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, ~~2020~~2021


☐			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)~~Incorporation or Organization)						(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

(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, ~~2020~~2021
Common Stock, no par value						~~104,625,384~~103,407,624

CINTAS CORPORATION

TABLE OF CONTENTS

Page

Part I. Financial Information

Item 1.

Financial Statements

Consolidated Condensed Statements of Income –

Three Months Ended August 31, ~~2020~~2021 and ~~2019~~2020

Consolidated Condensed Statements of Comprehensive Income –

Three Months Ended August 31, ~~2020~~2021 and ~~2019~~2020

Consolidated Condensed Balance Sheets –

August 31, ~~2020~~2021 and May 31, ~~2020~~2021

Consolidated Condensed Statements of Shareholders' Equity -

Three Months ~~ended~~ Ended August 31,, 2021 and 2020 ~~and~~ ~~2019~~

Consolidated Condensed Statements of Cash Flows –

Three Months Ended August 31, ~~2020~~2021 and ~~2019~~2020

Notes to Consolidated Condensed Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and

Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

2728

Item 4.

Controls and Procedures

2728

Part II. Other Information

Item 1.

Legal Proceedings

2829

~~Item 1A.~~

~~Risk Factors~~

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

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
		August 31, 2020		August 31, 2019			August 31, 2021		August 31, 2020
Revenue:	Revenue:					Revenue:
Uniform rental and facility services	Uniform rental and facility services	$	1,394,411	$	1,454,527	Uniform rental and facility services	$	1,508,176	$	1,394,411
Other	Other	352,164		356,612		Other	388,774		352,164
Total revenue	Total revenue	1,746,575		1,811,139		Total revenue	1,896,950		1,746,575

Costs and expenses:	Costs and expenses:					Costs and expenses:
Cost of uniform rental and facility services	Cost of uniform rental and facility services	715,412		768,676		Cost of uniform rental and facility services	779,301		715,412
Cost of other	Cost of other	204,962		193,321		Cost of other	214,893		204,962
Selling and administrative expenses	Selling and administrative expenses	476,495		542,996		Selling and administrative expenses	508,655		476,495

Operating income	Operating income	349,706		306,146		Operating income	394,101		349,706

Interest income	Interest income	(64)		(162)		Interest income	(56)		(64)
Interest expense	Interest expense	24,550		27,321		Interest expense	21,854		24,550

Income before income taxes	Income before income taxes	325,220		278,987		Income before income taxes	372,303		325,220
Income taxes	Income taxes	25,215		28,175		Income taxes	41,124		25,215

Net income	Net income	$	300,005	$	250,812	Net income	$	331,179	$	300,005

Basic earnings per share	Basic earnings per share	$	2.86	$	2.40	Basic earnings per share	$	3.19	$	2.86

Diluted earnings per share	Diluted earnings per share	$	2.78	$	2.32	Diluted earnings per share	$	3.11	$	2.78

Dividends declared per share						Dividends declared per share	$	0.95	$	—

See accompanying notes.

Table of Contents

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

Three Months Ended
August 31,
2020 August 31,
2019
Net income $ 300,005 $ 250,812
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments 26,946 6,724
Change in fair value of interest rate lock agreements, net of tax
   expense (benefit) of $3,672 and $(9,844), respectively
10,842 (29,903)
Amortization of interest rate lock agreements, net of tax benefit
   of $116 and $179, respectively
(358) (295)
Other comprehensive income (loss), net of tax expense (benefit) of
    $3,788 and $(9,665), respectively
37,430 (23,474)
Comprehensive income $ 337,435 $ 227,338


	Three Months Ended
	August 31, 2021		August 31, 2020

Net income	$	331,179	$	300,005

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(24,016)		26,946
Change in fair value of interest rate lock agreements, net of tax (benefit) expense of $(12,554) and $3,672, respectively	(36,679)		10,842
Amortization of interest rate lock agreements, net of tax benefit of $148 and $116, respectively	(459)		(358)

Other comprehensive (loss) income, net of tax (benefit) expense of $(12,406) and $3,788, respectively	(61,154)		37,430

Comprehensive income	$	270,025	$	337,435

See accompanying notes.

Table of Contents

CINTAS CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands except share data)

August 31,
2020 May 31,
2020
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 421,542 $ 145,402
Accounts receivable, net 866,414 870,369
Inventories, net 488,165 408,898
Uniforms and other rental items in service 756,364 770,411
Prepaid expenses and other current assets 133,692 114,619
Total current assets 2,666,177 2,309,699
Property and equipment, net 1,378,385 1,403,065
Investments 240,431 214,847
Goodwill 2,886,048 2,870,020
Service contracts, net 441,641 451,529
Operating lease right-of-use assets, net 159,120 159,967
Other assets, net 271,579 260,758
$ 8,043,381 $ 7,669,885
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 252,513 $ 230,995
Accrued compensation and related liabilities 117,577 127,417
Accrued liabilities 406,787 456,653
Income taxes, current 23,251 27,099
Operating lease liabilities, current 43,414 43,031
Debt due within one year 249,808 0
Total current liabilities 1,093,350 885,195
Long-term liabilities:
Debt due after one year 2,290,447 2,539,705
Deferred income taxes 385,149 388,579
Operating lease liabilities 121,727 122,695
Accrued liabilities 547,904 498,509
Total long-term liabilities 3,345,227 3,549,488
Shareholders’ equity:
Preferred stock, no par value: 0 0
100,000 shares authorized, NaN outstanding
Common stock, no par value: 1,345,233 1,102,689
425,000,000 shares authorized
FY 2021: 188,155,836 shares issued and 104,548,040 shares outstanding
FY 2020: 186,793,207 shares issued and 103,415,368 shares outstanding
Paid-in capital 30,155 171,521
Retained earnings 7,596,514 7,296,509
Treasury stock: (5,251,148) (5,182,137)
FY 2021: 83,607,796 shares
FY 2020: 83,377,839 shares
Accumulated other comprehensive loss (115,950) (153,380)
Total shareholders’ equity 3,604,804 3,235,202
$ 8,043,381 $ 7,669,885


	August 31, 2021		May 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	79,749	$	493,640

Accounts receivable, net	927,360		901,710
Inventories, net	463,692		481,797
Uniforms and other rental items in service	846,656		810,104
Income taxes, current	11,249		22,282
Prepaid expenses and other current assets	148,960		133,776
Total current assets	2,477,666		2,843,309

Property and equipment, net	1,301,233		1,318,438

Investments	295,268		274,616
Goodwill	2,924,993		2,913,069
Service contracts, net	403,982		408,445
Operating lease right-of-use assets, net	159,289		168,532
Other assets, net	295,319		310,414
	$	7,857,750	$	8,236,823

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	202,968	$	230,786
Accrued compensation and related liabilities	155,212		241,469
Accrued liabilities	592,384		518,910

Operating lease liabilities, current	43,308		43,850
Debt due within one year	1,275,167		899,070
Total current liabilities	2,269,039		1,934,085

Long-term liabilities:
Debt due after one year	1,343,222		1,642,833
Deferred income taxes	395,599		386,647
Operating lease liabilities	122,291		130,774
Accrued liabilities	418,396		454,637
Total long-term liabilities	2,279,508		2,614,891

Shareholders’ equity:
Preferred stock, no par value:	—		—
100,000 shares authorized, none outstanding
Common stock, no par value, and paid-in capital:	1,625,594		1,516,202
425,000,000 shares authorized
FY 2022: 190,127,513 shares issued and 103,329,218 shares outstanding
FY 2021: 189,071,185 shares issued and 104,061,391 shares outstanding

Retained earnings	8,109,368		7,877,015
Treasury stock:	(6,395,493)		(5,736,258)
FY 2022: 86,798,295 shares
FY 2021: 85,009,794 shares
Accumulated other comprehensive (loss) income	(30,266)		30,888
Total shareholders’ equity	3,309,203		3,687,847
	$	7,857,750	$	8,236,823

See accompanying notes.

Table of Contents

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(In thousands)

Common Stock Paid-In
Capital Retained
Earnings Other
Accumulated
Comprehensive
Loss Treasury Stock Total
Shareholders'
Equity
Shares Amount Shares Amount
Balance at June 1, 2020 186,793 $ 1,102,689 $ 171,521 $ 7,296,509 $ (153,380) (83,378) $ (5,182,137) $ 3,235,202
Net income — — — 300,005 — — — 300,005
Comprehensive income, net of tax — — — — 37,430 — — 37,430
Stock-based compensation — — 29,055 — — — — 29,055
Vesting of stock-based compensation awards 568 170,421 (170,421) — — — — 0
Stock options exercised, net of shares
surrendered 795 72,123 — — — — — 72,123
Repurchase of common stock — — — — — (230) (69,011) (69,011)
Balance at August 31, 2020 188,156 $ 1,345,233 $ 30,155 $ 7,596,514 $ (115,950) (83,608) $ (5,251,148) $ 3,604,804


	Common Stock and Paid-In Capital			Retained Earnings		Other Accumulated Comprehensive Income (Loss)			Treasury Stock				Total Shareholders' Equity
	Shares	Amount						Shares		Amount

Balance at June 1, 2021	189,071	$	1,516,202	$	7,877,015	$	30,888		(85,010)		$	(5,736,258)	$	3,687,847
Net income	—	—		331,179		—			—		—		331,179
Comprehensive loss, net of tax	—	—		—		(61,154)			—		—		(61,154)
Dividends	—	—		(98,826)		—			—		—		(98,826)
Stock-based compensation	—	36,496		—		—			—		—		36,496
Vesting of stock-based compensation awards	493	—		—		—			—		—		—
Stock options exercised, net of shares surrendered	564	72,896		—		—			—		—		72,896
Repurchase of common stock	—	—		—		—			(1,788)		(659,235)		(659,235)


Balance at August 31, 2021	190,128	$	1,625,594	$	8,109,368	$	(30,266)		(86,798)		$	(6,395,493)	$	3,309,203

Common Stock Paid-In
Capital Retained
Earnings Other
Accumulated
Comprehensive
Loss Treasury Stock Total
Shareholders'
Equity
Shares Amount Shares Amount
Balance at June 1, 2019 184,791 $ 840,328 $ 227,928 $ 6,691,236 $ (39,152) (81,506) $ (4,717,619) $ 3,002,721
Net income — — — 250,812 — — — 250,812
Comprehensive loss, net of tax — — — — (23,474) — — (23,474)
Stock-based compensation — — 40,395 — — — — 40,395
Vesting of stock-based compensation awards 605 157,882 (157,882) — — — — 0
Stock options exercised, net of shares
surrendered 557 37,915 — — — — — 37,915
Repurchase of common stock — — — — — (1,082) (256,830) (256,830)
Cumulative effect of change in accounting
principle — — — (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


	Common Stock and Paid-In Capital			Retained Earnings		Other Accumulated Comprehensive Loss			Treasury Stock				Total Shareholders' Equity
	Shares	Amount						Shares		Amount

Balance at June 1, 2020	186,793	$	1,274,210	$	7,296,509	$	(153,380)		(83,378)		$	(5,182,137)	$	3,235,202
Net income	—	—		300,005		—			—		—		300,005
Comprehensive income, net of tax	—	—		—		37,430			—		—		37,430

Stock-based compensation	—	29,055		—		—			—		—		29,055
Vesting of stock-based compensation awards	568	—		—		—			—		—		—
Stock options exercised, net of shares surrendered	795	72,123		—		—			—		—		72,123
Repurchase of common stock	—	—		—		—			(230)		(69,011)		(69,011)
Balance at August 31, 2020	188,156	$	1,375,388	$	7,596,514	$	(115,950)		(83,608)		$	(5,251,148)	$	3,604,804

See accompanying notes.

