8-K
CINTAS CORP (CTAS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 19, 2020
Cintas Corporation
(Exact name of registrant as specified in its charter)
| Washington | 0-11399 | 31-1188630 | |
|---|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>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
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of<br>each class | Trading<br>symbol(s) | Name of each exchange<br>on which registered | |
|---|---|---|---|
| Common stock, no par value | CTAS | The NASDAQ Stock Market LLC | |
| (NASDAQ Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 193 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02. Results of Operations and Financial Condition.
On March 19, 2020, Cintas Corporation issued a press release announcing its financial results for the quarter ended February 29, 2020. A copy of the press release is furnished as Exhibit 99 to this report and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
| Exhibit<br>Number | Description |
|---|---|
| 99 | Press release dated March 19, 2020 |
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 hereunto duly authorized.
| CINTAS CORPORATION | |||
|---|---|---|---|
| Date: | March 19, 2020 | By: | /s/ J. Michael Hansen |
| J. Michael Hansen | |||
| Executive Vice President and Chief Financial Officer |
Document
Exhibit 99
FOR IMMEDIATE RELEASE
March 19, 2020
Cintas Corporation Announces
Fiscal 2020 Third Quarter Results
CINCINNATI, March 19, 2020 -- Cintas Corporation (Nasdaq: CTAS) today reported results for its fiscal 2020 third quarter ended February 29, 2020. Revenue for the third quarter of fiscal 2020 was $1.81 billion, an increase of 7.6% over last year’s third quarter. Earnings per diluted share (EPS) from continuing operations were $2.16 in the third quarter of fiscal 2020, an increase of 17.4% over last year's third quarter EPS, adjusted for G&K Services, Inc. (G&K) integration expenses. Free cash flow for the third quarter of fiscal 2020 was $300.0 million, an increase of 17.2% over last year's third quarter.
Scott D. Farmer, Cintas' Chairman and Chief Executive Officer, stated, "We are pleased with our third quarter and fiscal year-to-date performance which includes strong growth in revenue, EPS and cash flow generation. More importantly, though, our concerns have turned to the COVID-19 coronavirus and its effects on our customers, our employee-partners and our communities. The pandemic has created a very fluid environment in the markets in which we operate, and I can't thank our employee-partners enough for doing our part to keep our customers' places of work clean, safe and Ready for the Workday^TM^."
The organic revenue growth rate for the third quarter of fiscal 2020, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations, and differences in the number of workdays, was 5.7%. The organic revenue growth rate for the Uniform Rental and Facility Services operating segment was 4.8%, and the organic revenue growth rate for the First Aid and Safety Services operating segment was 12.5%.
Gross margin for the third quarter of fiscal 2020 of $824.4 million increased 9.2% from last year’s third quarter. Gross margin as a percentage of revenue increased 60 basis points to 45.5% for the third quarter of fiscal 2020 compared to 44.9% in the third quarter of fiscal 2019.
Operating income for the third quarter of fiscal 2020 of $314.7 million increased 13.1% from last year’s third quarter operating income of $278.3 million. Operating income as a percentage of revenue was 17.4% in the third quarter of fiscal 2020 compared to 16.5% in the third quarter of fiscal 2019. Operating income in the third quarter of fiscal 2019 was impacted by non-recurring integration expenses related to the G&K acquisition of $0.8 million.
Net income from continuing operations was $234.5 million for the third quarter of fiscal 2020, and EPS from continuing operations were $2.16. Net income from continuing operations was $200.9 million in the third quarter of fiscal 2019, and EPS from continuing operations were $1.83. Fiscal 2019 third quarter EPS from continuing operations included non-recurring G&K integration expenses of $0.01.
