UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	~~August 31,~~November 30, 2019



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

Commission file number 0-11399

Cintas Corporation

(Exact name of registrant as specified in its charter)



Washington		31-1188630
(State or Other Jurisdiction of Incorporation)		(IRS Employer Identification Number)



6800 Cintas Boulevard
P.O. Box 625737
Cincinnati,	Ohio	45262-5737
(Address of Principal Executive Offices)		(Zip Code)

Registrant's Telephone Number, Including Area Code: (513) 459-1200

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



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

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

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

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

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

Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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



Class		Outstanding ~~September 30,~~December 31, 2019
Common Stock, no par value		~~103,499,651~~103,750,798

CINTAS CORPORATION

TABLE OF CONTENTS



			Page No.
Part I.	Financial Information

	Item 1.	Financial Statements

		Consolidated Condensed Statements of Income – Three and Six Months Ended ~~August 31,~~November 30, 2019 and 2018	3

		Consolidated Condensed Statements of Comprehensive Income – Three and Six Months Ended ~~August~~November 31, 2019 and 2018	4

		Consolidated Condensed Balance Sheets – ~~August 31,~~November 30, 2019 and May 31, 2019	5

		Consolidated Condensed Statements of Shareholders' Equity - Three and Six Months ended ~~August 31,~~November 30, 2019 and 2018	6

		Consolidated Condensed Statements of Cash Flows – ~~Three~~Six Months Ended ~~August 31,~~November 30, 2019 and 2018	78

		Notes to Consolidated Condensed Financial Statements	89

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2835

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3443

	Item 4.	Controls and Procedures	3443

Part II.	Other Information

	Item 1.	Legal Proceedings	44

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3544

	Item 5.	Other Information	45

	Item 6.	Exhibits	3545

Signatures			3646

Part I. Financial Information

ITEM 1. FINANCIAL STATEMENTS

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)

(In thousands except per share data)


	Three Months Ended						Three Months Ended						Six Months Ended
	August 31, 2019			August 31, 2018			November 30, 2019			November 30, 2018			November 30, 2019			November 30, 2018
Revenue:
Uniform rental and facility services	$	1,454,527		$	1,374,938		$	1,469,976		$	1,390,778		$	2,924,503		$	2,765,716
Other	356,612			323,037			373,773			327,490			730,385			650,527
Total revenue	1,811,139			1,697,975			1,843,749			1,718,268			3,654,888			3,416,243

Costs and expenses:
Cost of uniform rental and facility services	768,676			746,453			784,937			761,119			1,553,613			1,507,572
Cost of other	193,321			176,810			206,421			181,991			399,742			358,801
Selling and administrative expenses	542,996			504,634			517,927			491,671			1,060,923			996,305
G&K Services, Inc. integration expenses	—			4,850			—			7,847			—			12,697

Operating income	306,146			265,228			334,464			275,640			640,610			540,868

Gain on sale of a cost method investment							—			69,373			—			69,373

Interest income	(162		)	(496		)	(283		)	(391		)	(445		)	(887		)
Interest expense	27,321			24,304			26,177			24,880			53,498			49,184

Income before income taxes	278,987			241,420			308,570			320,524			587,557			561,944
Income taxes	28,175			28,873			62,127			77,530			90,302			106,403
Income from continuing operations	250,812			212,547			246,443			242,994			497,255			455,541
Loss from discontinued operations, net of tax benefit of $10	—			(32		)
(Loss) income from discontinued operations, net of tax benefit of $107, tax expense of $6, tax benefit of $107 and tax benefit of $4, respectively							(323		)	19			(323		)	(13		)
Net income	$	250,812		$	212,515		$	246,120		$	243,013		$	496,932		$	455,528

Basic earnings per share:
Continuing operations	$	2.40		$	1.96		$	2.35		$	2.25		$	4.75		$	4.21
Discontinued operations	0.00			0.00			0.00			0.00			0.00			0.00
Basic earnings per share	$	2.40		$	1.96		$	2.35		$	2.25		$	4.75		$	4.21

Diluted earnings per share:
Continuing operations	$	2.32		$	1.89		$	2.27		$	2.18		$	4.60		$	4.07
Discontinued operations	0.00			0.00			0.00			0.00			0.00			0.00
Diluted earnings per share	$	2.32		$	1.89		$	2.27		$	2.18		$	4.60		$	4.07

