Supplemental Guarantor Information | Supplemental Guarantor Information Cintas Corporation No. 2 ("Corp. 2") is the indirectly, wholly-owned principal operating subsidiary of Cintas. Corp. 2 is the issuer of the $ 1,300.0 million of long-term senior notes, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly-owned, direct and indirect domestic subsidiaries. As allowed by SEC rules, the following condensed consolidating financial statements are provided as an alternative to filing separate financial statements of the guarantors. Each of the subsidiaries presented in the following condensed consolidating financial statements has been fully consolidated in Cintas' consolidated financial statements. The following condensed consolidating financial statements should be read in conjunction with the consolidated financial statements of Cintas and notes thereto of which this note is an integral part. Condensed consolidating financial statements for Cintas, Corp. 2, the subsidiary guarantors and non-guarantors are presented on the following pages: Condensed Consolidating Income Statement Year Ended May 31, 2015 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Revenue: Rental uniforms and ancillary products $ — $ 2,657,177 $ 719,122 $ 215,491 $ (136,834 ) $ 3,454,956 Other services — 1,421,861 31,222 71,249 (502,402 ) 1,021,930 Equity in net income of affiliates 408,077 — — — (408,077 ) — 408,077 4,079,038 750,344 286,740 (1,047,313 ) 4,476,886 Costs and expenses (income): Cost of rental uniforms and ancillary products — 1,600,457 441,171 148,075 (276,237 ) 1,913,466 Cost of other services — 949,694 (17,547 ) 44,153 (334,217 ) 642,083 Selling and administrative expenses — 1,276,745 (100,025 ) 74,524 (26,314 ) 1,224,930 Operating income 408,077 252,142 426,745 19,988 (410,545 ) 696,407 Gain on deconsolidation of Shredding — 4,952 — — — 4,952 Gain on sale of stock of an equity method investment — — 21,739 — — 21,739 Interest income — (12 ) (250 ) (79 ) 2 (339 ) Interest expense (income) — 66,298 (1,134 ) (3 ) — 65,161 Income before income taxes 408,077 190,808 449,868 20,070 (410,547 ) 658,276 Income taxes — 68,516 168,708 7,502 (66 ) 244,660 Loss on investment in Shred-it Partnership, net of tax — (5,123 ) — (416 ) — (5,539 ) Income from continuing operations 408,077 117,169 281,160 12,152 (410,481 ) 408,077 Income from discontinued operations, net of tax 22,541 17,692 — 4,849 (22,541 ) 22,541 Net income $ 430,618 $ 134,861 $ 281,160 $ 17,001 $ (433,022 ) $ 430,618 Condensed Consolidating Income Statement Year Ended May 31, 2014 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Revenue: Rental uniforms and ancillary products $ — $ 2,460,666 $ 663,512 $ 220,969 $ (121,217 ) $ 3,223,930 Other services — 1,600,265 31,511 86,263 (472,404 ) 1,245,635 Equity in net income of affiliates 374,285 — — — (374,285 ) — 374,285 4,060,931 695,023 307,232 (967,906 ) 4,469,565 Costs and expenses (income): Cost of rental uniforms and ancillary products — 1,520,893 417,388 153,726 (262,580 ) 1,829,427 Cost of other services — 1,041,990 (15,441 ) 54,426 (314,491 ) 766,484 Selling and administrative expenses — 1,282,356 (81,765 ) 82,348 (18,103 ) 1,264,836 Shredding Transaction asset impairment charge — — 16,143 — — 16,143 Shredding Transaction costs — — 28,481 — — 28,481 Operating income 374,285 215,692 330,217 16,732 (372,732 ) 564,194 Gain (loss) on deconsolidation of Shredding — 111,661 — (5,220 ) — 106,441 Interest income — (43 ) (178 ) (15,279 ) 15,271 (229 ) Interest expense (income) — 66,461 (635 ) (4 ) — 65,822 Income before income taxes 374,285 260,935 331,030 26,795 (388,003 ) 605,042 Income taxes — 99,789 126,021 6,260 (79 ) 231,991 Gain on investment in Shred-it Partnership — 1,141 — 93 — 1,234 Income from continuing operations 374,285 162,287 205,009 20,628 (387,924 ) 374,285 Income (loss) from discontinued operations, net of tax 157 (24 ) — 181 (157 ) 157 