The following table provides a comparison of fiscal 2020 third quarter EPS to fiscal 2019 third quarter EPS:
| Three Months Ended | |||||
|---|---|---|---|---|---|
| February 29,<br>2020 | February 28,<br>2019 | Growth vs. <br>Fiscal 2019 | |||
| EPS - continuing operations | $ | 2.16 | $ | 1.83 | |
| G&K integration expenses | — | 0.01 | |||
| EPS excluding above items | $ | 2.16 | $ | 1.84 | 17.4% |
| Nine Months Ended | |||||
| February 29,<br>2020 | February 28,<br>2019 | Growth vs. <br>Fiscal 2019 | |||
| EPS - continuing operations | $ | 6.76 | $ | 5.91 | |
| G&K integration expenses | — | 0.09 | |||
| One-time gain on sale of investment | — | (0.47) | |||
| EPS excluding above items | $ | 6.76 | $ | 5.53 | 22.2% |
Net cash provided by operating activities for the third quarter of fiscal 2020 of $363.2 million increased 11.4% from last year's third quarter net cash provided by operating activities of $326.2 million. Third quarter free cash flow, which is defined as net cash provided by operating activities less capital expenditures, was $300.0 million, an increase of 17.2% compared to last year. For the nine months ended February 29, 2020, free cash flow was $745.2 million, an increase of 61.0% compared to the nine months ended February 28, 2019.
Mr. Farmer commented, “We continue to effectively deploy cash to increase shareholder value. In the third quarter of fiscal 2020, we paid an annual dividend of $2.55 per share, an increase of 24.4% over last year’s annual dividend. The amount paid to shareholders was $268.0 million. We have increased the annual dividend for 36 consecutive years. In addition to the annual dividend, we utilized cash to purchase $393.1 million of Cintas stock in fiscal 2020 to date, including $200.0 million in March 2020. The amount remaining under our share buyback authorization is $1.1 billion.”
Mr. Farmer concluded, “A week ago, we were expecting today to raise revenue and EPS guidance based upon our fourth quarter outlook. However, much has changed in the past week as our country and others continue to respond to the COVID-19 coronavirus pandemic. Due to the uncertainty, including the severity and duration of the pandemic, we are not providing guidance for the fourth quarter of fiscal 2020 at this time and withdrawing our full fiscal year guidance. Although our visibility to near-term financial results is currently diminished, we remain focused on the safety and well-being of our employee-partners and the care of our customers.”
About Cintas
Cintas Corporation helps more than one million businesses of all types and sizes 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™. Headquartered in Cincinnati, Cintas is a publicly held Fortune 500 company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of both the Standard & Poor’s 500 Index and the Nasdaq-100 Index.
CAUTION CONCERNING 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 Press Release. 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 time frame 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 including viral pandemics such as the COVID-19 coronavirus; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 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.
For additional information, contact:
J. Michael Hansen, Executive Vice President and Chief Financial Officer - 513-972-2079
Paul F. Adler, Vice President and Treasurer - 513-972-4195
Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
| Three Months Ended | |||||
|---|---|---|---|---|---|
| February 29,<br>2020 | February 28,<br>2019 | % <br>Change | |||
| Revenue: | |||||
| Uniform rental and facility services | $ | 1,448,021 | $ | 1,358,322 | 6.6% |
| Other | 362,627 | 324,008 | 11.9% | ||
| Total revenue | 1,810,648 | 1,682,330 | 7.6% | ||
| Costs and expenses: | |||||
| Cost of uniform rental and facility services | 784,930 | 748,971 | 4.8% | ||
| Cost of other | 201,323 | 178,206 | 13.0% | ||
| Selling and administrative expenses | 509,743 | 476,099 | 7.1% | ||
| G&K Services, Inc. integration expenses | — | 799 | (100.0)% | ||