Table of Contents

CINTAS CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

Three Months Ended
August 31,
2020 August 31,
2019
Cash flows from operating activities:
Net income $ 300,005 $ 250,812
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 60,574 56,726
Amortization of intangible assets and capitalized contract costs 35,605 35,268
Stock-based compensation 29,055 40,395
Deferred income taxes (8,716) 7,910
Change in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net 7,118 (6,636)
Inventories, net (77,944) (1,726)
Uniforms and other rental items in service 16,552 (11,305)
Prepaid expenses and other current assets and capitalized contract costs (42,277) (41,928)
Accounts payable 20,358 13,357
Accrued compensation and related liabilities (10,067) (58,718)
Accrued liabilities and other (14,297) (24,082)
Income taxes, current (3,674) 16,828
Net cash provided by operating activities 312,292 276,901
Cash flows from investing activities:
Capital expenditures (30,876) (64,743)
Purchases of investments (4,940) (9,391)
Acquisitions of businesses, net of cash acquired (1,984) (3,896)
Other, net (2,142) (109)
Net cash used in investing activities (39,942) (78,139)
Cash flows from financing activities:
Issuance of commercial paper, net 0 26,500
Proceeds from exercise of stock-based compensation awards 72,123 37,915
Repurchase of common stock (69,011) (256,830)
Other, net (869) (1,192)
Net cash provided by (used in) financing activities 2,243 (193,607)
Effect of exchange rate changes on cash and cash equivalents 1,547 331
Net increase in cash and cash equivalents 276,140 5,486
Cash and cash equivalents at beginning of period 145,402 96,645
Cash and cash equivalents at end of period $ 421,542 $ 102,131


	Three Months Ended
	August 31, 2021		August 31, 2020
Cash flows from operating activities:
Net income	$	331,179	$	300,005
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	60,955		60,574
Amortization of intangible assets and capitalized contract costs	36,994		35,605
Stock-based compensation	36,496		29,055
Gain on sale of operating assets	(12,178)		—

Deferred income taxes	22,887		(8,716)
Change in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	(27,742)		7,118
Inventories, net	14,986		(77,944)
Uniforms and other rental items in service	(39,274)		16,552
Prepaid expenses and other current assets and capitalized contract costs	(36,724)		(42,277)
Accounts payable	(26,272)		20,358
Accrued compensation and related liabilities	(85,834)		(10,067)
Accrued liabilities and other	(24,342)		(14,297)
Income taxes, current	11,010		(3,674)
Net cash provided by operating activities	262,141		312,292

Cash flows from investing activities:
Capital expenditures	(48,748)		(30,876)

Purchases of investments	(8,738)		(4,940)

Proceeds from sale of operating assets	15,070		—
Acquisitions of businesses, net of cash acquired	(35,725)		(1,984)
Other, net	(6,180)		(2,142)
Net cash used in investing activities	(84,321)		(39,942)

Cash flows from financing activities:
Issuance of commercial paper, net	326,000		—

Repayment of debt	(250,000)		—
Proceeds from exercise of stock-based compensation awards	72,896		72,123
Dividends paid	(79,135)		—
Repurchase of common stock	(659,235)		(69,011)
Other, net	(610)		(869)
Net cash (used in) provided by financing activities	(590,084)		2,243

Effect of exchange rate changes on cash and cash equivalents	(1,627)		1,547

Net (decrease) increase in cash and cash equivalents	(413,891)		276,140

Cash and cash equivalents at beginning of period	493,640		145,402

Cash and cash equivalents at end of period	$	79,749	$	421,542

See accompanying notes.

Table of Contents

CINTAS CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Basis of Presentation

The consolidated condensed financial statements of Cintas Corporation (Cintas, the Company, we, us or our) included herein have been prepared by Cintas, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with United States generally accepted accounting principles (U.S. GAAP) have been condensed or omitted pursuant to such rules and regulations. While we believe that the disclosures are adequately presented, we suggest that these consolidated condensed financial statements be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended May 31, ~~2020.~~2021. A summary of our significant accounting policies is presented beginning on page 40 of that report. There have been no material changes in the accounting policies followed by Cintas during the current fiscal ~~year other than the adoption of new accounting pronouncements discussed below.~~year.

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 consolidated results of the interim periods shown have been made.

Inventories, net are valued at the lower of cost (first-in, first-out) or net realizable value. Inventory is comprised of the following:


(In thousands)	(In thousands)	August 31, 2020		May 31, 2020		(In thousands)	August 31, 2021		May 31, 2021

Raw materials	Raw materials	$	18,560	$	18,661	Raw materials	$	15,732	$	15,109
Work in process	Work in process	26,747		29,497		Work in process	30,681		37,664
Finished goods	Finished goods	442,858		360,740		Finished goods	417,279		429,024
		$	488,165	$	408,898		$	463,692	$	481,797

Inventories are recorded net of reserves for obsolete inventory (excess and slow-moving) of ~~$48.2~~$110.2 million and ~~$45.5~~$111.0 million at August 31, ~~2020~~2021 and May 31, ~~2020,~~2021, respectively. The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence. Once a specific inventory item is written down to the lower of cost or net realizable value, a new cost basis has been established, and that inventory item cannot subsequently be marked up.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. The reclassification has been reflected in the consolidated condensed balance sheet and consolidated condensed statement of shareholders' equity for the fiscal year ended May 31, 2021 and the three months ended August 31, 2020, to combine common stock and paid-in capital for disclosure purposes. These reclassifications had no effect on the Company's reported results of operations.

New Accounting Pronouncements

~~Effective June 1, 2020,~~In December 2019, the ~~Company adopted~~ Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2016-13, “Financial Instruments-Credit Losses~~2019-12, Income Taxes (Topic ~~326)~~740): ~~Measurement~~Simplifying the Accounting for Income Taxes. ASU 2019-12 is part of ~~Credit Losses on Financial Instruments.”~~the FASB’s overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU ~~2016-13 replaces~~2019-12 removes certain exceptions to the ~~incurred loss impairment methodology with a methodology that reflects expected credit~~general principles of Accounting Standards Codification (ASC) 740, Income Taxes (ASC 740), in order to reduce the cost and complexity of its application in the areas of intraperiod tax allocation, deferred tax liabilities related to outside basis differences, year-to-date losses ~~and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In connection with recognizing credit losses on accounts receivable~~in interim periods and other ~~financial instruments, Cintas now uses a forward-looking expected loss model rather than the incurred loss model. Adoption of~~areas within ASC 740. The Company adopted ASU 2016-13 requires using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align existing credit loss methodology with the new standard.2019-12 on June 1, 2021. The adoption of ASU ~~2016-13~~2019-12 did not have a material impact on the ~~Company's~~Company’s consolidated condensed financial ~~statements.~~statements currently but may in future periods.

No other new accounting pronouncement recently issued or newly effective had, or is expected to have, a material impact on Cintas' consolidated condensed financial statements.

Table of Contents

Note 2 - Revenue Recognition

The following table presents Cintas' total revenue disaggregated by operating segment for the three months ended August 31:


		2020						2019
(In thousands)	(In thousands)	Revenue		%		Revenue		%		(In thousands)	2021				2020

Uniform Rental and Facility Services	Uniform Rental and Facility Services	$	1,394,411	79.8	%	$	1,454,527	80.3	%	Uniform Rental and Facility Services	$	1,508,176	79.5	%	$	1,394,411	79.8	%
First Aid and Safety Services	First Aid and Safety Services	204,481		11.7	%	172,090		9.5	%	First Aid and Safety Services	199,116		10.5	%	204,481		11.7	%
Fire Protection Services	Fire Protection Services	108,065		6.2	%	110,126		6.1	%	Fire Protection Services	128,218		6.8	%	108,065		6.2	%
Uniform Direct Sales	Uniform Direct Sales	39,618		2.3	%	74,396		4.1	%	Uniform Direct Sales	61,440		3.2	%	39,618		2.3	%
Total revenue	Total revenue	$	1,746,575	100.0	%	$	1,811,139	100.0	%	Total revenue	$	1,896,950	100.0	%	$	1,746,575	100.0	%

Fire Protection Services and Uniform Direct Sales operating segments are included within All Other as disclosed in Note 12 entitled Segment Information.

Revenue Recognition Policy

~~More than~~Approximately 95% of the Company's ~~revenue is~~revenues are derived from fees for route servicing of Uniform Rental and Facility Services, First Aid and Safety Services and Fire Protection Services, performed by a Cintas employee-partner, at the customer's location of business. Revenues from our route servicing customer contracts represent a single-performance obligation. The Company recognizes ~~these~~ revenues over time as services are performed based on the nature of services provided and contractual rates (output method). or at a point in time when the performance obligation under the terms of the contract with a customer are satisfied, at the customer's location of business. The Company's remaining ~~revenues,~~revenue, primarily within the Uniform Direct Sales operating segment, and representing ~~less than~~approximately 5% of the Company's total ~~revenues, are~~revenue, is recognized when the obligations under the terms of a contract with a customer are satisfied. This generally occurs when the goods are transferred to the customer.

Revenue recorded is presented net of sales and other taxes we collect on behalf of governmental authorities. Shipping and handling costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Certain of our customer contracts, ~~primarily within our Uniform Direct Sales operating segment,~~ include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration paid to a customer based on performance metrics specified within the contract. Specifically, some contracts contain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company's actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period. When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company's performance period generally corresponds with the monthly invoice period. No constraints on our revenue recognition were applied during the three months ended August 31, ~~2020~~2021 or ~~2019.~~2020. The Company reassesses these estimates during each reporting period. Cintas maintains a liability for these discounts and rebates within accrued liabilities on the consolidated condensed balance sheets. Variable consideration also includes consideration paid to a customer at the beginning of a contract. Cintas capitalizes this consideration and amortizes it over the life of the contract as a reduction to ~~revenue in accordance with Accounting Standards Codification (ASC) 606, "Revenue" (Topic 606).~~revenue. These assets are included in other assets, net on the consolidated condensed balance ~~sheet.~~sheets.

Additionally, ~~in accordance with Topic 606,~~ certain Uniform Direct Sales operating segment customer contracts contain a provision with an enforceable right of payment, and the underlying product has no alternative use to Cintas. Consequently, when both aforementioned provisions are prevalent in a customer contract, the revenue is recorded for finished goods that the customer is obligated to purchase under the termination terms of the contract.

We are exposed to credit losses primarily through our trade receivables. We determine the allowance for credit losses using both an estimate, based on historical rates of collections, and reserves for specific accounts identified as uncollectible. The portion of the allowance that is an estimate based on Cintas' historical rates of collections is recorded for overdue amounts, beginning with a nominal percentage when the account is current and increasing substantially as the account ages. The amount provided as the account ages will differ slightly between the Uniform

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Rental and Facility Services reportable operating segment, the First Aid and Safety Services reportable operating segment and All Other because of differences in customers served and the nature of each business. We update our estimate of credit loss reserves quarterly, considering recent write-offs and collections information and underlying economic expectations.

Costs to Obtain a Contract

The Company capitalizes commission expenses paid to our employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. As permitted by ASC 606, "Revenue", the Company has elected to apply the guidance to a portfolio of contracts (or performance obligations) with similar characteristics because the Company reasonably expects that the effects on the consolidated condensed financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts within the portfolio. The Company also continues to expense certain costs to obtain a contract if those costs do not meet the criteria of the standard or the amortization period of the asset would have been one year or less. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. We review the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense. The current portion is included in prepaid expenses and other current assets and the noncurrent portion is included in other assets, net on the Company's consolidated condensed balance sheets. As of August 31, ~~2020,~~2021, the current and noncurrent assets related to deferred commissions totaled ~~$77.5~~$80.2 million and ~~$230.0~~$227.2 million, respectively. As of May 31, ~~2020,~~2021, the current and noncurrent assets related to deferred commissions totaled ~~$76.2~~$79.4 million and $227.1 million, respectively. We recorded amortization expense related to deferred commissions of ~~$20.4~~$21.4 million and ~~$18.8~~$20.4 million during the three months ended August 31, ~~2020~~2021 and ~~2019,~~2020, respectively. These expenses are classified in selling and administrative expenses on the consolidated condensed statements of income.