Dividends declared per share							$	2.55		$	2.05		$	2.55		$	2.05

(In thousands)


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

Cash flows from operating activities:
Net income	$	212,515		$	62,612		$	143,033		$	5,010		$	(210,655	)	$	212,515		$	455,528		$	116,040		$	322,735		$	12,345		$	(451,120	)	$	455,528
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation	—			33,866			15,427			3,452			—			52,745			—			68,929			31,274			6,909			—			107,112
Amortization of intangible assets and capitalized contract costs	—			30,156			1,278			2,116			—			33,550			—			61,044			2,339			4,176			—			67,559
Stock-based compensation	46,172			—			—			—			—			46,172			74,784			—			—			—			—			74,784
Gain on sale of a cost method investment																			—			—			(69,373		)	—			—			(69,373		)
Deferred income taxes	—			5,388			2,122			1,512			—			9,022			—			10,865			5,519			2,843			—			19,227
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—			(12,891		)	3,381			(5,541		)	—			(15,051		)	—			(52,953		)	(20,151		)	(10,183		)	(2,461		)	(85,748		)
Inventories, net	—			(37,207		)	2,700			660			(782		)	(34,629		)	—			(52,989		)	3,546			(2,153		)	(1,631		)	(53,227		)
Uniforms and other rental items in service	—			(10,800		)	(7,904		)	(2,936		)	(1,379		)	(23,019		)	—			(39,481		)	(11,051		)	(7,152		)	—			(57,684		)
Prepaid expenses and other current assets and capitalized contract costs	—			(25,060		)	(21,838		)	(32		)	—			(46,930		)	—			(52,392		)	(5,570		)	(199		)	—			(58,161		)
Accounts payable	—			41,784			(37,657		)	(4,758		)	302			(329		)	—			(98,465		)	90,324			6,502			(316		)	(1,955		)
Accrued compensation and related liabilities	—			(41,910		)	(10,982		)	(3,294		)	—			(56,186		)	—			(16,186		)	(6,468		)	1,685			—			(20,969		)
Accrued liabilities and other	—			2,305			(26,295		)	(3,566		)	—			(27,556		)	—			(1,908		)	(9,983		)	(3,431		)	—			(15,322		)
Income taxes, current	—			5,022			8,474			(815		)	—			12,681			—			(5,329		)	(7,109		)	(4,766		)	—			(17,204		)
Net cash provided by (used in) operating activities	258,687			53,265			71,739			(8,192		)	(212,514		)	162,985			530,312			(62,825		)	326,032			6,576			(455,528		)	344,567

Cash flows from investing activities:
Capital expenditures	—			(43,966		)	(17,979		)	(2,583		)	—			(64,528		)	—			(92,461		)	(37,357		)	(7,796		)	—			(137,614		)
Proceeds from redemption of marketable securities	—			1,554			4			—			—			1,558
Purchases of investments																			—			(466		)	(13,605		)	—			—			(14,071		)
Proceeds from sale of a cost method investment																			—			—			73,342			—			—			73,342
Acquisitions of businesses, net of cash acquired	—			(7,613		)	—			—			—			(7,613		)	—			(6,580		)	—			—			—			(6,580		)
Other, net	(146,731		)	(4,048		)	(65,509		)	2,582			213,504			(202		)	(54,795		)	(2,534		)	(398,963		)	(953		)	455,528			(1,717		)
Net cash used in investing activities	(146,731		)	(54,073		)	(83,484		)	(1		)	213,504			(70,785		)	(54,795		)	(102,041		)	(376,583		)	(8,749		)	455,528			(86,640		)

Cash flows from financing activities:
Issuance of commercial paper, net																			—			173,500			—			—			—			173,500
Proceeds from exercise of stock-based compensation awards	27,512			—			—			—			—			27,512			32,612			—			—			—			—			32,612
Repurchase of common stock	(139,468		)	—			—			—			—			(139,468		)	(508,129		)	—			—			—			—			(508,129		)
Other, net	—			2,909			—			(2,471		)	(990		)	(552		)	—			(5,362		)	—			—			—			(5,362		)
Net cash (used in) provided by financing activities	(111,956		)	2,909			—			(2,471		)	(990		)	(112,508		)	(475,517		)	168,138			—			—			—			(307,379		)