| Operating income | 314,652 | 278,255 | 13.1% | ||
| Interest income | (347) | (70) | 395.7% | ||
| Interest expense | 25,943 | 26,770 | (3.1)% | ||
| Income before income taxes | 289,056 | 251,555 | 14.9% | ||
| Income taxes | 54,536 | 50,632 | 7.7% | ||
| Income from continuing operations | 234,520 | 200,923 | 16.7% | ||
| Income from discontinued operations, net of tax | — | 2,411 | (100.0)% | ||
| Net income | $ | 234,520 | $ | 203,334 | 15.3% |
| Basic earnings per share: | |||||
| Continuing operations | $ | 2.23 | $ | 1.89 | 18.0% |
| Discontinued operations | 0.00 | 0.02 | (100.0)% | ||
| Basic earnings per share | $ | 2.23 | $ | 1.91 | 16.8% |
| Diluted earnings per share: | |||||
| Continuing operations | $ | 2.16 | $ | 1.83 | 18.0% |
| Discontinued operations | 0.00 | 0.02 | (100.0)% | ||
| Diluted earnings per share | $ | 2.16 | $ | 1.85 | 16.8% |
| Weighted average number of shares outstanding | 104,245 | 105,080 | |||
| Diluted average number of shares outstanding | 107,588 | 108,162 |
Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
| Nine Months Ended | |||||
|---|---|---|---|---|---|
| February 29,<br>2020 | February 28,<br>2019 | % <br>Change | |||
| Revenue: | |||||
| Uniform rental and facility services | $ | 4,372,524 | $ | 4,124,038 | 6.0% |
| Other | 1,093,012 | 974,535 | 12.2% | ||
| Total revenue | 5,465,536 | 5,098,573 | 7.2% | ||
| Costs and expenses: | |||||
| Cost of uniform rental and facility services | 2,338,543 | 2,256,543 | 3.6% | ||
| Cost of other | 601,065 | 537,007 | 11.9% | ||
| Selling and administrative expenses | 1,570,666 | 1,472,404 | 6.7% | ||
| G&K Services, Inc. integration expenses | — | 13,496 | (100.0)% | ||
| Operating income | 955,262 | 819,123 | 16.6% | ||
| Gain on sale of a cost method investment | — | 69,373 | (100.0)% | ||
| Interest income | (792) | (957) | (17.2)% | ||
| Interest expense | 79,441 | 75,954 | 4.6% | ||
| Income before income taxes | 876,613 | 813,499 | 7.8% | ||
| Income taxes | 144,838 | 157,035 | (7.8)% | ||
| Income from continuing operations | 731,775 | 656,464 | 11.5% | ||
| (Loss) income from discontinued operations, net of tax | (323) | 2,398 | (113.5)% | ||
| Net income | $ | 731,452 | $ | 658,862 | 11.0% |
| Basic earnings per share: | |||||
| Continuing operations | $ | 6.98 | $ | 6.10 | 14.4% |
| Discontinued operations | 0.00 | 0.02 | (100.0)% | ||
| Basic earnings per share | $ | 6.98 | $ | 6.12 | 14.1% |
| Diluted earnings per share: | |||||
| Continuing operations | $ | 6.76 | $ | 5.91 | 14.4% |
| Discontinued operations | 0.00 | 0.02 | (100.0)% | ||
| Diluted earnings per share | $ | 6.76 | $ | 5.93 | 14.0% |
| Weighted average number of shares outstanding | 103,840 | 106,147 | |||
| Diluted average number of shares outstanding | 107,280 | 109,583 |
CINTAS CORPORATION SUPPLEMENTAL DATA
Gross Margin and Net Income Margin Results
| Three Months Ended | ||
|---|---|---|
| February 29,<br>2020 | February 28,<br>2019 | |
| Uniform rental and facility services gross margin | 45.8% | 44.9% |
| Other gross margin | 44.5% | 45.0% |
| Total gross margin | 45.5% | 44.9% |
| Net income margin, continuing operations | 13.0% | 11.9% |
| Nine Months Ended | ||
| February 29,<br>2020 | February 28,<br>2019 | |
| Uniform rental and facility services gross margin | 46.5% | 45.3% |
| Other gross margin | 45.0% | 44.9% |
| Total gross margin | 46.2% | 45.2% |
| Net income margin, continuing operations | 13.4% | 12.9% |
Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure
The press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To supplement its consolidated condensed financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides the additional non-GAAP financial measures of earnings per diluted share, cash flow and workday adjusted revenue growth. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance. A reconciliation of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP are shown in the tables within the narrative of the press release or below.