Note 3 - Leases

Cintas has operating leases for certain operating facilities, vehicles and equipment, which provide the right to use the underlying asset and require lease payments over the term of the lease. Each new contract is evaluated to determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. All identified leases are recorded on the consolidated condensed balance sheet with a corresponding operating lease right-of-use asset, net, representing the right to use the underlying asset for the lease term and the operating lease liabilities representing the obligation to make lease payments arising from the lease. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the consolidated condensed balance sheet.

Operating lease right-of-use assets, net and operating lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate ~~(discount rate)~~ based on the information available at lease commencement date. Lease expense for operating leases is recorded on a straight-line basis over the lease term and variable lease costs are recorded as incurred. Both lease expense and variable lease costs are primarily recorded in cost of uniform rental and facility services and other on the Company's consolidated condensed statements of income. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease costs ~~including short-term lease expense and variable lease costs which~~ were ~~immaterial in each period, were $17.1~~$18.2 million and ~~$17.2~~$17.1 million for the three months ended August 31, 2021 and 2020, respectively. Short-term lease expense and ~~2019, respectively.~~variable lease costs are included within operating lease costs and immaterial for the three months ended August 31, 2021 and 2020.

The following table provides supplemental information related to the Company's consolidated condensed statements of cash flows for the three months ended August 31:


(In thousands)	(In thousands)	2020		2019		(In thousands)	2021		2020

Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities	$	12,254	$	12,342	Cash paid for amounts included in the measurement of operating lease liabilities	$	11,913	$	12,254
Operating lease right-of-use assets obtained in exchange for new and renewed operating lease liabilities	Operating lease right-of-use assets obtained in exchange for new and renewed operating lease liabilities	$	9,317	$	6,828	Operating lease right-of-use assets obtained in exchange for new and renewed operating lease liabilities	$	2,792	$	9,317

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Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows:

August 31, 2020 May 31,
2020
Weighted-average remaining lease term - operating leases 5.10 years 5.19 years
Weighted-average discount rate - operating leases 2.62% 2.66%



	August 31, 2021	May 31, 2021

Weighted-average remaining lease term - operating leases	5.22 years	5.33 years
Weighted-average discount rate - operating leases	2.29%	2.32%

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of August 31, ~~2020:~~2021:


(In thousands)	(In thousands)			(In thousands)

2021 (remaining nine months)		$	36,380
2022		40,728
2022 (remaining nine months)				2022 (remaining nine months)	$	35,794
2023	2023	32,079		2023	40,285
2024	2024	22,423		2024	29,941
2025	2025	15,766		2025	22,509
2026				2026	16,995
Thereafter	Thereafter	29,643		Thereafter	30,336
Total payments	Total payments	177,019		Total payments	175,860
Less interest	Less interest	(11,878)		Less interest	(10,261)
Total present value of lease payments	Total present value of lease payments	$	165,141	Total present value of lease payments	$	165,599

Note 4 - Fair Value Measurements

All financial instruments that are measured at fair value on a recurring basis (at least annually) have been classified within the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the consolidated condensed balance sheet date. These financial instruments measured at fair value on a recurring basis are summarized below:


		As of August 31, 2020															As of August 31, 2021
(In thousands)	(In thousands)	Level 1		Level 2		Level 3		Fair Value		(In thousands)	Level 1		Level 2		Level 3		Fair Value

Cash and cash equivalents	Cash and cash equivalents	$	421,542	$	0	$	0	$	421,542	Cash and cash equivalents	$	79,749	$	—	$	—	$	79,749

Other assets, net:	Other assets, net:									Other assets, net:
Interest rate lock agreements	Interest rate lock agreements	0		6,425		0		6,425		Interest rate lock agreements	—		18,335		—		18,335
Total assets at fair value	Total assets at fair value	$	421,542	$	6,425	$	0	$	427,967	Total assets at fair value	$	79,749	$	18,335	$	—	$	98,084

Long-term accrued liabilities:
Current accrued liabilities:										Current accrued liabilities:
Interest rate lock agreements	Interest rate lock agreements	$	0	$	156,051	$	0	$	156,051	Interest rate lock agreements	$	—	$	88,736	$	—	$	88,736
Total liabilities at fair value	Total liabilities at fair value	$	0	$	156,051	$	0	$	156,051	Total liabilities at fair value	$	—	$	88,736	$	—	$	88,736


	As of May 31, 2021
(In thousands)	Level 1		Level 2		Level 3		Fair Value

Cash and cash equivalents	$	493,640	$	—	$	—	$	493,640


Other assets, net:
Interest rate lock agreements	—		40,400		—		40,400
Total assets at fair value	$	493,640	$	40,400	$	—	$	534,040

Long-term accrued liabilities:
Interest rate lock agreements	$	—	$	61,567	$	—	$	61,567
Total liabilities at fair value	$	—	$	61,567	$	—	$	61,567

As of May 31, 2020
(In thousands) Level 1 Level 2 Level 3 Fair Value
Cash and cash equivalents $ 145,402 $ 0 $ 0 $ 145,402
Other assets, net
Interest rate lock agreements 0 1,546 0 1,546
Total assets at fair value $ 145,402 $ 1,546 $ 0 $ 146,948
Long-term accrued liabilities:
Interest rate lock agreements $ 0 $ 165,686 $ 0 $ 165,686
Total liabilities at fair value $ 0 $ 165,686 $ 0 $ 165,686

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Cintas’ cash and cash equivalents are generally classified within Level 1 or Level 2 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets, and financial instruments classified as Level 2 are based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. The types of financial instruments Cintas classifies within Level 1 include most bank deposits and money market securities. Cintas does not adjust the quoted market price for such financial instruments.

~~The fair values of outstanding interest rate lock agreements are included in other assets, net and long-term accrued liabilities at both August 31, 2020 and May 31, 2020.~~ The fair values of Cintas' interest rate lock agreements are based on similar exchange traded derivatives (market approach) and are, therefore, included within Level 2 of the fair value hierarchy. The fair value was determined by comparing the locked rates against the benchmarked treasury rate. No other amounts included in other assets, net, current accrued liabilities or long-term accrued liabilities are recorded at fair value on a recurring basis.

The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated condensed balance sheet dates.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, Cintas records assets and liabilities at fair value on a nonrecurring basis as required under U.S. GAAP. The assets and liabilities measured at fair value on a nonrecurring basis primarily relate to assets and liabilities acquired in a business ~~acquisition.~~acquisition, which were not material during the three months ended August 31, 2021 and 2020.

Note 5 - Investments

~~At August 31, 2020,~~Cintas' investments were $240.4 million and include the cash surrender value of insurance policies of $217.2 million, equity method investments of $20.1 million and cost method investments of $3.1 million. At May 31, 2020, investments were $214.8 million and include the cash surrender value of insurance policies of $192.7 million, equity method investments of $19.0 million and cost method investments of $3.1 million. are summarized as follows:



(In thousands)	August 31, 2021		May 31, 2021

Cash surrender value of insurance policies	$	274,721	$	252,061
Equity method investments	18,383		19,388
Cost method investments	2,164		3,167
Total investments	$	295,268	$	274,616

Investments are generally evaluated for impairment on an annual basis or when indicators of impairment exist. For the three months ended August 31, 2021 and 2020, ~~and 2019, 0~~no impairment losses were recorded.

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Note 6 - Earnings Per Share

Cintas uses the two-class method to calculate basic and diluted earnings per share as a result of outstanding participating securities in the form of restricted stock awards. The following tables set forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas’ common ~~shares.~~shares for the three months ending August 31:


Basic Earnings per Share (In thousands except per share data)						Basic Earnings per Share (In thousands except per share data)	2021		2020

		Three Months Ended
Basic Earnings per Share (in thousands except per share data)		August 31, 2020		August 31, 2019

Net income	Net income	$	300,005	$	250,812	Net income	$	331,179	$	300,005
Less: income allocated to participating securities	Less: income allocated to participating securities	2,173		2,016		Less: income allocated to participating securities	1,765		2,173
Income available to common shareholders	Income available to common shareholders	$	297,832	$	248,796	Income available to common shareholders	$	329,414	$	297,832
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	104,110		103,543		Basic weighted average common shares outstanding	103,295		104,110

Basic earnings per share	Basic earnings per share	$	2.86	$	2.40	Basic earnings per share	$	3.19	$	2.86


Diluted Earnings per Share (In thousands except per share data)	2021		2020



Net income	$	331,179	$	300,005
Less: income allocated to participating securities	1,765		2,173
Income available to common shareholders	$	329,414	$	297,832
Basic weighted average common shares outstanding	103,295		104,110
Effect of dilutive securities – employee stock options	2,649		3,019
Diluted weighted average common shares outstanding	105,944		107,129

Diluted earnings per share	$	3.11	$	2.78

Three Months Ended
Diluted Earnings per Share
(in thousands except per share data)
August 31,
2020 August 31,
2019
Net income $ 300,005 $ 250,812
Less: income allocated to participating securities 2,173 2,016
Income available to common shareholders $ 297,832 $ 248,796
Basic weighted average common shares outstanding 104,110 103,543
Effect of dilutive securities – employee stock options 3,019 3,540
Diluted weighted average common shares outstanding 107,129 107,083
Diluted earnings per share $ 2.78 $ 2.32

For ~~both~~ the three months ended August 31, ~~2020~~2021 and ~~2019,~~2020, options granted to purchase 0.1 million and 0.2 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. The exercise prices of these options were greater than the average market price of the common stock (anti-dilutive).

On October ~~30, 2018,~~29, 2019, Cintas announced that the Board of Directors authorized a $1.0 billion share buyback program, which ~~does not have an expiration date. On~~was completed during the first quarter of fiscal 2022. From the inception of the October 29, 2019 weshare buyback program through July 2021, Cintas purchased a total of 2.8 million shares of Cintas common stock at an average price of $358.93 per share for a total purchase price of $1.0 billion. On July 27, 2021, Cintas announced that the Board of Directors authorized a new ~~$1.0~~$1.5 billion share buyback program, which does not have an expiration date. The following ~~table summarizes~~tables summarize the share buyback activity by program ~~and~~ for the three months ended August 31:


		2020								2019									2021					2020
Buyback Program (In thousands except per share data)	Buyback Program (In thousands except per share data)	Shares	Avg. Price per Share		Purchase Price		Shares	Avg. Price per Share		Purchase Price		Buyback Program (In thousands except per share data)	Shares	Avg. Price per Share		Purchase Price		Shares		Avg. Price per Share		Purchase Price

October 30, 2018		0	$	0	$	0	837	$	230.66	$	193,109

October 29, 2019	October 29, 2019	0	$	0	$	0	0	$	0	$	0	October 29, 2019	1,590	$	365.41	$	581,220	—		$	—	$	—
July 27, 2021												July 27, 2021	—	$	—	$	—	—		$	—	$	—
		0	$	0	$	0	837	$	230.66	$	193,109		1,590	$	365.41	$	581,220	—		$	—	$	—

There were 0no share buybacks in the period subsequent to August 31, ~~2020,~~2021, through October ~~9, 2020,~~7, 2021 under any share buyback program. ~~From~~

For the ~~inception of the October 30, 2018 program through October 9, 2020,~~three months ended August 31, 2021, Cintas ~~has purchased a total of 4.3~~acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested. These shares were acquired at an average price of ~~$219.42~~$394.19 per share for a total purchase price of ~~$939.1~~$78.0 million.