Effect of exchange rate changes on cash and cash equivalents	—			—			—			(60		)	—			(60		)	—			—			—			(793		)	—			(793		)

Net increase (decrease) in cash and cash equivalents	—			2,101			(11,745		)	(10,724		)	—			(20,368		)	—			3,272			(50,551		)	(2,966		)	—			(50,245		)
Cash and cash equivalents at beginning of period	—			44,499			60,310			33,915			—			138,724			—			44,499			60,310			33,915			—			138,724
Cash and cash equivalents at end of period	$	—		$	46,600		$	48,565		$	23,191		$	—		$	118,356		$	—		$	47,771		$	9,759		$	30,949		$	—		$	88,479

⁽¹⁾ ~~Variable rate debt instrument. The rate presented is the variable borrowing rate at August 31, 2019.~~


⁽¹⁾	Variable rate debt instrument. The rate presented is the variable borrowing rate at May 31, 2019.


⁽²⁾	Variable rate debt instrument. The rate presented is the variable borrowing rate at November 30, 2019.

⁽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 3.73%.

⁽³⁾⁽⁴⁾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 and restated on May 24, 2019. The amendment increased the capacity of the revolving credit facility from $600.0 million to $1.0 billion and created a new term loan of $200.0 million. 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 the term loan of up to $250.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit facility is May 23, 2024, and the maturity date of the term loan is May 23, 2020, which can be extended 12 months, annually, for up to four years. As of ~~August 31,~~November 30, 2019, there was ~~$139.0 million of~~no commercial paper outstanding and no borrowings on our revolving credit facility. As of May 31, 2019, there was $112.5 million of commercial paper outstanding and no borrowings on our revolving credit facility.

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 ~~August 31,~~November 30, 2019, Cintas was in compliance with all debt covenants.

Our access to the commercial paper and long-term debt markets has historically provided us with sources of liquidity. We do not anticipate having difficulty in obtaining financing from those markets in the future in view of our favorable experiences in the debt markets in the recent past. Our 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 ~~August 31,~~November 30, 2019, our ratings were as follows:

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

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

Litigation and Other Contingencies

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Quarterly Report. Factors that might cause such a difference include, but are not limited to, risks inherent with the G&K transaction in the achievement of cost synergies and the timing thereof, including whether the transaction will be accretive and within the expected timeframe and the actual amounts of future integration expenses; the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions, including G&K; fluctuations in costs of materials and labor including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; the cost, results and ongoing assessment of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002; the effect of new accounting pronouncements; costs of our SAP system implementation; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2019 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET 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 31 of our Annual Report on Form 10-K for the year ended May 31, 2019.

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

Disclosure Controls and Procedures

With the participation of Cintas’ management, including Cintas’ 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 ~~August 31,~~November 30, 2019. Based on such evaluation, Cintas’ management, including Cintas’ Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, has concluded that Cintas’ disclosure controls and procedures were effective as of ~~August 31,~~November 30, 2019, in ensuring (i) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s 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

Beginning June 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, “Leases (Topic 842)." As a result, we implemented certain changes to our related internal control activities, including the development of new policies and periodic reviews of lease-related transactions and enhanced contract review requirements and other ongoing monitoring activities. There were no ~~other~~ 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 ~~three~~six months ended ~~August 31,~~November 30, 2019, that have materially affected, or are reasonably likely to materially affect, Cintas' internal control over financial reporting.

Part II. Other Information

ITEM 1. LEGAL PROCEEDINGS

The Company and three executive officers are defendants in a purported class action, filed on December 12, 2019, pending in the U.S. District Court for the Southern District of Ohio alleging violations of federal securities laws. The lawsuit asserts that the defendants made material misstatements regarding the Company’s margins, earnings guidance and regulatory compliance that caused the Company's stock to trade at artificially inflated prices between March 2017 and November 2019. The defendants deny liability.

The Company, the Board of Directors, CEO 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 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. The defendants deny liability.

