UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
( X )☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedNovember 30, 2023
For the quarterly period ended November 30, 2017
 OR
(    )☐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
Commission file number 0-11399
Cintas Logo - Ready for the Workday.jpg
CINTAS CORPORATIONCintas Corporation
(Exact name of Registrantregistrant as specified in its charter)
WASHINGTONWashington31-1188630
(State or other jurisdictionOther Jurisdiction of Incorporation or Organization)(I.R.S.IRS Employer Identification Number)
incorporation or organization)6800 Cintas BoulevardIdentification No.)
P.O. Box 625737
Cincinnati,Ohio45262-5737
(Address of Principal Executive Offices)(Zip Code)
 
6800 CINTAS BOULEVARD
P.O. BOX 625737
CINCINNATI, OHIO 45262-5737
(Address of principal executive offices)(Zip Code)
Registrant's Telephone Number, Including Area Code: (513) 459-1200
(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, no par valueCTASThe 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 ☐
Yes ü No  _   
Indicate by checkmark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ü☑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)☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  _   ☐

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
Yes ☐ No ü
☑
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding December 31, 20172023
Common Stock, no par value106,488,799101,371,435




CINTAS CORPORATION
TABLE OF CONTENTS


Part I.Financial InformationPage No.
Item 1.
Consolidated Condensed Statements of Income –
Three and Six Months Ended November 30 2017, 2023 and 20162022
3
Consolidated Condensed Statements of Comprehensive Income –
Three and Six Months Ended November 30 2017, 2023 and 20162022
4
Consolidated Condensed Balance Sheets –
November 30, 20172023 and May 31, 20172023
5
Consolidated Condensed Statements of Shareholders' Equity -
Three and Six Months Ended November 30, 2023 and 2022
6
Consolidated Condensed Statements of Cash Flows –
Six Months Ended November 30, 2017 30, 2023 and 20162022
68
79
Item 2.
Condition and Results of Operations
3421
Item 3.
4331
Item 4.
4331
Item 1.
Other Information32
Item 2.
4432
Item 5.
Other Information
4432
Item 6.
4433
4534




CINTAS CORPORATION
Table of Contents

Part I. Financial Information
ITEM 1.                             
FINANCIAL STATEMENTS.STATEMENTS
CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In thousands except per share data)


Three Months EndedSix Months Ended
Three Months Ended Six Months Ended
November 30,
2017		 November 30,
2016		 November 30,
2017		 November 30,
2016
(In thousands except per share data)(In thousands except per share data)November 30, 2023November 30, 2022November 30, 2023November 30, 2022
Revenue: 
  
    Revenue:  
Uniform rental and facility services$1,308,038
 $1,000,015
 $2,619,822
 $1,994,297
Uniform rental and facility services$1,850,542 $1,709,987 $3,677,367 $3,407,759 
Other298,403
 271,062
 598,122
 543,430
Other526,635 464,871 1,042,140 933,553 
Total revenueTotal revenue2,377,177 2,174,858 4,719,507 4,341,312 
1,606,441
 1,271,077
 3,217,944
 2,537,727
Costs and expenses: 
  
    Costs and expenses:  
Cost of uniform rental and facility services723,960
 551,498
 1,430,823
 1,088,595
Cost of uniform rental and facility services974,231 906,727 1,921,814 1,797,493 
Cost of other166,112
 154,361
 331,399
 307,487
Cost of other261,398 245,684 514,574 493,260 
Selling and administrative expenses468,084
 361,415
 954,367
 731,118
Selling and administrative expenses641,865 577,513 1,282,880 1,165,505 
G&K Services, Inc. transaction and
integration expenses
13,074
 3,347
 17,045
 6,134
       
Operating income235,211
 200,456
 484,310
 404,393
Operating income499,683 444,934 1,000,239 885,054 
       
Interest income(291) (31) (588) (96)Interest income(769)(344)(1,191)(499)
Interest expense29,129
 13,267
 59,446
 27,439
Interest expense26,590 28,920 51,134 56,640 
       
Income before income taxes206,373

187,220

425,452

377,050
Income before income taxes473,862 416,358 950,296 828,913 
Income taxes68,636
 65,270
 126,607
 118,892
Income taxes99,249 92,065 190,598 152,931 
Income from continuing operations137,737
 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$374,613 $324,293 $759,698 $675,982 
       
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$3.67 $3.18 $7.43 $6.63 
       
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$3.61 $3.12 $7.32 $6.51 
       
Dividends declared per share$1.62
 $1.33
 $1.62
 $1.33
Dividends declared per share$1.35 $1.15 $2.70 $2.30 
 


See accompanying notes.

3

Table of Contents

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)


Three Months EndedSix Months Ended
(In thousands)November 30,
2023		November 30,
2022		November 30,
2023		November 30,
2022
Net income$374,613 $324,293 $759,698 $675,982 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments(1,813)(9,901)821 (29,107)
Change in fair value of interest rate lock
   agreements, net of tax expense of
   $3,115, $2,531, $5,921 and $2,851,
   respectively
9,099 7,394 17,298 8,328 
Amortization of interest rate lock
   agreements, net of tax benefit of
   $(503), $(513), $(990) and $(1,025),
   respectively
(1,495)(1,521)(2,937)(3,042)
Other, net of tax expense of $130, $0,
   $130 and $0, respectively
379 — 379 — 
Other comprehensive income (loss), net
   of tax expense of $2,742, $2,018,
   $5,061 and $1,826, respectively
6,170 (4,028)15,561 (23,821)
Comprehensive income$380,783 $320,265 $775,259 $652,161 
 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.














4
Table of Contents

CINTAS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands except share data)

November 30,
2017		 May 31,
2017
(In thousands except per share data)(In thousands except per share data)November 30,
2023		May 31,
2023
(Unaudited)  
 (Unaudited) 
ASSETS 
  
ASSETS  
Current assets: 
  
Current assets:  
Cash and cash equivalents$236,002
 $169,266
Cash and cash equivalents$85,556 $124,149 
Marketable securities22,732
 22,219
Accounts receivable, net763,555
 736,008
Accounts receivable, net1,273,974 1,152,993 
Inventories, net272,830
 278,218
Inventories, net474,840 506,604 
Uniforms and other rental items in service674,572
 635,702
Uniforms and other rental items in service1,035,717 1,011,918 
Income taxes, current35,700
 44,320
Prepaid expenses and other current assets38,058
 30,132
Prepaid expenses and other current assets166,652 142,795 
Assets held for sale—
 38,613
Total current assets2,043,449
 1,954,478
Total current assets3,036,739 2,938,459 
   
Property and equipment, net1,353,159
 1,323,501
Property and equipment, net1,463,826 1,396,476 
   
Investments175,663
 164,788
Investments270,006 247,191 
Goodwill2,811,796
 2,782,335
Goodwill3,120,506 3,056,201 
Service contracts, net565,574
 586,988
Service contracts, net329,511 346,574 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net179,154 178,464 
Other assets, net29,160
 31,967
Other assets, net414,127 382,991 
$6,978,801
 $6,844,057
 $8,813,869 $8,546,356 
   
LIABILITIES AND SHAREHOLDERS’ EQUITY 
  
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities: 
  
Current liabilities:  
Accounts payable$162,981
 $177,051
Accounts payable$316,697 $302,292 
Accrued compensation and related liabilities113,430
 149,635
Accrued compensation and related liabilities154,452 239,086 
Accrued liabilities577,960
 429,809
Accrued liabilities619,288 632,504 
Income taxes, currentIncome taxes, current13,102 12,470 
Operating lease liabilities, currentOperating lease liabilities, current44,063 43,710 
Debt due within one year300,000
 362,900
Debt due within one year210,000 — 
Liabilities held for sale—
 11,457
Total current liabilities1,154,371
 1,130,852
Total current liabilities1,357,602 1,230,062 
   
Long-term liabilities: 
  
Long-term liabilities:  
Debt due after one year2,534,222
 2,770,624
Debt due after one year2,474,287 2,486,405 
Deferred income taxes539,043
 469,328
Deferred income taxes497,198 498,356 
Operating lease liabilitiesOperating lease liabilities138,936 138,278 
Accrued liabilities198,132
 170,460
Accrued liabilities351,365 329,269 
Total long-term liabilities3,271,397
 3,410,412
Total long-term liabilities3,461,786 3,452,308 
   
Shareholders’ equity: 
  
Shareholders’ equity:  
Preferred stock, no par value:—
 —
Preferred stock, no par value:— — 
100,000 shares authorized, none outstanding

 

100,000 shares authorized, none outstanding
Common stock, no par value:600,563
 485,068
Common stock, no par value, and paid-in capital:Common stock, no par value, and paid-in capital:2,179,951 2,031,542 
425,000,000 shares authorized 
  
425,000,000 shares authorized  
FY 2018: 182,338,749 issued and 106,470,073 outstanding 
  
FY 2017: 180,992,605 issued and 105,400,629 outstanding   
Paid-in capital192,191
 223,924
FY 2024: 192,861,307 shares issued and 101,347,603 shares outstandingFY 2024: 192,861,307 shares issued and 101,347,603 shares outstanding  
FY 2023: 192,198,938 shares issued and 101,732,148 shares outstandingFY 2023: 192,198,938 shares issued and 101,732,148 shares outstanding
Retained earnings5,349,539
 5,170,830
Retained earnings10,081,267 9,597,315 
Treasury stock:(3,609,697) (3,574,000)Treasury stock:(8,360,076)(7,842,649)
FY 2018: 75,868,676 shares 
  
FY 2017: 75,591,976 shares   
Accumulated other comprehensive income (loss)20,437
 (3,029)
FY 2024: 91,513,704 sharesFY 2024: 91,513,704 shares  
FY 2023: 90,466,790 sharesFY 2023: 90,466,790 shares
Accumulated other comprehensive incomeAccumulated other comprehensive income93,339 77,778 
Total shareholders’ equity2,553,033
 2,302,793
Total shareholders’ equity3,994,481 3,863,986 
$6,978,801
 $6,844,057
 $8,813,869 $8,546,356 
See accompanying notes.