For the three months ended August 31, 2020, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that ~~vested during the three months ended August 31, 2020.~~vested. These shares were acquired at an average price of $300.01 per share for a total purchase price of $69.0 million. ~~For the three months ended August 31, 2019, Cintas acquired 0.2 million shares~~

Table of Cintas common stock for employee payroll taxes dues on restricted stock awards that vested during the three months ended August 31, 2019. These shares were acquired at an average price of $260.83 per share for a total purchase price of $63.7 million.Contents

Note 7 - Goodwill, Service Contracts and Other Assets

Changes in the carrying amount of goodwill and service contracts for the three months ended August 31, ~~2020,~~2021, by reportable operating segment and All Other, are as follows:


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

Balance as of June 1, 2020		$	2,513,041	$	243,266	$	113,713	$	2,870,020
Balance as of June 1, 2021										Balance as of June 1, 2021	$	2,547,510	$	248,571	$	116,988	$	2,913,069
Goodwill acquired	Goodwill acquired	2,001		0		0		2,001		Goodwill acquired	24,512		—		41		24,553

Foreign currency translation	Foreign currency translation	12,942		1,041		44		14,027		Foreign currency translation	(11,565)		(1,024)		(40)		(12,629)
Balance as of August 31, 2020		$	2,527,984	$	244,307	$	113,757	$	2,886,048
Balance as of August 31, 2021										Balance as of August 31, 2021	$	2,560,457	$	247,547	$	116,989	$	2,924,993

Service Contracts
(in thousands)
Uniform Rental
and Facility Services First Aid
and Safety Services All
Other Total
Balance as of June 1, 2020 $ 407,611 $ 19,805 $ 24,113 $ 451,529
Service contracts acquired 1,138 0 0 1,138
Service contracts amortization (12,031) (947) (1,290) (14,268)
Foreign currency translation 3,169 73 0 3,242
Balance as of August 31, 2020 $ 399,887 $ 18,931 $ 22,823 $ 441,641


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

Balance as of June 1, 2021	$	369,141	$	18,294	$	21,010	$	408,445
Service contracts acquired	12,807		—		53		12,860
Service contracts amortization	(12,380)		(991)		(1,190)		(14,561)
Foreign currency translation	(2,637)		(125)		—		(2,762)
Balance as of August 31, 2021	$	366,931	$	17,178	$	19,873	$	403,982

Information regarding Cintas’ service contracts and other assets is as follows:

As of August 31, 2020
(In thousands) Carrying
Amount Accumulated
Amortization Net
Service contracts $ 948,118 $ 506,477 $ 441,641
Capitalized contract costs ⁽¹⁾
$ 399,204 $ 169,248 $ 229,956
Noncompete and consulting agreements 44,174 41,621 2,553
Other 62,566 23,496 39,070
Total other assets $ 505,944 $ 234,365 $ 271,579


		As of May 31, 2020											As of August 31, 2021						As of May 31, 2021
(In thousands)	(In thousands)	Carrying Amount		Accumulated Amortization		Net		(In thousands)	Carrying Amount		Accumulated Amortization		Net		Carrying Amount		Accumulated Amortization		Net

Service contracts	Service contracts	$	941,383	$	489,854	$	451,529	Service contracts	$	969,728	$	565,746	$	403,982	$	961,942	$	553,497	$	408,445

Capitalized contract costs ⁽¹⁾	Capitalized contract costs ⁽¹⁾	$	375,912	$	148,853	$	227,059	Capitalized contract costs (1)	$	480,535	$	253,298	$	227,237	$	459,079	$	231,940	$	227,139
Noncompete and consulting agreements	Noncompete and consulting agreements	43,890		41,317		2,573		Noncompete and consulting agreements	45,783		42,601		3,182		44,683		42,408		2,275
Other	Other	54,239		23,113		31,126		Other	89,293		24,393		64,900		105,371		24,371		81,000
Total other assets	Total other assets	$	474,041	$	213,283	$	260,758	Total other assets	$	615,611	$	320,292	$	295,319	$	609,133	$	298,719	$	310,414

⁽¹⁾The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance ~~sheet~~sheets as of August 31, ~~2020~~2021 and May 31, ~~2020,~~2021, is ~~$77.5~~$80.2 million and ~~$76.2~~$79.4 million, respectively.

Amortization expense for service contracts and other assets was ~~$35.1~~$36.5 million and ~~$34.6~~$35.1 million for the three months ended August 31, 2021 and 2020, respectively. These expenses are recorded in selling and ~~2019, respectively. The~~administrative expenses on the consolidated condensed statements of income. As of August 31, 2021, the estimated future amortization expense for service contracts and other assets, excluding any future acquisitions and commissions to be earned, ~~as of August 31, 2020~~ is as follows:

Fiscal Year (In thousands)
2021 (remaining nine months)
$ 102,745
2022 126,441
2023 107,211
2024 95,316
2025 82,492
Thereafter 240,600
Total future amortization expense $ 754,805


Fiscal Year (In thousands)

2022 (remaining nine months)	$	104,871
2023	122,464
2024	110,029
2025	96,113
2026	79,013
Thereafter	204,245
Total future amortization expense	$	716,735

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Note 8 - Debt, Derivatives and Hedging Activities

Cintas' outstanding debt is summarized as follows:


(In thousands)	Interest Rate			Fiscal Year Issued	Fiscal Year Maturity	August 31, 2021		May 31, 2021

Debt due within one year
Senior notes	4.30	%		2012	2022	$	—	$	250,000
Senior notes	2.90	%		2017	2022	650,000		650,000
Senior notes	3.25	%		2013	2023	300,000		—
Commercial paper	0.20	%	(1)	2022	2022	326,000		—
Debt issuance costs						(833)		(930)
Total debt due within one year						$	1,275,167	$	899,070

Debt due after one year
Senior notes	3.25	%		2013	2023	$	—	$	300,000
Senior notes (2)	2.78	%		2013	2023	50,707		50,815
Senior notes (3)	3.11	%		2015	2025	51,217		51,301
Senior notes	3.70	%		2017	2027	1,000,000		1,000,000
Senior notes	6.15	%		2007	2037	250,000		250,000

Debt issuance costs						(8,702)		(9,283)
Total debt due after one year						$	1,343,222	$	1,642,833

(1) Variable rate debt instrument. The rate presented is the variable borrowing rate at August 31, 2021.

(In thousands) Interest
Rate Fiscal Year
Issued Fiscal Year
Maturity August 31,
2020 May 31,
2020
Debt due within one year
Senior notes 4.30 % 2012 2022 $ 250,000 $ 0
Debt issuance costs (192) 0
Total debt due within one year $ 249,808 $ 0
Debt due after one year
Senior notes 4.30 % 2012 2022 $ 0 $ 250,000
Senior notes 2.90 % 2017 2022 650,000 650,000
Senior notes 3.25 % 2013 2023 300,000 300,000
Senior notes ⁽¹⁾
2.78 % 2013 2023 51,141 51,250
Senior notes ⁽²⁾
3.11 % 2015 2025 51,553 51,637
Senior notes 3.70 % 2017 2027 1,000,000 1,000,000
Senior notes 6.15 % 2007 2037 250,000 250,000
Debt issuance costs (12,247) (13,182)
Total debt due after one year $ 2,290,447 $ 2,539,705

⁽¹⁾(2) 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%.

⁽²⁾(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 3.88%.

Cintas' senior notes, excluding the G&K senior notes assumed with the acquisition of G&K in fiscal 2017, ~~and term loan,~~ are recorded at cost, net of debt issuance costs. The fair value of the long-term debt is estimated using Level 2 inputs based on general market prices. The carrying value and fair value of Cintas' debt as of August 31, ~~2020~~2021 were ~~$2,550.0~~$2,626.0 million and ~~$2,840.2~~$2,863.8 million, respectively, and as of May 31, ~~2020~~2021 were $2,550.0 million and ~~$2,804.2~~$2,788.8 million, respectively. On June 1, 2021, in accordance with the terms of the notes, Cintas paid the $250.0 million aggregate principal amount of its 4.30%, 10-year senior notes that matured on that date with cash on hand. During the three months ended August 31, 2021, Cintas issued $326.0 million, net of commercial paper borrowings.

The credit agreement that supports our commercial paper program ~~was amended and restated on May 24, 2019. The amendment increased the capacity of the~~has a revolving credit facility ~~from $600.0 million to~~with a capacity of $1.0 ~~billion and created a new term loan of $200.0 million.~~billion. 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.As of August 31, ~~2020~~2021, there was $326.0 million of commercial paper outstanding with maturity dates less than 30 days and with a weighted average interest rate of 0.20% and there was no borrowings on our revolving credit facility. As of May 31, ~~2020,~~2021, there was 0no commercial paper outstanding and 0no borrowings on our revolving credit facility.

Cintas uses interest rate locks to manage ~~our~~its overall interest expense as interest rate locks effectively change the interest rate of specific debt issuances. The interest rate locks are entered into to protect against unfavorable movements in the benchmark treasury rate related to forecasted debt issuances. Cintas used interest rate lock agreements to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 2012, fiscal 2013 and fiscal 2017. The amortization of the cash flow hedges resulted in ~~an increase~~a decrease to other comprehensive ~~loss~~income of $0.5 million and $0.4 million~~and$0.3 million for the~~ three months ended August 31, ~~2020~~2021 and ~~2019,~~2020, respectively. During fiscal 2020 Cintas entered into interest rate lock agreements with a notional value of $950.0 million for a forecasted debt issuance in connection with the upcoming debt maturities. As of August 31, 2020, the fair values of these interest rate locks were an asset of $6.4 million and a liability of $48.2 million, recorded in other assets and long-term accrued liabilities, respectively, and in other comprehensive loss, net of tax. As of May 31, 2020, the fair values of these interest rate locks were an asset of $1.5 million and a liability of $53.8 million, recorded in other assets and long-term accrued liabilities, respectively, and in other comprehensive loss, net of tax.

~~During~~ fiscal 2019, Cintas entered into interest rate lock agreements with a total

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notional value of $950.0 million and $500.0 million, respectively, for a forecasted debt ~~issuance~~issuances in connection with ~~the~~ upcoming debt maturities. ~~As of August 31, 2020 and May 31, 2020, the~~

The fair values of ~~these~~the outstanding interest rate lock agreements are summarized as follows:


			August 31, 2021				May 31, 2021
Fiscal Year of Issuance (in thousands)	Notional Value		Other assets, net		Current accrued liabilities		Other assets, net		Long-term accrued liabilities

2020	$	950,000	$	18,335	$	10,264	$	40,400	$	—
2019	$	500,000	$	—	$	78,472	$	—	$	61,657

The interest rate locks ~~were a liability of $107.8 million and $111.9 million, respectively, and were~~are also recorded ~~in long-term accrued liabilities and~~ in other comprehensive ~~loss,~~income (loss), net of tax. These interest rate locks had no impact on net income or cash flows ~~from continuing operations~~ for the three months endedAugust 31, ~~2020~~2021 or ~~2019.~~2020.

Cintas has certain covenants related to debt agreements. These covenants limit Cintas' 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 consolidated ~~EBITDA~~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. Cintas was in compliance with all of the debt covenants for all periods presented.

As of August 31, 2020 and May 31, 2020, the Company had unrecognized inventory purchase commitments with various suppliers totaling $64.4 million and $117.6 million, respectively. In fiscal 2021, we entered into $9.8 million of new unrecognized inventory purchase commitments and made $62.5 million of inventory purchases related to the unrecognized commitments outstanding at May 31, 2020. The Company expects to purchase all remaining commitments within the next twelve months.

Note 9 - Income Taxes

In the normal course of business, Cintas provides for uncertain tax positions and the related interest and adjusts its unrecognized tax benefits and accrued interest accordingly. As of August 31, ~~2020~~2021 and May 31, ~~2020,~~2021, recorded unrecognized tax benefits were ~~$36.5~~$34.6 million and ~~$35.9~~$34.2 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance ~~sheet.~~sheets.

The majority of Cintas' operations are in North America. Cintas is required to file federal income tax returns, as well as state income tax returns in a majority of the domestic states and also in certain Canadian provinces. At times, Cintas is subject to audits in these jurisdictions. The audits, by nature, are sometimes complex and can require several years to resolve. The final resolution of any such tax audit could result in either a reduction in Cintas' accruals or an increase in its income tax provision, either of which could have an impact on the consolidated results of operations in any given period.

All United States federal income tax returns are closed to audit through fiscal ~~2016.~~2017. Cintas is currently in various audits in certain foreign jurisdictions and certain domestic states. The years under foreign and domestic state audits cover fiscal years back to ~~2013.~~2014. Based on the resolution of the various audits and other potential regulatory developments, it is reasonably possible that the balance of unrecognized tax benefits would not change for the fiscal year ending May 31, ~~2021.~~2022.

