---

---

---

---

---

---

---

---

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 U.S. generally accepted accounting principles (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, 2019. A summary of our significant accounting policies is presented beginning on page 41 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. 

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

(In thousands)	November 30, 2019				May 31, 2019
Raw materials	$	15,550			$	17,812
Work in process	27,148				28,820
Finished goods	305,606				287,957
	$	348,304			$	334,589

Inventories are recorded net of reserves for obsolete inventory of $33.8 million and $32.7 million at November 30, 2019 and May 31, 2019, respectively.

 

New Accounting Pronouncements

Effective June 1, 2019, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, “Leases (Topic 842)”, using a modified retrospective transition approach. Topic 842 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Topic 842 provided a number of optional practical expedients in transition, and we have determined to use certain of these practical expedients upon our adoption of Topic 842. Specifically, the Company elected the package of practical expedients permitted under Topic 842, which allows a lessee to carryforward their population of existing leases, the classification of each lease, as well as the treatment of initial direct lease costs as of the period of adoption. The Company also elected the practical expedient related to lease and non-lease components, as an accounting policy election for the fleet and vehicle asset class, which allows a lessee to not separate non-lease from lease components and instead account for consideration paid in a contract as a single lease component. In addition, the Company elected the short-term lease recognition exemption for all leases with a term of 12 months or less, which means it will not recognize right-of-use assets or lease liabilities for these leases. The adoption of Topic 842, on June 1, 2019, resulted in the Company recognizing right-of-use assets, net of $168.0 million and corresponding lease liabilities of $173.4 million. The adoption of Topic 842 did not have a material impact on the Company's consolidated condensed statements of income or consolidated condensed statements of cash flows.

---

Effective June 1, 2019, Cintas adopted ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." ASU 2018-02 allows companies to elect to reclassify the disproportionate income tax effects resulting from the Tax Cuts and Jobs Act (Tax Act) on items within accumulated other comprehensive income to retained earnings. The adoption of ASU 2018-02, on a prospective basis, resulted in a $2.0 million reclassification adjustment of the stranded tax effects from retained earnings to accumulated other comprehensive loss that was determined using a specific identification method.

In April 2019, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 will replace the incurred loss impairment methodology with a methodology that reflects expected credit 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 and other financial instruments, Cintas will be required to use a forward-looking expected loss model rather than the incurred loss model. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The adoption of this standard will be through a cumulative-effect adjustment to retained earnings as of the effective date. Cintas is currently evaluating the impact that ASU 2016-13 will have on its consolidated condensed financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by the difference between a reporting unit's carrying value and its fair value (impairment loss is limited to the carrying value). ASU 2017-04 is effective for annual or any interim goodwill impairment tests beginning after December 15, 2019. The adoption of ASU 2017-04 is not expected to have an impact on the consolidated condensed financial statements.

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.

The following table presents Cintas' total revenue disaggregated by service type:

	Three Months Ended												Six Months Ended
	November 30, 2019						November 30, 2018						November 30, 2019						November 30, 2018
(In thousands)	Revenue			%			Revenue			%			Revenue			%			Revenue			%
Uniform Rental and    Facility Services	$	1,469,976		79.7	%		$	1,390,778		81.0	%		$	2,924,503		80.0	%		$	2,765,716		81.0	%
First Aid and Safety    Services	169,668			9.2	%		153,348			8.9	%		341,758			9.4	%		306,765			9.0	%
Fire Protection    Services	106,735			5.8	%		96,183			5.6	%		216,861			5.9	%		194,292			5.7	%
Uniform Direct    Sales	97,370			5.3	%		77,959			4.5	%		171,766			4.7	%		149,470			4.3	%
Total revenue	$	1,843,749		100.0	%		$	1,718,268		100.0	%		$	3,654,888		100.0	%		$	3,416,243		100.0	%

Fire Protection Services and Uniform Direct Sales are recorded within the All Other segment disclosed in Note 12 entitled Segment Information.

Revenue Recognition Policy

More than 95% of the Company's 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 (input method). The Company's remaining revenues, primarily within the Uniform Direct Sales operating segment, and representing less than 5% of the Company's total revenues, are 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 business, 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 or six months ended November 30, 2019 or 2018. 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) Topic 606, Revenue (ASC 606). These assets are included in other assets, net on the consolidated condensed balance sheet.

