For the quarterly period ended November 30, 2000
OR
For the transition period from _____________________ to ___________________
Commission file number 0-11399
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 issuers classes of common stock, as of the latest practicable date.
Class
Outstanding December 15, 2000
-------------------------------
-----------------------------------
Common Stock, no par value
168,756,504
CINTAS CORPORATION
INDEX
Page No. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets - November 30, 2000 and May 31, 2000 3 Consolidated Condensed Statements of Income - Three Months and Six Months Ended November 30, 2000 and 1999 4 Consolidated Condensed Statements of Cash Flows - Six Months Ended November 30, 2000 and 1999 5 Notes to Consolidated Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk 10 Part II. Other Information 11 Signatures 12
CINTAS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands except share data)
November 30, May 31, 2000 2000 ---------------------- ---------------------- (Unaudited) ASSETS ------ Current assets: Cash and cash equivalents $ 34,176 $ 52,182 Marketable securities 37,311 57,640 Accounts receivable, net 252,537 225,735 Inventories 200,449 164,906 Uniforms and other rental items in service 230,119 213,770 Prepaid expenses 8,530 7,237 ---------------------- ---------------------- Total current assets 763,122 721,470 Property and equipment, at cost, net 678,065 642,507 Other assets 229,586 217,365 ---------------------- ---------------------- $ 1,670,773 $ 1,581,342 ====================== ====================== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 55,362 $ 50,976 Accrued compensation and related liabilities 29,233 28,140 Accrued liabilities 67,555 90,058 Deferred income taxes 60,138 49,614 Long-term debt due within one year 15,850 16,604 ---------------------- ---------------------- Total current liabilities 228,138 235,392 Long-term debt due after one year 238,939 254,378 Deferred income taxes 53,344 48,696 Shareholders' equity: Preferred stock, no par value, 100,000 shares authorized, none outstanding ---- ---- Common stock, no par value, 425,000,000 shares authorized, 168,735,788 shares issued and outstanding (168,281,506 at May 31, 2000) 58,938 54,738 Retained earnings 1,096,750 992,450 Accumulated other comprehensive income (loss) (5,336) (4,312) ---------------------- ---------------------- Total shareholders' equity 1,150,352 1,042,876 ---------------------- ---------------------- $ 1,670,773 $ 1,581,342 ====================== ======================
CINTAS CORPORATION
(Unaudited)
(Amounts in thousands except per share data)
Three Months Ended Six Months Ended November 30 November 30 2000 1999 2000 1999 ---- ---- ---- ---- Numerator: Net income $56,533 $48,335 $107,382 $91,500 =========== =========== ============= ============= Denominator: Denominator for basic earnings per share-weighted avg. shares 168,660 166,898 168,513 166,698 Effect of dilutive securities- employee stock options 3,178 2,934 2,932 3,078 ------------- ------------- --------------- --------------- Denominator for diluted earnings per share-adjusted weighted avg. shares and assumed conversions 171,838 169,832 171,445 169,776 ============= ============= =============== =============== CINTAS CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) (In thousands except per share data) Three Months Ended Six Months Ended November 30 November 30 2000 1999 2000 1999 ---- ---- ---- ---- Basic earnings per share $ .34 $ .29 $ .64 $ .55 ============ ========== =========== ============= Diluted earnings per share $ .33 $ .29 $ .63 $ .54 ============ ========== =========== =============
Three Months Ended Six Months Ended November 30 November 30 2000 1999 2000 1999 ---- ---- ---- ---- Net income $56,533 $48,335 $107,382 $91,500 Other comprehensive income: Foreign currency translation adjustment (1,669) 395 (1,024) 152 ---------------- -------------- -------------- -------------- Comprehensive income $54,864 $ 48,730 $106,35 $ 91,652 ================ ============== ============== ==============
CINTAS CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(In thousands except per share data)