Cintas’ effective tax rate was ~~7.8%~~11.0% and ~~10.1%~~7.8% for the three months ended August 31, ~~2020~~2021 and ~~2019,~~2020, respectively. The effective tax rate for ~~both~~all periods ~~were~~was impacted by certain discrete items (primarily the tax accounting for stock-based compensation).

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Note 10 - Pension Plans

In conjunction with the acquisition of G&K in fiscal 2017, Cintas assumed G&K's noncontributory defined benefit pension plan (the Pension Plan) that covers substantially all legacy G&K employees who were employed as of July 1, 2005, except certain employees who were covered by union-administered plans. Benefits are based on the number of years of service and each employee’s compensation near retirement. We will make annual contributions to the Pension Plan consistent with federal funding requirements. The Pension Plan was frozen by G&K effective December 31, 2006. Future growth in benefits will not occur beyond this date. Applicable accounting standards require that the consolidated condensed balance ~~sheet~~sheets reflect the funded status of the Pension Plan. The funded status of the Pension Plan is measured as the difference between the plan assets at fair value and the projected benefit obligation (PBO). The PBO represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels. The measurement of the PBO is based on the Company’s estimates and actuarial valuations. The net pension liability is included in long-term accrued liabilities on the consolidated condensed balance sheets. Unrecognized differences between actual amounts and estimates based on actuarial assumptions are included in accumulated other comprehensive ~~loss in~~(loss) income on our consolidated condensed balance sheets. The difference between actual amounts and estimates based on actuarial assumptions are recognized in other comprehensive (loss) income, ~~(loss)~~net of tax, in the period in which they occur. The Pension Plan assumptions are evaluated annually and are updated as deemed necessary.

The components of net periodic pension benefit are summarized as follows for the three months ended August 31:


(In thousands)						(In thousands)	2021		2020

(In thousands)		2020		2019

Interest cost	Interest cost	$	512	$	720	Interest cost	$	542	$	512
Expected return on assets	Expected return on assets	(731)		(740)		Expected return on assets	(917)		(731)
Amortization of net loss	Amortization of net loss	56		0		Amortization of net loss	—		56
Net periodic pension benefit	Net periodic pension benefit	$	(163)	$	(20)	Net periodic pension benefit	$	(375)	$	(163)

Note 11 - Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in the accumulated balances for each component of accumulated other comprehensive (loss) income, ~~(loss),~~ net of tax:

(In thousands) Foreign
Currency Unrealized Loss on
Interest Rate Hedges Other Total
Balance at June 1, 2020 $ (26,343) $ (112,718) $ (14,319) $ (153,380)
Other comprehensive income before reclassifications 26,946 10,842 0 37,788
Amounts reclassified from accumulated other
comprehensive income (loss)
0 (358) 0 (358)
Net current period other comprehensive income 26,946 10,484 0 37,430
Balance at August 31, 2020 $ 603 $ (102,234) $ (14,319) $ (115,950)


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

Balance at June 1, 2021	$	41,839	$	(7,308)	$	(3,643)	$	30,888
Other comprehensive loss before reclassifications	(24,016)		(36,679)		—		(60,695)
Amounts reclassified from accumulated other comprehensive (loss) income	—		(459)		—		(459)
Net current period other comprehensive loss	(24,016)		(37,138)		—		(61,154)
Balance at August 31, 2021	$	17,823	$	(44,446)	$	(3,643)	$	(30,266)

(In thousands) Foreign
Currency Unrealized Loss on
Interest Rate Hedges Other Total
Balance at June 1, 2019 $ (15,022) $ (18,389) $ (5,741) $ (39,152)
Other comprehensive income (loss) before reclassifications 6,724 (29,903) 0 (23,179)
Amounts reclassified from accumulated other
comprehensive income (loss)
0 (295) 0 (295)
Net current period other comprehensive income (loss) 6,724 (30,198) 0 (23,474)
Cumulative effect of change in accounting principle 0 2,058 (83) 1,975
Balance at August 31, 2019 $ (8,298) $ (46,529) $ (5,824) $ (60,651)


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

Balance at June 1, 2020	$	(26,343)	$	(112,718)	$	(14,319)	$	(153,380)
Other comprehensive income before reclassifications	26,946		10,842		—		37,788
Amounts reclassified from accumulated other comprehensive (loss) income	—		(358)		—		(358)
Net current period other comprehensive income	26,946		10,484		—		37,430
Balance at August 31, 2020	$	603	$	(102,234)	$	(14,319)	$	(115,950)

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The following table summarizes the reclassifications out of accumulated other comprehensive (loss) income ~~(loss):~~for the three months ended August 31:


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
Details about Accumulated Other Comprehensive (Loss) Income Components							Details about Accumulated Other Comprehensive (Loss) Income Components	Amount Reclassified from Accumulated Other Comprehensive (Loss) Income				Affected Line in the Consolidated Condensed Statements of Income
(In thousands)							(In thousands)	2021		2020
		Three Months Ended
(In thousands)		August 31, 2020		August 31, 2019

Amortization of interest rate locks	Amortization of interest rate locks	$	474	$	474	Interest expense	Amortization of interest rate locks	$	607	$	474		Interest expense
Tax expense	Tax expense	(116)		(179)		Income taxes	Tax expense	(148)		(116)			Income taxes
Amortization of interest rate locks, net of tax	Amortization of interest rate locks, net of tax	$	358	$	295	Net income	Amortization of interest rate locks, net of tax	$	459	$	358

Note 12 - Segment Information

Cintas’ reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services reportable operating segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items. In addition to these rental items, restroom cleaning services and supplies, and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas’ operating segments, which consists of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, is included in All Other.

Cintas evaluates the performance of each operating segment based on several factors of which the primary financial measures are operating segment revenue and income before income taxes. The accounting policies of the operating segments are the same as those described in Note 1 entitled Basis of Presentation. Information related to the operations of Cintas’ reportable operating segments and All Other is set forth below:


(In thousands)	(In thousands)	Uniform Rental and Facility Services		First Aid and Safety Services		All Other		Corporate⁽¹⁾		Total		(In thousands)	Uniform Rental and Facility Services		First Aid and Safety Services		All Other		Corporate (1)		Total

As of and for the three months ended August 31, 2020
As of and for the three months ended August 31, 2021												As of and for the three months ended August 31, 2021

Revenue	Revenue	$	1,394,411	$	204,481	$	147,683	$	0	$	1,746,575	Revenue	$	1,508,176	$	199,116	$	189,658	$	—	$	1,896,950
Income (loss) before income taxes	Income (loss) before income taxes	$	315,028	$	18,527	$	16,151	$	(24,486)	$	325,220	Income (loss) before income taxes	$	329,382	$	25,728	$	38,991	$	(21,798)	$	372,303
Total assets	Total assets	$	6,628,127	$	620,169	$	373,543	$	421,542	$	8,043,381	Total assets	$	6,770,296	$	636,829	$	370,876	$	79,749	$	7,857,750

As of and for the three months ended August 31, 2019
As of and for the three months ended August 31, 2020												As of and for the three months ended August 31, 2020

Revenue	Revenue	$	1,454,527	$	172,090	$	184,522	$	0	$	1,811,139	Revenue	$	1,394,411	$	204,481	$	147,683	$	—	$	1,746,575
Income (loss) before income taxes	Income (loss) before income taxes	$	269,011	$	24,769	$	12,366	$	(27,159)	$	278,987	Income (loss) before income taxes	$	315,028	$	18,527	$	16,151	$	(24,486)	$	325,220
Total assets	Total assets	$	6,607,453	$	536,652	$	416,282	$	101,513	$	7,661,900	Total assets	$	6,628,127	$	620,169	$	373,543	$	421,542	$	8,043,381

⁽¹⁾Corporate assets include cash and cash equivalents and marketable securities, if applicable, in all periods.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF ~~FINANCIAL~~

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Strategy

Cintas helps more than one million businesses of all types and sizes, primarily in the United States (U.S.), as well as Canada and Latin America, ~~Europe and Asia,~~ get ~~READY™~~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, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training, ~~and compliance courses,~~ Cintas helps customers get Ready for the Workday^®. Cintas is also the creator of the Total Clean Program™ — a first-of-its-kind service that includes scheduled delivery of essential cleaning supplies, hygienically clean laundering, and sanitizing and disinfecting projects and services.

We are North America’s leading provider of corporate identity uniforms through rental and sales programs, as well as a significant provider of related business services, including entrance mats, restroom cleaning services and supplies, first aid and safety services and fire protection products and services.

Cintas’ principal objective is “to exceed customers’ expectations in order to maximize the long-term value of Cintas for shareholders and working partners,” and it provides the framework and focus for Cintas’ business strategy. This strategy is to achieve revenue growth for all our products and services by increasing our penetration at existing customers and by broadening our customer base to include ~~business~~market segments to which we have not historically served. We will also continue to identify additional product and service opportunities for our current and future customers.

To pursue the strategy of increasing penetration, we have a highly talented and diverse team of service professionals visiting our customers on a regular basis. This frequent contact with our customers enables us to develop close personal relationships. The combination of our distribution system and these strong customer relationships provides a platform from which we launch additional products and services.

We pursue the strategy of broadening our customer base in several ways. Cintas has a national sales organization introducing all its products and services to prospects in all ~~business~~market segments. Our broad range of products and services allows our sales organization to consider any type of business a prospect. We also broaden our customer base through geographic ~~expansion, especially in our fire protection operating segment.~~expansion. Finally, we evaluate strategic acquisitions as opportunities arise.

Results of Operations

Cintas classifies its business into two reportable operating segments and places the remainder of its operating segments in an All Other category. Cintas’ two reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services reportable operating segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items. In addition to these rental items, restroom cleaning services and supplies and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas’ business, which consists of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, is included in All Other. These operating segments consist of fire protection products and services and the direct sale of uniforms and related items. Cintas evaluates operating segment performance based on revenue and income before income taxes. Revenue and income before income taxes for the three months ended August 31, ~~2020~~2021 and ~~2019,~~2020, for the two reportable operating segments and All Other isare presented in Note 12 entitled Segment Information of “Notes to Consolidated Condensed Financial Statements.”

In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China, and has since spread globally. In March 2020, the World Health Organization characterized COVID-19 as a pandemic. Efforts to contain the spread of COVID-19 intensified during our fiscal 2020 fourth quarter and remained in effect throughout our fiscal 2021 first quarter. Most states and municipalities within the U.S. enacted temporary closures of businesses, issued quarantine orders and took other restrictive measures in response to the COVID-19 pandemic. Within the U.S., our business has been designated an essential business, which allows us to continue to serve customers that remain open.

We have operations throughout the U.S. and Canada and participate in a global supply chain. During ~~the first quarter~~most of fiscal 2021, the existence of the ~~COVID-19~~novel strain of coronavirus (COVID-19) pandemic, the fear associated with the COVID-19 pandemic and the reactions

of governments around the world in response to the COVID-19 pandemic to regulate the flow of labor and products and impede the business of our customers, ~~continued to impact~~impacted our ability to conduct normal business operations, which had an adverse effect on our business. If we need to close a significant number of our facilities or a critical number of our employees become too ill to work, our business operations could be materially adversely affected in a rapid manner. Similarly, if our customers experience adverse business consequences due to the COVID-19 pandemic, including being required to shut down their operations, demand for our services and products could also be materially adversely affected in a rapid manner. In response to the impact of COVID-19, Cintas put in place health and safety measures to keep Cintas employees, contractors and customers safe. These health and safety measures have not materially impacted our ability to service our customers. Many of Cintas' customers were also impacted by the COVID-19 pandemic, and we ~~did see~~saw an impact on some customer's ability to ~~pay.~~pay timely. While there was

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minimal disruption to our supply chain, Cintas did ~~experience an~~ increase in inventory, primarily personal protective equipment and facility services inventory, ~~caused by~~in response to the ~~impact~~customer needs and demand associated with the safety and cleanliness requirements of COVID-19. The increase in inventory resulted in additional inventory reserves during fiscal 2021 and could result in future inventory reserve increases if demand for personal protective equipment materially declines. The on-going roll out of the COVID-19 vaccines and gradual lifting of COVID-19 restrictions had a positive impact on our business during the three months ended August 31, 2021. The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot predict the extent to which our business, consolidated results of operations, consolidated financial condition or liquidity will ultimately be impacted.