Earnings Per Share Results
| Three Months Ended | |||||
|---|---|---|---|---|---|
| February 29,<br>2020 | February 28,<br>2019 | Growth vs.<br> Fiscal 2019 | |||
| EPS - continuing operations | $ | 2.16 | $ | 1.83 | |
| G&K Services, Inc. integration expenses | — | 0.01 | |||
| EPS excluding above items | $ | 2.16 | $ | 1.84 | 17.4% |
| Nine Months Ended | |||||
| February 29,<br>2020 | February 28,<br>2019 | Growth vs.<br> Fiscal 2019 | |||
| EPS - continuing operations | $ | 6.76 | $ | 5.91 | |
| G&K Services, Inc. integration expenses | — | 0.09 | |||
| One-time gain on sale of investment | — | (0.47) | |||
| EPS excluding above items | $ | 6.76 | $ | 5.53 | 22.2% |
Computation of Free Cash Flow
| Nine Months Ended | ||||
|---|---|---|---|---|
| February 29,<br>2020 | February 28,<br>2019 | |||
| Net cash provided by operations | $ | 934,549 | $ | 670,717 |
| Capital expenditures | (189,379) | (207,805) | ||
| Free cash flow | $ | 745,170 | $ | 462,912 |
Management uses free cash flow to assess the financial performance of the Company. Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.
Computation of Growth on a Constant Workday Basis
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| February 29,<br>2020 | February 28,<br>2019 | Growth % | February 29,<br>2020 | February 28,<br>2019 | Growth % | |||||
| A | B | G | I | J | O | |||||
| Revenue | $ | 1,810,648 | $ | 1,682,330 | 7.6% | $ | 5,465,536 | $ | 5,098,573 | 7.2% |
| G=(A-B)/B | O=(I-J)/J | |||||||||
| C | D | K | L | |||||||
| Workdays in the period | 65 | 64 | 195 | 195 | ||||||
| E | F | H | M | N | P | |||||
| Revenue adjusted for<br> workday difference | $ | 1,782,792 | $ | 1,682,330 | 6.0% | $ | 5,465,536 | $ | 5,098,573 | 7.2% |
| E=(A/C)*D | F=(B/D)*D | H=(E-F)/F | M=(I/K)*L | N=(J/L)*L | P=(M-N)/N |
Management believes that workday adjusted revenue growth is valuable to investors because it reflects the revenue performance compared to a prior period with the same number of revenue generating days.
SUPPLEMENTAL SEGMENT DATA
| Uniform Rental<br>and Facility Services | First Aid<br> and Safety Services | All<br>Other | Corporate | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended February 29, 2020 | ||||||||||
| Revenue | $ | 1,448,021 | $ | 170,541 | $ | 192,086 | $ | — | $ | 1,810,648 |
| Gross margin | $ | 663,091 | $ | 81,910 | $ | 79,394 | $ | — | $ | 824,395 |
| Selling and administrative expenses | $ | 391,462 | $ | 57,218 | $ | 61,063 | $ | — | $ | 509,743 |
| Interest income | $ | — | $ | — | $ | — | $ | (347) | $ | (347) |
| Interest expense | $ | — | $ | — | $ | — | $ | 25,943 | $ | 25,943 |
| Income (loss) before income taxes | $ | 271,629 | $ | 24,692 | $ | 18,331 | $ | (25,596) | $ | 289,056 |
| For the three months ended February 28, 2019 | ||||||||||
| Revenue | $ | 1,358,322 | $ | 149,170 | $ | 174,838 | $ | — | $ | 1,682,330 |
| Gross margin | $ | 609,351 | $ | 71,890 | $ | 73,912 | $ | — | $ | 755,153 |
| Selling and administrative expenses | $ | 369,414 | $ | 50,268 | $ | 56,417 | $ | — | $ | 476,099 |
| G&K Services, Inc. integration<br> expenses | $ | 799 | $ | — | $ | — | $ | — | $ | 799 |
