~~earnings~~net income combined with the decrease in weighted average common shares outstanding. The decrease in common shares outstanding resulted from ~~continuing operations.~~purchasing an aggregate of approximately 3.0 million shares of common stock under the October 30, 2018 and October 29, 2019 share buyback programs since the beginning of the third quarter of fiscal 2021 through the first quarter of fiscal 2022.

Uniform Rental and Facility Services Reportable Operating Segment

Three Months Ended ~~November 30, 2017~~ August 31, 2021 Compared to Three Months Ended~~November 30, 2016~~ August 31, 2020

Uniform Rental and Facility Services reportable operating segment revenue ~~increased from~~ ~~$1,000.0~~was $1,508.2 million to ~~$1,308.0 million, or~~ ~~30.8%~~, for the three months ended ~~November 30, 2017, over~~August 31, 2021 compared to $1,394.4 million for the same period inof the prior fiscal year, and the cost of uniform rental and facility services increased ~~$172.5~~$63.9 million,, or ~~31.3%~~8.9%. ~~Revenue increased organically by 7.3%~~The organic revenue grow rate for the reportable operating segment was 8.2%. The reportable operating segment’s gross margin was ~~$584.1~~$728.9 million,, or ~~44.7%~~48.3% of revenue. The gross margin was 2040 basis points lower than the prior fiscal year’s ~~second~~first quarter gross margin of ~~44.9%~~48.7%. The ~~decrease~~difference in gross margin as a percent to revenue was driven primarily by ~~the recent G&K acquisition, which has lower margins than our legacy Cintas margins.~~an increase in labor and energy costs.

Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased ~~$99.0~~$35.5 million in the three months ended August 31, 2021 compared to ~~28.1%~~the same period of the prior fiscal year. Selling and administrative expenses as a percent of revenue for the three months ended August 31, 2021 was 26.5% compared to ~~26.8%~~26.1% in the ~~second~~first quarter of the prior fiscal year. ~~This~~The increase as a percent of revenue was primarily due to increases in ~~expense was due primarily to increased~~selling labor and ~~employee-partner related expenses incurred as a result of the G&K acquisition,~~ increased ~~amortization expense related to intangibles acquired as a result of the G&K acquisition~~travel and ~~an investment in an enterprise resource planning system.~~meeting expenses.

Income before income taxes increased ~~$26.9~~$14.4 million, or ~~15.2%~~4.6%, for the Uniform Rental and Facility Services reportable operating segment for the three months ended ~~November 30, 2017~~August 31, 2021, compared to the same period in the prior fiscal year. Income before income taxes was ~~15.6%~~21.8% of the reportable operating segment’s revenue, which was a ~~210~~80 basis point decrease compared to the ~~second~~first quarter of the prior fiscal year of ~~17.7%~~22.6%. This decrease was primarily due to the ~~increase~~previously discussed changes in gross margin and selling and administrative expenses as ~~previously discussed, and the G&K transaction and integration expenses incurred during the quarter, which had~~ a ~~70 basis point impact.~~percent of revenue.

First Aid and Safety Services Reportable Operating Segment

Three Months Ended ~~November 30, 2017~~August 31, 2021 Compared to Three Months Ended ~~November 30, 2016~~August 31, 2020

First Aid and Safety Services reportable operating segment revenue ~~increased~~decreased from ~~$124.8~~$204.5 million to ~~$139.1~~$199.1 million, or ~~11.5%~~2.6%, for the three months ended ~~November 30, 2017~~August 31, 2021, over the same period in the prior fiscal year. Revenue ~~increased~~for the reportable operating segment declined organically by ~~10.8% as a result of increased sales volume. Total~~3.3%. First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.5% due to acquisitions and by 0.2% due to foreign currency exchange rate ~~fluctuations and~~fluctuations. The change in revenue was caused by ~~0.5% due to acquisitions~~a decrease in ~~the three months ended November 30, 2017 compared to the three months ended November 30, 2016. Growth was driven by many factors including new business sold by sales representatives, penetration~~demand for personal protective equipment.

Table of ~~additional products and services into existing customers and strong customer retention.~~Contents

Cost of first aid and safety services ~~increased $6.6~~decreased $12.5 million, or ~~9.8%~~10.2%, for the three months ended ~~November 30, 2017,~~August 31, 2021, over the three months ended ~~November 30, 2016,~~August 31, 2020, due to ~~higher~~lower sales volume. The gross margin as a percent of revenue was ~~46.9%~~44.8% for the quarter ended ~~November 30, 2017, which is an increase of 80 basis points~~August 31, 2021, compared to the gross margin as a percent of revenue of ~~46.1%~~40.2% in the same period of the prior fiscal year. The ~~increase~~improvement in gross margin from the first quarter of the prior year was primarily driven ~~primarily~~ by ~~improved sourcing, leveraging~~a decrease in the proportion of ~~existing warehouses and optimization of delivery routes.~~sales related to personal protective equipment, which typically have lower gross margins than first aid cabinet sales.

Selling and administrative expenses ~~increased $4.5~~remained at $63.5 million, ~~compared to~~which is in line with the ~~same~~first quarter inof the prior fiscal ~~year. The increase was due primarily to~~year, but increased ~~labor. Selling and administrative expenses~~ as a percent of revenue ~~improved~~ to ~~34.0%~~31.9%, compared to ~~34.3%~~31.1% in the ~~second~~first quarter of the prior fiscal year. The ~~decrease in selling and administrative expenses~~change as a percent toof revenue from the prior year was primarily due to ~~revenue growing at a faster pace than labor and employee-partner related expenses.~~lower revenue.

Income before income taxes for the First Aid and Safety Services reportable operating segment increased ~~$3.2~~$7.2 million to ~~$18.0~~$25.7 million for the three months ended November 30, 2017, compared to the same period in the prior fiscal year, due to the previously discussed growth in revenue, improvement in the gross margin percentage and improvement in selling and administrative expenses as a percent to revenue. Income before income taxes, at 12.9% of the reportable operating segment’s revenue, was a 110 basis point increase compared to the same quarter last fiscal year due to the reasons previously mentioned.

~~Consolidated Results~~

~~Six Months Ended November 30, 2017 Compared to Six Months Ended November 30, 2016~~

Total revenue increased 26.8% for the six months ended November 30, 2017 over the same period in the prior fiscal year, from $2,537.7 million to $3,217.9 million. Revenue increased organically by 8.0% as a result of increased sales volume. Organic growth adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations. Total revenue was positively impacted by 0.2% due to foreign currency exchange rate fluctuations and by 18.6% due to acquisitions, primarily the acquisition of G&K.