Consolidated Results

Three Months Ended August 31, ~~2020~~2021 Compared to Three Months Ended August 31, ~~2019~~2020

Total revenue ~~decreased 3.6%~~increased 8.6% to $1,897.0 million for the three months ended August 31, ~~2020, over the same period in the prior fiscal year, from $1,811.1 million~~2021, compared to $1,746.6 ~~million. Revenue also declined organically by 5.0% as a result of decreased sales volume from~~million for the ~~COVID-19 pandemic business closures. Organic~~three months ended August 31, 2020. The organic revenue growth rate, which adjusts for the impact of acquisitions, divestitures and foreign currency exchange rate fluctuations, ~~and workday differences.~~was 8.6%. Revenue growth was negatively impacted by ~~0.1%~~a net 0.5% due to acquisitions and divestitures and positively impacted by 0.5% due to foreign currency exchange rate fluctuations and positively impacted by 0.1% due to growth derived through acquisitions and 1.4% due to one more workday in the three months ended August 31, 2020 compared to the three months ended August 31, 2019.fluctuations.

As previously discussed, the government enactment of temporary closures of certain businesses in response to the COVID-19 pandemic continued to impact our ability to service some of our customers during the first quarter of fiscal 2021. Due to the constantly changing impact of the COVID-19 pandemic, uncertainty remains about the pace of the economic recovery and about its impact on future Cintas consolidated financial results.

Uniform Rental and Facility Services reportable operating segment revenue ~~decreased 4.1%~~was $1,508.2 million for the three months ended August 31, ~~2020, over~~2021, compared to $1,394.4 million for the same period in the prior fiscal year, ~~from $1,454.5 million to $1,394.4 million. Revenue declined organically by 5.4%~~which was an increase of 8.2%. The organic revenue grow rate for this reportable operating segment was 8.2%. Revenue growth in the Uniform Rental and Facility Services reportable operating segment was negatively impacted by ~~0.2%~~a net 0.5% due to acquisitions and divestitures and positively impacted by 0.5% due to foreign currency exchange rate ~~fluctuations~~fluctuations. Revenue growth was a result of new business, the penetration of additional products and ~~positively impacted~~services into existing customers and price increases, partially offset by ~~1.5% due to one more workday~~lost business. New business growth resulted from an increase in the ~~three months ended August 31, 2020, compared to the three months ended August 31, 2019.~~number of sales representatives.

Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, ~~decreased 1.2%~~increased 10.4% for the three months ended August 31, ~~2020,~~2021, compared to the same period in the prior fiscal year, from ~~$356.6~~$352.2 million to ~~$352.2~~$388.8 million. ~~Revenue declined organically by 3.3%~~The organic revenue grow rate for other revenue was 10.3%. Revenue growth was positively impacted by ~~0.6%~~0.1% due to growth derived through acquisitions in our Fire Protection operating segment, which is included in All Other. In addition, revenue growth was positively impacted by 1.5% due to one more workday in the three months ended August 31, 2020, compared to the three months ended August 31, 2019.foreign currency exchange rate fluctuations.

Cost of uniform rental and facility services consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, shop towels and other ancillary items. Cost of uniform rental and facility services ~~decreased $53.3~~increased $63.9 million, or ~~6.9%~~8.9%, for the three months ended August 31, ~~2020,~~2021, compared to the three months ended August 31, ~~2019.~~2020. This ~~decrease~~change from prior fiscal year was primarily due to ~~lower~~higher Uniform Rental and Facility Services reportable operating segment sales volume, as well as ~~certain cost control measures such as reduced supplies,~~increased labor and energy ~~costs that were partially offset by increases in material cost.~~costs.

Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, personal protective equipment, uniforms, and fire protection products), delivery expenses and distribution expenses in the First Aid and Safety Services reportable operating segment and All Other. Cost of other increased ~~$11.6~~$9.9 million, or ~~6.0%~~4.8%, for the three months ended August 31, ~~2020,~~2021, compared to the three months ended August 31, ~~2019.~~2020. Cost of other improved as a percentage of revenue, decreasing from 58.2% for three months ended August 31, 2020 to 55.3% for the three months ended August 31, 2021. The ~~increase~~decrease in cost of sales as a percent to revenue was primarily due to ~~an increase~~a favorable change sales mix, including a decrease in the proportion of sales ~~from~~related to personal protective ~~equipment in the First Aid and Safety Services reportable operating segment and All Other.~~equipment.

Selling and administrative expenses ~~decreased $66.5~~increased $32.2 million, or 6.7%, in the three months ended August 31, 2021, compared to the same period of the prior fiscal year. The increase in expense was due to increases in selling labor and increased travel and meeting expenses, partially offset by a gain on the sale of certain operating assets within the Uniform Direct Sales operating segment. Selling and administrative expenses as a percent of revenue were 26.8% for the three months ended August 31, 2021, which is a 50 basis point improvement compared to 27.3% for the same period in the prior fiscal year. The improvement as a percent of revenue was primarily due to revenue growth outpacing the growth in expenses.

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Operating income was $394.1 million, or 20.8% of revenue, for the three months ended August 31, 2021, compared to $349.7 million, or 20.0% of revenue, for the three months ended August 31, 2020. The 80 basis point increase in operating income as a percent of revenue was due to both cost of sales and selling and administrative expenses decreasing as a percent of revenue for the three months ended August 31, ~~2020, compared to 30.0% for the same period in the prior fiscal year. The decrease as a percent~~2021.

~~of revenue was primarily due to decreases in labor and employee-partner related expenses as well as lower discretionary spending.~~

Operating income was $349.7 million for the three months ended August 31, 2020, compared to $306.1 million for the three months ended August 31, 2019. Operating income was positively impacted by lower cost of sales as a percent of revenue and the decrease in selling and administrative expenses for the three months ended August 31, 2020.

Net interest expense (interest expense less interest income) was $21.8 million for the three months ended August 31, 2021, compared to $24.5 million for the three months ended August 31, ~~2020, compared~~2020. The change was primarily due to ~~$27.2~~the refinancing of $250.0 million from senior debt with an interest rate of 4.30% which matured on June 1, 2021, into commercial paper which had an interest rate of 0.20% at August 31, 2021.

Cintas’ effective tax rate for continuing operations was 11.0% and 7.8% for the three months ended August 31, ~~2019. The decrease was primarily due to the decrease in total debt outstanding during the quarter.~~

~~Cintas’ effective tax rate was 7.8%~~2021 and ~~10.1% for the three months ended August 31,~~ 2020, ~~and 2019,~~ respectively. The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation.

Net income for the three months ended August 31, ~~2020~~2021 increased ~~$49.2~~$31.2 million, or ~~19.6%~~10.4%, compared to the three months ended August 31, ~~2019.~~2020. Diluted earnings per share were ~~$2.78~~$3.11 for the three months ended August 31, ~~2020,~~2021, which was an increase of ~~19.8%~~11.9% compared to the same period in the prior fiscal year. Diluted earnings per share increased primarily due to the increase in ~~earnings.~~net income combined with the decrease in weighted average common shares outstanding. The decrease in common shares outstanding resulted from purchasing an aggregate of approximately 3.0 million shares of common stock under the October 30, 2018 and October 29, 2019 share buyback programs since the beginning of the third quarter of fiscal 2021 through the first quarter of fiscal 2022.

Uniform Rental and Facility Services Reportable Operating Segment

Three Months Ended August 31, ~~2020~~2021 Compared to Three Months Ended August 31, ~~2019~~2020

Uniform Rental and Facility Services reportable operating segment revenue ~~decreased from $1,454.5~~was $1,508.2 million ~~to $1,394.4 million, or 4.1%,~~ for the three months ended August 31, ~~2020, over~~2021 compared to $1,394.4 million for the same period inof the prior fiscal year, and the cost of uniform rental and facility services ~~decreased $53.3~~increased $63.9 million, or ~~6.9%~~8.9%. ~~Revenue declined organically by 5.4%~~The organic revenue grow rate for the reportable operating segment was 8.2%. The reportable operating segment’s gross margin was ~~$679.0~~$728.9 million, or ~~48.7%~~48.3% of revenue. The gross margin was ~~150~~40 basis points ~~higher~~lower than the prior fiscal year’s first quarter gross margin of ~~47.2%~~48.7%. The ~~increase~~difference in gross margin as a percent to revenue was driven primarily by ~~certain cost control measures such as reduced supplies,~~an increase in labor and energy ~~costs that were partially offset by increases in material cost.~~costs.

Selling and administrative expenses ~~decreased $52.9~~for the Uniform Rental and Facility Services reportable operating segment increased $35.5 million in the three months ended August 31, 2021 compared to the same period of the prior fiscal year. Selling and ~~decreased~~administrative expenses as a percent of revenue ~~to 26.1%,~~for the three months ended August 31, 2021 was 26.5% compared to ~~28.7%~~26.1% in the first quarter of the prior fiscal year. The ~~decrease~~increase as a percent of revenue was primarily due to ~~decreases~~increases in selling labor and ~~employee-partner related expenses as well as lower discretionary spending.~~increased travel and meeting expenses.

Income before income taxes increased ~~$46.0~~$14.4 million, or ~~17.1%~~4.6%, for the Uniform Rental and Facility Services reportable operating segment for the three months ended August 31, ~~2020,~~2021, compared to the same period in the prior fiscal year. Income before income taxes was ~~22.6%~~21.8% of the reportable operating segment’s revenue, which was a ~~410~~80 basis point ~~increase~~decrease compared to the first quarter of the prior fiscal year of ~~18.5%~~22.6%. This ~~increase~~decrease was primarily due to the previously discussed ~~increase~~changes in gross margin and ~~the decrease in~~ selling and administrative ~~expenses.~~expenses as a percent of revenue.

First Aid and Safety Services Reportable Operating Segment

Three Months Ended August 31, ~~2020~~2021 Compared to Three Months Ended August 31, ~~2019~~2020

First Aid and Safety Services reportable operating segment revenue ~~increased~~decreased from ~~$172.1~~$204.5 million to ~~$204.5~~$199.1 million, or ~~18.8%~~2.6%, for the three months ended August 31, ~~2020,~~2021, over the same period in the prior fiscal year. Revenue ~~also increased~~for the reportable operating segment declined organically by ~~17.1%~~3.3%. ~~Total~~First Aid and Safety Services reportable operating segment revenue was positively impacted by ~~1.8%~~0.5% due to ~~one more workday in the three months ended August 31, 2020 compared to the three months ended August 31, 2019~~acquisitions and ~~negatively impacted~~ by ~~0.1%~~0.2% due to foreign currency exchange rate fluctuations. ~~Growth~~The change in revenue was ~~driven~~caused by ~~many factors including new business sold by sales representatives, penetration of additional products and services into existing customers and sales of~~a decrease in demand for personal protective ~~equipment in response to the COVID-19 pandemic.~~equipment.

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Cost of first aid and safety services ~~increased $34.6~~decreased $12.5 million, or ~~39.4%~~10.2%, for the three months ended August 31, ~~2020,~~2021, over the three months ended August 31, ~~2019,~~2020, due to ~~higher~~lower sales volume. The gross margin as a percent of revenue was ~~40.2%~~44.8% for the quarter ended August 31, ~~2020~~2021, compared to the gross margin as a percent of revenue of ~~49.0%~~40.2% in the same period of the prior fiscal year. The ~~decrease~~improvement in gross margin from the first quarter of the prior year was primarily driven by ~~an increase~~a decrease in the proportion of sales ofrelated to personal protective equipment, which typically have lower gross margins ~~as a result of the impact of the COVID-19 pandemic.~~than first aid cabinet sales.