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

ITEM 2. UNREGISTERED SALES OF EQUITY

SECURITIES AND USE OF PROCEEDS

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

Average
price paid
per share

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

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

June 1 - 30, 2019 ⁽²⁾
838,179
$ 230.66
837,205
$ 263.5
July 1 - 31, 2019 ⁽³⁾
177,328
$ 261.67
—
$ 263.5
August 1 - 31, 2019 ⁽⁴⁾
66,687
$ 259.04
—
$ 263.5
Total 1,082,194
$ 237.49
837,205
$ 263.5



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, 2019 ⁽²⁾	831	$	255.12	—	$	263.5
October 1 - 31, 2019 ⁽³⁾	419	$	268.62	—	$	1,263.5
November 1 - 30, 2019 ⁽⁴⁾	72	$	250.87	—	$	1,263.5
Total	1,322	$	259.17	—	$	1,263.5

⁽¹⁾On October 30, 2018, Cintas announced that the Board of Directors authorized a $1.0 billion share buyback program, which does not have an expiration date. From the inception of the October 30, 2018 share buyback program through ~~August 31,~~November 30, 2019, Cintas has purchased a total of 3.5 million shares of Cintas common stock at an average price of $209.82 per share for a total purchase price of $736.5 million. Additionally, on October 29, 2019, Cintas announced that the Board of Directors authorized a new $1.0 billion share buyback program, which does not have an expiration date. Cintas has not made any purchases under the October 29, 2019 share buyback program through November 30, 2019.

⁽²⁾During ~~June~~September 2019, Cintas acquired ~~974~~831 shares of Cintas common stock in trade for employee payroll taxes due on restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of ~~$229.51~~$255.12 per share for a total purchase price of $0.2 million.

⁽³⁾During ~~July~~October 2019, Cintas acquired ~~177,328~~419 shares of Cintas common stock in trade for employee payroll taxes due on restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of ~~$261.67~~$268.62 per share for a total purchase price of ~~$46.4~~$0.1 million.

⁽⁴⁾During ~~August~~November 2019, Cintas acquired ~~66,687~~72 shares of Cintas common stock in trade for employee payroll taxes due on restricted stock awards that vested during the fiscal year. These shares were acquired at an average price of ~~$259.04~~$250.87 per share for a total purchase price of ~~$17.3~~less than $0.1 million.

ITEM 5. OTHER INFORMATION

On October 29, 2019, Cintas declared an annual cash dividend of $2.55 per share on outstanding common stock, a

24.4% increase over the annual dividend paid in the prior year. The dividend was paid on December 6, 2019, to shareholders of record as of November 8, 2019.

ITEM 6. EXHIBITS



31.1	Certification of Principal Executive Officer required by Rule 13a-14(a)
31.2	Certification of Principal Financial Officer required by Rule 13a-14(a)
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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:	~~October 8, 2019~~January 9, 2020	/s/	J. Michael Hansen

			J. Michael Hansen
			Executive Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)

3646


	Three Months Ended						Three Months Ended						Six Months Ended
	August 31, 2019			August 31, 2018			November 30, 2019			November 30, 2018			November 30, 2019			November 30, 2018

Net income	$	250,812		$	212,515		$	246,120		$	243,013		$	496,932		$	455,528

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	6,724			(3,019		)	1,413			(10,623		)	8,137			(13,642		)
Change in fair value of interest rate lock agreements	(29,903		)	(3,168		)	22,761			4,921			(7,142		)	1,753
Amortization of interest rate lock agreements	(295		)	(295		)	(358		)	(294		)	(653		)	(589		)

Other comprehensive loss	(23,474		)	(6,482		)
Other comprehensive income (loss)							23,816			(5,996		)	342			(12,478		)

Comprehensive income	$	227,338		$	206,033		$	269,936		$	237,017		$	497,274		$	443,050


	August 31, 2019			May 31, 2019			November 30, 2019			May 31, 2019
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	102,131		$	96,645		$	226,535		$	96,645
Accounts receivable, net	917,535			910,120			949,122			910,120
Inventories, net	336,290			334,589			348,304			334,589
Uniforms and other rental items in service	796,187			784,133			817,859			784,133
Income taxes, current	—			7,475			24,878			7,475
Prepaid expenses and other current assets	137,675			103,318			123,589			103,318
Total current assets	2,289,818			2,236,280			2,490,287			2,236,280

Property and equipment, net	1,422,351			1,430,685			1,425,584			1,430,685

Investments	208,987			192,346			218,873			192,346
Goodwill	2,849,613			2,842,441			2,852,801			2,842,441
Service contracts, net	482,977			494,595			469,933			494,595
Operating lease right-of-use assets, net	163,089			—			169,233			—
Other assets, net	245,065			240,315			260,626			240,315
	$	7,661,900		$	7,436,662		$	7,887,337		$	7,436,662