5

Table of Contents

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)

Common Stock
and Paid-In Capital 		Retained
Earnings		Accumulated
Other
Comprehensive
Income		Treasury Stock  Total
Shareholders'
Equity
(In thousands)SharesAmountSharesAmount
Balance at June 1, 2023192,199 $2,031,542 $9,597,315 $77,778 (90,467)$(7,842,649)$3,863,986 
Net income— — 385,085 — — — 385,085 
Comprehensive income, net of tax— — — 9,391 — — 9,391 
Dividends— — (138,272)— — — (138,272)
Stock-based compensation— 30,242 — — — — 30,242 
Vesting of stock-based compensation awards156 — — — — — — 
Stock options exercised303 59,691 — — (118)(59,212)479 
Repurchase of common stock— — — — (145)(73,276)(73,276)
Balance at August 31, 2023192,658 $2,121,475 $9,844,128 $87,169 (90,730)$(7,975,137)$4,077,635 
Net income— — 374,613 — — — 374,613 
Comprehensive income, net of tax— — — 6,170 — — 6,170 
Dividends— — (137,474)— — — (137,474)
Stock-based compensation— 22,940 — — — — 22,940 
Vesting of stock-based compensation awards3 — — — — — — 
Stock options exercised200 35,536 — — (68)(35,087)449 
Repurchase of common stock— — — — (716)(349,852)(349,852)
Balance at November 30, 2023192,861 $2,179,951 $10,081,267 $93,339 (91,514)$(8,360,076)$3,994,481 


6
Table of Contents

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)

Common Stock
and Paid-In Capital  		Retained
Earnings		Accumulated
Other
Comprehensive
Income		Treasury Stock  Total
Shareholders'
Equity
(In thousands)SharesAmountSharesAmount
Balance at June 1, 2022190,838 $1,771,917 $8,719,163 $107,917 (89,127)$(7,290,801)$3,308,196 
Net income— — 351,689 — — — 351,689 
Comprehensive loss, net of tax— — — (19,793)— — (19,793)
Dividends— — (117,461)— — — (117,461)
Stock-based compensation— 26,282 — — — — 26,282 
Vesting of stock-based compensation awards273 — — — — — — 
Stock options exercised543 80,638 — — (193)(79,591)1,047 
Repurchase of common stock— — — — (802)(320,334)(320,334)
Balance at August 31, 2022191,654 $1,878,837 $8,953,391 $88,124 (90,122)$(7,690,726)$3,229,626 
Net income— — 324,293 — — — 324,293 
Comprehensive loss, net of tax— — — (4,028)— — (4,028)
Dividends— — (117,338)— — — (117,338)
Stock-based compensation— 25,255 — — — — 25,255 
Vesting of stock-based compensation awards9 — — — — — — 
Stock options exercised194 29,053 — — (66)(27,975)1,078 
Repurchase of common stock— — — — (68)(28,348)(28,348)
Balance at November 30, 2022191,857 $1,933,145 $9,160,346 $84,096 (90,256)$(7,747,049)$3,430,538 

See accompanying notes.
7
Table of Contents

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands) 
Six Months Ended
Six Months Ended
November 30,
2017		 November 30,
2016
(In thousands)(In thousands)November 30, 2023November 30, 2022
Cash flows from operating activities: 
  
Cash flows from operating activities:  
Net income$354,320
 $278,468
Net income$759,698 $675,982 
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation107,578
 79,590
Depreciation136,803 126,561 
Amortization of intangible assets31,261
 7,460
Amortization of intangible assets and capitalized contract costsAmortization of intangible assets and capitalized contract costs79,235 74,693 
Stock-based compensation55,204
 39,582
Stock-based compensation53,182 51,537 
Gain on sale of business(99,060) —
Gain on Shred-it—
 (25,876)
Deferred income taxes42,162
 (3,833)Deferred income taxes(7,105)18,565 
Change in current assets and liabilities, net of acquisitions of businesses: 
  
Change in current assets and liabilities, net of acquisitions of businesses:  
Accounts receivable, net(24,800) (44,920)Accounts receivable, net(120,881)(133,897)
Inventories, net2,595
 (14,616)Inventories, net32,093 (43,266)
Uniforms and other rental items in service(33,294) (4,315)Uniforms and other rental items in service(21,649)(73,475)
Prepaid expenses and other current assets(18,573) (1,952)
Prepaid expenses and other current assets and capitalized contract costsPrepaid expenses and other current assets and capitalized contract costs(80,056)(85,532)
Accounts payable(8,706) 15,451
Accounts payable14,981 61,421 
Accrued compensation and related liabilities(36,480) (18,936)Accrued compensation and related liabilities(86,725)(28,212)
Accrued liabilities and other(1,940) (4,866)Accrued liabilities and other(30,453)(33,352)
Income taxes, current8,742
 484
Income taxes, current508 8,124 
Net cash provided by operating activities379,009
 301,721
Net cash provided by operating activities729,631 619,149 
   
Cash flows from investing activities: 
  
Cash flows from investing activities:  
Capital expenditures(132,466) (155,173)Capital expenditures(200,527)(146,404)
Proceeds from redemption of marketable securities100,259
 172,968
Purchase of marketable securities and investments(99,877) (118,270)
Proceeds from sale of business127,835
 —
Proceeds from sale of investment in Shred-it—
 25,876
Purchases of investmentsPurchases of investments(7,475)(5,182)
Acquisitions of businesses, net of cash acquired(1,099) (17,778)Acquisitions of businesses, net of cash acquired(73,997)(15,457)
Other, net(870) 332
Other, net(196)(4,381)
Net cash used in investing activities(6,218) (92,045)Net cash used in investing activities(282,195)(171,424)
   
Cash flows from financing activities: 
  
Cash flows from financing activities:  
(Payments) issuance of commercial paper, net(50,500) 66,000
Issuance of commercial paper, netIssuance of commercial paper, net210,000 124,046 
Repayment of debt(250,000) (250,000)Repayment of debt(13,450)— 
Prepaid short-term debt financing fees—
 (13,495)
Proceeds from exercise of stock-based compensation awards28,558
 19,225
Proceeds from exercise of stock-based compensation awards929 2,125 
Dividends paidDividends paid(255,839)(215,017)
Repurchase of common stock(35,697) (19,230)Repurchase of common stock(423,128)(348,682)
Other, net(1,882) (5,572)Other, net(4,322)(8,840)
Net cash used in financing activities(309,521) (203,072)Net cash used in financing activities(485,810)(446,368)
   
Effect of exchange rate changes on cash and cash equivalents3,466
 (2,388)Effect of exchange rate changes on cash and cash equivalents(219)(2,029)
   
Net increase in cash and cash equivalents66,736
 4,216
   
Net decrease in cash and cash equivalentsNet decrease in cash and cash equivalents(38,593)(672)
Cash and cash equivalents at beginning of period169,266
 139,357
Cash and cash equivalents at beginning of period124,149 90,471 
   
Cash and cash equivalents at end of period$236,002
 $143,573
Cash and cash equivalents at end of period$85,556 $89,799 
See accompanying notes.

8

Table of Contents

CINTAS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited) 


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. A2023 (Annual Report) filed with the SEC on July 27, 2023. See Note 1 entitled Significant Accounting Policies of "Notes to Consolidated Financial Statements" of that Annual Report for a summary of our significant accounting policies is presented beginning on page 38 of that report.policies. 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 measuredvalued at the lower of cost (first-in, first-out) or net realizable value. Inventory is comprised of the following amounts at: 
(In thousands)November 30,
2017		 May 31,
2017		(In thousands)November 30,
2023		May 31,
2023
   
Raw materials$16,231
 $17,528
Raw materials$19,283 $27,878 
Work in process23,199
 17,951
Work in process46,063 56,384 
Finished goods233,400
 242,739
Finished goods409,494 422,342 
$272,830
 $278,218
Inventories, netInventories, net$474,840 $506,604 
Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of $37.5$73.6 million and $38.3$80.1 million at November 30, 20172023 and May 31, 2017,2023, respectively.

2.New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2014-09, "Revenue from Contracts with Customers (Topic 606)," to clarify revenue recognition principles. This guidance The inventory obsolescence reserve is intended to improve disclosure requirements and enhance the comparabilitydetermined by specific identification, as well as an estimate based on Cintas' historical rates of revenue recognition practices. Improved disclosures under the amended guidance relateobsolescence. Once a specific inventory item is written down to the nature, amount, timing and uncertaintylower 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 teamcost or net realizable value, a new cost basis 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, weinventory item cannot subsequently be marked up.
New Accounting Pronouncements
There 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 to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Cintas is currently evaluating the impact that ASU 2016-02 will have 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. The adoption of this standard is not expected to have a material impact on the consolidated condensed financial statements.

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 otherno new accounting pronouncementpronouncements recently issued or newly effective that had, or isare expected to have, a material impact on Cintas' consolidated condensed financial statements.



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3.
Note 2 - Revenue Recognition
The following table presents Cintas' total revenue disaggregated by operating segment:
Three Months EndedSix Months Ended
(In thousands)November 30,
2023		November 30,
2022		November 30,
2023		November 30,
2022
Uniform Rental and
  Facility Services		$1,850,542 77.9 %$1,709,987 78.6 %$3,677,367 77.9 %$3,407,759 78.5 %
First Aid and Safety
  Services		266,401 11.2 %235,974 10.9 %527,094 11.2 %470,135 10.8 %
Fire Protection
   Services		173,950 7.3 %146,602 6.7 %348,266 7.4 %298,449 6.9 %
Uniform Direct
   Sales		86,284 3.6 %82,295 3.8 %166,780 3.5 %164,969 3.8 %
Total revenue$2,377,177 100.0 %$2,174,858 100.0 %$4,719,507 100.0 %$4,341,312 100.0 %

The Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 10 entitled Segment Information.