Selling and administrative expenses ~~increased $4.1~~remained at $63.5 million, which is in line with the first quarter of the prior fiscal year, but ~~decreased~~increased as a percent of revenue to ~~31.1%~~31.9%, compared to ~~34.6%~~31.1% in the first quarter of the prior fiscal year. The ~~decrease in selling and administrative expenses~~change as a percent of revenue from the prior year was primarily due to ~~revenue growing at a faster pace than labor and employee-partner related expenses and discretionary spending.~~lower revenue.

Income before income taxes for the First Aid and Safety Services reportable operating segment ~~decreased $6.2~~increased $7.2 million to ~~$18.5~~$25.7 million for the three months ended August 31, ~~2020,~~2021, compared to the same period in the prior fiscal year. Income before income taxes was ~~9.1%~~12.9% of the reportable operating segment’s revenue compared to the first quarter of the prior fiscal year of ~~14.4%~~9.1%. This ~~decrease~~change was primarily due to the previously discussed ~~decrease~~increase in gross margin.

Liquidity and Capital Resources

The following is a summary of our cash flows and cash and cash equivalents as of and for the three months ended August 31:

(In thousands) 2020 2019
Net cash provided by operating activities $ 312,292 $ 276,901
Net cash used in investing activities $ (39,942) $ (78,139)
Net cash provided by (used in) financing activities $ 2,243 $ (193,607)
Cash and cash equivalents at the end of the period $ 421,542 $ 102,131


(In thousands)	2021		2020

Net cash provided by operating activities	$	262,141	$	312,292
Net cash used in investing activities	$	(84,321)	$	(39,942)
Net cash (used in) provided by financing activities	$	(590,084)	$	2,243

Cash and cash equivalents at the end of the period	$	79,749	$	421,542

Cash and cash equivalents as of August 31, 2021 and 2020, ~~and 2019~~ include ~~$36.3~~$38.1 million and ~~$25.4~~$36.3 million, respectively, that is located outside of the ~~United States.~~U.S.

Cash flows provided by operating activities have historically supplied us with a significant source of liquidity. We generally use these cash flows to fund most, if not all, of our operations and expansion activities and dividends on our common stock. We may also use cash flows provided by operating activities, as well as proceeds from long-term debt and short-term borrowings, to fund growth and expansion opportunities, as well as other cash requirements such as the repurchase of our common stock and payment of long-term debt.

The disruption from the COVID-19 pandemic continued to have a negative impact on Cintas' fiscal 2021 first quarter financial results, however, net cash flow provided by operating activities in the first quarter was not significantly impacted. At August 31, 2020, our short-term liquidity position remained solid, asWe expect our cash flows from operating activities ~~are expected~~ to remain sufficient to provide us with adequate levels of short-term liquidity. In addition, we have access to $1.0 billion of short-term debt from our revolving credit facility. ~~However,~~Although the impact of the COVID-19 pandemic is fluid and continues to evolve, we believe our long-term liquidity position remains unclear due to the constantly changing scope and nature of the impacts of the COVID-19 pandemic. Accordingly, we have taken proactive measures to maintain financial flexibility within the landscape of the COVID-19 pandemic.strong. We believe ~~we have~~the Company has sufficient liquidity to operate in the current business ~~environment as a result~~environment. Acquisitions and dividends remain strategic objectives, but they will be dependent on the economic outlook and liquidity of ~~these actions.~~the Company.

Net cash provided by operating activities was $262.1 million for the three months ended August 31, 2021, compared to $312.3 million for the three months ended August 31, ~~2020,~~2020. The change from the prior fiscal year was primarily due to an increase in accounts receivable and uniforms and other rental items in service which resulted from the growth in sales. Additionally, there were uses of ~~$35.4 million compared~~cash from the change in accrued compensation and other related liabilities, which was caused by the differences in the annual bonus payments and accounts payable, which was due to ~~the three months ended August 31, 2019. The increase was primarily the result~~timing. These uses of cash were partially offset by increased net ~~income.~~income and favorable changes in working capital, specifically, inventories, net.

Net cash used in investing activities includes capital expenditures, purchases of investments, proceeds from sale of operating assets and cash paid for acquisitions of businesses. Capital expenditures were ~~$30.9~~$48.7 million and ~~$64.7~~$30.9 million for the three months ended August 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Capital expenditures in ~~fiscal~~three months ended August 31, 2021 included ~~$20.9~~$34.5 million for the Uniform Rental and Facility Services reportable operating segment and ~~$9.0~~$10.7 million for the First Aid and Safety Services reportable operating segment. Cash paid for acquisitions of businesses was ~~$2.0~~$35.7 million and ~~$3.9~~$2.0 million for the three months ended August 31, 2021 and

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2020, respectively. The acquisitions during the three months ended August 31, 2021 occurred in our Uniform Rental and ~~2019, respectively.~~Facility Services reportable operating segment and our Fire Protection operating segment, which is included in All Other. The acquisitions during the three months ended August 31, 2020 occurred in our Uniform Rental and Facility Services reportable operating segment. ~~The acquisitions~~Also, during the three months ended August 31, ~~2019 occurred in our First Aid and Safety Services reportable~~2021, the Company received proceeds of $15.1 million from the sale of certain operating ~~segment and our Fire Protection business, which is included~~assets in All Other. Net cash used in investing activities also includes $8.7 million and $4.9 million ~~and $9.4 million from~~of purchases of investments during the three months ended August 31, 2021 and 2020, ~~and 2019,~~ respectively.

Net cash used in financing activities was $590.1 million for the three months ended August 31, 2021, and net cash provided by financing activities was $2.2 million for the three months ended August 31, ~~2020, and net~~2020. The change in cash used in financing activities was ~~$193.6 million for~~primarily due to the increase in share buyback activity, debt payments and dividend payments, partially offset by the net issuance of commercial paper in the three months ended August 31, ~~2019.~~ 2021.

On October ~~30, 2018,~~29, 2019, we announced ~~that~~ the Board of Directors authorized a $1.0 billion share buyback program, which ~~does not have an expiration date.~~was completed during the first quarter of fiscal 2022. On ~~October 29, 2019,~~July 27, 2021, we announced that the Board of Directors authorized a new ~~$1.0~~$1.5 billion share buyback program, which does not have an expiration date. The following table summarizes the buyback activity by program and for the three months ended August 31:


		2020								2019									2021				2020
Buyback Program (In thousands except per share data)	Buyback Program (In thousands except per share data)	Shares	Avg. Price per Share		Purchase Price		Shares	Avg. Price per Share		Purchase Price		Buyback Program (In thousands except per share data)	Shares	Avg. Price per Share		Purchase Price		Shares	Avg. Price per Share		Purchase Price

October 30, 2018		—	$	—	$	—	837	$	230.66	$	193,109

October 29, 2019	October 29, 2019	—	$	—	$	—	—	$	—	$	—	October 29, 2019	1,590	$	365.41	$	581,220	—	$	—	$	—
July 27, 2021												July 27, 2021	—	$	—	$	—	—	$	—	$	—
		—	$	—	$	—	837	$	230.66	$	193,109		1,590	$	—	$	581,220	—	$	—	$	—

There were no share buybacks in the period subsequent to August 31, ~~2020,~~2021, through October ~~9, 2020,~~7, 2021 under any share buyback program. ~~From~~In addition, for the ~~inception of the October 30, 2018 share buyback program through October 9, 2020,~~three months ended August 31, 2021, Cintas ~~has purchased a total of 4.3~~acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the three months ended August 31, 2021. These shares were acquired at an average price of ~~$219.42~~$394.19 per share for a total purchase price of ~~$939.1~~$78.0 million. ~~In addition, for~~For the three months ended August 31, 2020, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the three months ended August 31, 2020. These shares were acquired at an average price of $300.01 per share for a total purchase price of $69.0 million. ~~For~~

On April 13, 2021, our Board of Directors declared a quarterly dividend of $0.75 per share on outstanding common stock. These dividends, totaling $79.1 million, were paid on June 15, 2021, to shareholders of record as of May 15, 2021. On July 27, 2021, the ~~three months ended~~Board of Directors declared a quarterly dividend of $0.95 per share on outstanding common stock. This dividend of $98.8 million was accrued on the August 31, ~~2019, Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes dues~~2021 consolidated condensed balance sheet and was paid on ~~restricted stock awards that vested~~September 15, 2021, during the ~~three months ended~~second quarter of fiscal 2022, to shareholders of record as of August ~~31, 2019. These shares were acquired~~13, 2021. Any future dividend declarations, including the amount of any dividends, are at ~~an average price~~the discretion of ~~$260.83 per share for a total purchase price~~the Board of ~~$63.7 million.~~Directors and dependent upon then-existing conditions, including the Company's consolidated operating results and consolidated financial condition, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors may deem relevant.

During the three months ended August 31, ~~2019,~~2021, Cintas issued ~~$26.5~~$326.0 million, net of commercial paper borrowings. On June 1, 2021, in accordance with the terms of the notes, Cintas paid the $250.0 million aggregate principal amount of its 4.30%, 10-year senior notes that matured on that date with cash on hand. During the next 12 months, Cintas expects to issue long-term debt to pay the $650 million principal amount of its 2.90%, 5-year senior notes that mature in the fourth quarter of fiscal 2022 and the $300 million principal amount of its 3.25%, 10-year senior notes that mature in the first quarter of fiscal 2023.

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The following table summarizes Cintas' outstanding debt:


(In thousands)	(In thousands)	Interest Rate		Fiscal Year Issued	Fiscal Year Maturity	August 31, 2020		May 31, 2020		(In thousands)	Interest Rate			Fiscal Year Issued	Fiscal Year Maturity	August 31, 2021		May 31, 2021

Debt due within one year	Debt due within one year									Debt due within one year
Senior notes	Senior notes	4.30	%	2012	2022	$	250,000	$	—	Senior notes	4.30	%		2012	2022	$	—	$	250,000

Senior notes										Senior notes	2.90	%		2017	2022	650,000		650,000
Senior notes										Senior notes	3.25	%		2013	2023	300,000		—
Commercial paper										Commercial paper	0.20	%	(1)	2022	2022	326,000		—
Debt issuance costs	Debt issuance costs					(192)		—		Debt issuance costs						(833)		(930)
Total debt due within one year	Total debt due within one year					$	249,808	$	—	Total debt due within one year						$	1,275,167	$	899,070

Debt due after one year	Debt due after one year									Debt due after one year
Senior notes	Senior notes	4.30	%	2012	2022	$	—	$	250,000	Senior notes	3.25	%		2013	2023	$	—	$	300,000
Senior notes		2.90	%	2017	2022	650,000		650,000
Senior notes		3.25	%	2013	2023	300,000		300,000
Senior notes (2)										Senior notes (2)	2.78	%		2013	2023	50,707		50,815
Senior notes ⁽¹⁾⁽³⁾	Senior notes ⁽¹⁾⁽³⁾	2.78	%	2013	2023	51,141		51,250		Senior notes ⁽¹⁾⁽³⁾	3.11	%		2015	2025	51,217		51,301
Senior notes ⁽²⁾		3.11	%	2015	2025	51,553		51,637
Senior notes	Senior notes	3.70	%	2017	2027	1,000,000		1,000,000		Senior notes	3.70	%		2017	2027	1,000,000		1,000,000
Senior notes	Senior notes	6.15	%	2007	2037	250,000		250,000		Senior notes	6.15	%		2007	2037	250,000		250,000

Debt issuance costs	Debt issuance costs					(12,247)		(13,182)		Debt issuance costs						(8,702)		(9,283)
Total debt due after one year	Total debt due after one year					$	2,290,447	$	2,539,705	Total debt due after one year						$	1,343,222	$	1,642,833

⁽¹⁾Variable rate debt instrument. The rate presented is the variable borrowing rate at August 31, 2021.

(1) 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%.

⁽²⁾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%.