Uniform Rental and Facility Services reportable operating segment revenue increased 31.4% for the six months ended November 30, 2017 over the same period in the prior fiscal year, from $1,994.3 million to $2,619.8 million. Revenue increased organically by 7.7%. Revenue growth was positively impacted by 0.2% due to foreign currency exchange rate fluctuations and 23.5% due to acquisitions, primarily the acquisition of G&K. Growth was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers and strong customer retention.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 10.1% for the six months ended November 30, 2017 compared to the same period in the prior fiscal year, from $543.4 million to $598.1 million. Revenue increased organically by 9.0%. Revenue growth was positively impacted by 0.2% due to foreign currency exchange rate fluctuations and by 0.9% due to growth derived through acquisitions in our First Aid and Safety Services reportable operating segment and our Fire Protection business, which is included in All Other.

Cost of uniform rental and facility services consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, shop towels and other ancillary items. Cost of uniform rental and facility services increased $342.2 million, or 31.4%, for the six months ended November 30, 2017, compared to the six months ended November 30, 2016. This increase was due to higher Uniform Rental and Facility Services reportable operating segment sales volume, including the newly acquired G&K sales volume.

Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, uniforms, and fire protection products), delivery expenses and distribution expenses in the First Aid and Safety Services reportable operating segment and All Other. Cost of other increased $23.9 million, or 7.8%, for the six months ended November 30, 2017, compared to the six months ended November 30, 2016. The increase was primarily due to higher sales volume in the First Aid and Safety Services reportable operating segment and All Other.

Selling and administrative expenses increased $223.2 million, or 30.5%, for the six months ended November 30, 2017, compared to the same period in the prior fiscal year. The increase was due to higher sales volume, increased labor and other employee-partner related expenses as a result of the acquisition of G&K, increased amortization expense related to intangible assets acquired as a result of the G&K acquisition and increased costs related to investments in a new enterprise resource planning system. Operating income for the six months ended November 30, 2017 was negatively impacted by $17.0 million of transaction and integration expenses incurred in connection with the G&K acquisition. For the six months ended November 30, 2017, the after-tax effect of these transaction and integration expenses represents a negative impact of $0.10 per share on diluted earnings per share.

Net interest expense (interest expense less interest income) was $58.9 million for the six months ended November 30, 2017, compared to $27.3 million for the six months ended November 30, 2016. The increase was primarily due to the additional debt issued to finance the G&K acquisition.

Cintas’ effective tax rate for continuing operations was 29.8% and 31.5% for the six months ended November 30, 2017 and 2016, respectively. The effective tax rate for both periods was largely impacted by certain discrete items (primarily the tax accounting for stock-based compensation).

Net income from continuing operations for the six months ended November 30, 2017 increased $40.7 million, or 15.8%, compared to the six months ended November 30, 2016. Diluted earnings per share from continuing operations was $2.69 for the six months ended November 30, 2017, which was an increase of 14.0% compared to the same period in the prior fiscal year. Diluted earnings per share from continuing operations increased due to the increase in earnings from continuing operations.

~~Uniform Rental and Facility Services Reportable Operating Segment~~

~~Six Months Ended November 30, 2017 Compared to Six Months Ended November 30, 2016~~

Uniform Rental and Facility Services reportable operating segment revenue increased from $1,994.3 million to $2,619.8 million, or 31.4%, for the six months ended November 30, 2017, over the same period in the prior fiscal year, and the cost of uniform rental and facility services increased $342.2 million, or 31.4%. Revenue increased organically by 7.7%. The reportable operating segment’s gross margin was $1,189.0 million, or 45.4% of revenue, which was the same gross margin as the prior year's first half gross margin. The increase in gross margin was a result of new business sold by sales representatives, penetration of additional products and services into existing customers and continuous improvement in process efficiency that was offset by lower margin business attributed to the recent G&K acquisition.

Selling and administrative expenses increased $211.4 million to 28.6% of revenue, compared to 27.0% in the first six months of the prior fiscal year. This increase in expense was due primarily to increased labor and employee-partner related expenses incurred as a result of the G&K acquisition, increased amortization expense related to intangibles acquired as a result of the G&K acquisition and an investment in an enterprise resource planning system.

~~Income before income taxes increased $61.0 million, or 16.9%, for the Uniform Rental and Facility Services reportable operating segment for the six months ended November 30, 2017~~August 31, 2021, compared to the same period in the prior fiscal year. Income before income taxes was ~~16.1%~~12.9% of the reportable operating segment’s revenue ~~which was a 200 basis point decrease~~ compared to the first ~~half~~quarter of the prior fiscal year of ~~18.1%~~9.1%. This ~~decrease~~change was primarily due to the previously discussed increase in ~~selling~~gross margin.

Liquidity and ~~administrative expenses, as previously discussed, and the G&K transaction and integration expenses incurred during the quarter, which had a 40 basis point impact.~~

~~First Aid and Safety Services Reportable Operating Segment~~

~~Six Months Ended November 30, 2017 Compared to Six Months Ended November 30, 2016~~

First Aid and Safety Services reportable operating segment revenue increased from $249.6 million to $279.7 million, or 12.0%, for the six months ended November 30, 2017 over the same period in the prior fiscal year. Revenue increased organically by 11.4% as a result of increased sales volume. Total revenue was positively impacted by 0.6% due to acquisitions in the six months ended November 30, 2017 compared to the six months ended November 30, 2016. Growth was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers and strong customer retention.

Cost of first aid and safety services increased $12.7 million, or 9.4%, for the six months ended November 30, 2017, over the six months ended November 30, 2016, due to higher sales volume. The gross margin as a percent of revenue was 47.2% for the six months ended November 30, 2017, which is an increase of 130 basis points compared to the gross margin as a percent of revenue of 45.9% in the same period of the prior fiscal year. The increase was driven primarily by improved sourcing, leveraging of existing warehouses and optimization of delivery routes, as a result of the ZEE Medical Inc. (ZEE) acquisition.

Selling and administrative expenses increased $6.3 million compared to the first half of the prior fiscal year. The increase was due primarily to increased labor. Selling and administrative expenses as a percent of revenue improved to 33.8% compared to 35.4% in the first half of the prior fiscal year. The decrease in selling and administrative expenses as a percent to revenue was due to revenue growing at a faster pace than labor and employee-partner related expenses as a result of the ZEE acquisition.

Income before income taxes for the First Aid and Safety Services reportable operating segment increased $11.1 million to $37.4 million for the six months ended November 30, 2017, compared to the same period in the prior fiscal year, due to the growth in revenue, the improvement in the gross margin percentage and the decrease in selling and administrative expenses as a percent to revenue. Income before income taxes, at 13.4% of the reportable operating segment’s revenue, was a 290 basis point increase compared to the same period last fiscal year due to the reasons previously mentioned.