Other services Rentals Corporate Total ------------------- --- ------------- --------------- -------------------- For the three months ended November 30, 2000 Revenue $ 398,929 $ 140,123 $ -- $ 539,052 =============== ============= =========== ================ Income before income taxes $ 77,087 $ 16,369 $ (2,756) $ 90,700 =============== ============= =========== ================ For the three months ended November 30, 1999 Revenue $ 349,726 $ 116,123 $ -- $ 465,849 =============== ============= =========== ================ Income before income taxes $ 67,784 $ 13,048 $ (2,822) $ 78,010 =============== ============= =========== ================ As of and for the six months ended November 30, 2000 Revenue $ 788,556 $ 272,455 $ -- $ 1,061,011 =============== ============= =========== ================ Income before income taxes $ 150,328 $ 27,457 $ (5,583) $ 172,202 =============== ============= =========== ================ Total assets $ 1,304,031 $ 295,255 $ 71,487 $ 1,670,773 =============== ============= =========== ================ As of and for the six months ended November 30, 1999 Revenue $ 694,243 $ 228,981 $ -- $ 923,224 =============== ============= =========== ================ Income before income taxes $ 129,828 $ 23,906 $ (5,801) $ 147,933 =============== ============= =========== ================ Total assets $ 1,150,455 $ 242,333 $ 93,777 $ 1,486,565 =============== ============= =========== ================
CINTAS CORPORATION
Total revenues increased 16% and 15%, respectively, for the three and six months ended November 30, over the same periods in fiscal 2000. Net rental revenue increased 14% for the three and six months ended November 30, over the same periods in the prior fiscal year primarily due to growth in the customer base. Revenue from the sale of uniforms and other direct sale items increased 21% and 19%, respectively, for the three and six months ended November 30, over the same periods in the prior year, as a result of the increased sales in our catalog business, as well as our First Aid and Safety, Cleanroom, National Account and Uniforms To You divisions.
Net income increased 17% for the three and six months ended November 30, over the same periods in fiscal 2000. Diluted earnings per share increased 14% and 17%, respectively, for the three and six months ended November 30, over the same periods in the prior fiscal year.
Net interest expense (interest expense less interest income) was $2,756,000 and $5,583,000 for the three and six months ended November 30, 2000 compared to $2,822,000 and $5,801,000, respectively, for the same periods in the prior fiscal year. Net interest expense has decreased primarily due to the repayment of long-term debt. Also, in February 2000, we refinanced our variable rate bank debt and replaced it with our own commercial paper program. Cintas received an A1/P1 rating from Standard & Poors and Moodys. Cintas effective tax rate was 37.7% and 37.6% for the three and six months ended November 30, compared to 38.0% and 38.1%, respectively, for the same periods in fiscal 2000. The decrease was primarily the result of a decrease in state and local income taxes attributable to state tax planning programs.
Cash, cash equivalents and marketable securities decreased by $38 million at November 30, 2000 from May 31, 2000 due to capital expenditures for new uniform facilities and an acceleration in sales growth causing our working capital assets, primarily accounts receivable and inventories, to increase. In addition, we prefunded the majority of our medical costs into a VEBA Trust, thereby generating a favorable tax impact. The cash, cash equivalents and marketable securities will be used to finance future acquisitions and capital expenditures.
Net property and equipment increased by $36 million from May 31, 2000 to November 30, 2000. At the end of the second quarter of fiscal 2001, we had nine uniform rental facilities in various stages of construction.
Financial ConditionAt November 30, 2000, we had $71 million in cash, cash equivalents and marketable securities. We believe that our current cash position, funds generated from operations and the strength of our banking relationships are sufficient to meet our anticipated operational and capital requirements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In our normal operations, Cintas has market risk exposure to interest rates. There has been no significant change in our exposure to these risks, which has been previously disclosed.