| Interest income | $ | — | $ | — | $ | — | $ | (70) | $ | (70) |
| Interest expense | $ | — | $ | — | $ | — | $ | 26,770 | $ | 26,770 |
| Income (loss) before income taxes | $ | 239,138 | $ | 21,622 | $ | 17,495 | $ | (26,700) | $ | 251,555 |
| For the nine months ended February 29, 2020 | ||||||||||
| Revenue | $ | 4,372,524 | $ | 512,299 | $ | 580,713 | $ | — | $ | 5,465,536 |
| Gross margin | $ | 2,033,981 | $ | 248,272 | $ | 243,675 | $ | — | $ | 2,525,928 |
| Selling and administrative expenses | $ | 1,206,982 | $ | 174,170 | $ | 189,514 | $ | — | $ | 1,570,666 |
| Interest income | $ | — | $ | — | $ | — | $ | (792) | $ | (792) |
| Interest expense | $ | — | $ | — | $ | — | $ | 79,441 | $ | 79,441 |
| Income (loss) before income taxes | $ | 826,999 | $ | 74,102 | $ | 54,161 | $ | (78,649) | $ | 876,613 |
| For the nine months ended February 28, 2019 | ||||||||||
| Revenue | $ | 4,124,038 | $ | 455,935 | $ | 518,600 | $ | — | $ | 5,098,573 |
| Gross margin | $ | 1,867,495 | $ | 219,045 | $ | 218,483 | $ | — | $ | 2,305,023 |
| Selling and administrative expenses | $ | 1,140,436 | $ | 154,112 | $ | 177,856 | $ | — | $ | 1,472,404 |
| G&K Services, Inc. integration<br> expenses | $ | 13,496 | $ | — | $ | — | $ | — | $ | 13,496 |
| Gain on sale of a cost method<br> investment | $ | — | $ | — | $ | — | $ | 69,373 | $ | 69,373 |
| Interest income | $ | — | $ | — | $ | — | $ | (957) | $ | (957) |
| Interest expense | $ | — | $ | — | $ | — | $ | 75,954 | $ | 75,954 |
| Income (loss) before income taxes | $ | 713,563 | $ | 64,933 | $ | 40,627 | $ | (5,624) | $ | 813,499 |
Cintas Corporation
Consolidated Condensed Balance Sheets
(In thousands except per share data)
| February 29,<br>2020 | May 31,<br>2019 | |||
|---|---|---|---|---|
| (Unaudited) | ||||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 234,441 | $ | 96,645 |
| Accounts receivable, net | 942,853 | 910,120 | ||
| Inventories, net | 352,924 | 334,589 | ||
| Uniforms and other rental items in service | 818,486 | 784,133 | ||
| Income taxes, current | 23,485 | 7,475 | ||
| Prepaid expenses and other current assets | 125,517 | 103,318 | ||
| Total current assets | 2,497,706 | 2,236,280 | ||
| Property and equipment, net | 1,434,866 | 1,430,685 | ||
| Investments | 212,798 | 192,346 | ||
| Goodwill | 2,873,996 | 2,842,441 | ||
| Service contracts, net | 464,852 | 494,595 | ||
| Operating lease right-of-use assets, net | 165,169 | — | ||
| Other assets, net | 252,593 | 240,315 | ||
| $ | 7,901,980 | $ | 7,436,662 | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 243,248 | $ | 226,020 |
| Accrued compensation and related liabilities | 148,912 | 155,509 | ||
| Accrued liabilities | 430,643 | 433,940 | ||
| Operating lease liabilities, current | 44,043 | — | ||
| Debt due within one year | 199,800 | 312,264 | ||
| Total current liabilities | 1,066,646 | 1,127,733 | ||
| Long-term liabilities: | ||||
| Debt due after one year | 2,539,156 | 2,537,507 | ||
| Deferred income taxes | 423,677 | 438,179 | ||
| Operating lease liabilities | 126,994 | — | ||
| Accrued liabilities | 421,198 | 330,522 | ||
| Total long-term liabilities | 3,511,025 | 3,306,208 | ||