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

Revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities. Shipping and handling costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Certain of our customer contracts include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration paid to a customer based on performance metrics specified within the contract and is not material in any period presented. When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company's performance period generally corresponds with the monthly invoice period. No constraints on our revenue recognition were applied during the three or six months ended November 30, 2023 or 2022.

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 for credit losses 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 operating segment. We update our allowance for credit losses quarterly, considering recent write-offs and collections information and underlying economic conditions and expectations.






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Costs to Obtain a Contract
The Company capitalizes commission expenses paid to our employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. As permitted by Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606), the Company has elected to apply the guidance to a portfolio of contracts (or performance obligations) with similar characteristics because the Company reasonably expects that the effects on the consolidated condensed financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio. The Company also continues to expense certain costs to obtain a contract if those costs do not meet the criteria of ASC 606 or the amortization period of the asset would have been one year or less. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. We review the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense. The current portion is included in prepaid expenses and other current assets and the noncurrent portion is included in other assets, net on the Company's consolidated condensed balance sheets. As of November 30, 2023, the current and noncurrent assets related to deferred commissions totaled $93.9 million and $258.6 million, respectively. As of May 31, 2023, the current and noncurrent assets related to deferred commissions totaled $92.5 million and $251.6 million, respectively. We recorded amortization expense related to deferred commissions of $25.2 million and $23.4 million during the three months ended November 30, 2023 and 2022, respectively. During the six months ended November 30, 2023 and 2022, we recorded amortization expense related to deferred commissions of $49.6 million and $45.8 million, respectively. These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income.
Note 3 - Leases
Cintas has operating leases for certain operating facilities, vehicles and equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. Each new contract is evaluated to determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated condensed balance sheets 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 sheets.

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

Operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $20.8 million and $20.0 million for the three months ended November 30, 2023 and 2022, respectively. For the six months ended November 30, 2023 and 2022, operating lease costs, including short-term lease expense and variable lease costs which were immaterial in both periods, were $40.5 million and $39.5 million, respectively.


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The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the six months ended November 30:
(In thousands)20232022
Cash paid for amounts included in the measurement of operating lease liabilities$25,321 $25,108 
Operating lease right-of-use assets obtained in exchange for new and renewed
   operating lease liabilities		$22,684 $29,186 
Operating lease right-of-use assets acquired in business combinations$267 $— 

Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows:
November 30,
2023		May 31,
2023
Weighted-average remaining lease term5.20 years5.28 years
Weighted-average discount rate3.14%2.87%
The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2023:
(In thousands)
2024 (remaining six months)
$24,842 
202545,671 
202637,932 
202728,682 
202823,489 
Thereafter38,400 
Total payments199,016 
Less interest(16,017)
Total present value of lease payments$182,999 

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.dates. These financial instruments measured at fair value on a recurring basis are summarized below: 
 As of November 30, 2017
(In thousands)Level 1 Level 2 Level 3 Fair Value
        
Cash and cash equivalents$236,002
 $—
 $—
 $236,002
Marketable securities:       
Canadian treasury securities—
 22,732
 —
 22,732
Total assets at fair value$236,002
 $22,732
 $—
 $258,734


 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

As of November 30, 2023As of May 31, 2023
(In thousands)Level 1Level 2Level 3Fair ValueLevel 1Level 2Level 3Fair Value
Cash and cash equivalents$85,556 $— $— $85,556 $124,149 $— $— $124,149 
Other assets, net:
  Interest rate lock
    agreements		— 93,669 — 93,669 — 70,449 — 70,449 
Total assets at fair
   value		$85,556 $93,669 $— $179,225 $124,149 $70,449 $— $194,598 
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
12
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within Level 1 include most bank deposits and money market securities. Cintas does not adjust the quoted market price for such financial instruments.


The typesfair values of financial instruments Cintas classifies within Level 2Cintas' interest rate lock agreements are primarily high grade domestic commercial paperbased on similar exchange traded derivatives (market approach) and Canadian treasury securities (federal). The valuation technique used for Cintas’ marketable securities classifiedare, 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 towas determined by comparing the inherent volatility inlocked 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 bebenchmarked treasury rate. No other than temporary on available-for-sale securities areamounts included in interest income or expense. The cost of the securities sold is basedother assets, net, 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 CompanyCintas 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 recordedassets and liabilities measured at fair value. See Note 9 entitled Acquisitions for additional informationvalue on the measurement of the G&Ka nonrecurring basis primarily relate to assets acquired and liabilities assumed. There were no material acquisitions during the six months ended November 30, 2017.acquired in a business acquisition.



4.Investments
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.

Investments are generally evaluated for impairment on an annual basis or when indicators of impairment exist. For the six months ended November 30, 2017 and 2016, no impairment losses were recorded.



5.Note 5 - 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 setstables 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:
Three Months EndedSix Months Ended
Basic Earnings per Share
(In thousands except per share data)
November 30, 2023November 30, 2022November 30, 2023November 30, 2022
Net income$374,613 $324,293 $759,698 $675,982 
Less: net income allocated to participating securities1,460 1,372 2,957 2,859 
Net income available to common shareholders$373,153 $322,921 $756,741 $673,123 
Basic weighted average common shares outstanding101,667 101,637 101,781 101,530 
Basic earnings per share$3.67 $3.18 $7.43 $6.63 
Three Months EndedSix Months Ended
Diluted Earnings per Share
(In thousands except per share data)
November 30, 2023November 30, 2022November 30, 2023November 30, 2022
Net income$374,613 $324,293 $759,698 $675,982 
Less: net income allocated to participating securities1,460 1,372 2,957 2,859 
Net income available to common shareholders$373,153 $322,921 $756,741 $673,123 
Basic weighted average common shares outstanding101,667 101,637 101,781 101,530 
Effect of dilutive securities – employee stock options1,599 1,719 1,637 1,813 
Diluted weighted average common shares outstanding103,266 103,356 103,418 103,343 
Diluted earnings per share$3.61 $3.12 $7.32 $6.51 

13
 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 securities2,111
 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 outstanding106,340
 104,957
 106,039
 104,719
        
Basic earnings per share from continuing operations$1.27
 $1.15

$2.77
 $2.42
Table of Contents

 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 securities2,111
 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 outstanding106,340
 104,957
 106,039
 104,719
Effect of dilutive securities – employee stock options3,478
 2,690
 2,899
 2,559
Diluted weighted average common shares outstanding109,818
 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 basic2023 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 2016,2022, options granted to purchase 0.5 million and 0.71.1 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, 20172023 and 2016,2022, options granted to purchase 0.60.3 million and 0.9 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. The exercise prices of these options were greater than the average market price of the common stock (anti-dilutive).


On August 2, 2016,July 27, 2021, Cintas announced that the Board of Directors authorized a $500.0 million$1.5 billion share buyback program, which does not have an expiration date. AsOn July 26, 2022, Cintas announced that the Board of November 30, 2017, noDirectors authorized a new $1.0 billion share buybacksbuyback program, which does not have occurred underan expiration date. The following table summarizes the August 2, 2016share buyback activity by program and there were no share buybacks under this program subsequent to November 30, 2017 through January 5, 2018.period:

Three Months EndedSix Months Ended
November 30, 2023November 30, 2023
Buyback Activity
(In thousands except per share data)
SharesAvg. Price
per Share		Purchase
Price		SharesAvg. Price
per Share		Purchase
Price
July 27, 2021658 $486.58 $320,266 658 $486.58 $320,266 
July 26, 2022— — — — — — 
658 $486.58 $320,266 658 $486.58 $320,266 
Shares acquired for taxes due (1)
58 $518.89 $29,586 203 $507.61 $102,862 
Total repurchase of Cintas common stock$349,852 $423,128 
Three Months EndedSix Months Ended
November 30, 2022November 30, 2022
Buyback Activity
(In thousands except per share data)
SharesAvg. Price
per Share		Purchase
Price		SharesAvg. Price
per Share		Purchase
Price
July 27, 202112 $377.66 $4,683 544 $395.97 $215,434 
July 26, 2022— — — — — — 
12 $377.66 $4,683 544 $395.97 $215,434 
Shares acquired for taxes due (1)
56 $423.64 $23,665 326 $408.97 $133,248 
Total repurchase of Cintas common stock$28,348 $348,682 
For the six months ended November 30, 2017, Cintas acquired 0.3 million shares(1) Shares of Cintas common stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards that vested duringawards.