~~LIQUIDITY AND CAPITAL RESOURCES~~

Capital Resources

The following is a summary of our cash flows and cash and cash equivalents ~~and marketable securities~~ as of and for the ~~six~~three months ended ~~November 30, 2017~~August 31:


(In thousands)	2021		2020

Net cash provided by operating activities	$	262,141	$	312,292
Net cash used in investing activities	$	(84,321)	$	(39,942)
Net cash (used in) provided by financing activities	$	(590,084)	$	2,243

Cash and cash equivalents at the end of the period	$	79,749	$	421,542

Cash and ~~2016:~~

(In thousands) 2017 2016

Net cash provided by operating activities $ 379,009
$ 301,721
Net cash used in investing activities $ (6,218 ) $ (92,045 )
Net cash used in financing activities $ (309,521 ) $ (203,072 )

Cash and cash equivalents at the end of the period $ 236,002
$ 143,573
Marketable securities at the end of the period $ 22,732
$ —

~~Cash,~~ cash equivalents ~~and marketable securities~~ as of ~~November 30, 2017~~August 31, 2021 and ~~2016~~2020, include ~~$133.1~~$38.1 million and ~~$94.6~~$36.3 million, respectively, that is located outside of the ~~United States. We expect to use these amounts to fund our international operations and international expansion activities.~~ U.S.

Cash flows provided by operating activities have historically supplied us with a significant source of liquidity. We generally use these cash flows to fund most, if not all, of our operations and expansion activities and dividends on our common stock. We may also use cash flows provided by operating activities, as well as proceeds from long-term debt and short-term borrowings, to fund growth and expansion opportunities, as well as other cash requirements such as the repurchase of our common stock and payment of long-term debt.

We expect our cash flows from operating activities to remain sufficient to provide us with adequate levels of short-term liquidity. In addition, we have access to $1.0 billion of short-term debt from our revolving credit facility. Although the impact of the COVID-19 pandemic is fluid and continues to evolve, we believe our long-term liquidity position remains strong. We believe the Company has sufficient liquidity to operate in the current business environment. Acquisitions and dividends remain strategic objectives, but they will be dependent on the economic outlook and liquidity of the Company.

Net cash provided by operating activities was ~~$379.0~~$262.1 million for the ~~six~~three months ended ~~November 30, 2017,~~August 31, 2021, compared to $312.3 million for the three months ended August 31, 2020. The change from the prior fiscal year was primarily due to an increase in accounts receivable and uniforms and other rental items in service which resulted from the growth in sales. Additionally, there were uses of ~~$77.3 million compared~~cash from the change in accrued compensation and other related liabilities, which was caused by the differences in the annual bonus payments and accounts payable, which was due to ~~the six months ended November 30, 2016. The increase was the result~~timing. These uses of ~~higher~~cash were partially offset by increased net income ~~offset by~~and favorable changes in working ~~capital.~~capital, specifically, inventories, net.

Net cash used in investing activities includes capital expenditures, purchases of investments, proceeds from ~~the~~ sale of ~~businesses~~operating assets and cash paid for acquisitions of businesses. Capital expenditures were ~~$132.5~~$48.7 million and ~~$155.2~~$30.9 million for the ~~six~~three months ended ~~November 30, 2017~~August 31, 2021 and ~~2016,~~2020, respectively. Capital expenditures in ~~fiscal 2018 primarily relate to expansion efforts in~~three months ended August 31, 2021 included $34.5 million for the Uniform Rental and Facility Services reportable operating segment ~~representing $111.4~~and $10.7 million offor the ~~current year amount.~~First Aid and Safety Services reportable operating segment. Cash paid for acquisitions of businesses was ~~$1.1~~$35.7 million and ~~$17.8~~$2.0 million for the ~~six~~three months ended ~~November 30, 2017~~August 31, 2021 and ~~2016,~~

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2020, respectively. The acquisitions during the ~~six~~three months ended ~~November 30, 2017~~August 31, 2021 occurred in our Uniform Rental and Facility Services reportable operating segment ~~First Aid and Safety Services reportable operating segment~~ and our Fire Protection ~~business,~~operating segment, which is included in All Other. ~~For~~The acquisitions during the ~~six~~three months ended ~~November 30, 2017, investing activities included~~August 31, 2020 occurred in our Uniform Rental and Facility Services reportable operating segment. Also, during the three months ended August 31, 2021, the Company received proceeds of ~~$127.8~~$15.1 million ~~related to~~from the sale of ~~Discontinued Services.~~certain operating assets in All Other. Net cash used in investing activities also includes ~~net proceeds from purchases and redemptions of marketable securities and investments of $0.4~~$8.7 million and ~~$54.7~~$4.9 million ~~for~~of purchases of investments during the ~~six~~three months ended ~~November 30, 2017~~August 31, 2021 and ~~2016,~~2020, respectively.

Net cash used in financing activities was ~~$309.5 million and $203.1~~$590.1 million for the ~~six~~three months ended~~November 30, 2017~~ August 31, 2021, and ~~2016, respectively.~~ net cash provided by financing activities was $2.2 million for the three months ended August 31, 2020. The change in cash used in financing activities was primarily due to the increase in share buyback activity, debt payments and dividend payments, partially offset by the net issuance of commercial paper in the three months ended August 31, 2021.

On ~~August 4, 2015,~~October 29, 2019, we announced ~~that~~ the Board of Directors authorized a ~~$500.0 million~~$1.0 billion share buyback ~~program. During~~program, which was completed during the ~~six months ended November 30, 2016, under the August 4, 2015 share buyback plan, we purchased 0.1 million shares at an average price~~first quarter of $94.11 per share for a total purchase price of $3.7 million. This completed the August 4, 2015 program through which Cintas purchased a total of 5.7 million shares of Cintas common stock at an average price of $87.89 for a total purchase price of $500.0 million.fiscal 2022. On ~~August 2, 2016,~~July 27, 2021, we announced that the Board of Directors authorized a new ~~$500.0 million~~$1.5 billion share buyback program, which does not have an expiration date. ~~As of November 30, 2017, no share buybacks have occurred under~~The following table summarizes the ~~August 2, 2016~~buyback activity by program and ~~there~~for the three months ended August 31:


	2021					2020
Buyback Program (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	$	—	$	581,220	—	$	—	$	—

There were no share buybacks ~~under this program~~in the period subsequent to ~~November 30, 2017~~August 31, 2021, through ~~January 5, 2018.~~October 7, 2021 under any share buyback program. In addition, for the ~~six~~three months ended ~~November 30, 2017,~~August 31, 2021, Cintas acquired ~~0.3~~0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the ~~six~~three months ended ~~November 30, 2017.~~August 31, 2021. These shares were acquired at an average price of ~~$129.01~~$394.19 per share for a total purchase price of ~~$35.7~~$78.0 million. For the three months ended August 31, 2020, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the three months ended August 31, 2020. These shares were acquired at an average price of $300.01 per share for a total purchase price of $69.0 million.