Forward-Looking StatementsThe Private Securities Litigation Reform Act of 1995 provides safe harbor from civil litigation for forward-looking statements. This report contains forward-looking statements that reflect our current views as to future events and financial performance with respect to our operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in this report. Factors that might cause such a difference include the possibility of greater than anticipated operating costs, lower sales volumes, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor, the outcome of pending environmental matters and the reactions of competitors in terms of price and service. Forward-looking statements speak only as of the date made. Cintas undertakes no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date of which they are made.
CINTAS CORPORATION
Part II. Other Information
Item 4. Submission of matters to a vote of security holders
Cintas Annual Shareholders meeting was held on October 25, 2000, at which the following issues were voted upon by shareholders:
Issue No. 1
-----------------
Authority to establish the number of Directors to be elected at the Meeting at seven.
FOR 154,170,157 AGAINST 1,041,060 ABSTAIN 131,562 BROKER NON-VOTES 0
Issue No. 2
-----------------
Shares - Name Shares For Withheld Authority ------------------------------- ----------------------------- ----------------------------- Richard T. Farmer 150,325,280 5,017,499 Scott D. Farmer 150,340,327 5,002,452 Gerald V. Dirvin 150,543,170 4,799,609 James J. Gardner 150,316,165 5,026,614 Roger L. Howe 150,558,957 4,783,822 Donald P. Klekamp 150,304,247 5,038,532 Robert J. Kohlhepp 150,341,343 5,001,436
CINTAS CORPORATION
Issue No. 3
----------------
Proposal to increase shares of Common Stock.
FOR 153,920,786 AGAINST 1,226,506 ABSTAIN 195,487 BROKER NON-VOTES 0
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibit Index
Exhibit Number
Description of Exhibit
10.12
Directors' Deferred Compensation Plan
27
Financial Data Schedule
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CINTAS CORPORATION (Registrant) Date: January 3, 2001 /s/William C. Gale ----------------------- --------------------------------------- William C. Gale Vice President and Chief Financial Officer
CINTAS CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
This Directors Deferred Compensation Plan has been adopted by the Board of Directors of Cintas Corporation to allow non-employee directors to defer receipt of compensation and to elect to receive deferred compensation in the form of cash or Common Stock equivalents of Cintas Corporation.
1. Directors Compensation . For purposes of this Plan, Compensation means all cash amounts payable to a Director for services as a Director and as a member of a committee of the Board of Directors of Cintas. Until changed by the Board of Directors, the cash amounts payable to non-employee Directors is $12,000 per year as an annual retainer, plus $2,250 for each meeting of the Board of Directors attended, plus $1,200 for each meeting of a committee of the Board of Directors attended. Committee Chairmen receive an additional $2,500 per year.
2. Deferral of Directors Compensation . Each non-employee Director may, by delivering a written election to the Secretary of Cintas on or before January 1 of any year, elect to defer receipt of from 50% to 100% of the Directors Compensation during the balance of such year. Cintas will present each Director with a form of election by December 1 of each year.
Each election shall be irrevocable for the year for which it is given. The election will expire at the end of such year.
3. Election to Receive Stock Equivalents . Each non-employee director entitled to cash Compensation who has elected to defer receipt of all or part of that Compensation may elect to have such deferred cash Compensation, in increments of 10%, credited to a stock equivalent account in accordance with Section 4. Election shall be made by notice to the secretary of Cintas on or before January 1 of any year. Each election shall be irrevocable for the year for which it is given. The election will expire at the end of such year.