In addition to the six months ended November 30, 2017. Theseshare buyback activity presented above, Cintas acquired shares were acquired at an average price of $129.01 perCintas common stock, via non-cash transactions, in connection with net-share settlements of option exercises. The following table summarizes Cintas' non-cash share for a total purchase pricebuyback activity:
Three Months EndedSix Months Ended
November 30, 2023November 30, 2023

(In thousands except per share data)
SharesAvg. Price
per Share		Non-Cash
Value		SharesAvg. Price
per Share		Non-Cash
Value
Non-cash transaction activity68 $514.75 $35,087 186 $506.82 $94,300 
Three Months EndedSix Months Ended
November 30, 2022November 30, 2022
SharesAvg. Price
per Share		Non-Cash
Value		SharesAvg. Price
per Share		Non-Cash
Value
Non-cash transaction activity66 $421.85 $27,975 260 $414.46 $107,566 
14
Table of $35.7 million.
Contents



6.Note 6 - Goodwill, Service Contracts and Other Assets,
Net
Changes in the carrying amount of goodwill and service contracts for the six months ended November 30, 2017,2023, 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, 2023$2,636,607 $292,868 $126,726 $3,056,201 
Goodwill acquired49,737 962 13,361 64,060 
Foreign currency translation224 20 1 245 
Balance as of November 30, 2023$2,686,568 $293,850 $140,088 $3,120,506 
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 translation927
 891
 37
 1,855
Balance as of November 30, 2017$2,476,104
 $244,076
 $91,616
 $2,811,796
Service Contracts
(In thousands)
Uniform Rental
 and Facility Services		First Aid
 and Safety Services		All
Other		Total
Balance as of June 1, 2023$310,030 $21,157 $15,387 $346,574 
Service contracts acquired7,632 290 1,558 9,480 
Service contracts amortization(22,103)(2,627)(1,908)(26,638)
Foreign currency translation86 9 — 95 
Balance as of November 30, 2023$295,645 $18,829 $15,037 $329,511 

(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)
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
Service contracts acquired32
 411
 533
 976
Service contracts amortization(21,946) (1,927) (2,364) (26,237)
Foreign currency translation3,748
 99
 —
 3,847
Balance as of November 30, 2017$511,757
 $28,645
 $25,172
 $565,574


Information regarding Cintas’ service contracts and other assets, net is as follows:
 As of November 30, 2023As of May 31, 2023
(In thousands)Carrying
Amount		Accumulated
Amortization		NetCarrying
Amount		Accumulated
Amortization		Net
Service contracts$1,014,332 $684,821 $329,511 $1,004,754 $658,180 $346,574 
Capitalized contract
   costs (1)
$721,921 $463,307 $258,614 $665,705 $413,680 $252,025 
Noncompete and
   consulting agreements
   and other		224,489 68,976 155,513 198,260 67,294 130,966 
Total other assets, net$946,410 $532,283 $414,127 $863,965 $480,974 $382,991 
 As of November 30, 2017
(In thousands)Carrying Amount Accumulated Amortization Net
      
Service contracts$917,072
 $351,498
 $565,574
      
Noncompete and consulting agreements$40,913
 $39,588
 $1,325
Other35,711
 7,876
 27,835
Total other assets$76,624
 $47,464
 $29,160
(1)    The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheets as of November 30, 2023 and May 31, 2023, is $93.9 million and $92.5 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
Other34,890
 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$39.4 million and $3.2$37.3 million for the three months ended November 30, 20172023 and 2016,2022, respectively. AmortizationFor the six months ended November 30, 2023 and 2022, amortization expense for service contracts and other assets for continuing operations was $29.8$77.9 million and $6.4$73.7 million, forrespectively. These expenses are recorded in selling and administrative expenses on the six months endedconsolidated condensed statements of income. As of November 30, 2017 and 2016, respectively. Estimated2023, the estimated future amortization expense for service contracts and other assets, excluding any future acquisitions for eachand commissions to be earned, is as follows:
Fiscal Year (In thousands)
2024 (remaining six months)$77,591 
2025142,842 
2026121,587 
202798,902 
202875,019 
Thereafter176,763 
Total future amortization expense$692,704 
15
Table of the next five full fiscal years and thereafter is $61.3 million, $61.0 million, $59.6 million, $53.8 million, $51.8 million and $248.3 million, respectively. The increase in amortization expense in the current year and for the next five years over past fiscal years is the result of the G&K acquisition.
Contents



7.Note 7 - Debt, Derivatives and Hedging Activities
Cintas' outstanding debt is summarized as follows:
(In thousands)Interest
 Rate		Fiscal Year
Issued		Fiscal Year
Maturity		November 30,
2023		May 31,
2023
Debt due within one year
Commercial paper5.52 %(1)20242024$210,000 $— 
Total debt due within one year$210,000 $— 
Debt due after one year
Senior notes (2)
3.11 %20152025$50,462 $50,630 
Senior notes3.45 %20222025400,000 400,000 
Senior notes3.70 %201720271,000,000 1,000,000 
Senior notes4.00 %20222032800,000 800,000 
Senior notes6.15 %20072037236,550 250,000 
Debt issuance costs(12,725)(14,225)
Total debt due after one year$2,474,287 $2,486,405 
(In thousands)
Interest
 Rate
 
Fiscal Year
Issued
 
Fiscal Year
Maturity
 
November 30,
2017
 
May 31,
2017
          
Debt due within one year         
Senior notes6.13% 2008 2018 $300,000
 $300,000
Commercial paper1.24%
(1) 
Various Various —
 50,500
Current portion of term loan2.00%
(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 notes4.30% 2012 2022 $250,000
 $250,000
Senior notes2.90% 2017 2022 650,000
 650,000
Senior notes3.25% 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 notes3.70% 2017 2027 1,000,000
 1,000,000
Senior notes6.15% 2007 2037 250,000
 250,000
Long-term portion of term loan2.00%
(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 31, 2017.November 30, 2023.
(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, 20172023 were $2,854.8$2,486.6 million and $2,985.2$2,396.5 million,, respectively, and as of May 31, 20172023 were $3,156.0$2,500.0 million and $3,296.8$2,443.8 million, respectively. During the three and six months ended November 30, 2023, Cintas repurchased, and subsequently retired, $3.5 million and $13.5 million, respectively, of its 6.15%, respectively.30-year senior notes. In conjunction with these transactions, during the three and six months ended November 30, 2023, Cintas recognized a loss of $0.1 million and $0.9 million, respectively, which is recorded in interest expense on the consolidated condensed statements of income. During the six months ended November 30, 2017,2023 and 2022, Cintas made payments of $50.5issued $210.0 million and $124.0 million, net onof commercial paper, borrowings and paid off the term loan balance of $250.0 million with cash on hand. On December 1, 2017, in accordance with the terms of the notes, Cintas paid the $300.0 million aggregate principal amount of its 6.13% 10-year senior notes that matured on that date with cash on hand and $265.0 million in proceeds from the issuance of commercial paper.respectively.


The credit agreement that supports our commercial paper program was amended on September 16, 2016. The amendment increased thehas capacity ofunder the revolving credit facility from $450.0 million to $600.0 million and added a $250.0 million term loan facility. The existing term loan facility was paid in full as of the first quarter of fiscal 2018.$2.0 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$500.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit agreementfacility is September 15, 2021.March 23, 2027. As of November 30, 2017,2023, there was $210.0 million of commercial paper outstanding with a weighted average interest rate of 5.52% and maturity dates less than 90 days and no borrowings on our revolving credit facility. As of May 31, 2023, 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 ourits 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 agreementslocks, which represent cash flow hedges, to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 2008, fiscal 2012, fiscal 20132017 and fiscal 2017.2022. The amortization of the cash flow hedgesinterest rate locks resulted in a decrease to other comprehensive income (loss) of $0.1$1.5 million for the three months ended November 30, 2017 and an increase to other comprehensive income of $0.4 million forboth the three months ended November 30, 2016.2023 and 2022. For the six months ended November 30, 20172023 and 2016,2022, the amortization of the cash flow hedgesinterest rate locks resulted in a decrease to other comprehensive income (loss) of $0.3$2.9 million and an increase to$3.0 million, respectively.


16
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During fiscal 2022 and fiscal 2020, Cintas entered into interest rate lock agreements for forecasted debt issuances. The aggregate notional value of outstanding cash flow hedges was $500.0 million at both November 30, 2023 and May 31, 2023. The fair values of the outstanding interest rate locks, for forecasted debt issuances, are summarized as follows:
November 30, 2023May 31, 2023
Fiscal Year of Issuance
(In thousands)
Other
assets, net		Other
assets, net
2022$56,054 $44,803 
2020$37,615 $25,646 

The changes in fair value of the interest rate locks are recorded in other comprehensive income (loss), net of $0.8 million, respectively.tax. These interest rate locks had no impact on net income or cash flows for the three and six months ended November 30, 2023 or 2022.


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 8 - 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, 20172023 and May 31, 2017,2023, recorded unrecognized tax benefits were $18.7$31.3 million and $12.6$29.3 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 U.S. 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 U.S. federal income tax returns are closed to audit through fiscal 2019. 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 status and resolution of the various audits and other potential regulatory developments, it is expected that the balance of unrecognized tax benefits will not materially change for the fiscal year ending May 31, 2024.

Cintas’ effective tax rate for continuing operations was 33.3%20.9% and 34.9%22.1% for the three months ended November 30, 20172023 and 2016,2022, respectively. For the six months ended November 30, 20172023 and 2016,2022, Cintas' effective tax rate for continuing operations was 29.8%20.1% and 31.5%18.4%, respectively. The effective tax rate for allboth 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. 




