FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to
___________________
Commission file number 0-11399
CINTAS CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 31-1188630
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6800 CINTAS BOULEVARD
P.O. BOX 625737
CINCINNATI, OHIO 45262-5737
(Address of principal executive offices)
(Zip Code)
(513) 459-1200
(Registrant's telephone number, including area code)
Indicate by check mark 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 X 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 April 8, 1994
Common Stock, no par value
46,787,434
(Page 1 of 11)
PAGE
<PAGE>
CINTAS CORPORATION
INDEX
Page No.
Part I. Financial Information:
Consolidated Condensed Balance Sheet -
February 28, 1994 and May 31, 1993 3
Consolidated Condensed Statement of Income -
Three Months and Nine Months Ended
February 28, 1994 and 1993 4
Consolidated Condensed Statement of Cash Flows -
Nine Months Ended February 28, 1994 and 1993 5
Notes to Consolidated Condensed Financial
Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information 9
Signatures 10
- 2 -
PAGE
<PAGE>
<TABLE>
<CAPTION>
CINTAS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in Thousands)
February 28, May 31,
1994 1993
(Unaudited) (Derived
from Audited
Financial
Statements)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,583 $ 14,192
Marketable securities, at cost,
which approximates market 57,259 40,777
Accounts receivable (net) 50,935 48,075
Inventories 27,740 21,452
Uniforms and other rental items
in service 68,349 61,001
Prepaid expenses 1,876 1,636
Total current assets 212,742 187,133
Property, plant and equipment:
Cost 283,879 263,053
Less accumulated depreciation (93,495) (82,206)
190,384 180,847
Investments and other assets 86,471 86,185
$ 489,597 $ 454,165
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,402 $ 20,637
Accrued liabilities 29,471 28,638
Income taxes -
Current 5,391 1,616
Deferred 19,701 9,823
Long-term debt due within one year 10,162 4,462
Total current liabilities 82,127 65,176
Long-term debt due after one year 90,186 103,611
Deferred income taxes 14,653 20,464
Shareholders' equity:
Preferred stock, no par value,
100,000 shares authorized,
none outstanding ------ -----
Common stock, no par value,
120,000,000 shares authorized,
46,757,451 shares issued and
outstanding(46,578,791 at
May 31, 1993) 40,763 39,869
Retained earnings 262,906 225,722
Cumulative translation adjustment (1,038) (677)
Total shareholders' equity 302,631 264,914
$ 489,59 $ 454,165
</TABLE>
See accompanying notes.
- 3 -
<PAGE><TABLE>
<CAPTION>
CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
(Amounts in Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended
February 28 February 28
1994 1993 1994 1993
<S> <C> <C>
<C> <C>
Revenues:
Net rentals $115,117 $101,687 $341,313 $294,522
Net sales 14,268 11,117 40,079 33,924
129,385 112,804 381,392 328,446
Costs and expenses (income):
Cost of rentals 66,208 57,922 192,813 165,315
Cost of sales 11,353 8,657 33,459 28,911
Selling and administrative
expenses 29,668 27,180 89,951 78,434
Interest income (493) (373) (1,246) (948)
Interest expense 1,570 1,881 5,137 5,035
108,306 95,267 320,114 276,747
Income before
income taxes 21,079 17,537 61,278 51,699
Income taxes 8,018 6,523 24,094 19,473
Net income $ 13,061 $ 11,014 $ 37,184 $ 32,226
Earnings per share $ .28 $ .24 $ .80 $ .70
Weighted average
number of shares
outstanding 46,717 46,409 46,677 46,356
</TABLE>
See accompanying notes.
- 4 -
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED FEBRUARY 28, 1994 and 1993
(Unaudited)
(Dollars in thousands)
Nine Months Ended
February 28
Cash flows from operating activities: 1994 1993
<S> <C> <C>
Net income $37,184 $32,226
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 18,034 15,990
Amortization of deferred charges 8,043 6,317
Provision for losses on accounts
receivable 989 1,324
Change in current assets and
liabilities:
Accounts receivable (3,214) (3,070)
Inventories (12,940) (1,622)
Prepaid expenses (240) (471)
Accounts payable (3,235) 132
Accrued liabilities 833 2,434
Income taxes payable 3,775 2,246
Deferred income taxes 4,067 3,209
Net cash provided by operating
activities 53,296 58,715
Cash flows from investing activities:
Capital expenditures (27,504) (19,353)
Additions to investments and
other assets (2,731) (3,237)
Proceeds from sale or redemption
of marketable securities 27,412 40,989
Purchase of marketable securities (43,894) (70,713)
Acquisition of businesses net of
cash acquired (7,357) (36,666)
Net cash used by investing activities(54,074) (88,980)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 263 35,665
Repayment of long-term debt (7,988) (6,690)
Increase in common stock 585 594
Tax benefit resulting from exercise
of employee stock options 309 721
Net cash (used) provided by
financing activities (6,831) 30,290
Net (decrease) increase in cash and
cash equivalents (7,609) 25
Cash and cash equivalents at
beginning of period 14,192 8,757
Cash and cash equivalents at end
of period $ 6,583 $ 8,782
</TABLE>
See accompanying notes.
- 5 -
PAGE
<PAGE>
CINTAS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated condensed financial statements of
Cintas Corporation (the "Company") included herein have been
prepared by the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations. While the Company believes that the
disclosures presented are adequate to make the information
not misleading, it is suggested that these consolidate
condensed financial statements be read in conjunction with
the financial statements and notes included in the Company's
most recent annual report.
2. 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, except as
discussed in Note 3., all adjustments (which include only
normal recurring adjustments) necessary for a fair statement
of the results of the interim periods shown have been made.
