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 August 31, 1996
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 September 30, 1996
Common Stock, no par value 47,393,516
<PAGE>
CINTAS CORPORATION
INDEX
Page No.
Part I. Financial Information:
Consolidated Condensed Balance Sheets -
August 31, 1996 and May 31, 1996 3
Consolidated Condensed Statements of Income -
Three Months Ended August 31, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended August 31, 1996 and 1995 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information 8
Signatures 8
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<PAGE>
CINTAS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands except share data)
<TABLE>
<CAPTION>
August 31, May 31,
1996 1996
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,576 $ 9,066
Marketable securities 81,797 73,477
Accounts receivable (net) 79,615 78,244
Inventories 37,501 34,678
Uniforms and other rental items in service 102,075 100,307
Prepaid expenses 1,510 1,730
Total current assets 314,074 297,502
Property, plant and equipment, at cost, net 259,038 252,597
Other assets 117,157 118,663
$ 690,269 $ 668,762
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 22,021 $ 19,363
Accrued liabilities 36,484 49,168
Income taxes -
Current 6,490 ----
Deferred 30,813 27,471
Long-term debt due within one year 6,498 6,592
Total current liabilities 102,306 102,594
Long-term debt due after one year 117,568 117,924
Deferred income taxes 19,736 18,747
Shareholders' equity:
Preferred stock, no par value,
100,000 shares authorized, none
outstanding ----- -----
Common stock, no par value,
120,000,000 shares authorized,
47,376,572 shares issued and
outstanding
(47,199,299 at May 31, 1996) 43,927 43,657
Retained earnings 407,552 386,673
Foreign currency translation adjustment (820) (833)
Total shareholders' equity 450,659 429,497
$690,269 $668,762
</TABLE>
See accompanying notes.
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<PAGE>
CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended
August 31,
1996 1995
<S> <C> <C>
Revenues:
Net rentals $ 174,499 $ 154,268
Net sales 18,287 16,075
192,786 170,343
Costs and expenses (income):
Cost of rentals 98,464 87,276
Cost of sales 16,083 13,811
Selling and administrative expenses 45,221 40,718
Interest income (854) (421)
Interest expense 1,989 2,510
160,903 143,894
Income before income taxes 31,883 26,449
Income taxes 12,186 10,161
Net income $ 19,697 $ 16,288
Earnings per share $ .42 $ .35
Weighted average number of shares outstanding 47,266 47,033
</TABLE>
See accompanying notes.
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<PAGE>
CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
August 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $19,697 $16,288
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 8,258 6,968
Amortization of deferred charges 2,993 3,163
Deferred income taxes 4,331 4,598
Change in current assets and liabilities,
net of acquisitions of businesses:
Accounts receivable (1,134) (993)
Inventories (4,524) (1,563)
Prepaid expenses 231 (787)
Accounts payable 2,492 1,041
Accrued liabilities (12,900) (3,482)
Income taxes payable 6,490 5,549
Net cash provided by operating
activities 25,934 30,782
Cash flows from investing activities:
Proceeds from sale of property, plant and
equipment 120 ----
Capital expenditures (14,367) (13,541)
Proceeds from sale or redemption of
marketable securities 6,182 8,066
Purchase of marketable securities (14,501) (22,939)
Acquisitions of businesses, net of
cash acquired (360) (496)
Other (277) (1,082)
Net cash used by investing activities (23,203) (29,992)
Cash flows from financing activities:
Proceeds from issuance of long-term debt ---- 407
Repayment of long-term debt (450) (570)
Issuance of common stock 247 214
Other (18) ----
Net cash provided by (used in)
financing activities (221) 51
Net increase in cash and cash equivalents 2,510 841
Cash and cash equivalents at beginning of
period 9,066 6,685
Cash and cash equivalents at end of period $11,576 $ 7,526
</TABLE>
See accompanying notes.
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<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 consolidated condensed financial
statements be read in conjunction with the financial statements and notes
included in the Company's most recent annual report for the fiscal year
ended May 31, 1996.
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, 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 adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", in the
first quarter of fiscal 1996. The adoption of this statement did not
have a material financial impact on the Company.
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<PAGE>
CINTAS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Total revenues increased 13% in the first quarter of fiscal 1997 over the same
period in fiscal 1996. Net rental revenue also increased 13% for the three
months ended August 31, 1996, over the same period in the prior fiscal year.
The first quarter of fiscal 1997 had one less workday than the first quarter
of fiscal 1996. First quarter revenues from the sale of uniforms and other
direct sale items increased 14% over the prior year's first quarter,
principally as a result of an increase in unit sales and other direct sale
items.
Net income and earnings per share increased 21% and 20%, respectively, for the
three months ended August 31, 1996, over the same period in fiscal 1996.
Net interest expense (interest expense less interest income) was $1,135,000
for the first quarter of fiscal 1997 compared to $2,089,000 in the first
quarter of fiscal 1996. Net interest expense has decreased primarily due to
an increase in interest income (related to a higher level of cash and
marketable securities on hand) combined with a decrease in interest
expense (related to a lower amount of long-term debt and improved interest
rates). The Company's effective tax rate was 38% in both periods.
Cash, cash equivalents and marketable securities increased by $11 million at
August 31, 1996 from May 31, 1996, primarily due to strong cash flow from
operations. The cash, cash equivalents and marketable securities will be used
to finance future acquisitions and capital expenditures.
Net property, plant and equipment increased by $6 million from May 31, 1996 to
August 31, 1996. At the end of the first quarter of fiscal 1997, the Company
had six uniform rental facilities in various stages of construction.
During the first quarter of fiscal 1997, the Company's new distribution
center in Montgomery, Alabama began operations. The new distribution center
will service the Company's operations in the South, Southeast and Southwest
regions of the United States. The expansion into Montgomery, as well as the
expansion of the Cincinnati distribution center completed in fiscal 1996, will
free up capacity in Cincinnati in order to more effectively service growth in
the Midwest, on the East Coast and Canada.
Financial Condition
At August 31, 1996, the Company had $93 million in cash, cash equivalents and
marketable securities. The Company believes that its current cash position,
funds anticipated to be generated from operations and the strength of its
banking relationships are sufficient to meet its anticipated operational and
capital needs requirements.
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<PAGE>
CINTAS CORPORATION
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibit Index
Exhibit Number Description of Exhibit
27 Financial Data Schedule
(b.) No reports were filed on Form 8-K during the quarter.
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 11, 1996 /s/ William C. Gale
William C. Gale
Vice President - Finance
(Chief Accounting Officer)
-8-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> AUG-31-1996
<CASH> 11,576,000
<SECURITIES> 81,797,000
<RECEIVABLES> 81,960,000
<ALLOWANCES> 2,345,000
<INVENTORY> 139,576,000
<CURRENT-ASSETS> 314,074,000
<PP&E> 379,582,000
<DEPRECIATION> 120,544,000
<TOTAL-ASSETS> 690,269,000
<CURRENT-LIABILITIES> 102,306,000
<BONDS> 0
0
0
<COMMON> 43,927,000
<OTHER-SE> 406,732,000
<TOTAL-LIABILITY-AND-EQUITY> 690,269,000
<SALES> 18,287,000
<TOTAL-REVENUES> 192,786,000
<CGS> 16,083,000
<TOTAL-COSTS> 114,547,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,989,000
<INCOME-PRETAX> 31,883,000
<INCOME-TAX> 12,186,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,697,000
<EPS-PRIMARY> .42
<EPS-DILUTED> 0
</TABLE>