9.Acquisitions

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:
17
(In thousands)  
   
Cash consideration for common stock$1,901,845
(1) 
Cash consideration for share-based awards62,257
(2) 
Cash consideration for G&K revolving debt124,180
(3) 
Cash consideration for transaction expenses24,529
(4) 
Total consideration2,112,811
 
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
Inventories30,254
Uniforms and other rental items in service93,659
Income taxes, current15,873
Prepaid expenses and other current assets43,235
Property and equipment254,035
Goodwill1,520,295
Service contracts519,000
Trade names17,000
Other assets15,585
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 assetsPreliminary ValuationAmortization Period
   
Service contracts$519,000
15 years
Trade names17,000
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.Pension Plans

In conjunction with the acquisition of G&K, Cintas assumed G&K's noncontributory frozen defined benefit pension plan (the Pension Plan) that covers substantially all 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 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. The net pension liability at November 30, 2017 is included in long-term accrued liabilities on the consolidated condensed balance sheet. Unrecognized differences between actual amounts and estimates based on actuarial assumptions are included in accumulated other comprehensive income in our consolidated condensed balance sheet. The difference between actual amounts and estimates based on actuarial assumptions are recognized in other comprehensive income 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 for the Pension Plan are as follows:
 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 9 - Accumulated Other Comprehensive Income (Loss)

The following table summarizestables summarize the changes in the accumulated balances for each component of accumulated other comprehensive income (loss), net of tax:
(In thousands)Foreign
Currency		Unrealized Income
on Interest Rate Locks		OtherTotal
Balance at June 1, 2023$(17,001)$96,714 $(1,935)$77,778 
Other comprehensive income before reclassifications2,634 8,199 — 10,833 
Amounts reclassified from accumulated other
   comprehensive income (loss)
— (1,442)— (1,442)
Net current period other comprehensive income2,634 6,757 — 9,391 
Balance at August 31, 2023(14,367)103,471 (1,935)87,169 
Other comprehensive (loss) income before
   reclassifications		(1,813)9,099 379 7,665 
Amounts reclassified from accumulated other
   comprehensive income (loss)
— (1,495)— (1,495)
Net current period other comprehensive (loss) income(1,813)7,604 379 6,170 
Balance at November 30, 2023$(16,180)$111,075 $(1,556)$93,339 
(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 reclassifications35,184
 —
 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, 201722,458

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 Income
on Interest Rate Locks		OtherTotal
Balance at June 1, 2022$17,006 $92,688 $(1,777)$107,917 
Other comprehensive (loss) income before
   reclassifications		(19,206)934 — (18,272)
Amounts reclassified from accumulated other
   comprehensive income (loss)
— (1,521)— (1,521)
Net current period other comprehensive loss(19,206)(587)— (19,793)
Balance at August 31, 2022(2,200)92,101 (1,777)88,124 
Other comprehensive (loss) income before
   reclassifications		(9,901)7,394 — (2,507)
Amounts reclassified from accumulated other
   comprehensive income (loss)
— (1,521)— (1,521)
Net current period other comprehensive (loss) income(9,901)5,873 — (4,028)
Balance at November 30, 2022$(12,101)$97,974 $(1,777)$84,096 
(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)



The following table summarizes the 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 EndedSix Months Ended
(In thousands)November 30,
2023		November 30,
2022		November 30,
2023		November 30,
2022
Amortization of interest
   rate locks		$1,998 $2,034 $3,927 $4,067 Interest expense
Tax expense(503)(513)(990)(1,025)Income taxes
Amortization of interest rate locks, net of tax$1,495 $1,521 $2,937 $3,042 

18
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
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12.Note 10 - 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
For the three months ended November 30, 2023   
Revenue$1,850,542 $266,401 $260,234 $— $2,377,177 
Income (loss) before income taxes$399,611 $58,531 $41,541 $(25,821)$473,862 
For the three months ended November 30, 2022   
Revenue$1,709,987 $235,974 $228,897 $— $2,174,858 
Income (loss) before income taxes$369,095 $45,495 $30,344 $(28,576)$416,358 
As of and for the six months ended November 30, 2023   
Revenue$3,677,367 $527,094 $515,046 $— $4,719,507 
Income (loss) before income taxes$806,140 $118,111 $75,988 $(49,943)$950,296 
Total assets$7,405,444 $733,074 $589,795 $85,556 $8,813,869 
As of and for the six months ended November 30, 2022
Revenue$3,407,759 $470,135 $463,418 $— $4,341,312 
Income (loss) before income taxes$733,866 $86,341 $64,847 $(56,141)$828,913 
Total assets$7,142,226 $699,184 $495,798 $89,799 $8,427,007 
(1) Corporate assets include cash and cash equivalents and marketable securities, if applicable, in all periods.

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Table of Contents

Note 11 - Litigation and Other Contingencies
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. Cintas is party to additional litigation not considered in the ordinary course of business, including the litigation discussed below.

The Company is a defendant in a purported class action lawsuit, City of Laurel, Mississippi v. Cintas Corporation No. 2, filed on March 12, 2021. This is a contract dispute whereby plaintiffs allege that Cintas breached its contracts with participating public agencies and seek, among other things, contract-based damages in an unspecified amount. In March 2022, the U.S. District Court for the District of Nevada denied Cintas’ motion to compel arbitration, and on March 6, 2023, the Ninth Circuit Court of Appeals affirmed. Any liability in this matter is not probable nor estimable at this time.

The Company, the Board of Directors, Scott Farmer (Executive Chairman) and the Investment Policy Committee are defendants in a purported class action, filed on December 13, 2019, pending in the U.S. District Court for the Southern District of Ohio alleging violations of The Employee Retirement Income Security Act of 1974 (ERISA). The lawsuit asserts that the defendants improperly managed the costs of the employee retirement plan, breached their fiduciary duties in failing to investigate and select lower cost alternative funds and failed to monitor and control the employee retirement plan’s recordkeeping costs. In November 2023, an agreement in principle was reached with the plaintiffs, which would require a payment of an immaterial amount that would be covered by the Company's insurance. The settlement remains subject to reaching a definitive agreement and the approval of the U.S. District Court for the Southern District of Ohio.

Cintas records an accrual for legal contingencies when Cintas determines that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. As of November 30, 2023 and May 31, 2023, Cintas did not accrue any material amounts for legal contingencies. The litigation discussed above, if decided or settled adversely to Cintas, may result in liability material to Cintas' consolidated financial condition, consolidated results of operations or consolidated cash flows and could increase costs of operations on an ongoing basis. Cintas may enter into discussions regarding settlement of these and other lawsuits and may enter into settlement agreements if it believes such settlement is in the best interest of Cintas' shareholders.

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Table of Contents

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 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®.

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 its 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 itsthe 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 gain606
 (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 millionand$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 affiliates137,737
 —
 —
 —
 (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 income137,737
 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 taxes137,737

30,058

166,569

10,672

(138,663)
206,373
Income taxes—
 11,449
 54,414
 2,798
 (25) 68,636
Income from continuing operations137,737

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 affiliates121,950
 —
 —
 —
 (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 income121,950
 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 taxes121,950
 58,524
 121,837
 5,940
 (121,031) 187,220
Income taxes—
 20,635
 42,652
 2,011
 (28) 65,270
Income from continuing operations121,950

37,889

79,185

3,929

(121,003)
121,950
           

Income from discontinued operations, net of tax18,427
 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 affiliates298,845
 —
 —
 —
 (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 income298,845
 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 taxes298,845
 103,156
 297,762
 22,674
 (296,985) 425,452
Income taxes—
 31,019
 89,537
 6,095
 (44) 126,607
Income from continuing operations298,845

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 affiliates258,158
 —
 —
 —
 (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 income258,158
 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 taxes258,158
 117,181
 244,878
 11,272
 (254,439) 377,050
Income taxes—
 37,304
 78,178
 3,464
 (54) 118,892
Income from continuing operations258,158

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 agreements385
 385
 —
 —
 (385) 385
Change in fair value of available-for-sale securities1
 —
 —
 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 adjustments23,810
 —
 —
 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 agreements770
 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, net1,766,703
 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’ equity2,553,033
 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, net1,516,463
 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’ equity2,302,793
 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 compensation55,204
 —
 —
 —
 —
 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 activities409,524
 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 awards28,558
 —
 —
 —
 —
 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 compensation39,582
 —
 —
 —
 —
 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 liabilities2,819
 (12,734) (8,935) (86) —
 (18,936)
Accrued liabilities and other139,766
 3,711
 (148,384) 41
 —
 (4,866)
Income taxes, current—
 (1,635) 1,460
 659
 —
 484
Net cash provided by operating activities460,635
 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 awards19,225
 —
 —
 —
 —
 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.
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 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 three and six months endedNovember 30, 20172023 and 20162022, for the two reportable operating segments and All Other isare presented in Note 1210 entitled Segment Information of “Notes to Consolidated Condensed Financial Statements.”


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. See Note 9 entitled Acquisitions of “Notes to Consolidated Condensed Financial Statements” for additional information.

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 EndedNovember 30, 20172023 Compared to Three Months EndedNovember 30, 20162022
 
Total revenue increased 26.4%9.3% to $2,377.2 million for the three months ended November 30, 2017 over2023, compared to $2,174.9 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. Organicthree months ended November 30, 2022. The organic revenue growth rate, which adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations. Total revenuefluctuations, was 9.0%. Revenue growth was positively impacted by 0.3%0.4% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations and by 18.4% due to acquisitions, primarily the acquisitionfluctuations.
21
Table of G&K.Contents


Uniform Rental and Facility Services reportable operating segment revenue increased 30.8%was $1,850.5 million for the three months ended November 30, 2017 over2023, compared to $1,710.0 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 growth rate for this reportable operating segment was 7.9%. Revenue growth in the Uniform Rental and Facility Services reportable operating segment was positively impacted 23.2%by 0.4% due to acquisitions primarily G&K. Foreignand negatively impacted by 0.1% due to foreign currency exchange rate fluctuations positively impactedfluctuations. Revenue growth by 0.3%. Growth was driven by many factors includinga 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 and productivity of sales representatives.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 10.1%13.3% for the three months ended November 30, 20172023, compared to the same period in the prior fiscal year, from $271.1$464.9 million to $298.4 million. Revenue increased organically by 9.2%$526.6 million. The organic revenue growth rate for other revenue was 12.9%. Revenue growth was positively impacted by 0.2%0.4% 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.acquisitions.


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$67.5 million, or 31.3%7.4%, for the three months ended November 30, 2017,2023, compared to the three months ended November 30, 2016.2022. This increasechange from the same period in the prior fiscal year was primarily due to higher Uniform Rental and Facility Services reportable operating segment sales volume, includingas well as investments in delivery infrastructure to support increased revenue growth achieved during the newly acquired G&K sales volume.three months ended November 30, 2023.

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$15.7 million,, or 7.6%6.4%, for the three months ended November 30, 2017,2023, compared to the three months ended November 30, 2016.2022, primarily due to increased sales volume in each of the underlying operating segments. Cost of other improved as a percent of revenue, decreasing from 52.8% for three months ended November 30, 2022, to 49.6% for the three months ended November 30, 2023. The increaseimprovement in cost of sales as a percent of revenue was primarily due to higherfavorable changes in the sales volumemix, sourcing and productivity initiatives in the First Aid and Safety Services reportable operating segment as well as improved leverage of fixed costs for both the First Aid and Safety Services reportable operating segment and All Other.