Additionally, in accordance with ASC 606, certain Uniform Direct Sales 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.

Costs to Obtain a Contract

---

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 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 $17.7 million and $34.9 million, respectively, for the three and six months ended November 30, 2019.

The following table provides supplemental information related to the Company's consolidated condensed statement of cash flows for the six months ended November 30, 2019:

(In thousands)		November 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities		$	24,927
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities		$	24,770

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

		November 30, 2019
Weighted-average remaining lease term - operating leases		5.35 years
Weighted-average discount rate - operating leases		2.71%

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of November 30, 2019:

(In thousands)
2020 (remaining six months)		$	24,836
2021		44,642
2022		35,528
2023		27,414
2024		18,313
Thereafter		37,869
Total payments		188,602
Less interest		(13,759		)
Total present value of lease payments		$	174,843

---

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 November 30, 2019
(In thousands)	Level 1				Level 2				Level 3				Fair Value
Cash and cash equivalents	$	226,535			$	—			$	—			$	226,535
Other assets, net:
Interest rate lock agreements	—				12,241				—				12,241
Total assets at fair value	$	226,535			$	12,241			$	—			$	238,776
Long-term accrued liabilities:
Interest rate lock agreements	$	—			$	58,274			$	—			$	58,274
Total liabilities at fair value	$	—			$	58,274			$	—			$	58,274

	As of May 31, 2019
(In thousands)	Level 1				Level 2				Level 3				Fair Value
Cash and cash equivalents	$	96,645			$	—			$	—			$	96,645
Total assets at fair value	$	96,645			$	—			$	—			$	96,645
Long-term accrued liabilities:
Interest rate lock agreements	$	—			$	36,393			$	—			$	36,393
Total liabilities at fair value	$	—			$	36,393			$	—			$	36,393

Cintas’ cash and cash equivalents are generally classified within Level 1 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets. 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.

Interest, realized gains and losses and declines in value determined to be other than temporary on available-for-sale securities are included in interest income or expense. The cost of the securities sold is based on the specific identification method. There were no outstanding marketable securities as of November 30, 2019 or May 31, 2019.

The fair values of outstanding interest rate lock agreements are included in other assets, net, as of November 30, 2019 and long-term accrued liabilities at both November 30, 2019 and May 31, 2019. 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 or long-term accrued liabilities are recorded at fair value.

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.

---

Investments at November 30, 2019 of $218.9 million include the cash surrender value of insurance policies of $196.6 million, equity method investments of $19.1 million and cost method investments of $3.2 million. Investments at May 31, 2019 of $192.3 million include the cash surrender value of insurance policies of $170.5 million, equity method investments of $18.6 million and cost method investments of $3.2 million. Investments are generally evaluated for impairment on an annual basis or when indicators of impairment exist. For the three and six months ended November 30, 2019 and 2018, no impairment losses were recorded.

During the three months ended November 30, 2018, Cintas sold a cost method investment to a third party. Proceeds from the one-time sale were $73.3 million, which resulted in a pre-tax gain of $69.4 million.

The following tables set forth the computation of basic and diluted earnings per share from continuing operations using the two-class method for amounts attributable to Cintas’ common shares: 

	Three Months Ended								Six Months Ended
Basic Earnings per Share from Continuing Operations (in thousands except per share data)	November 30, 2019				November 30, 2018				November 30, 2019				November 30, 2018
Income from continuing operations	$	246,443			$	242,994			$	497,255			$	455,541
Less: income from continuing operations allocated to participating securities	2,425				3,376				4,904				6,308
Income from continuing operations available to common shareholders	$	244,018			$	239,618			$	492,351			$	449,233
Basic weighted average common shares outstanding	103,959				106,475				103,638				106,652
Basic earnings per share from continuing operations	$	2.35			$	2.25			$	4.75			$	4.21

	Three Months Ended								Six Months Ended
Diluted Earnings per Share from Continuing Operations (in thousands except per share data)	November 30, 2019				November 30, 2018				November 30, 2019				November 30, 2018
Income from continuing operations	$	246,443			$	242,994			$	497,255			$	455,541
Less: income from continuing operations allocated to participating securities	2,425				3,376				4,904				6,308
Income from continuing operations available to common shareholders	$	244,018			$	239,618			$	492,351			$	449,233
Basic weighted average common shares outstanding	103,959				106,475				103,638				106,652
Effect of dilutive securities – employee stock options	3,376				3,399				3,476				3,605
Diluted weighted average common shares outstanding	107,335				109,874				107,114				110,257
Diluted earnings per share from continuing operations	$	2.27			$	2.18			$	4.60			$	4.07

For the three and six months ended November 30, 2019 and 2018, both basic and diluted earnings per share from discontinued operations rounded to zero.