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	237,242		$	226,020		$	254,611		$	226,020
Accrued compensation and related liabilities	99,200			155,509			124,349			155,509
Accrued liabilities	395,416			433,940			674,240			433,940
Income taxes, current	9,238			—
Operating lease liabilities, current	43,010			—			44,263			—
Debt due within one year	338,776			312,264			199,788			312,264
Total current liabilities	1,122,882			1,127,733			1,297,251			1,127,733

Long-term liabilities:
Debt due after one year	2,538,057			2,537,507			2,538,606			2,537,507
Deferred income taxes	436,755			438,179			443,857			438,179
Operating lease liabilities	125,684			—			130,580			—
Accrued liabilities	387,816			330,522			372,073			330,522
Total long-term liabilities	3,488,312			3,306,208			3,485,116			3,306,208

Shareholders’ equity:
Preferred stock, no par value:	—			—			—			—
100,000 shares authorized, none outstanding
Common stock, no par value:	1,036,125			840,328			1,066,814			840,328
425,000,000 shares authorized
FY 2020: 185,952,964 shares issued and 103,364,545 shares outstanding
FY 2020: 186,298,161 shares issued and 103,702,675 shares outstanding
FY 2019: 184,790,626 shares issued and 103,284,401 shares outstanding
Paid-in capital	110,441			227,928			134,041			227,928
Retained earnings	6,939,240			6,691,236			6,917,310			6,691,236
Treasury stock:	(4,974,449		)	(4,717,619		)	(4,976,360		)	(4,717,619		)
FY 2020: 82,588,419 shares
FY 2020: 82,595,486 shares
FY 2019: 81,506,225 shares
Accumulated other comprehensive loss	(60,651		)	(39,152		)	(36,835		)	(39,152		)
Total shareholders’ equity	3,050,706			3,002,721			3,104,970			3,002,721
	$	7,661,900		$	7,436,662		$	7,887,337		$	7,436,662


(In thousands)	August 31, 2019		May 31, 2019		November 30, 2019		May 31, 2019

Raw materials	$	16,541	$	17,812	$	15,550	$	17,812
Work in process	25,618		28,820		27,148		28,820
Finished goods	294,131		287,957		305,606		287,957
	$	336,290	$	334,589	$	348,304	$	334,589



	Three Months Ended
	August 31, 2019				August 31, 2018
(In thousands)	Revenue		%		Revenue		%

Uniform Rental and Facility Services	$	1,454,527	80.3	%	$	1,374,938	81.0	%
First Aid and Safety Services	172,090		9.5	%	153,417		9.0	%
Fire Protection Services	110,126		6.1	%	98,109		5.8	%
Uniform Direct Sales	74,396		4.1	%	71,511		4.2	%
Total revenue	$	1,811,139	100.0	%	$	1,697,975	100.0	%



	Three Months Ended								Six Months Ended
	November 30, 2019				November 30, 2018				November 30, 2019				November 30, 2018
(In thousands)	Revenue		%		Revenue		%		Revenue		%		Revenue		%

Uniform Rental and Facility Services	$	1,469,976	79.7	%	$	1,390,778	81.0	%	$	2,924,503	80.0	%	$	2,765,716	81.0	%
First Aid and Safety Services	169,668		9.2	%	153,348		8.9	%	341,758		9.4	%	306,765		9.0	%
Fire Protection Services	106,735		5.8	%	96,183		5.6	%	216,861		5.9	%	194,292		5.7	%
Uniform Direct Sales	97,370		5.3	%	77,959		4.5	%	171,766		4.7	%	149,470		4.3	%
Total revenue	$	1,843,749	100.0	%	$	1,718,268	100.0	%	$	3,654,888	100.0	%	$	3,416,243	100.0	%