Net income $ 374,442 $ 162,263 $ 205,009 $ 20,809 $ (388,081 ) $ 374,442 Condensed Consolidating Income Statement Year Ended May 31, 2013 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Revenue: Rental uniforms and ancillary products $ — $ 2,314,386 $ 616,726 $ 220,946 $ (107,471 ) $ 3,044,587 Other services — 1,552,687 31,210 88,040 (470,560 ) 1,201,377 Equity in net income of affiliates 316,586 — — — (316,586 ) — 316,586 3,867,073 647,936 308,986 (894,617 ) 4,245,964 Costs and expenses (income): Cost of rental uniforms and ancillary products — 1,454,791 392,134 155,490 (246,118 ) 1,756,297 Cost of other services — 1,000,471 (12,440 ) 55,703 (307,376 ) 736,358 Selling and administrative expenses — 1,192,205 (66,640 ) 81,671 (19,905 ) 1,187,331 Operating income 316,586 219,606 334,882 16,122 (321,218 ) 565,978 Interest income — (40 ) (272 ) (28,334 ) 28,237 (409 ) Interest expense (income) — 66,584 (875 ) 3 — 65,712 Income before income taxes 316,586 153,062 336,029 44,453 (349,455 ) 500,675 Income taxes — 54,350 119,302 10,480 (43 ) 184,089 Income from continuing operations 316,586 98,712 216,727 33,973 (349,412 ) 316,586 (Loss) income from discontinued operations, net of tax (1,144 ) 36 — (1,180 ) 1,144 (1,144 ) Net income $ 315,442 $ 98,748 $ 216,727 $ 32,793 $ (348,268 ) $ 315,442 Condensed Consolidating Statement of Comprehensive Income Year Ended May 31, 2015 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Net income $ 430,618 $ 134,861 $ 281,160 $ 17,001 $ (433,022 ) $ 430,618 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments — — — (38,538 ) — (38,538 ) Change in fair value of derivatives — — — 37 — 37 Amortization of interest rate lock agreements — 1,952 — — — 1,952 Other — — (361 ) 11 — (350 ) Other comprehensive income (loss) — 1,952 (361 ) (38,490 ) — (36,899 ) Comprehensive income (loss) $ 430,618 $ 136,813 $ 280,799 $ (21,489 ) $ (433,022 ) $ 393,719 Condensed Consolidating Statement of Comprehensive Income Year Ended May 31, 2014 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Net income $ 374,442 $ 162,263 $ 205,009 $ 20,809 $ (388,081 ) $ 374,442 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments — — — (9,787 ) — (9,787 ) Change in fair value of derivatives — — — (228 ) — (228 ) Amortization of interest rate lock agreements — 1,952 — — — 1,952 Other — — (1,629 ) (3 ) — (1,632 ) Other comprehensive income (loss) — 1,952 (1,629 ) (10,018 ) — (9,695 ) Comprehensive income $ 374,442 $ 164,215 $ 203,380 $ 10,791 $ (388,081 ) $ 364,747 Condensed Consolidating Statement of Comprehensive Income Year Ended May 31, 2013 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Net income $ 315,442 $ 98,748 $ 216,727 $ 32,793 $ (348,268 ) $ 315,442 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments — (12 ) — (1,075 ) — (1,087 ) Change in fair value of derivatives — (187 ) — — — (187 ) Amortization of interest rate lock agreements — 1,952 — — — 1,952 Other — — 782 — — 782 Other comprehensive income (loss) — 1,753 782 (1,075 ) — 1,460 Comprehensive income $ 315,442 $ 100,501 $ 217,509 $ 31,718 $ (348,268 ) $ 316,902 Condensed Consolidating Balance Sheet As of May 31, 2015 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Assets Current assets: Cash and cash equivalents $ — $ 74,145 $ 249,203 $ 93,725 $ — $ 417,073 Marketable securities — — — 16,081 — 16,081 Accounts receivable, net — 358,560 104,964 32,606 — 496,130 Inventories, net — 193,594 21,149 8,870 2,598 226,211 Uniforms and other rental items in service — 399,017 117,473 36,478 (18,963 ) 534,005 Income taxes, current — 1,191 (339 ) 84 — 936 Assets held for sale — 21,341 — — — 21,341 Prepaid expenses and other current assets — 5,514 17,492 1,024 — 24,030 Total current assets — 1,053,362 509,942 188,868 (16,365 ) 1,735,807 Property and equipment, at cost, net — 523,690 275,072 72,659 — 871,421 Investments 321,083 1,956,320 895,393 956,461 (3,799,565 ) 329,692 Goodwill — — 1,180,527 15,197 (112 ) 1,195,612 Service contracts, net — 42,400 34 — — 42,434 Other assets, net 1,154,596 12,373 2,741,950 3,572 (3,894,997 ) 17,494 $ 1,475,679 $ 3,588,145 $ 5,602,918 $ 1,236,757 $ (7,711,039 ) $ 4,192,460 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ (465,247 ) $ (877,042 ) $ 1,391,999 $ 21,876 $ 38,021 $ 109,607 Accrued compensation and related liabilities — 59,752 23,989 4,682 — 88,423 Accrued liabilities — 65,022 232,500 13,137 (724 ) 309,935 Deferred tax (asset) liability — (299 ) 104,663 8,025 — 112,389 Liabilities held for sale — 704 — — — 704 Long-term debt due within one year — 293 (293 ) — — — Total current liabilities (465,247 ) (751,570 ) 1,752,858 47,720 37,297 621,058 Long-term liabilities: Long-term debt due after one year — 1,308,452 (9,766 ) 590 724 1,300,000 Deferred income taxes — (5 ) 229,266 (2,323 ) — 226,938 Accrued liabilities — — 111,105 904 — 112,009 Total long-term liabilities — 1,308,447 330,605 (829 ) 724 1,638,947 Total shareholders' equity 1,940,926 3,031,268 3,519,455 1,189,866 (7,749,060 ) 1,932,455 $ 1,475,679 $ 3,588,145 $ 5,602,918 $ 1,236,757 $ (7,711,039 ) $ 4,192,460 Condensed Consolidating Balance Sheet As of May 31, 2014 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Assets Current assets: Cash and cash equivalents $ — $ 73,540 $ 399,525 $ 40,223 $ — $ 513,288 Accounts receivable, net — 366,629 97,869 43,929 — 508,427 Inventories, net — 215,974 20,745 9,650 4,870 251,239 Uniforms and other rental items in service — 374,666 112,467 38,240 (18,836 ) 506,537 Income taxes, current — 1,549 (1,549 ) — — — Prepaid expenses and other current assets — 7,058 14,752 4,380 — 26,190 Total current assets — 1,039,416 643,809 136,422 (13,966 ) 1,805,681 Property and equipment, at cost, net — 533,665 225,677 96,360 — 855,702 Investments 321,083 2,081,094 893,647 1,015,343 (3,852,810 ) 458,357 Goodwill — — 1,211,716 55,807 (112 ) 1,267,411 Service contracts, net — 51,248 53 4,374 — 55,675 Other assets, net 1,378,100 8,900 2,189,527 9,044 (3,565,945 ) 19,626 $ 1,699,183 $ 3,714,323 $ 5,164,429 $ 1,317,350 $ (7,432,833 ) $ 4,462,452 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ (465,247 ) $ (545,526 ) $ 1,092,545 $ 30,281 $ 38,017 $ 150,070 Accrued compensation and related liabilities — 56,581 22,590 5,855 — 85,026 Accrued liabilities — 79,614 208,983 11,876 (746 ) 299,727 Income taxes, current — — 4,915 1,045 — 5,960 Deferred tax (asset) liability — (510 ) 80,575 8,780 — 88,845 Long-term debt due within one year — 773 (270 ) — — 503 Total current liabilities (465,247 ) (409,068 ) 1,409,338 57,837 37,271 630,131 Long-term liabilities: Long-term debt due after one year — 1,309,611 (10,380 ) 500 746 1,300,477 Deferred income taxes — (6 ) 251,924 (5,874 ) — 246,044 Accrued liabilities — — 92,069 873 — 92,942 Total long-term liabilities — 1,309,605 333,613 (4,501 ) 746 1,639,463 Total shareholders' equity 2,164,430 2,813,786 3,421,478 1,264,014 (7,470,850 ) 2,192,858 $ 1,699,183 $ 3,714,323 $ 5,164,429 $ 1,317,350 $ (7,432,833 ) $ 4,462,452 Condensed Consolidating Statement of Cash Flows Year Ended May 31, 2015 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Cash flows from operating activities: Net income $ 430,618 $ 134,861 $ 281,160 $ 17,001 $ (433,022 ) $ 430,618 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation — 87,186 43,013 10,425 — 140,624 Amortization of intangible assets — 13,972 60 426 — 14,458 Stock-based compensation 47,002 — — — — 47,002 Gain on sale of Storage — (31,113 ) — (7,460 ) — (38,573 ) Gain on deconsolidation of Shredding — (4,952 ) — — — (4,952 ) Gain on sale of stock of an equity method investment — — (21,739 ) — — (21,739 ) Loss on investment in Shred-it Partnership — 8,142 — 661 — 8,803 Deferred income taxes — 67 18,565 2,234 — 20,866 Changes in current assets and liabilities, net of acquisitions of businesses: Accounts