Selling and administrative expenses increased $106.7$64.4 million, or 11.1%, or 29.5%,in the three months ended November 30, 2023, compared to the same period of the prior fiscal year. Selling and administrative expenses as a percent of revenue were 27.0% for the three months ended November 30, 2017,2023, compared to 26.6% for the same period in the prior fiscal year. The increase waschange as a percent of revenue is primarily due to higher sales volume, increased laborinvesting in additional selling resources, investing in our management trainee program and other employee-partner related expenses as a resultexpanding our talent acquisition efforts for future growth.

Operating income was $499.7 million, or 21.0% 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 incomerevenue, for the three months ended November 30, 2017 was negatively impacted by $13.12023, compared to $444.9 million, or 20.5% of transaction and integration expenses incurred in connection with the G&K acquisition. Forrevenue, for the three months ended November 30, 2017, the after-tax effect2022. The improvement in operating income as a percent of these transactionrevenue was due to operating leverage from revenue growth, efficiency gains in energy usage and integration expenses represents a negative impact of $0.07 per share on diluted earnings per share.productivity initiatives.


Net interest expense (interest expense less interest income) was $28.8$25.8 million for the three months ended November 30, 2017,2023, compared to $13.2$28.6 million for the three months ended November 30, 2016.2022. The increasedecrease was primarily due to a decrease in the additionalaverage amount of outstanding debt issuedduring the three months ended November 30, 2023 compared to finance the G&K acquisition.three months ended November 30, 2022.


Cintas’ effective tax rate for continuing operations was 33.3%20.9% and 34.9% for the three 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 operations22.1% for the three months ended November 30, 2017 increased $15.82023 and 2022, respectively. The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation.

Net income was $374.6 million or 12.9%for the three months ended November 30, 2023, an increase of 15.5%, compared to the three months ended November 30, 2016.2022. Diluted earnings per share from continuing operations was $1.24were $3.61 for the three months ended November 30, 2017,2023, which was an increase of 10.7%15.7% 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.net income.




22
Table of Contents

Uniform Rental and Facility Services Reportable Operating Segment
Three Months Ended November 30, 20172023 Compared to Three Months EndedNovember 30, 20162022
 
Uniform Rental and Facility Services reportable operating segment revenue increased from $1,000.0was $1,850.5 million to $1,308.0 million, or 30.8%, for the three months ended November 30, 2017, over2023 compared to $1,710.0 million for the same period inof the prior fiscal year, andyear. The organic revenue growth rate for the reportable operating segment was 7.9%. The cost of uniform rental and facility services increased $172.5$67.5 million,, or 31.3%. Revenue increased organically by 7.3%7.4%. The reportable operating segment’s gross margin was $584.1 million, or 44.7%$876.3 million. Gross margin as a percent of revenue.revenue was 47.4% for the three months ended November 30, 2023 compared to 47.0% for the three months ended November 30, 2022. The improvement in gross margin was 20 basis points lower thanprimarily the prior fiscal year’s second quarter gross marginresult of 44.9%. The decrease was driven by the recent G&K acquisition, which has lower margins than our legacy Cintas margins.a reduction in energy expense as a percent of revenue.


Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $99.0$42.5 million to 28.1% of revenue,in the three months ended November 30, 2023 compared to 26.8% in the second quartersame period of the prior fiscal year. This increase in expense was due primarily to increased laborSelling and employee-partner relatedadministrative expenses incurred as a resultpercent of revenue for the three months ended November 30, 2023 were 25.8% compared to the 25.4% in the same period of the G&K acquisition, increased amortization expense related to intangibles acquiredprior fiscal year. The change as a resultpercent of the G&Krevenue was primarily due to investing in additional selling resources, investing in our management trainee program and expanding our talent acquisition and an investment in an enterprise resource planning system.efforts for future growth.

Income before income taxes increased $26.9$30.5 million, or 15.2%8.3%, for the Uniform Rental and Facility Services reportable operating segment for the three months ended November 30, 20172023, compared to the same period in the prior fiscal year. Income before income taxesyear, but remained the same as a percent of revenue at 21.6%. This was 15.6%a result of the reportable operating segment’s revenue, which was a 210 basis point decrease compared toimprovement in gross margin being offset by the second quarter of the prior fiscal year of 17.7%. This decrease was due to the increaseinvestments in 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.noted above.


First Aid and Safety Services Reportable Operating Segment
Three Months Ended November 30, 20172023 Compared to Three Months Ended November 30, 20162022


First Aid and Safety Services reportable operating segment revenue increased from $124.8$236.0 million to $139.1$266.4 million, or 11.5%12.9%, for the three months ended November 30, 20172023, over the same period in the prior fiscal year. Revenue increased organically by 10.8% as a result of increased sales volume. TotalThe organic revenue growth rate for the reportable operating segment was 12.7%. First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.2% due to foreign currency exchange rate fluctuations and by 0.5% due to acquisitionsacquisitions. The increase in the three months ended November 30, 2017 compared to the three months ended November 30, 2016. Growthrevenue was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers, price increases and strong customer retention.


Cost of first aid and safety services increased $6.6 million, or 9.8%, for the three months ended November 30, 2017, over2023, increased $4.3 million, or 3.7%, compared to the three months ended November 30, 2016, due to higher sales volume.2022. The gross margin as a percent of revenue was 46.9%54.5% for the quarterthree months ended November 30, 2017, which is an increase of 80 basis points2023, compared to the gross margin as a percent of revenue of 46.1%50.5% in the same period of the prior fiscal year. The increaseimprovement in gross margin was primarily driven primarily by improvedfavorable changes in the sales mix and sourcing leveragingand productivity initiatives, as well as improved leverage of existing warehousesfixed costs and optimizationa reduction in energy expense as a percent of delivery routes.revenue.

Selling and administrative expenses increased $4.5$13.1 million in the three months ended November 30, 2023, compared to the same quarter inperiod of the prior fiscal year. The increase was due primarily to increased labor. Selling and administrative expenses as a percent of revenue improved to 34.0%for the three months ended November 30, 2023 were 32.6%, compared to 34.3%31.2% in the second quarter of the prior fiscal year. The decrease in selling and administrative expenseschange as a percent toof revenue was largely due to revenue growing at a faster pace than labor and employee-partner related expenses.investing in additional selling resources for future growth.


Income before income taxes for the First Aid and Safety Services reportable operating segment increased $3.2$13.0 million to $18.0$58.5 million for the three months ended November 30, 2017,2023, 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.year. Income before income taxes at 12.9%was 22.0% of the reportable operating segment’s revenue was a 110 basis point increase compared to the same quarter lastperiod of the prior fiscal year of 19.3%. The increase in income before income taxes was due to the reasons previously mentioned.discussed improvements in gross margin, partially offset by the increase in selling and administrative expenses.




Consolidated Results
Six Months Ended November 30, 20172023 Compared to Six Months Ended November 30, 20162022
 
Total revenue increased 26.8%8.7% to $4,719.5 million for the six months ended November 30, 2017 over2023, compared to $4,341.3 million for 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.six months ended November 30, 2022. Total organic revenue growth was 8.5%. Organic growth adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations. Total revenueRevenue growth was
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positively impacted by 0.2%0.3% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations and by 18.6% due to acquisitions, primarily the acquisition of G&K.fluctuations.


Uniform Rental and Facility Services reportable operating segment revenue increased 31.4%was $3,677.4 million for the six months ended November 30, 2017 over2023, compared to $3,407.8 million in the same period inof the prior fiscal year, from $1,994.3 millionwhich was an increase of 7.9%. Organic revenue growth for this reportable operating segment was 7.8%. Uniform Rental and Facility Services reportable operating segment revenue was positively impacted by 0.3% due to $2,619.8 million. Revenue increased organically by 7.7%. Revenue growth was positivelyacquisitions and negatively impacted by 0.2% due to foreign currency exchange rate fluctuations and 23.5% due to acquisitions, primarily the acquisitionfluctuations. Revenue growth was a result of G&K. Growth was driven by many factors including 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 and productivity of sales representatives.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 10.1%was $1,042.1 million for the six months ended November 30, 20172023, compared to $933.6 million for the same period inof the prior fiscal year, from $543.4 million to $598.1 million. Revenue increased organically by 9.0%which was an increase of 11.6%. Other revenue organic growth was 11.3%. Revenue growth was positively impacted by 0.2%0.4% due to acquisitions and negatively impacted by 0.1% 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.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 $342.2$124.3 million, or 31.4%6.9%, for the six months ended November 30, 2017,2023, compared to the six months ended November 30, 2016. This2022. The increase over the same period of the prior fiscal year 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, 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 $23.9$21.3 million, or 7.8%4.3%, for the six months ended November 30, 2017,2023, compared to the six months ended November 30, 2016.2022. Cost of other improved as a percent of revenue, decreasing from 52.8% for six months ended November 30, 2022, to 49.4% for the six months ended November 30, 2023. The increaseimprovement in cost of sales as a percent of revenue was primarily due to higherfavorable changes in the sales volumemix in the First Aid and Safety Services reportable operating segment as well as improved leverage of fixed costs for both the First Aid and Safety Services reportable operating segment and All Other.


Selling and administrative expenses increased $223.2$117.4 million, or 30.5%10.1%, for the six months ended November 30, 2017,2023, compared to the same period in the prior fiscal year. The increase was due to higher sales volume, increased laborSelling and other employee-partner relatedadministrative expenses as a resultpercent 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 incomerevenue were 27.2% for the six months ended November 30, 20172023, compared to 26.8% for the same period of the prior fiscal year. The change as a percent of revenue is primarily due to investing in additional selling resources, investing in our management trainee program and expanding our talent acquisition efforts for future growth.