On April 13, 2021, our Board of Directors declared a quarterly dividend of $0.75 per share on outstanding common stock. These dividends, totaling $79.1 million, were paid on June 15, 2021, to shareholders of record as of May 15, 2021. On July 27, 2021, the Board of Directors declared a quarterly dividend of $0.95 per share on outstanding common stock. This dividend of $98.8 million was accrued on the August 31, 2021 consolidated condensed balance sheet and was paid on September 15, 2021, during the second quarter of fiscal 2022, to shareholders of record as of August 13, 2021. Any future dividend declarations, including the amount of any dividends, are at the discretion of the Board of Directors and dependent upon then-existing conditions, including the Company's consolidated operating results and consolidated financial condition, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors may deem relevant.

During the ~~six~~three months ended ~~November 30, 2016,~~August 31, 2021, Cintas paid $13.5 million in prepaid short term debt financing fees related to bridge loan financing in connection with the entry into the merger agreement among Cintas, G&K and Bravo Merger Sub, Inc., a wholly-owned subsidiary of Cintas, pursuant to which Cintas would acquire all outstanding shares of G&K for $97.50 per share in cash, for a total enterprise value of approximately $2.1 billion, including acquired net debt.

~~During the six months ended November 30, 2017, Cintas made payments of $50.5~~issued $326.0 million, net onof commercial paper ~~borrowings and paid off the term loan balance of $250.0 million with cash on hand.~~borrowings. On June 1, 2016, Cintas paid the $250.0 million aggregate principal amount of five-year senior notes that matured on that date with cash on hand and proceeds from the issuance of commercial paper. On December 1, 2017,2021, in accordance with the terms of the notes, Cintas paid the ~~$300.0~~$250.0 million aggregate principal amount of ~~6.13%~~its 4.30%, 10-year senior notes that matured on that date with cash on ~~hand~~hand. During the next 12 months, Cintas expects to issue long-term debt to pay the $650 million principal amount of its 2.90%, 5-year senior notes that mature in the fourth quarter of fiscal 2022 and ~~$265.0~~the $300 million principal amount of its 3.25%, 10-year senior notes that mature in ~~proceeds from~~ the ~~issuance~~first quarter of ~~commercial paper.~~fiscal 2023.

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The following table summarizes Cintas' outstanding debt:


(In thousands)	Interest Rate			Fiscal Year Issued	Fiscal Year Maturity	August 31, 2021		May 31, 2021

Debt due within one year
Senior notes	4.30	%		2012	2022	$	—	$	250,000
Senior notes	2.90	%		2017	2022	650,000		650,000
Senior notes	3.25	%		2013	2023	300,000		—
Commercial paper	0.20	%	(1)	2022	2022	326,000		—
Debt issuance costs						(833)		(930)
Total debt due within one year						$	1,275,167	$	899,070

Debt due after one year
Senior notes	3.25	%		2013	2023	$	—	$	300,000
Senior notes (2)	2.78	%		2013	2023	50,707		50,815
Senior notes (3)	3.11	%		2015	2025	51,217		51,301
Senior notes	3.70	%		2017	2027	1,000,000		1,000,000
Senior notes	6.15	%		2007	2037	250,000		250,000

Debt issuance costs						(8,702)		(9,283)
Total debt due after one year						$	1,343,222	$	1,642,833

⁽¹⁾Variable rate debt instrument. The rate presented is the variable borrowing rate at ~~May~~August 31, ~~2017.~~2021.

⁽²⁾(1) Cintas assumed these senior notes with the acquisition of G&K Services, Inc. (G&K) in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is $50.0 million with a stated interest rate of 3.73%.

⁽³⁾(2) Cintas assumed these senior notes with the acquisition of G&K in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is $50.0 million with a stated interest rate of 3.88%.

The credit agreement that supports our commercial paper program ~~was amended on September 16, 2016. The amendment increased the capacity of the~~has a revolving credit facility ~~from $450.0 million~~with capacity to ~~$600.0 million and added a $250.0 million term loan facility. The existing term loan facility was paid in full during the first quarter of fiscal 2018.~~$1.0 billion. The credit agreement has an accordion feature that provides Cintas the ability to request increases to the borrowing commitments under ~~either~~ the revolving credit facility ~~or a new term loan~~ of up to $250.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit ~~agreement~~facility is ~~September 15, 2021.~~May 23, 2024. As of ~~November 30, 2017,~~August 31, 2021, there was no$326.0 million of commercial paper outstanding and no borrowings on our revolving credit facility. As of May 31, ~~2017,~~2021, there was ~~$50.5 million of~~no commercial paper outstanding ~~with a weighted average interest rate of 1.24% and maturity dates less than 30 days~~ and no borrowings on our revolving credit facility. The fair value of the commercial paper is estimated using Level 2 inputs based on general market prices. Given its short-term nature, the carrying value of the outstanding commercial paper approximates fair value.

Cintas has certain covenants related to debt agreements. These covenants limit our ability to incur certain liens, to engage in sale-leaseback transactions and to merge, consolidate or sell all or substantially all of Cintas' assets. These covenants also require Cintas to maintain certain debt to earnings before interest, taxes, depreciation and amortization (EBITDA) and interest coverage ratios. Cross-default provisions exist between certain debt instruments. If a default of a significant covenant were to occur, the default could result in an acceleration of the maturity of the indebtedness, impair liquidity and limit the ability to raise future capital. ~~As of November 30, 2017,~~ Cintas was in compliance with all of the debt ~~covenants.~~covenants for all periods presented.