receivable, net — 4,370 (7,095 ) 1,282 — (1,443 ) Inventories, net — 22,405 (405 ) (487 ) 2,272 23,785 Uniforms and other rental items in service — (24,351 ) (5,006 ) (2,764 ) 127 (31,994 ) Prepaid expenses and other current assets — (345 ) (2,740 ) (117 ) — (3,202 ) Accounts payable — (322,461 ) 289,110 (98 ) 4 (33,445 ) Accrued compensation and related liabilities — 3,171 1,400 (1,337 ) — 3,234 Accrued liabilities and other — (15,829 ) 42,551 6,322 22 33,066 Income taxes, current — 358 (6,155 ) (1,035 ) — (6,832 ) Net cash provided by (used in) operating activities 477,620 (124,519 ) 632,719 25,053 (430,597 ) 580,276 Cash flows from investing activities: Capital expenditures — (110,658 ) (92,600 ) (14,462 ) — (217,720 ) Proceeds from redemption of marketable securities — — — 161,938 — 161,938 Purchase of marketable securities and investments — (1,827 ) 38,731 (179,130 ) (53,245 ) (195,471 ) Proceeds from Storage Transactions, net of cash contributed — 93,387 — 65,041 — 158,428 Proceeds from Shredding Transaction, net of cash contributed — 3,344 — — — 3,344 Proceeds from sale of stock of an equity method investment — — 29,933 — — 29,933 Dividends received on equity method investment — — 5,247 — — 5,247 Dividends received on Shred-it Partnership investment — 113,400 — — — 113,400 Acquisitions of businesses, net of cash acquired — (15,495 ) — — — (15,495 ) Other 235,951 42,199 (764,336 ) 3,705 483,864 1,383 Net cash provided by (used in) investing activities 235,951 124,350 (783,025 ) 37,092 430,619 44,987 Cash flows from financing activities: Proceeds from the issuances of debt — — (2,615 ) 2,615 — — Repayment of debt — (1,178 ) 2,962 (2,280 ) (22 ) (518 ) Proceeds from exercise of stock-based compensation awards 40,230 — — — — 40,230 Dividends paid (201,831 ) — — (60 ) — (201,891 ) Repurchase of common stock (551,970 ) — — — — (551,970 ) Other — 1,952 (363 ) — — 1,589 Net cash (used in) provided by financing activities (713,571 ) 774 (16 ) 275 (22 ) (712,560 ) Effect of exchange rate changes on cash and cash equivalents — — — (8,918 ) — (8,918 ) Net increase (decrease) in cash and cash equivalents — 605 (150,322 ) 53,502 — (96,215 ) Cash and cash equivalents at beginning of year — 73,540 399,525 40,223 — 513,288 Cash and cash equivalents at end of year $ — $ 74,145 $ 249,203 $ 93,725 $ — $ 417,073 Condensed Consolidating Statement of Cash Flows Year Ended May 31, 2014 Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Cash flows from operating activities: Net income $ 374,442 $ 162,263 $ 205,009 $ 20,809 $ (388,081 ) $ 374,442 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation — 110,100 44,856 13,264 — 168,220 Amortization of intangible assets — 20,547 153 1,942 — 22,642 Stock-based compensation 29,875 — — — — 29,875 (Gain) loss on deconsolidation of Shredding — (111,661 ) — 5,220 — (106,441 ) Gain on investment in Shred-it Partnership — (1,850 ) — (150 ) — (2,000 ) Shredding Transaction asset impairment charge — — 16,143 — — 16,143 Shredding Transaction costs — — 26,057 — — 26,057 Deferred income taxes — (2 ) 47,373 (262 ) — 47,109 Changes in current assets and liabilities, net of acquisitions of businesses: Accounts receivable, net — (53,053 ) (1,300 ) (1,878 ) — (56,231 ) Inventories, net — (14,735 ) 4,839 450 (1,616 ) (11,062 ) Uniforms and other rental items in service — (11,004 ) 557 (973 ) (15 ) (11,435 ) Prepaid expenses and other current assets — (386 ) (1,844 ) 53 — (2,177 ) Accounts payable — 25,573 23,246 (18,374 ) 1 30,446 Accrued compensation and related liabilities — 5,778 4,947 206 — 10,931 Accrued liabilities and other — 50,008 4,897 (689 ) 21 54,237 Income taxes, current — 2,621 9,902 2,690 — 15,213 Net cash provided by operating activities 404,317 184,199 384,835 22,308 (389,690 ) 605,969 Cash flows from investing activities: Capital expenditures — (123,978 ) (9,591 ) (12,011 ) — (145,580 ) Proceeds from redemption of