| Shareholders’ equity: | ||||
| Preferred stock, no par value:<br><br>100,000 shares authorized, none outstanding | — | — | ||
| Common stock, no par value:<br>425,000,000 shares authorized<br>FY 2020: 186,631,553 issued and 104,026,576 outstanding<br>FY 2019: 184,790,626 issued and 103,284,401 outstanding | 1,092,074 | 840,328 | ||
| Paid-in capital | 154,157 | 227,928 | ||
| Retained earnings | 7,151,838 | 6,691,236 | ||
| Treasury stock:<br><br>FY 2020: 82,604,977 shares<br><br>FY 2019: 81,506,225 shares | (4,978,946) | (4,717,619) | ||
| Accumulated other comprehensive loss | (94,814) | (39,152) | ||
| Total shareholders’ equity | 3,324,309 | 3,002,721 | ||
| $ | 7,901,980 | $ | 7,436,662 |
Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
| Nine Months Ended | ||||
|---|---|---|---|---|
| February 29,<br>2020 | February 28,<br>2019 | |||
| Cash flows from operating activities: | ||||
| Net income | $ | 731,452 | $ | 658,862 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation | 175,261 | 164,380 | ||
| Amortization of intangible assets and capitalized contract costs | 107,232 | 101,949 | ||
| Stock-based compensation | 96,428 | 105,553 | ||
| Gain on sale of a cost method investment | — | (69,373) | ||
| Gain on sale of business | — | (2,419) | ||
| Deferred income taxes | 5,013 | 25,079 | ||
| Change in current assets and liabilities, net of acquisitions of businesses: | ||||
| Accounts receivable, net | (31,135) | (61,102) | ||
| Inventories, net | (17,780) | (70,716) | ||
| Uniforms and other rental items in service | (33,732) | (72,336) | ||
| Prepaid expenses and other current assets and capitalized contract costs | (95,169) | (85,123) | ||
| Accounts payable | 14,271 | 79 | ||
| Accrued compensation and related liabilities | (4,792) | (3,866) | ||
| Accrued liabilities and other | 3,426 | 3,614 | ||
| Income taxes, current | (15,926) | (23,864) | ||
| Net cash provided by operating activities | 934,549 | 670,717 | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (189,379) | (207,805) | ||
| Purchase of investments | (10,461) | (17,544) | ||
| Proceeds from sale of assets | 13,300 | — | ||
| Proceeds from sale of a cost method investment | — | 73,342 | ||
| Proceeds from sale of business | — | 3,200 | ||
| Acquisitions of businesses, net of cash acquired | (47,850) | (7,403) | ||
| Other, net | (2,090) | (6,804) | ||
| Net cash used in investing activities | (236,480) | (163,014) | ||
| Cash flows from financing activities: | ||||
| (Payments) issuance of commercial paper, net | (112,500) | 217,500 | ||
| Proceeds from exercise of stock-based compensation awards | 81,547 | 54,274 | ||
| Dividends paid | (268,042) | (220,760) | ||
| Repurchase of common stock | (261,327) | (608,224) | ||
| Other, net | 30 | (8,088) | ||
| Net cash used in financing activities | (560,292) | (565,298) | ||
| Effect of exchange rate changes on cash and cash equivalents | 19 | (270) | ||
| Net increase (decrease) in cash and cash equivalents | 137,796 | (57,865) | ||
| Cash and cash equivalents at beginning of period | 96,645 | 138,724 | ||
| Cash and cash equivalents at end of period | $ | 234,441 | $ | 80,859 |