Our access to the commercial paper and long-term debt markets has historically provided us with sources of liquidity. We do not anticipate having difficulty in obtaining financing from those markets in the future in view of our favorable experiences in the debt markets in the recent ~~past. Our~~past, including, without limitation, to repay our long-term debt that is maturing in the next twelve months. However, the COVID-19 pandemic, which has caused disruption in the capital markets, could make financing more difficult and/or expensive. Additionally, our ability to continue to access the commercial paper and long-term debt markets on favorable interest rate and other terms will depend, to

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a significant degree, on the ratings assigned by the credit rating agencies to our indebtedness. As of ~~November 30, 2017,~~August 31, 2021, our ratings were as follows:

Rating Agency

Outlook

Commercial
Paper

Long-term
Debt

~~Rating Agency~~

~~Outlook~~

~~Commercial Paper~~

~~Long-term Debt~~

Standard & Poor’s

Stable

A-2

~~BBB+~~A-

Moody’s Investors Service

Stable

P-2

In the event that the ratings of our commercial paper or our outstanding long-term debt issues were substantially lowered or withdrawn for any reason, or if the ratings assigned to any new issue of long-term debt securities were significantly lower than those noted above, particularly if we no longer had investment grade ratings, our ability to access the debt markets may be adversely affected. In addition, in such a case, our cost of funds for new issues of commercial paper and long-term debt would be higher than our cost of funds would have been had the ratings of those new issues been at or above the level of the ratings noted above. The rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated independently of any other rating. Moreover, each credit rating is specific to the security to which it applies.

To monitor our credit rating and our capacity for long-term financing, we consider various qualitative and quantitative factors. One such factor is the ratio of our total debt to EBITDA. For the purpose of this calculation, debt is defined as the sum of short-term borrowings, long-term debt due within one year, ~~obligations under capital leases due in one year,~~ long-term debt and ~~long-term obligations under capital leases.~~standby letters of credit.

~~On December 22, 2017,~~

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Financial and Nonfinancial Disclosure About Issuers and Guarantors of Cintas’ Senior Notes

Cintas Corporation No. 2 (Corp. 2) is the President signed into legislation The Tax Cuts and Jobs Act (the Act). The Act changes existing U.S. tax law and includes numerous provisions that will affect our business, including our income tax accounting, disclosure and tax compliance. We believeindirectly, wholly owned principal operating subsidiary of Cintas. Corp. 2 is the ~~most impactful changes within the Act provision are those that will reduce the U.S. corporate tax rates, business-related exclusions and deductions and credits. We are currently evaluating the impact~~issuer of the ~~Act,~~$2,300.0 million aggregate principal amount of senior notes outstanding as of August 31, 2021, which ~~will~~are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly owned, direct and indirect domestic subsidiaries.

Basis of Preparation of the Summarized Financial Information

The following tables include ~~remeasuring~~summarized financial information of Cintas Corporation (Issuer), Corp. 2 and subsidiary guarantors (together, the ~~deferred tax assets~~Obligor Group). Investments in and ~~liabilities,~~equity in the ~~one-time transition tax,~~earnings of non-guarantors, which are not members of the Obligor Group, have been excluded. Non-guarantor subsidiaries are located outside the U.S., and therefore, excluded from the Obligor Group.

The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with non-guarantors have been presented in separate line items, if they are material. Summarized financial information of the Obligor Group is as ~~well evaluating our reinvestment assertion on all future earnings~~follows:


	Three Months Ended
Summarized Consolidated Condensed Statement of Income (In thousands)	August 31, 2021		August 31, 2020

Net sales to unrelated parties	$	1,788,303	$	1,647,338
Net sales to non-guarantors	$	1,493	$	831
Operating income	$	380,322	$	338,962
Net income	$	320,957	$	292,039


Summarized Consolidated Condensed Balance Sheets (In thousands)	August 31, 2021		May 31, 2021

ASSETS
Receivables due from non-obligor subsidiaries	$	4,667	$	2,292
Total other current assets	$	2,283,848	$	2,652,810
Total other noncurrent assets	$	4,935,913	$	4,924,550

LIABILITIES
Amounts due to non-obligor subsidiaries	$	1,446	$	457
Current liabilities	$	2,234,867	$	1,893,352
Noncurrent liabilities	$	2,216,902	$	2,549,911

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Litigation and ~~profits of our foreign entities. We expect the Act to have a positive impact on our cash flows through a reduction of cash taxes paid.~~

~~LITIGATION AND OTHER CONTINGENCIES~~

Other Contingencies

Cintas is subject to other legal proceedings, insurance receipts, legal settlements and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such ordinary course of business actions will not have a material adverse effect on the consolidated financial position, orconsolidated results of ~~operation~~operations or consolidated cash flows of Cintas.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains 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 Quarterly Report. 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 transaction and 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;~~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; 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~~reporting; the ~~Sarbanes-Oxley Act~~effect of ~~2002; costs of our SAP system implementation;~~new accounting pronouncements; 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 including viral pandemics such as the ~~negative impacts from hurricanes Harvey and Irma;~~COVID-19 coronavirus; 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, ~~2017~~2021 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.

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ITEM 3.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET ~~RISK.~~RISK

In our normal operations, Cintas has market risk exposure to interest rates. There has been no material change to this market risk exposure to interest rates from that which was previously disclosed on page 2829 of our Annual Report on Form 10-K for the year ended May 31, ~~2017~~.2021.

Through its foreign operations, Cintas is exposed to foreign currency risk. Foreign currency exposures arise from transactions denominated in a currency other than the functional currency and from foreign currency denominated revenue and profit translated into U.S. dollars. The primary foreign currency to which Cintas is exposed is the Canadian dollar.

ITEM 4.

CONTROLS AND ~~PROCEDURES.~~PROCEDURES

Disclosure Controls and Procedures

With the participation of Cintas’ management, including Cintas’ President and Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, Cintas has evaluated the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as of ~~November 30, 2017~~.August 31, 2021. Based on such evaluation, Cintas’ management, including Cintas’ President and Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, has concluded that Cintas’ disclosure controls and procedures were effective as of ~~November 30, 2017~~,August 31, 2021, in ensuring (i) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the ~~SEC’s~~Securities and Exchange Commission's rules and forms and (ii) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is accumulated and communicated to Cintas’ management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

There were no changes in Cintas’ internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended ~~November 30, 2017,~~August 31, 2021, that have materially affected, or are reasonably likely to materially affect, Cintas' internal control over financial reporting.

Table of Contents

Part II. Other Information

~~Item~~ITEM 1.

LEGAL PROCEEDINGS

Cintas is subject to legal proceedings, insurance receipts, legal settlements and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such ordinary course of business actions will not have a material adverse effect on the consolidated financial position, consolidated results of operations or consolidated cash flows of Cintas.