marketable securities — — 5,659 48,537 — 54,196 Purchase of marketable securities and investments — (151,063 ) (242,956 ) (48,387 ) 378,548 (63,858 ) Proceeds from Shredding Transaction, net of cash contributed — 180,000 — (641 ) — 179,359 Acquisitions of businesses, net of cash acquired — (13,199 ) — (20,242 ) — (33,441 ) Other 13,783 (50,446 ) 8,108 12,173 11,163 (5,219 ) Net cash provided by (used in) investing activities 13,783 (158,686 ) (238,780 ) (20,571 ) 389,711 (14,543 ) Cash flows from financing activities: Proceeds from the issuance of debt — — (2,445 ) 2,445 — — Repayment of debt — (8,436 ) (106 ) 376 (21 ) (8,187 ) Proceeds from exercise of stock-based compensation awards 41,902 — — — — 41,902 Dividends paid (93,293 ) — — (27 ) — (93,320 ) Repurchase of common stock (370,599 ) — — — — (370,599 ) Other 3,890 1,952 8,951 (14,324 ) — 469 Net cash (used in) provided by financing activities (418,100 ) (6,484 ) 6,400 (11,530 ) (21 ) (429,735 ) Effect of exchange rate changes on cash and cash equivalents — — — (676 ) — (676 ) Net increase (decrease) in cash and cash equivalents — 19,029 152,455 (10,469 ) — 161,015 Cash and cash equivalents at beginning of year — 54,511 247,070 50,692 — 352,273 Cash and cash equivalents at end of year $ — $ 73,540 $ 399,525 $ 40,223 $ — $ 513,288 Condensed Consolidating Statement of Cash Flows Year Ended May 31, 2013 (in thousands) Cintas Corporation Corp. 2 Subsidiary Guarantors Non- Guarantors Eliminations Cintas Corporation Consolidated Cash flows from operating activities: Net income $ 315,442 $ 98,748 $ 216,727 $ 32,793 $ (348,268 ) $ 315,442 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation — 16,647 135,345 13,672 — 165,664 Amortization of intangible assets — 21,077 200 2,436 — 23,713 Stock-based compensation 23,310 — — — — 23,310 Deferred income taxes — — 53,916 (5,893 ) — 48,023 Changes in current assets and liabilities, net of acquisitions of businesses: Accounts receivable, net — (25,206 ) (15,326 ) (2,172 ) — (42,704 ) Inventories, net — 9,034 (5,292 ) 626 6,629 10,997 Uniforms and other rental items in service — (26,364 ) (11,590 ) (4,077 ) (2,148 ) (44,179 ) Prepaid expenses and other current assets — 507 (3,620 ) (168 ) — (3,281 ) Accounts payable — (55,802 ) 75,034 5,794 (3 ) 25,023 Accrued compensation and related liabilities — (9,206 ) (3,977 ) 22 — (13,161 ) Accrued liabilities and other — (5,416 ) 38,099 (829 ) 19 31,873 Income taxes, current — 1,110 206 10,712 — 12,028 Net cash provided by operating activities 338,752 25,129 479,722 52,916 (343,771 ) 552,748 Cash flows from investing activities: Capital expenditures — (39,975 ) (131,208 ) (25,303 ) — (196,486 ) Proceeds from redemption of marketable securities — — 13,899 147,579 — 161,478 Purchase of marketable securities and investments — (683 ) (31,075 ) (158,378 ) 11,672 (178,464 ) Acquisitions of businesses, net of cash acquired — (67,431 ) 112 (2,051 ) — (69,370 ) Other (60,918 ) 58,589 (315,519 ) (15,609 ) 332,118 (1,339 ) Net cash used in investing activities (60,918 ) (49,500 ) (463,791 ) (53,762 ) 343,790 (284,181 ) Cash flows from financing activities: Proceeds from the issuance of debt — 250,000 638 (638 ) — 250,000 Repayment of debt — (225,866 ) 445 (196 ) (19 ) (225,636 ) Proceeds from exercise of stock-based compensation awards 14,807 — — — — 14,807 Dividends paid (79,723 ) — — (21 ) — (79,744 ) Repurchase of common stock (215,681 ) — — — — (215,681 ) Other 2,763 (3,989 ) 769 653 — 196 Net cash (used in) provided by financing activities (277,834 ) 20,145 1,852 (202 ) (19 ) (256,058 ) Effect of exchange rate changes on cash and cash equivalents — — — (61 ) — (61 ) Net (decrease) increase in cash and cash equivalents — (4,226 ) 17,783 (1,109 ) — 12,448 Cash and cash equivalents at beginning of year — 58,737 229,287 51,801 — 339,825 Cash and cash equivalents at end of year $ — $ 54,511 $ 247,070 $ 50,692 $ — $ 352,273 |