	Common Stock			Paid-In Capital				Retained Earnings			Other Accumulated Comprehensive Loss				Treasury Stock							Total Shareholders' Equity			Common Stock					Paid-In Capital				Retained Earnings			Other Accumulated Comprehensive Loss			Treasury Stock							Total Shareholders' Equity
	Shares	Amount					Shares				Other Accumulated Comprehensive Loss			Amount				Shares			Amount							Shares		Paid-In Capital			Amount				Other Accumulated Comprehensive Loss										Total Shareholders' Equity
				Paid-In Capital
Balance at June 1, 2019	184,791	$	840,328	$	227,928			Retained Earnings	$	6,691,236		$	(39,152	)		(81,506	)		$	(4,717,619	)	Total Shareholders' Equity			$	3,002,721	184,791		$	840,328			$	Retained Earnings		227,928		$	6,691,236		$	(39,152	)		(81,506	)		$	(4,717,619	)	$	3,002,721
Net income	—	—		—				250,812			—				—			—				250,812			—		—			—				250,812			—			—			—				250,812
Comprehensive loss, net of tax	—	—		—				—			(23,474		)		—			—				(23,474		)	—		—			—				—			(23,474		)	—			—				(23,474		)
Stock-based compensation	—	—		40,395				—			—				—			—				40,395			—		—			40,395				—			—			—			—				40,395
Vesting of stock-based compensation awards	605	157,882		(157,882		)		—			—				—			—				—			605		157,882			(157,882		)		—			—			—			—				—
Stock options exercised, net of shares surrendered	557	37,915		—				—			—				—			—				37,915			557		37,915			—				—			—			—			—				37,915
Repurchase of common stock	—	—		—				—			—				(1,082	)		(256,830		)		(256,830		)	—		—			—				—			—			(1,082	)		(256,830		)		(256,830		)
Cumulative effect of change in accounting principle	—	—		—				(2,808		)	1,975				—			—				(833		)	—		—			—				(2,808		)	1,975			—			—				(833		)
Balance at August 31, 2019	185,953	$	1,036,125	$	110,441			$	6,939,240		$	(60,651	)		(82,588	)		$	(4,974,449	)		$	3,050,706		185,953		$	1,036,125		$	110,441			$	6,939,240		$	(60,651	)	(82,588	)		$	(4,974,449	)		$	3,050,706
Net income																									—		—			—				246,120			—			—			—				246,120
Comprehensive income, net of tax																									—		—			—				—			23,816			—			—				23,816
Dividends																									—		—			—				(268,050		)	—			—			—				(268,050		)
Stock-based compensation																									—		—			29,003				—			—			—			—				29,003
Vesting of stock-based compensation awards																									21		5,403			(5,403		)		—			—			—			—				—
Stock options exercised, net of shares surrendered																									324		25,286			—				—			—			—			—				25,286
Repurchase of common stock																									—		—			—				—			—			(7	)		(1,911		)		(1,911		)
Balance at November 30, 2019																									186,298		$	1,066,814		$	134,041			$	6,917,310		$	(36,835	)	(82,595	)		$	(4,976,360	)		$	3,104,970



(In thousands)	November 30, 2019

Cash paid for amounts included in the measurement of operating lease liabilities	$	24,927
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	24,770



(In thousands, except lease term and discount rate)

Lease cost
Operating lease costs including short-term lease expense and variable lease costs, which were immaterial in the quarter	$	17,200

Operating cash flow impacts
Cash paid for amounts included in the measurement of operating lease liabilities	$	12,342
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	6,828
Weighted-average remaining lease term - operating leases	5.36 years
Weighted-average discount rate - operating leases	2.68%



		November 30, 2019

Weighted-average remaining lease term - operating leases		5.35 years
Weighted-average discount rate - operating leases		2.71%


(In thousands)

2020 (remaining nine months)	$	35,753
2020 (remaining six months)				$	24,836
2021	40,981			44,642
2022	31,877			35,528
2023	24,487			27,414
2024	15,691			18,313
Thereafter	33,065			37,869
Total payments	181,854			188,602
Less interest	(13,160		)	(13,759		)
Total present value of lease payments	$	168,694		$	174,843


	As of August 31, 2019								As of November 30, 2019
(In thousands)	Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3		Fair Value

Cash and cash equivalents	$	102,131	$	—	$	—	$	102,131	$	226,535	$	—	$	—	$	226,535
Other assets, net:
Interest rate lock agreements									—		12,241		—		12,241
Total assets at fair value	$	102,131	$	—	$	—	$	102,131	$	226,535	$	12,241	$	—	$	238,776