ITEM 2. ~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

UNREGISTERED SALES OF EQUITY

Period (In millions, except share and per share data)
Total number
of shares
purchased

Average
price paid
per share

Total number of
shares purchased
as part of the
publicly announced
plan ⁽¹⁾

Maximum
approximate dollar
value of shares that
may yet be
purchased under
the plan ⁽¹⁾

September 1 - 30, 2017 ⁽²⁾
957
$ 136.10
—
$ 500.0
October 1 - 31, 2017 ⁽³⁾
1,261
$ 149.04
—
$ 500.0
November 1 - 30, 2017 ⁽⁴⁾
2,232
$ 152.03
—
$ 500.0
Total 4,450
$ 147.76
—
$ 500.0
SECURITIES AND USE OF PROCEEDS


Period (In millions, except share and per share data)	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of the publicly announced plan (1)	Maximum approximate dollar value of shares that may yet be purchased under the plan (1)

June 1 - 30, 2021 (2)	1,158,068	$	358.64	1,153,324	$	167.6
July 1 - 31, 2021 (3)	628,949	$	386.86	437,265	$	1,500.0
August 1 - 31, 2021 (4)	1,484	$	395.77	—	$	1,500.0
Total	1,788,501	$	368.60	1,590,589	$	1,500.0

(1) On ~~August 2, 2016,~~October 29, 2019, Cintas announced that the Board of Directors authorized a ~~$500.0~~$1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022. From the inception of the October 29, 2019 share buyback program through July, 2021, Cintas has purchased a total of 2.8 million shares of Cintas common stock at an average price of $358.93 per share for a total purchase price of $1.0 billion. On July 27, 2021, Cintas announced that the Board of Directors authorized a new $1.5 billion share buyback program, which does not have an expiration date. There were no share buybacks under the July 27 2021 share buyback program through August 31, 2021.

⁽²⁾During ~~September 2017,~~June 2021, Cintas acquired ~~957~~4,744 shares of Cintas common stock in trade for employee payroll taxes due on restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of ~~$136.10~~$357.11 per share for a total purchase price of ~~$0.1~~$1.7 million.

⁽³⁾During ~~October 2017,~~July 2021, Cintas acquired ~~1,261~~191,684 shares of Cintas common stock in trade for employee payroll taxes due on restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of ~~$149.04~~$395.10 per share for a total purchase price of ~~$0.2~~$75.7 million.

⁽⁴⁾During ~~November 2017,~~August 2021, Cintas acquired ~~2,232~~1,484 shares of Cintas common stock in trade for employee payroll taxes due on restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of ~~$152.03~~$395.77 per share for a total purchase price of ~~$0.3~~$0.6 million.

~~Item 5. Other Information.~~

On October 17, 2017, Cintas declared an annual cash dividend of $1.62 per share on outstanding common stock, a 21.8% increase over the annual dividend paid in the prior year. The dividend was paid on December 8, 2017, to shareholders of record as of November 10, 2017.

~~Item 6. Exhibits.~~

Table of Contents

ITEM 6.

EXHIBITS



~~10.1~~ 22		~~Amendment No. 1~~Subsidiary Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize Securities of the Registrant (Incorporated by reference to ~~Cintas Corporation 2016 Equity and Incentive Compensation Plan~~ Exhibit 22 to Cintas' Annual Report on Form 10-K for the year ended May 31, 2021).
31.1		Certification of Principal Executive Officer required by Rule 13a-14(a)
31.2		Certification of Principal Financial Officer required by Rule 13a-14(a)
32.1		Section 1350 Certification of Chief Executive Officer
32.2		Section 1350 Certification of Chief Financial Officer
~~101.INS~~101		~~XBRL Instance Document~~The following financial statements from Cintas' Quarterly Report on Form 10-Q for the period ended August 31, 2021, formatted in Inline XBRL: (i) Consolidated Condensed Statements of Income (unaudited), (ii) Consolidated Condensed Statements of Comprehensive Income (unaudited), (iii) Consolidated Condensed Balance Sheets (unaudited), (iv) Consolidated Condensed Statements of Shareholders' Equity (unaudited), (v) Consolidated Condensed Statements of Cash Flows (unaudited) and (vi) Notes to Consolidated Condensed Financial Statements, tagged as blocks of text and including detailed tags.
~~101.SCH~~104		Cover Page Interactive Data File (formatted as Inline XBRL ~~Taxonomy Extension Schema Document~~
~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~and contained in Exhibit 101)

Table of Contents

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 thereunto duly authorized.

CINTAS CORPORATION

(Registrant)

Date:

~~January 5, 2018~~October 7, 2021

/s/

J. Michael Hansen

~~Senior~~Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)



Class						Outstanding ~~December 31, 2017~~September 30, 2021
Common Stock, no par value						~~106,488,799~~103,407,624


	August 31, 2021		May 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	79,749	$	493,640

Accounts receivable, net	927,360		901,710
Inventories, net	463,692		481,797
Uniforms and other rental items in service	846,656		810,104
Income taxes, current	11,249		22,282
Prepaid expenses and other current assets	148,960		133,776
Total current assets	2,477,666		2,843,309

Property and equipment, net	1,301,233		1,318,438

Investments	295,268		274,616
Goodwill	2,924,993		2,913,069
Service contracts, net	403,982		408,445
Operating lease right-of-use assets, net	159,289		168,532
Other assets, net	295,319		310,414
	$	7,857,750	$	8,236,823

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	202,968	$	230,786
Accrued compensation and related liabilities	155,212		241,469
Accrued liabilities	592,384		518,910

Operating lease liabilities, current	43,308		43,850
Debt due within one year	1,275,167		899,070
Total current liabilities	2,269,039		1,934,085

Long-term liabilities:
Debt due after one year	1,343,222		1,642,833
Deferred income taxes	395,599		386,647
Operating lease liabilities	122,291		130,774
Accrued liabilities	418,396		454,637
Total long-term liabilities	2,279,508		2,614,891

Shareholders’ equity:
Preferred stock, no par value:	—		—
100,000 shares authorized, none outstanding
Common stock, no par value, and paid-in capital:	1,625,594		1,516,202
425,000,000 shares authorized
FY 2022: 190,127,513 shares issued and 103,329,218 shares outstanding
FY 2021: 189,071,185 shares issued and 104,061,391 shares outstanding

Retained earnings	8,109,368		7,877,015
Treasury stock:	(6,395,493)		(5,736,258)
FY 2022: 86,798,295 shares
FY 2021: 85,009,794 shares
Accumulated other comprehensive (loss) income	(30,266)		30,888
Total shareholders’ equity	3,309,203		3,687,847
	$	7,857,750	$	8,236,823


(In thousands)	November 30, 2017		May 31, 2017		(In thousands)	August 31, 2021		May 31, 2021