Operating income was negatively impacted by $17.0$1,000.2 million, or 21.2% of transaction and integration expenses incurred in connection with the G&K acquisition. Forrevenue, for the six months ended November 30, 2017,2023, compared to $885.1 million, or 20.4% of revenue, for the after-tax effectsix months ended November 30, 2022. The change in operating income as a percent of these transaction and integration expenses represents a negative impact of $0.10 per share on diluted earnings per share.revenue was due to the previously mentioned improvements in gross margin.


Net interest expense (interest expense less interest income) was $58.9$49.9 million for the six months ended November 30, 2017,2023, compared to $27.3$56.1 million for the six months ended November 30, 2016.2022. The increasechange was primarily due to a decrease in the additionalaverage amount of outstanding debt issued to financeduring the G&K acquisition.six months ended November 30, 2023.


Cintas’ effective tax rate for continuing operations was 29.8%20.1% and 31.5%18.4% for the six months ended November 30, 20172023 and 2016,2022, respectively. The effective tax rate forin both periods was largely impacted by certain discrete items, (primarilyprimarily the tax accounting for stock-based compensation).compensation.


Net income from continuing operations for the six months ended November 30, 20172023, increased $40.7$83.7 million, or 15.8%12.4%, compared to the six months ended November 30, 2016.2022. Diluted earnings per share from continuing operations was $2.69$7.32 for the six months ended November 30, 2017,2023, which was an increase of 14.0%12.4% 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.net income.



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Uniform Rental and Facility Services Reportable Operating Segment
Six Months Ended November 30, 20172023 Compared to Six Months Ended November 30, 20162022
 
Uniform Rental and Facility Services reportable operating segment revenue increased from $1,994.37.9% to $3,677.4 million for the six months ended November 30, 2023, compared to $2,619.8$3,407.8 million for the same period of the prior fiscal year. Organic revenue growth for this reportable operating segment was 7.8%. The cost of uniform rental and facility services increased $124.3 million, or 31.4%6.9%, for the six months ended November 30, 2017,2023 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%.year. The reportable operating segment’s gross margin was $1,189.0$1,755.6 million, or 45.4%47.7% of revenue, which wasfor the samesix months ended November 30, 2023, compared to the gross margin asof 47.3% for the prior year's first half gross margin.six months ended November 30, 2022. The increaseimprovement in gross margin was aprimarily the result of new business sold by sales representatives, penetrationa reduction in energy expense as a percent 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.revenue.


Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $211.4$73.0 million, to 28.6%increasing as a percent of revenue for the six months ended November 30, 2023 to 25.8%, compared to 27.0% in25.7% for the first six monthssame period of the prior fiscal year. This increase in expense was due primarilyAs a percent of revenue, expenses were largely consistent as compared to increased labor and employee-partner related expenses incurred as a resultthe same period 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.prior year.

Income before income taxes increased $61.0$72.3 million, or 16.9%9.8%, for the Uniform Rental and Facility Services reportable operating segment for the six months ended November 30, 20172023, compared to the same period in the prior fiscal year. Income before income taxes was 16.1%21.9% of the reportable operating segment’s revenue, which was a 200 basis point decrease compared to 21.5% for the first halfsix months ended November 30, 2022. The change as a percent of revenue was primarily a result of the prior fiscal year of 18.1%. This decrease was due to the increaseimprovement in selling 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.gross margin.


First Aid and Safety Services Reportable Operating Segment
Six Months Ended November 30, 20172023 Compared to Six Months Ended November 30, 20162022


First Aid and Safety Services reportable operating segment revenue increased from $249.6$470.1 million to $279.7$527.1 million, or 12.0%12.1%, for the six months ended November 30, 20172023, over the same period in the prior fiscal year. Revenue increased organically by 11.4% as a result of increased sales volume. TotalOrganic revenue growth for this reportable operating segment was 11.9%. First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.6%0.3% due to acquisitions and negatively impacted by 0.1% due to foreign currency exchange rate fluctuations. This increase in the six months ended November 30, 2017 compared to the six months ended November 30, 2016. Growthrevenue was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers, price increases, and strong customer retention.


Cost of first aid and safety services increased $12.7$1.2 million, or 9.4%0.5%, for the six months ended November 30, 2017, over2023, from the six months ended November 30, 2016,2022, due to higher sales volume. The gross margin as a percent of revenue was 47.2%55.2% for the six months ended November 30, 2017,2023, which iswas an increase of 130520 basis points compared to the gross margin as a percent of revenue of 45.9%50.0% in the same period of the prior fiscal year. The increaseimprovement in gross margin was primarily driven primarily by improvedfavorable changes in the sales mix, sourcing leveragingand productivity initiatives, as well as improved leverage of existing warehousesfixed costs and optimization of delivery routes,a reduction in energy expense as a resultpercent of the ZEE Medical Inc. (ZEE) acquisition.revenue.


Selling and administrative expenses increased $6.3$24.0 million, and increased as a percent of revenue to 32.8%, for the six months ended November 30, 2023, compared to 31.7% for the first half of the prior fiscal year.six months ended November 30, 2022. The increase was due primarily to increased labor. Selling and administrativein 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 primarily due to revenue growing at a faster pace thanincreases in labor and other employee-partner related expenses, as a result of the ZEE acquisition.including investing in additional selling resources for future growth.

Income before income taxes for the First Aid and Safety Services reportable operating segment increased $11.1 million to $37.4was $118.1 million for the six months ended November 30, 2017,2023, compared to $86.3 million for 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.year. Income before income taxes, at 13.4%22.4% of the reportable operating segment’s revenue, was a 290increased 400 basis point increasepoints compared to the same period lastof the prior fiscal year due to the reasons previously mentioned.improvements in gross margin, partially offset by increases selling and administrative expenses.




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LIQUIDITY AND CAPITAL RESOURCES
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Liquidity and 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 months ended November 30, 201730:
(In thousands)20232022
Net cash provided by operating activities$729,631 $619,149 
Net cash used in investing activities$(282,195)$(171,424)
Net cash used in financing activities$(485,810)$(446,368)
Cash and cash equivalents at the end of the period$85,556 $89,799 
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, 20172023 and 20162022, include $133.1$40.7 million and $94.6$29.8 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 liquidity. In addition, we have access to $2.0 billion of debt capacity from our amended and restated revolving credit facility. We believe the Company has sufficient liquidity to operate in the current business environment for at least the next 12 months and the foreseeable future thereafter. Acquisitions, repurchases of our common stock 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$729.6 million for the six months ended November 30, 2017, an increase of $77.32023, compared to $619.1 million compared tofor the six months ended November 30, 2016.2022. The change from the prior fiscal year was primarily due to an increase was the result of higherin net income offset byand favorable changes in working capital.capital, specifically accounts receivable, inventories, net and uniforms and other rental items in service. These improvements were partially offset by unfavorable changes in working capital, specifically, accrued compensation and related liabilities and accounts payable.

Net cash used in investing activities includes capital expenditures, proceeds from the salepurchases of businessesinvestments and cash paid for acquisitions of businesses. Capital expenditures were $132.5$200.5 million and $155.2$146.4 million for the six months ended November 30, 20172023 and 2016,2022, respectively. Capital expenditures in fiscal 2018 primarily relate to expansion efforts inthe six months ended November 30, 2023, included $127.6 million for the Uniform Rental and Facility Services reportable operating segment representing $111.4and $46.8 million offor the currentFirst Aid and Safety Services reportable operating segment. The increase in capital expenditures during the six months ended November 30, 2023, over the same period in the prior fiscal year, amount.was due to investments in the operating segments to support continued revenue growth, an increase in equipment purchases, primarily trucks, due to vendors clearing backlogged orders and spending associated with the SAP implementation in the Fire Protection Services operating segment. Cash paid for acquisitions of businesses was $1.1$74.0 million and $17.8$15.5 million for the six months ended November 30, 20172023 and 2016,2022, respectively. The acquisitions during both the six months ended November 30, 20172023 and 2022, occurred in our Uniform Rental and Facility Services reportable operating segment, our First Aid and Safety Services reportable operating segment and our Fire Protection business,operating segment, which is included in All Other. For the six months ended November 30, 2017, investing activities included proceeds of $127.8 million related to the sale of Discontinued Services. Net cash used in investing activities also includes net proceeds from purchases and redemptions of marketable securities and investments of $0.4$7.5 million and $54.7$5.2 million of purchases of investments during the six months ended November 30, 2023 and 2022, respectively.

Net cash used in financing activities was $485.8 million and $446.4 million for the six months ended November 30, 20172023 and 2016,2022, respectively.
Net The increase in cash used in financing activities was $309.5 milliondue to the increase in share buyback activity and $203.1 million foran increase in dividends paid. This increase was partially offset by an increase in proceeds from the net issuance of commercial paper in the six months endedNovember 30, 2017 and 2016, respectively. 2023.

On August 4, 2015, weJuly 27, 2021, Cintas announced that the Board of Directors authorized a $500.0 million share buyback program. 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 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. On August 2, 2016, 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. AsOn July 26, 2022, Cintas announced that the Board of November 30, 2017, noDirectors authorized a new $1.0 billion share buybacksbuyback program, which does not have occurred underan expiration date.

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The following table summarizes the August 2, 2016buyback activity by program and there were no share buybacks under this program subsequent to November 30, 2017 through January 5, 2018. In addition, for the six months ended November 30, 2017, Cintas acquired 0.3 million shares30:
20232022
Buyback Activity
(In thousands except per share data)
SharesAvg. Price
per Share		Purchase
Price		SharesAvg. Price
per Share		Purchase
Price
July 27, 2021658 486.58 320,266 544 395.97 215,434 
July 26, 2022— — — — — — 
658 $486.58 $320,266 544 $395.97 $215,434 
Shares acquired for taxes due (1)
203 $507.61 $102,862 326 $408.97 $133,248 
Total repurchase of Cintas common stock$423,128 $348,682 
(1)Shares of Cintas common stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards that vestedawards.