~~a new term loan of $200.0 million.~~billion. 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. As of August 31, ~~2020~~2021, there was $326.0 million of commercial paper outstanding and no borrowings on our revolving credit facility. As of May 31, ~~2020,~~2021, there was no 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. Cintas was in compliance with all of the debt covenants for all periods presented.

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.~~past, including, without limitation, to repay our long-term debt that is maturing in the next twelve months. However, the COVID-19 pandemic, which has caused disruption in the capital markets, could make financing more difficult and/or expensive. Additionally, our ability to continue to access the commercial paper and long-term debt markets on favorable interest rate and other terms will depend, to

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a significant degree, on the ratings assigned by the credit rating agencies to our indebtedness. As of August 31, ~~2020,~~2021, our ratings were as follows:

Rating Agency

Outlook

Commercial
Paper

Long-term
Debt

Standard & Poor’s

~~Negative~~Stable

A-2

A-

Moody’s Investors Service

Stable

P-2

Standard and Poor's negative outlook reflects the inherent uncertainty regarding the spread of COVID-19 and the potential impact to Cintas’ operating conditions, which could result in Cintas being unable to maintain adjusted leverage of less than two times total debt to EBITDA.

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, long-term debt and standby letters of credit.

We have assessed the impact of events subsequent to our consolidated condensed balance sheet date but prior to the issuance of this filing. The impact from the COVID-19 pandemic, however, continues to evolve, and the scope and nature of the impacts of the COVID-19 pandemic remain unclear. As such, our conclusions regarding both our short-term and long-term liquidity position remain unchanged. Management will continue to evaluate the Company’s liquidity position and our near- and longer-term financial performance as we manage the Company through the uncertainty related to the COVID-19 pandemic.

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Financial and Nonfinancial Disclosure About Issuers and Guarantors of Cintas’ Senior Notes

Cintas Corporation No. 2 (Corp. 2) is the indirectly, wholly owned principal operating subsidiary of Cintas. Corp. 2 is the issuer of the ~~$2,550.0~~$2,300.0 million aggregate principal amount of senior notes outstanding as of August 31, ~~2020,~~2021, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly owned, direct and indirect domestic subsidiaries.

Basis of Preparation of the Summarized Financial Information

The following tables include summarized financial information of Cintas Corporation (Issuer), Corp. 2 and subsidiary guarantors (together, the Obligor Group). Investments in and equity in the earnings of non-guarantors, which are not members of the Obligor Group, have been excluded. Non-guarantor subsidiaries are located outside the U.S., and therefore, excluded from the Obligor Group.

The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with non-guarantors have been presented in separate line items, if they are material. Summarized financial information of the Obligor Group ~~as of and for the three months ended August 31, 2020~~ is as follows:


~~Summarized Consolidated Statement of Income~~ ~~(In thousands)~~	Obligor Group

~~Net sales to unrelated parties~~	$	~~1,647,338~~
~~Net sales to non-guarantors~~	$	~~831~~
~~Operating income~~	$	~~338,962~~
~~Net income~~	$	~~292,039~~


	Three Months Ended
Summarized Consolidated Condensed Statement of Income (In thousands)	August 31, 2021		August 31, 2020

Net sales to unrelated parties	$	1,788,303	$	1,647,338
Net sales to non-guarantors	$	1,493	$	831
Operating income	$	380,322	$	338,962
Net income	$	320,957	$	292,039


~~Summarized Consolidated Balance Sheet~~ ~~(In thousands)~~	Obligor Group

~~ASSETS~~
~~Receivables due from non-obligor subsidiaries~~	$	~~2,950~~
~~Total other current assets~~	$	~~2,485,529~~
~~Total other noncurrent assets~~	$	~~4,935,408~~

~~LIABILITIES~~
~~Amounts due to non-obligor subsidiaries~~	$	~~4,099~~
~~Current liabilities~~	$	~~1,053,554~~
~~Noncurrent liabilities~~	$	~~3,289,723~~


Summarized Consolidated Condensed Balance Sheets (In thousands)	August 31, 2021		May 31, 2021

ASSETS
Receivables due from non-obligor subsidiaries	$	4,667	$	2,292
Total other current assets	$	2,283,848	$	2,652,810
Total other noncurrent assets	$	4,935,913	$	4,924,550

LIABILITIES
Amounts due to non-obligor subsidiaries	$	1,446	$	457
Current liabilities	$	2,234,867	$	1,893,352
Noncurrent liabilities	$	2,216,902	$	2,549,911

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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, consolidated results of operations or consolidated cash flows 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, 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; 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;~~reporting; the effect of new accounting pronouncements; 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, ~~2020~~2021 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.

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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 29 of our Annual Report on Form 10-K for the year ended May 31, ~~2020.~~2021.

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’ President and 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, ~~2020.~~2021. Based on such evaluation, Cintas’ management, including Cintas’ President and Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, has concluded that Cintas’ disclosure controls and procedures were effective as of August 31, ~~2020,~~2021, 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 Securities and Exchange Commission'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

There were no 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 months~~fiscal quarter ended August 31, ~~2020,~~2021, that have materially affected, or are reasonably likely to materially affect, Cintas' internal control over financial reporting.

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Part II. Other Information

ITEM 1.

LEGAL PROCEEDINGS

Cintas is subject to 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, consolidated results of operations or consolidated cash flows of Cintas.

ITEM ~~1A. RISK FACTORS~~2.

The following disclosure modifies the discussion of certain risks and uncertainties previously disclosed in our Annual Report on Form 10-K for the year ended May 31, 2020. These risks and uncertainties, along with those previously disclosed, could materially adversely affect our business or financial results. Additional risks and uncertainties that are not presently known to us or that we deem immaterial may also impact our business or financial results.

We rely extensively on computer systems, including third-party systems, to process transactions, maintain information and manage our businesses. Disruptions in the availability of computer systems due to implementation of a new system or otherwise, or privacy breaches involving computer systems, could impact our ability to service our customers and adversely affect our sales, consolidated results of operations and reputation and expose us to litigation risk.

Our businesses rely on various computer systems, including third-party systems, to provide customer information, process customer transactions and provide other general information necessary to manage our businesses. We have an active disaster recovery plan in place that is frequently reviewed and tested. However, our computer systems are subject to damage or interruption due to system conversions, such as our current conversion to SAP enterprise system, power outages, computer or telecommunication failures, catastrophic events such as fires, tornadoes and hurricanes and usage errors by our employees. Although we believe that we have adopted appropriate measures to mitigate potential risks to our technology and our operations from these information technology-related and other potential disruptions, given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to production downtimes, operational delays and interruptions in our ability to provide products and services to our customers. Any disruption caused by the unavailability of our computer systems could adversely affect our sales, could require us to make a significant investment to fix or replace them and, therefore, could adversely affect our consolidated results of operations. In addition, cyber-security attacks are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data. If the network of security controls, policy enforcement mechanisms and monitoring systems to address these threats to our technology fails, or we are unable to successfully address security incidents, production downtimes, operational delays and interruptions in our ability to provide products and services to our customers, the compromising of confidential or otherwise protected Company, customer, or employee information, destruction or corruption of data, security breaches, or other manipulation or improper use of our systems and networks could result in financial losses from remedial actions, loss of business or potential liability and damage to our reputation or otherwise have a material impact on our business, operations or financial condition.

We also rely on software applications, enterprise cloud storage systems and cloud computing services provided by third-party vendors for certain information technology services, including our SAP enterprise system, payroll data, risk management data and lease data. If these third-party vendors, as well as our suppliers and other vendors, experience service interruptions or damage, security breaches, cyber-attacks, computer viruses, ransomware or other similar events or intrusions, our business and our consolidated results of operations may be adversely affected.

~~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, 2020 ⁽²⁾
17,744 $ 251.95 — $ 1,060.9
July 1 - 31, 2020 ⁽³⁾
167,822 $ 302.44 — $ 1,060.9
August 1 - 31, 2020 ⁽⁴⁾
44,391 $ 310.04 — $ 1,060.9
Total 229,957 $ 300.01 — $ 1,060.9


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, 2021 (2)	1,158,068	$	358.64	1,153,324	$	167.6
July 1 - 31, 2021 (3)	628,949	$	386.86	437,265	$	1,500.0
August 1 - 31, 2021 (4)	1,484	$	395.77	—	$	1,500.0
Total	1,788,501	$	368.60	1,590,589	$	1,500.0

⁽¹⁾On October ~~30, 2018,~~29, 2019, Cintas announced that the Board of Directors authorized a $1.0 billion share buyback program, which ~~does not have an expiration date.~~was completed during the first quarter of fiscal 2022. From the inception of the October ~~30, 2018~~29, 2019 share buyback program through ~~August 31, 2020,~~July, 2021, Cintas has purchased a total of ~~4.3~~2.8 million shares of Cintas common stock at an average price of ~~$219.42~~$358.93 per share for a total purchase price of ~~$939.1 million. Additionally, on October 29, 2019,~~$1.0 billion. On July 27, 2021, Cintas announced that the Board of Directors authorized a new ~~$1.0~~$1.5 billion share buyback program, which does not have an expiration date. ~~Cintas has not made any purchases~~There were no share buybacks under the ~~October 29, 2019~~July 27 2021 share buyback program through August 31, ~~2020.~~2021.

⁽²⁾During June ~~2020,~~2021, Cintas acquired ~~17,744~~4,744 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 ~~$251.95~~$357.11 per share for a total purchase price of ~~$4.5~~$1.7 million.

⁽³⁾During July ~~2020,~~2021, Cintas acquired ~~167,822~~191,684 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 ~~$302.44~~$395.10 per share for a total purchase price of ~~$50.7~~$75.7 million.

⁽⁴⁾During August ~~2020,~~2021, Cintas acquired ~~44,391~~1,484 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 ~~$310.04~~$395.77 per share for a total purchase price of ~~$13.8~~$0.6 million.

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ITEM 6.

EXHIBITS


22			Subsidiary Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize Securities of the Registrant (Incorporated by reference to Exhibit 22 to Cintas' Annual Report on Form 10-K for the year ended May 31, 2021).
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~~101			The following financial statements from Cintas' Quarterly Report on Form 10-Q for the period ended August 31, 2021, formatted in Inline ~~XBRL Instance Document~~
~~101.SCH~~			~~Inline XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~			~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~			~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~			~~Inline XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~			~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~XBRL: (i) Consolidated Condensed Statements of Income (unaudited), (ii) Consolidated Condensed Statements of Comprehensive Income (unaudited), (iii) Consolidated Condensed Balance Sheets (unaudited), (iv) Consolidated Condensed Statements of Shareholders' Equity (unaudited), (v) Consolidated Condensed Statements of Cash Flows (unaudited) and (vi) Notes to Consolidated Condensed Financial Statements, tagged as blocks of text and including detailed tags.
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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 ~~9, 2020~~7, 2021

/s/

J. Michael Hansen

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)


	Common Stock					Paid-In Capital		Retained Earnings		Other Accumulated Comprehensive Loss	Treasury Stock						Total Shareholders' Equity
	Shares	Amount											Shares			Amount

Balance at June 1, 2020	186,793	$	1,102,689	$	171,521	$	7,296,509	$	(153,380)	(83,378)	$	(5,182,137)		$	3,235,202
Net income	—	—		—		300,005		—		—	—			300,005
Comprehensive income, net of tax	—	—		—		—		37,430		—	—			37,430

Stock-based compensation	—	—		29,055		—		—		—	—			29,055
Vesting of stock-based compensation awards	568	170,421		(170,421)		—		—		—	—			0
Stock options exercised, net of shares surrendered	795	72,123		—		—		—		—	—			72,123
Repurchase of common stock	—	—		—		—		—		(230)	(69,011)			(69,011)


Balance at August 31, 2020	188,156	$	1,345,233	$	30,155	$	7,596,514	$	(115,950)	(83,608)	$	(5,251,148)		$	3,604,804


Fiscal Year (In thousands)

2021 (remaining nine months)	$	102,745
2022	126,441
2023	107,211
2024	95,316
2025	82,492
Thereafter	240,600
Total future amortization expense	$	754,805