---

For the three months ended November 30, 2019 and 2018, options granted to purchase 0.2 million and 0.4 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. For the six months ended November 30, 2019 and 2018, options granted to purchase 0.3 million and 0.4 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, Cintas announced that the Board of Directors authorized a $1.0 billion share buyback program, which does not have an expiration date. There were no share buybacks for the three months ended November 30, 2019. For the six months ended November 30, 2019, we purchased 0.8 million shares of Cintas common stock at an average price of $230.66 per share for a total purchase price of $193.1 million. Additionally, on October 29, 2019, we announced that the Board of Directors authorized a new $1.0 billion share buyback program, which does not have an expiration date. There have been no share buybacks under this new share buyback program. There were no share buybacks in the period subsequent to November 30, 2019, through January 9, 2020, under either share buyback program. From the inception of the October 30, 2018 share buyback program through January 9, 2020, Cintas has purchased a total of 3.5 million shares of Cintas common stock at an average price of $209.82 for a total purchase price of $736.5 million.

Changes in the carrying amount of goodwill and service contracts for the six months ended November 30, 2019, by reportable operating segment and All Other, are as follows:

Goodwill (in thousands)	Uniform Rental  and Facility Services				First Aid  and Safety Services				All Other				Total
Balance as of June 1, 2019	$	2,496,402			$	243,459			$	102,580			$	2,842,441
Goodwill acquired	—				164				5,624				5,788
Foreign currency translation	4,219				339				14				4,572
Balance as of November 30, 2019	$	2,500,621			$	243,962			$	108,218			$	2,852,801

Service Contracts (in thousands)	Uniform Rental  and Facility Services				First Aid  and Safety Services				All Other				Total
Balance as of June 1, 2019	$	445,016			$	23,380			$	26,199			$	494,595
Service contracts acquired	—				325				2,049				2,374
Service contracts amortization	(23,551		)		(1,940		)		(2,759		)		(28,250		)
Foreign currency translation	1,185				29				—				1,214
Balance as of November 30, 2019	$	422,650			$	21,794			$	25,489			$	469,933

---

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

	As of November 30, 2019
(In thousands)	Carrying Amount				Accumulated Amortization				Net
Service contracts	$	932,833			$	462,900			$	469,933
Capitalized contract costs (1)	$	325,160			$	109,055			$	216,105
Noncompete and consulting agreements	42,687				40,937				1,750
Other	63,780				21,009				42,771
Total other assets	$	431,627			$	171,001			$	260,626

	As of May 31, 2019
(In thousands)	Carrying Amount				Accumulated Amortization				Net
Service contracts	$	928,635			$	434,040			$	494,595
Capitalized contract costs (2)	$	277,016			$	71,062			$	205,954
Noncompete and consulting agreements	42,308				40,524				1,784
Other	50,306				17,729				32,577
Total other assets	$	369,630			$	129,315			$	240,315

(1)	The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheet as of November 30, 2019, is $74.9 million.

(2)	The current portion of capitalized contract costs, included in prepaid expenses and other current assets on the consolidated condensed balance sheet as of May 31, 2019, is $69.6 million.

Amortization expense for service contracts and other assets for continuing operations was $35.3 million and $33.3 million for the three months ended November 30, 2019 and 2018, respectively. For the six months ended November 30, 2019 and 2018, amortization expense for service contracts and other assets for continuing operations was $69.9 million and $66.2 million, respectively. The estimated future amortization expense for service contracts and other assets, excluding any future acquisitions and commissions to be earned, as of November 30, 2019 is as follows:

Fiscal Year (In thousands)
2020 (remaining six months)		$	68,366
2021		125,140
2022		113,263
2023		94,309
2024		82,990
Thereafter		284,200
Total future amortization expense		$	768,268

---

Cintas' outstanding debt is summarized as follows:

(In thousands)	Interest  Rate			Fiscal Year Issued		Fiscal Year Maturity		November 30, 2019				May 31, 2019
Debt due within one year
Commercial paper	2.68	%	(1)	2019		2020		$	—			$	112,500
Term loan	2.44	%	(2)	2019		2020		200,000				200,000
Debt issuance costs								(212		)		(236		)
Total debt due within one year								$	199,788			$	312,264
Debt due after one year
Senior notes	4.30	%		2012		2022		$	250,000			$	250,000
Senior notes	2.90	%		2017		2022		650,000				650,000
Senior notes	3.25	%		2013		2023		300,000				300,000
Senior notes (3)	2.78	%		2013		2023		51,467				51,684
Senior notes (4)	3.11	%		2015		2025		51,805				51,973
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								(14,666		)		(16,150		)
Total debt due after one year								$	2,538,606			$	2,537,507

(1)	Variable rate debt instrument. The rate presented is the variable borrowing rate at May 31, 2019

(2)	Variable rate debt instrument. The rate presented is the variable borrowing rate at November 30, 2019.

(3)	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%.

(4)	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 November 30, 2019 were $2,750.0 million and $2,954.3 million, respectively, and as of May 31, 2019 were $2,866.2 million and $2,998.7 million, respectively. During the six months ended November 30, 2019, Cintas paid a net total of $112.5 million of commercial paper.

The credit agreement that supports our commercial paper program was amended and restated on May 24, 2019. The amendment increased the capacity of the revolving credit facility from $600.0 million to $1.0 billion and created a new term loan of $200.0 million. 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, and the maturity date of the term loan in May 23, 2020, which can be extended 12 months, annually, for up to four years. As of November 30, 2019, there was no commercial paper outstanding and no borrowings on our revolving credit facility. As of May 31, 2019, there was $112.5 million of commercial paper outstanding with maturity dates less than 30 days and with a weighted average interest rate of 2.68% and no borrowings on our revolving credit facility.

Cintas uses interest rate locks to manage our 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 a decrease to other comprehensive income of $0.4 million and $0.3 million for the three months ended November 30, 2019 and 2018, respectively. For the six months ended November 30, 2019 and 2018, the amortization of the cash flow hedges resulted in a decrease

---

to other comprehensive income of $0.7 million and $0.6 million, respectively. During the three months ended November 30, 2019, Cintas entered into interest rate lock agreements with a notional value of $700.0 million for a forecasted debt issuance. As of November 30, 2019, the fair values of these interest rate locks were an asset of $12.2 million and were recorded in other assets, net and in other comprehensive income, net of tax. During fiscal 2019, Cintas entered into interest rate lock agreements with a notional value of $500.0 million for a forecasted debt issuance. As of November 30, 2019 and May 31, 2019, the fair values of these interest rate locks were a liability of $58.3 million and $36.4 million, respectively and were recorded in long-term accrued liabilities and in other comprehensive income, net of tax. These interest rate locks had no impact on net income or cash flows from continuing operations for the three and six months ended November 30, 2019 or 2018.

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 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. As of November 30, 2019, Cintas was in compliance with all debt covenants.

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 November 30, 2019 and May 31, 2019, recorded unrecognized tax benefits were $34.7 million and $37.3 million, respectively, and are included in long-term accrued liabilities on the consolidated condensed balance sheet.

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 U.S. federal income tax returns are closed to audit through fiscal 2015. 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. 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, 2020.

---

In conjunction with the acquisition of G&K in fiscal 2017, Cintas assumed G&K's noncontributory frozen defined benefit pension plan (the Pension Plan) that covers substantially all 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 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. 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 income in our consolidated condensed balance sheets. The difference between actual amounts and estimates based on actuarial assumptions are recognized in other comprehensive income 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 benefit cost are summarized as follows:

	Three Months Ended								Six Months Ended
(In thousands)	November 30, 2019				November 30, 2018				November 30, 2019				November 30, 2018
Interest cost	$	721			$	781			$	1,441			$	1,562
Expected return on assets	(741		)		(720		)		(1,481		)		(1,441		)
Net periodic benefit cost	$	(20	)		$	61			$	(40	)		$	121