4. Accounts .
4.1 All cash Compensation deferred shall be maintained by Cintas in an account which will be credited with interest at a rate equal to the rate on one-year United States Treasury Bills, determined as of the preceding December 31, increased by 100 basis points. Such interest shall be credited to accounts as of the end of each calendar quarter. |
4.2 The deferred Compensation account for directors who make a stock equivalent election shall be credited with earnings or losses, including, without limitation, unrealized gains or losses, dividends, stock dividends and stock splits, determined as if such deferred Compensation were invested in Common Stock of Cintas. The number of shares deemed invested shall be determined by dividing the dollar amount of each deferral of Compensation into such account by the closing price for Cintass Common Stock on the Nasdaq National Market on the date paid. |
4.3 In January of each year Cintas will present each non-employee Director with a statement of accounts applicable to such Director as of the preceding December 31. The statement will also contain a confirmation of the elections made by the Director pursuant to Sections 2 and 3. |
5.1 As a lump sum including earnings determined under Section 4 accrued as of the day preceding payment, payable on the first day of the month selected by the Director, but in no event later than the first day of the month after the time that the Director ceases to be a Director; or |
5.2 In a designated number of monthly installments, not less than 12 nor more than 120, commencing on the first day of the month selected by the Director, but in no event later than the first day of the month after the Director ceases to be a Director. The initial installment as calculated herein shall remain in effect until the end of the first calendar year in which said installments commenced. Beginning with the first monthly installment in the second calendar year, the monthly installment payable for each calendar year, shall be computed as of the beginning of said calendar year based on the previous calendar year ending balance divided by the number of remaining installment payments. Earnings determined under Section 4 shall accrue and be credited to the Directors Deferred Compensation Account as described in Section 4. Any residual amounts determined after calculation of the final years installment payments shall be paid with the last scheduled installment payment. |
Upon application by a retiring or retired Director, the Board of Directors may, notwithstanding previously filed election forms, determine in a particular case that an alternative method of payment should be used. |
6. Payment in Event of Death . When a non-employee Director dies, before or after the time the director ceases to be a director, any portion of the Compensation pursuant to this Plan then unpaid shall be paid to the beneficiaries named in the most recent beneficiary designation filed with the Secretary of Cintas. In the absence of such a designation, such Compensation shall be paid to, or as directed by, the decedents personal representative. The form of payment shall be as elected by the Director pursuant to Section 5.
7. Miscellaneous . All amounts credited to the accounts established by Section 4 shall be fully vested when credited. No funding shall be established for this Plan and participants will stand as unsecured general creditors of Cintas with respect to the amounts deferred and set forth in the accounts established by Section 4. No Director or beneficiary shall encumber or dispose of any right to receive any payments hereunder. This Agreement shall be governed by the laws of Ohio.
8. Amendment and Termination of Plan . The Board of Directors may suspend, amend or terminate this Plan at any time.ARTICLE 5 |
PERIOD TYPE | 3 mos |
FISCAL YEAR END | MAY 31 2001 |
PERIOD END | NOV 30 2000 |
CASH | 34,176,000 |
SECURITIES | 37,311,000 |
RECEIVABLES | 260,675,000 |
ALLOWANCES | 8,138,000 |
INVENTORY | 430,568,000 |
CURRENT ASSETS | 763,123,000 |
PP&E | 1,010,505,000 |
DEPRECIATION | 332,440,000 |
TOTAL ASSETS | 1,670,773,000 |
CURRENT LIABILITIES | 228,138,000 |
BONDS | 0 |
PREFERRED MANDATORY | 0 |
PREFERRED | 0 |
COMMON | 58,938,000 |
OTHER SE | 1,091,414,000 |
TOTAL LIABILITY AND EQUITY | 1,670,773,000 |
SALES | 140,123,000 |
TOTAL REVENUES | 539,052,000 |
CGS | 91,678,000 |
TOTAL COSTS | 315,675,000 |
OTHER EXPENSES | 129,921,000 |
LOSS PROVISION | 0 |
INTEREST EXPENSE | 3,883,000 |
INCOME PRETAX | 90,700,000 |
INCOME TAX | 34,167,000 |
INCOME CONTINUING | 0 |
DISCONTINUED | 0 |
EXTRAORDINARY | 0 |
CHANGES | 0 |
NET INCOME | 56,533,000 |
EPS BASIC | 0.34 |
EPS DILUTED | 0.33 |