3. The Company's net income and earnings per share for the
nine months ended February 28, 1994, were adversely impacted
by one-time tax adjustments relating to the Omnibus Budget
Reconciliation Act of 1993, a new tax law enacted on August
10, 1993. The reported tax expense includes one-time
charges of approximately $274,000 to retroactively apply the
new tax rates to January 1, 1993. This one-time charge was
partially offset by jobs tax credits of $201,000, which the
new tax law extended retroactive to June 30, 1992. In
addition, during the first quarter of 1994, the Company
adopted SFAS No. 109, Accounting for Income Taxes, which
necessitated the reclassification of certain deferred tax
balances and resulted in a charge to earnings of
approximately $789,000. The effect of these one-time tax
adjustments reduced earnings per share by $.02 per share.
4. Stock Options:
In fiscal year 1993, the Company adopted a stock option
plan for officers and key employees which provides for the
issuance of 2,300,000 shares of common stock. This plan
replaced a similar plan adopted in 1983 which expired in
June, 1993. Options are generally granted at the fair
market value of the underlying Common Stock on the date of
the grant and generally become exercisable at the rate of
20% per year commencing five years after grant, so long as
the holder remains an employee of the Company.
At May 31, 1993, options as to 1,317,476 shares were
outstanding at prices ranging from $2.67 - $28.75 per share.
Of these options outstanding, 297,654 were exercisable at
May 31, 1993. On July 13, 1993, additional options as to
206,250 shares exercisable at $26.50 per share were granted
under the plan. During the first quarter of fiscal 1994,
options as to 101,681 shares were exercised ranging in price
from $2.67 to $11.00 per share. During the second quarter
of fiscal 1994, options as to 22,919 shares were exercised
ranging in price from $3.46 to $11.42. Options as to 71,022
shares were exercised in the third quarter ranging in price
from $3.46 to $11.00 per share.
5. Inventories:
Inventories are valued at the lower of cost (first-in,
first-out) or market. Substantially, all inventories
represent finished goods.
- 6 -
<PAGE>
6. Supplemental Cash Flow Disclosures:
Cash paid through the nine months ended February 28,
1994 and 1993:
1994 1993
Interest, net of amount
capitalized $4,837,000 $4,250,000
Income taxes $10,284,000 $13,956,000
- 7 -
PAGE
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Total revenues increased 15% and 16% for the three months
and nine months ended February 28, 1994, over the same
periods in the prior fiscal year. Net rental revenue
increased 13% and 16% for the three months and nine months
ended February 28, 1994, over the same periods in the prior
fiscal year. Growth in the customer base and price
increases in established operations for the nine months
ended February 28, 1994, accounted for a 9% increase in
rental revenues and the remaining 7% was due primarily to
acquisitions. Third quarter revenues from the sale
of uniforms and other direct sale items increased 28% over
the prior year's third quarter principally as a result of an
increase in unit sales and other direct sale items. In the
nine months ended February 28, 1994, sales increased 18%
over the same period in fiscal 1993. The increases in
revenues from the sale of uniforms and other direct sale
items were not significantly affected by acquisitions.
Pre-tax income increased 20% and 19% for the three months
and nine months ended February 28, 1994, respectively, over
the same periods in fiscal 1993. Net income and earnings
per share were adversely impacted by one-time tax
adjustments relating to the Omnibus Budget Reconciliation
Act of 1993, a new tax law enacted on August 10, 1993. The
reported tax expense for the nine months ended February 28,
1994, includes one-time charges of approximately $274,000 to
retroactively apply the new tax rates to January 1, 1993.
This one-time charge was partially offset jobs tax credits
of $201,000 which the new tax law extended retroactive to
June 30, 1992. In addition, during the first quarter of
1994, the Company adopted SFAS No. 109, Accounting for
Income Taxes, which necessitated the reclassification of
certain deferred tax balances and resulted in a charge to
earnings of approximately $789,000. The effect of these
one-time tax adjustments reduced earnings per share in
fiscal 1994 by $.02 per share.
Income from operations, which excludes interest income and
interest expense, as a percent of revenues was 17% for the
three months and nine months ended February 28, 1994 and
1993.
Net interest expense (interest expense less interest income)
was $1,077,000 and $3,891,000 for the third quarter and nine
months ended February 28, 1994 respectively, compared to
$1,508,000 and $4,087,000 respectively, for the same two
periods in the prior fiscal year. Net interest expense has
decreased primarily due to an increase in interest income.
- 8 -
<PAGE>
During the third quarter of fiscal 1994, the Company's
operations were impacted by the Midwestern and Northeastern
snowstorms and earthquake in Los Angeles. Although the
Company did not sustain any physical damage to its
facilities, these unusual events caused a temporary
interruption in business. As a result, the Company
sustained a one-time loss in both sales and net income of
$500,000. Earnings per share were adversely impacted by
$.01 per share. There is no ongoing negative impact to the
Company from these events.
Financial Condition
The Company believes that its capital requirements for
operations, capital improvements, repayment of long-term
debt and dividends can be made from funds on hand and funds
generated from operations.
- 9 -
<PAGE> <PAGE>
CINTAS CORPORATION
Part II. Other Information
Item 5. Other Information
On February 17, 1994, the Registrant declared an annual
cash dividend of $.17 per share on outstanding Common
Stock, a 21% increase over the dividend paid in the
prior year. The dividend was payable on April 5, 1994,
to shareholders of record as of March 11, 1994.
Item 6. No reports were filed on Form 8-K during
the quarter.
- 10 -
PAGE
<PAGE>
CINTAS CORPORATION
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: April 8, 1994 David T. Jeanmougin
David T. Jeanmougin
Senior Vice President - Finance
(Chief Financial Officer)
- 11 -
<PAGE>