Our Board of Directors declared the following dividends:
Paid Dividends
Declaration Date
(In millions except per share data)
Record
 Date		Payment
 Date		Dividend
Per Share		Total
Amount
Six months ended November 30, 2023
April 11, 2023May 15, 2023June 15, 2023$1.15 $117.6 
July 25, 2023August 15, 2023September 15, 20231.35 138.2 
$2.50 $255.8 
Six months ended November 30, 2022
April 12, 2022May 16, 2022June 15, 2022$0.95 $97.7 
July 26, 2022August 15, 2022September 15, 20221.15 117.3 
$2.10 $215.0 
Accrued Dividends
As of November 30, 2023
October 24, 2023 (1)
November 15, 2023December 15, 2023$1.35 $137.5 
As of November 30, 2022
October 25, 2022 (1)
November 15, 2022December 15, 2022$1.15 $117.4 
(1)The dividends declared during the sixthree months ended November 30, 2017. These shares2023 and 2022 were acquiredincluded in current accrued liabilities on the consolidated condensed balance sheet at an average priceNovember 30, 2023 and 2022.

Any future dividend declarations, including the amount of $129.01 per share for a total purchase priceany dividends, are at the discretion of $35.7 million.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 months ended November 30, 2016,2023, Cintas paidrepurchased, and subsequently retired, $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.of its 6.15%, 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.


30-year senior notes. During the six months ended November 30, 2017,2023 and 2022, Cintas made paymentsissued a net $210.0 million and $124.0 million of $50.5 million, net on commercial paper, borrowings and paid off the term loan balancerespectively.

27
Table of $250.0 million with cash on hand. 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, in accordance with the terms of the notes, Cintas paid the $300.0 million aggregate principal amount of 6.13% 10-year senior notes that matured on that date with cash on hand and $265.0 million in proceeds from the issuance of commercial paper.Contents


The following table summarizes Cintas' outstanding debt:
(In thousands)Interest
 Rate		Fiscal Year
Issued		Fiscal Year
 Maturity		November 30,
2023		May 31,
2023
Debt due within one year
Commercial paper5.52 %(1)20242024$210,000 $— 
Total debt due within one year$210,000 $— 
Debt due after one year
Senior notes (2)
3.11 %20152025$50,462 $50,630 
Senior notes3.45 %20222025400,000 400,000 
Senior notes3.70 %201720271,000,000 1,000,000 
Senior notes4.00 %20222032800,000 800,000 
Senior notes6.15 %20072037236,550 250,000 
Debt issuance costs(12,725)(14,225)
Total debt due after one year$2,474,287 $2,486,405 
(In thousands)
Interest
 Rate
 
Fiscal Year
Issued
 
Fiscal Year
 Maturity
 
November 30,
2017
 
May 31,
 2017
          
Debt due within one year         
Senior notes6.13% 2008 2018 $300,000
 $300,000
Commercial paper1.24%
(1) 
Various Various —
 50,500
Current portion of term loan2.00%
(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 notes4.30% 2012 2022 $250,000
 $250,000
Senior notes2.90% 2017 2022 650,000
 650,000
Senior notes3.25% 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 notes3.70% 2017 2027 1,000,000
 1,000,000
Senior notes6.15% 2007 2037 250,000
 250,000
Long-term portion of term loan2.00%
(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 31, 2017.November 30, 2023.
(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%.

The credit agreement that supports our commercial paper program was amended on September 16, 2016. The amendment increased the capacity of thehas a revolving credit facility from $450.0 million to $600.0 million and addedwith a $250.0 million term loan facility. The existing term loan facility was paid in full during the first quartercapacity of fiscal 2018.$2.0 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$500.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit agreementfacility is September 15, 2021.March 23, 2027. As of November 30, 2017,2023, there was $210.0 million of commercial paper outstanding with a weighted average interest rate of 5.52% and maturity dates less than 90 days and no borrowings on our revolving credit facility. As of May 31, 2023, 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 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 ofbased on our favorable experiences in the debt markets in the recent past. OurAdditionally, our ability to continue to access the commercial paper and long-term debt markets on favorable interest rate and other terms will depend, to a significant degree, on the ratings assigned by the credit rating agencies to our indebtedness. As of November 30, 2017,2023, our ratings were as follows:
Rating AgencyOutlookCommercial
Paper		Long-term
 Debt
Rating AgencyOutlookCommercial PaperLong-term Debt
Standard & Poor’sStableA-2BBB+A-
Moody’s Investors ServiceStableP-2A3

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
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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,
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 impactissuer of the Act,$2,486.6 million aggregate principal amount of senior notes outstanding as of November 30, 2023, which willare 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 remeasuringsummarized financial information of Cintas Corporation (Issuer), Corp. 2 and subsidiary guarantors (together, the deferred tax assetsObligor 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 earningsfollows:
Six Months Ended
Summarized Consolidated Condensed Statements of Income
(In thousands)
November 30,
2023		November 30,
2022
Net sales to unrelated parties$4,466,257 $4,105,128 
Net sales to non-guarantors$7,144 $7,227 
Operating income$938,947 $861,404 
Net income$708,330 $658,665 

Summarized Consolidated Condensed Balance Sheets
(In thousands)
November 30,
2023		May 31,
2023
ASSETS
Receivables due from non-obligor subsidiaries$8,993 $9,168 
Total other current assets$2,819,855 $2,738,095 
Total other noncurrent assets$5,382,261 $5,210,312 
LIABILITIES
Amounts due to non-obligor subsidiaries$42,477 $11,902 
Current liabilities$1,315,629 $1,183,511 
Noncurrent liabilities$3,407,111 $3,399,191 

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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.Other Contingencies




LITIGATION AND OTHER CONTINGENCIES
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, orconsolidated results of operationoperations or consolidated cash flows of Cintas. Cintas is also party to additional litigation not considered in the ordinary course of business. See Note 11 entitled Litigation and Other Contingencies of “Notes to Consolidated Condensed Financial Statements” for a detailed discussion of such additional litigation.




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; inflationary pressures and fluctuations in costs of materials and labor, including increased medical costs; interest rate volatility; 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; our ability to meet our goals relating to environmental, social and governance opportunities, improvements and efficiencies; the cost, results and ongoing assessment of internal controls for financial reporting required byreporting; the Sarbanes-Oxley Acteffect 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 global health 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.made, except otherwise as required by law. 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, 20172023 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 28 ofin Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K for the year ended May 31, 2017.2023.
 
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, 2017.2023. 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, 2017,2023, 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’sSecurities 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, 2017,2023, that have materially affected, or are reasonably likely to materially affect, Cintas' internal control over financial reporting.








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Part II.  Other Information
 
ITEM 1.                              
LEGAL PROCEEDINGS

We discuss material legal proceedings (other than ordinary routine litigation incidental to our business) pending against us in “Part I, Item 1. Financial Statements,” in Note 11 entitled Litigation and Other Contingencies of “Notes to Consolidated Condensed Financial Statements.” We refer you to and incorporate by reference into this Part II, Item 1 that discussion for important information concerning those legal proceedings.


ITEM 2.                           Unregistered Sales of Equity Securities and Use of Proceeds.
UNREGISTERED SALES OF EQUITY SECURITIES,
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
Total4,450
 $147.76
 —
 $500.0
USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES


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, 2023 (2)
95,018 $482.90 85,700 $1,417.1 
October 1 - 31, 2023 (3)
583,746 $488.18 560,502 $1,144.0 
November 1 - 30, 2023 (4)
36,470 $521.06 12,000 $1,138.0 
Total715,234 $489.15 658,202 $1,138.0 

(1)   On August 2, 2016,July 27, 2021, Cintas announced that the Board of Directors authorized a $500.0 million$1.5 billion share buyback program, which does not have an expiration date. From the inception of the July 27, 2021 share buyback program through November 30, 2023, Cintas has purchased a total of 3.4 million shares of Cintas common stock at an average price of $405.55 per share for a total purchase price of $1,362.0 million. On July 26, 2022, Cintas announced that the Board of Directors authorized a new $1.0 billion share buyback program, which does not have an expiration date. There were no share buybacks under the July 26, 2022 share buyback program through November 30, 2023.
(2)   During September 2017,2023, Cintas acquired 9579,318 shares of Cintas common stock in trade for employee payroll taxes due on options exercised and restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of $136.10$507.55 per share for a total purchase price of $0.1$4.7 million.
(3)  During October 2017,2023, Cintas acquired 1,26123,244 shares of Cintas common stock in trade for employee payroll taxes due on options exercised and restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of $149.04$509.64 per share for a total purchase price of $0.2$11.8 million.
(4)  During November 2017,2023, Cintas acquired 2,23224,470 shares of Cintas common stock in trade for employee payroll taxes due on options exercised and restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of $152.03$531.99 per share for a total purchase price of $0.3$13.0 million.




ITEM 5.                              
OTHER INFORMATION

During the quarter ended November 30, 2023, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of Cintas adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 5.    Other Information.

On October 17, 2017, Cintas declared an annual cash dividend408 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.Regulation S-K).
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ITEM 6.                                   
EXHIBITS

10.1
Amendment No. 1 to Cintas Corporation 2016 Equity and Incentive Compensation Plan
Subsidiary Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize Securities of the Registrant (Incorporated by reference to Exhibit 22 to Cintas' Annual Report on Form 10-K for the year ended May 31, 2023)
101.INS101XBRL Instance DocumentThe following financial statements from Cintas' Quarterly Report on Form 10-Q for the period ended November 30, 2023, 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.SCH104Cover Page Interactive Data File (formatted as Inline XBRL Taxonomy Extension Schema Document
101.CALand contained in Exhibit 101)XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document




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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, 20188, 2024/s/J. Michael Hansen
J. Michael Hansen
SeniorExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)


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