Raw materials	$	16,231	$	17,528	Raw materials	$	15,732	$	15,109
Work in process	23,199		17,951		Work in process	30,681		37,664
Finished goods	233,400		242,739		Finished goods	417,279		429,024
	$	272,830	$	278,218		$	463,692	$	481,797


Service Contracts (in thousands)	Uniform Rental and Facility Services			First Aid and Safety Services			All Other			Total			Service Contracts (in thousands)	Uniform Rental and Facility Services		First Aid and Safety Services		All Other		Total

Balance as of June 1, 2017	$	529,923		$	30,062		$	27,003		$	586,988
Balance as of June 1, 2021													Balance as of June 1, 2021	$	369,141	$	18,294	$	21,010	$	408,445
Service contracts acquired	32			411			533			976			Service contracts acquired	12,807		—		53		12,860
Service contracts amortization	(21,946		)	(1,927		)	(2,364		)	(26,237		)	Service contracts amortization	(12,380)		(991)		(1,190)		(14,561)
Foreign currency translation	3,748			99			—			3,847			Foreign currency translation	(2,637)		(125)		—		(2,762)
Balance as of November 30, 2017	$	511,757		$	28,645		$	25,172		$	565,574
Balance as of August 31, 2021													Balance as of August 31, 2021	$	366,931	$	17,178	$	19,873	$	403,982


	As of November 30, 2017							As of August 31, 2021						As of May 31, 2021
(In thousands)	Carrying Amount		Accumulated Amortization		Net		(In thousands)	Carrying Amount		Accumulated Amortization		Net		Carrying Amount		Accumulated Amortization		Net

Service contracts	$	917,072	$	351,498	$	565,574	Service contracts	$	969,728	$	565,746	$	403,982	$	961,942	$	553,497	$	408,445

Capitalized contract costs (1)							Capitalized contract costs (1)	$	480,535	$	253,298	$	227,237	$	459,079	$	231,940	$	227,139
Noncompete and consulting agreements	$	40,913	$	39,588	$	1,325	Noncompete and consulting agreements	45,783		42,601		3,182		44,683		42,408		2,275
Other	35,711		7,876		27,835		Other	89,293		24,393		64,900		105,371		24,371		81,000
Total other assets	$	76,624	$	47,464	$	29,160	Total other assets	$	615,611	$	320,292	$	295,319	$	609,133	$	298,719	$	310,414


	Three Months Ended						Six Months Ended							Three Months Ended
	November 30, 2017			November 30, 2016			November 30, 2017			November 30, 2016				August 31, 2021		August 31, 2020
Revenue:													Revenue:
Uniform rental and facility services	$	1,308,038		$	1,000,015		$	2,619,822		$	1,994,297		Uniform rental and facility services	$	1,508,176	$	1,394,411
Other	298,403			271,062			598,122			543,430			Other	388,774		352,164
Total revenue													Total revenue	1,896,950		1,746,575
	1,606,441			1,271,077			3,217,944			2,537,727
Costs and expenses:													Costs and expenses:
Cost of uniform rental and facility services	723,960			551,498			1,430,823			1,088,595			Cost of uniform rental and facility services	779,301		715,412
Cost of other	166,112			154,361			331,399			307,487			Cost of other	214,893		204,962
Selling and administrative expenses	468,084			361,415			954,367			731,118			Selling and administrative expenses	508,655		476,495
G&K Services, Inc. transaction and integration expenses	13,074			3,347			17,045			6,134

Operating income	235,211			200,456			484,310			404,393			Operating income	394,101		349,706

Interest income	(291		)	(31		)	(588		)	(96		)	Interest income	(56)		(64)
Interest expense	29,129			13,267			59,446			27,439			Interest expense	21,854		24,550

Income before income taxes	206,373			187,220			425,452			377,050			Income before income taxes	372,303		325,220
Income taxes	68,636			65,270			126,607			118,892			Income taxes	41,124		25,215
Income from continuing operations	137,737			121,950			298,845			258,158
(Loss) income from discontinued operations, net of tax benefit of $624 and tax expense of $9,851, $41,103 and $10,992, respectively	(628		)	18,427			55,475			20,310

Net income	$	137,109		$	140,377		$	354,320		$	278,468		Net income	$	331,179	$	300,005

Basic earnings (loss) per share:
Continuing operations	$	1.27		$	1.15		$	2.77		$	2.42
Discontinued operations	(0.01		)	0.17			0.51			0.19

Basic earnings per share	$	1.26		$	1.32		$	3.28		$	2.61		Basic earnings per share	$	3.19	$	2.86

Diluted earnings (loss) per share:
Continuing operations	$	1.24		$	1.12		$	2.69		$	2.36
Discontinued operations	(0.01		)	0.17			0.50			0.19

Diluted earnings per share	$	1.23		$	1.29		$	3.19		$	2.55		Diluted earnings per share	$	3.11	$	2.78

Dividends declared per share	$	1.62		$	1.33		$	1.62		$	1.33		Dividends declared per share	$	0.95	$	—



	Three Months Ended						Six Months Ended
	November 30, 2017			November 30, 2016			November 30, 2017			November 30, 2016

Net income	$	137,109		$	140,377		$	354,320		$	278,468

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(11,374		)	(7,650		)	23,810			(7,535		)
Change in fair value of cash flow hedges	—			26,390			—			14,353
Amortization of interest rate lock agreements	(172		)	385			(344		)	770
Change in fair value of available-for-sale securities	(20		)	1			—			—

Other comprehensive (loss) income	(11,566		)	19,126			23,466			7,588

Comprehensive income	$	125,543		$	159,503		$	377,786		$	286,056


	Common Stock and Paid-In Capital			Retained Earnings		Other Accumulated Comprehensive Income (Loss)			Treasury Stock				Total Shareholders' Equity
	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, net of shares surrendered	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



	As of May 31, 2017
(In thousands)	Level 1		Level 2		Level 3		Fair Value

Cash and cash equivalents	$	169,266	$	—	$	—	$	169,266
Marketable securities:
Canadian treasury securities	—		22,219		—		22,219
Total assets at fair value	$	169,266	$	22,219	$	—	$	191,485



	Three Months Ended				Six Months Ended
Basic Earnings per Share from Continuing Operations (in thousands except per share data)	November 30, 2017		November 30, 2016		November 30, 2017		November 30, 2016

Income from continuing operations	$	137,737	$	121,950	$	298,845	$	258,158
Less: income from continuing operations allocated to participating securities	2,111		1,923		5,298		4,775
Income from continuing operations available to common shareholders	$	135,626	$	120,027	$	293,547	$	253,383
Basic weighted average common shares outstanding	106,340		104,957		106,039		104,719