Long-term accrued liabilities:
Interest rate lock agreements	$	—	$	76,141	$	—	$	76,141	$	—	$	58,274	$	—	$	58,274
Total liabilities at fair value	$	—	$	76,141	$	—	$	76,141	$	—	$	58,274	$	—	$	58,274



	As of May 31, 2019
(In thousands)	Level 1		Level 2		Level 3		Fair Value

Cash and cash equivalents	$	96,645	$	—	$	—	$	96,645
Total assets at fair value	$	96,645	$	—	$	—	$	96,645

Long-term accrued liabilities:
Interest rate lock agreements	$	—	$	36,393	$	—	$	36,393
Total liabilities at fair value	$	—	$	36,393	$	—	$	36,393


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

Balance as of June 1, 2019	$	2,496,402	$	243,459	$	102,580	$	2,842,441	$	2,496,402	$	243,459	$	102,580	$	2,842,441
Goodwill acquired	—		164		3,022		3,186		—		164		5,624		5,788
Foreign currency translation	3,675		296		15		3,986		4,219		339		14		4,572
Balance as of August 31, 2019	$	2,500,077	$	243,919	$	105,617	$	2,849,613
Balance as of November 30, 2019									$	2,500,621	$	243,962	$	108,218	$	2,852,801


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

Balance as of June 1, 2019	$	445,016		$	23,380		$	26,199		$	494,595		$	445,016		$	23,380		$	26,199		$	494,595
Service contracts acquired	—			325			1,133			1,458			—			325			2,049			2,374
Service contracts amortization	(11,783		)	(970		)	(1,378		)	(14,131		)	(23,551		)	(1,940		)	(2,759		)	(28,250		)
Foreign currency translation	1,030			25			—			1,055			1,185			29			—			1,214
Balance as of August 31, 2019	$	434,263		$	22,760		$	25,954		$	482,977
Balance as of November 30, 2019													$	422,650		$	21,794		$	25,489		$	469,933



	As of May 31, 2019
(In thousands)	Carrying Amount		Accumulated Amortization		Net

Service contracts	$	928,635	$	434,040	$	494,595

Capitalized contract costs ⁽²⁾	$	277,016	$	71,062	$	205,954
Noncompete and consulting agreements	42,308		40,524		1,784
Other	50,306		17,729		32,577
Total other assets	$	369,630	$	129,315	$	240,315


(In thousands)	Interest Rate			Fiscal Year Issued	Fiscal Year Maturity	August 31, 2019			May 31, 2019			Interest Rate			Fiscal Year Issued	Fiscal Year Maturity	November 30, 2019			May 31, 2019

Debt due within one year
Commercial paper	2.36	%	⁽¹⁾	2020	2020	$	139,000		$	112,500		2.68	%	⁽¹⁾	2019	2020	$	—		$	112,500
Term loan	2.88	%	⁽¹⁾	2019	2020	200,000			200,000			2.44	%	⁽²⁾	2019	2020	200,000			200,000
Debt issuance costs						(224		)	(236		)						(212		)	(236		)
Total debt due within one year						$	338,776		$	312,264							$	199,788		$	312,264

Debt due after one year
Senior notes	4.30	%		2012	2022	$	250,000		$	250,000		4.30	%		2012	2022	$	250,000		$	250,000
Senior notes	2.90	%		2017	2022	650,000			650,000			2.90	%		2017	2022	650,000			650,000
Senior notes	3.25	%		2013	2023	300,000			300,000			3.25	%		2013	2023	300,000			300,000
Senior notes ⁽²⁾⁽³⁾	2.78	%		2013	2023	51,576			51,684			2.78	%		2013	2023	51,467			51,684
Senior notes ⁽³⁾⁽⁴⁾	3.11	%		2015	2025	51,889			51,973			3.11	%		2015	2025	51,805			51,973
Senior notes	3.70	%		2017	2027	1,000,000			1,000,000			3.70	%		2017	2027	1,000,000			1,000,000
Senior notes	6.15	%		2007	2037	250,000			250,000			6.15	%		2007	2037	250,000			250,000
Debt issuance costs						(15,408		)	(16,150		)						(14,666		)	(16,150		)
Total debt due after one year						$	2,538,057		$	2,537,507							$	2,538,606		$	2,537,507


⁽¹⁾	See new accounting pronouncements in Note 1 entitled Basis of Presentation for more information.