Basic earnings per share from continuing operations	$	1.27	$	1.15	$	2.77	$	2.42



	Three Months Ended				Six Months Ended
Diluted Earnings per Share from Continuing Operations (in thousands except per share data)	November 30, 2017		November 30, 2016		November 30, 2017		November 30, 2016

Income from continuing operations	$	137,737	$	121,950	$	298,845	$	258,158
Less: income from continuing operations allocated to participating securities	2,111		1,923		5,298		4,775
Income from continuing operations available to common shareholders	$	135,626	$	120,027	$	293,547	$	253,383
Basic weighted average common shares outstanding	106,340		104,957		106,039		104,719
Effect of dilutive securities – employee stock options	3,478		2,690		2,899		2,559
Diluted weighted average common shares outstanding	109,818		107,647		108,938		107,278

Diluted earnings per share from continuing operations	$	1.24	$	1.12	$	2.69	$	2.36



Goodwill (in thousands)	Uniform Rental and Facility Services		First Aid and Safety Services		All Other		Total

Balance as of June 1, 2017	$	2,448,070	$	243,112	$	91,153	$	2,782,335
Goodwill acquired ⁽¹⁾	27,107		73		426		27,606
Foreign currency translation	927		891		37		1,855
Balance as of November 30, 2017	$	2,476,104	$	244,076	$	91,616	$	2,811,796



(In thousands)

Cash consideration for common stock	$	1,901,845		⁽¹⁾
Cash consideration for share-based awards	62,257			⁽²⁾
Cash consideration for G&K revolving debt	124,180			⁽³⁾
Cash consideration for transaction expenses	24,529			⁽⁴⁾
Total consideration	2,112,811
Cash acquired	(34,393		)	⁽⁵⁾
Net consideration transferred	$	2,078,418



Assets
Accounts receivable	$	95,846
Inventories	30,254
Uniforms and other rental items in service	93,659
Income taxes, current	15,873
Prepaid expenses and other current assets	43,235
Property and equipment	254,035
Goodwill	1,520,295
Service contracts	519,000
Trade names	17,000
Other assets	15,585
Liabilities
Accounts payable	(53,220		)
Accrued compensation and related liabilities	(9,594		)
Accrued liabilities	(115,109		)
Long-term accrued liabilities	(28,380		)
G&K senior notes	(105,359		)
Deferred income taxes	(214,702		)
Total consideration	$	2,078,418



Identifiable intangible assets	Preliminary Valuation		Amortization Period

Service contracts	$	519,000	15 years
Trade names	17,000		3 years
Total	$	536,000



(In thousands)	Foreign Currency			Unrealized Income on Cash Flow Hedges			Other			Total

Balance at June 1, 2017	$	(12,726	)	$	11,382		$	(1,685	)	$	(3,029	)
Other comprehensive income before reclassifications	35,184			—			20			35,204
Amounts reclassified from accumulated other comprehensive income (loss)	—			(172		)	—			(172		)
Net current period other comprehensive income (loss)	35,184			(172		)	20			35,032
Balance at August 31, 2017	22,458			11,210			(1,665		)	32,003
Other comprehensive loss before reclassifications	(11,374		)	—			(20		)	(11,394		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(172		)	—			(172		)
Net current period other comprehensive loss	(11,374		)	(172		)	(20		)	(11,566		)
Balance at November 30, 2017	$	11,084		$	11,038		$	(1,685	)	$	20,437



(In thousands)	Foreign Currency			Unrealized Loss on Cash Flow Hedges			Other			Total

Balance at June 1, 2016	$	(2,474	)	$	(20,830	)	$	(1,570	)	$	(24,874	)
Other comprehensive income (loss) before reclassifications	115			(12,037		)	(1		)	(11,923		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			385			—			385
Net current period other comprehensive income (loss)	115			(11,652		)	(1		)	(11,538		)
Balance at August 31, 2016	(2,359		)	(32,482		)	(1,571		)	(36,412		)
Other comprehensive (loss) income before reclassifications	(7,650		)	26,390			1			18,741
Amounts reclassified from accumulated other comprehensive income (loss)	—			385			—			385
Net current period other comprehensive (loss) income	(7,650		)	26,775			1			19,126
Balance at November 30, 2016	$	(10,009	)	$	(5,707	)	$	(1,570	)	$	(17,286	)



Reclassifications out of Accumulated Other Comprehensive Income (Loss)

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)												Affected Line in the Consolidated Condensed Statements of Income

	Three Months Ended						Six Months Ended
(In thousands)	November 30, 2017			November 30, 2016			November 30, 2017			November 30, 2016

Amortization of interest rate locks	$	278		$	(615	)	$	556		$	(1,229	)	Interest expense
Tax (expense) benefit	(106		)	230			(212		)	459			Income taxes
Amortization of interest rate locks, net of tax	$	172		$	(385	)	$	344		$	(770	)	Net income



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

Revenue:
Uniform rental and facility services	$	—		$	1,086,667		$	170,320		$	100,933		$	(49,882	)	$	1,308,038
Other	—			435,539			(313		)	21,982			(158,805		)	298,403
Equity in net income of affiliates	137,737			—			—			—			(137,737		)	—
	137,737			1,522,206			170,007			122,915			(346,424		)	1,606,441
Costs and expenses (income):
Cost of uniform rental and facility services	—			628,123			105,954			65,220			(75,337		)	723,960
Cost of other	—			302,065			(25,046		)	15,438			(126,345		)	166,112
Selling and administrative expenses	—			528,369			(85,417		)	31,211			(6,079		)	468,084
G&K Services, Inc. transaction and integration expenses	—			4,192			8,319			563			—			13,074
Operating income	137,737			59,457			166,197			10,483			(138,663		)	235,211

Interest income	—			(45		)	(59		)	(187		)	—			(291		)
Interest expense (income)	—			29,444			(313		)	(2		)	—			29,129

Income before income taxes	137,737			30,058			166,569			10,672			(138,663		)	206,373
Income taxes	—			11,449			54,414			2,798			(25		)	68,636
Income from continuing operations	137,737			18,609			112,155			7,874			(138,638		)	137,737

Loss from discontinued operations, net of tax	(628		)	(628		)	—			—			628			(628		)

Net income	$	137,109		$	17,981		$	112,155		$	7,874		$	(138,010	)	$	137,109



(In thousands)	2017			2016

Net cash provided by operating activities	$	379,009		$	301,721
Net cash used in investing activities	$	(6,218	)	$	(92,045	)
Net cash used in financing activities	$	(309,521	)	$	(203,072	)

Cash and cash equivalents at the end of the period	$	236,002		$	143,573
Marketable securities at the end of the period	$	22,732		$	—