⁽¹⁾	The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheet as of ~~August 31,~~November 30, 2019, is ~~$71.3~~$74.9 million.


Fiscal Year (In thousands)

2020 (remaining nine months)	$	100,846
2020 (remaining six months)			$	68,366
2021	120,954		125,140
2022	109,078		113,263
2023	90,379		94,309
2024	79,144		82,990
Thereafter	274,800		284,200
Total future amortization expense	$	775,201	$	768,268


⁽²⁾⁽³⁾	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⁾⁽⁴⁾	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%.


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

Balance at June 1, 2019	$	(15,022	)	$	(18,389	)	$	(5,741	)	$	(39,152	)	$	(15,022	)	$	(18,389	)	$	(5,741	)	$	(39,152	)
Other comprehensive income (loss) before reclassifications	6,724			(29,903		)	—			(23,179		)	6,724			(29,903		)	—			(23,179		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(295		)	—			(295		)	—			(295		)	—			(295		)
Net current period other comprehensive income (loss)	6,724			(30,198		)	—			(23,474		)	6,724			(30,198		)	—			(23,474		)
Cumulative effect of change in accounting principle ⁽¹⁾	—			2,058			(83		)	1,975			—			2,058			(83		)	1,975
Balance at August 31, 2019	$	(8,298	)	$	(46,529	)	$	(5,824	)	$	(60,651	)	(8,298		)	(46,529		)	(5,824		)	(60,651		)
Other comprehensive income before reclassifications													1,413			22,761			—			24,174
Amounts reclassified from accumulated other comprehensive income (loss)													—			(358		)	—			(358		)
Net current period other comprehensive income													1,413			22,403			—			23,816
Balance at November 30, 2019													$	(6,885	)	$	(24,126	)	$	(5,824	)	$	(36,835	)


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

Balance at June 1, 2018	$	6,550		$	10,449		$	(656	)	$	16,343		$	6,550		$	10,449		$	(656	)	$	16,343
Other comprehensive loss before reclassifications	(3,019		)	(3,168		)	—			(6,187		)	(3,019		)	(3,168		)	—			(6,187		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			(295		)	—			(295		)	—			(295		)	—			(295		)
Net current period other comprehensive loss	(3,019		)	(3,463		)	—			(6,482		)	(3,019		)	(3,463		)	—			(6,482		)
Balance at August 31, 2018	$	3,531		$	6,986		$	(656	)	$	9,861		3,531			6,986			(656		)	9,861
Other comprehensive (loss) income before reclassifications													(10,623		)	4,921			—			(5,702		)
Amounts reclassified from accumulated other comprehensive income (loss)													—			(294		)	—			(294		)
Net current period other comprehensive (loss) income													(10,623		)	4,627			—			(5,996		)
Balance at November 30, 2018													$	(7,092	)	$	11,613		$	(656	)	$	3,865


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	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)												Affected Line in the Consolidated Condensed Statements of Income
	Three Months Ended							Three Months Ended						Six Months Ended
(In thousands)	August 31, 2019			August 31, 2018				November 30, 2019			November 30, 2018			November 30, 2019			November 30, 2018

Amortization of interest rate locks	$	474		$	474		Interest expense	$	474		$	474		$	948		$	948		Interest expense
Tax expense	(179		)	(179		)	Income taxes	(116		)	(180		)	(295		)	(359		)	Income taxes
Amortization of interest rate locks, net of tax	$	295		$	295		Net income	$	358		$	294		$	653		$	589		Net income


⁽¹⁾	Investments include inter-company investment activity. Corp 2 and Subsidiary Guarantors hold ~~$19.6~~$20.3 million and ~~$189.4~~$198.6 million, respectively, of the ~~$209.0~~$218.9 million consolidated net investments.


(In thousands)	2019			2018			2019			2018

Net cash provided by operating activities	$	276,901		$	162,985		$	571,351		$	344,567
Net cash used in investing activities	$	(78,139	)	$	(70,785	)	$	(131,673	)	$	(86,640	)
Net cash used in financing activities	$	(193,607	)	$	(112,508	)	$	(309,992	)	$	(307,379	)

Cash and cash equivalents at the end of the period	$	102,131		$	118,356		$	226,535		$	88,479

Rating Agency

Commercial Paper

Long-term Debt

Standard & Poor’s

Moody’s Investors Service