---

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

(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		)		—				(23,179		)
Amounts reclassified from accumulated other    comprehensive income (loss)	—				(295		)		—				(295		)
Net current period other comprehensive income (loss)	6,724				(30,198		)		—				(23,474		)
Cumulative effect of change in accounting principle (1)	—				2,058				(83		)		1,975
Balance at August 31, 2019	(8,298		)		(46,529		)		(5,824		)		(60,651		)
Other comprehensive income before reclassifications	1,413				22,761				—				24,174
Amounts reclassified from accumulated other comprehensive income (loss)	—				(358		)		—				(358		)
Net current period other comprehensive income	1,413				22,403				—				23,816
Balance at November 30, 2019	$	(6,885	)		$	(24,126	)		$	(5,824	)		$	(36,835	)

(1)	See new accounting pronouncements in Note 1 entitled Basis of Presentation for more information.

(In thousands)	Foreign Currency				Unrealized Income on Interest Rate Hedges				Other				Total
Balance at June 1, 2018	$	6,550			$	10,449			$	(656	)		$	16,343
Other comprehensive loss before reclassifications	(3,019		)		(3,168		)		—				(6,187		)
Amounts reclassified from accumulated other comprehensive income (loss)	—				(295		)		—				(295		)
Net current period other comprehensive loss	(3,019		)		(3,463		)		—				(6,482		)
Balance at August 31, 2018	3,531				6,986				(656		)		9,861
Other comprehensive (loss) income before reclassifications	(10,623		)		4,921				—				(5,702		)
Amounts reclassified from accumulated other comprehensive income (loss)	—				(294		)		—				(294		)
Net current period other comprehensive (loss) income	(10,623		)		4,627				—				(5,996		)
Balance at November 30, 2018	$	(7,092	)		$	11,613			$	(656	)		$	3,865

The following table summarizes the reclassifications out of accumulated other comprehensive income (loss):

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
	Three Months Ended								Six Months Ended
(In thousands)	November 30, 2019				November 30, 2018				November 30, 2019				November 30, 2018
Amortization of interest rate locks	$	474			$	474			$	948			$	948		Interest expense
Tax expense	(116		)		(180		)		(295		)		(359		)	Income taxes
Amortization of interest rate locks, net of tax	$	358			$	294			$	653			$	589		Net income

---

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, carpet and tile cleaning services 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 Fire Protection Services and its Uniform Direct Sale business, 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’ operating segments is set forth below: 

(In thousands)	Uniform Rental and Facility Services				First Aid and Safety Services				All Other				Corporate (1)				Total
For the three months ended November 30, 2019
Revenue	$	1,469,976			$	169,668			$	204,105			$	—			$	1,843,749
Income (loss) before income    taxes	$	286,360			$	24,640			$	23,464			$	(25,894	)		$	308,570
For the three months ended November 30, 2018
Revenue	$	1,390,778			$	153,348			$	174,142			$	—			$	1,718,268
Income before income taxes	$	242,891			$	21,328			$	11,421			$	44,884			$	320,524
As of and for the six months ended November 30, 2019
Revenue	$	2,924,503			$	341,758			$	388,627			$	—			$	3,654,888
Income (loss) before income    taxes	$	555,371			$	49,409			$	35,830			$	(53,053	)		$	587,557
Total assets	$	6,699,166			$	537,740			$	423,896			$	226,535			$	7,887,337
As of and for the six months ended November 30, 2018
Revenue	$	2,765,716			$	306,765			$	343,762			$	—			$	3,416,243
Income before income taxes	$	474,425			$	43,311			$	23,132			$	21,076			$	561,944
Total assets	$	6,438,400			$	495,054			$	383,150			$	88,479			$	7,405,083

⁽¹⁾ Corporate assets include cash and marketable securities in all periods.

As a result of the acquisition of G&K in fiscal 2017, the Company incurred $7.8 million and $12.7 million in expenses during the three and six months ended November 31, 2018, respectively, which represented integration expenses directly related to the acquisition, primarily facility closure expenses. No such costs were incurred during the three or six months ended November 30, 2019.

---

Cintas Corporation No. 2 (Corp. 2) is the indirectly, wholly-owned principal operating subsidiary of Cintas. Corp. 2 is the obligor for the term loan of $200.0 million and the $2,550.0 million aggregate principal amount of senior notes outstanding as of November 30, 2019, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and certain wholly-owned, direct and indirect domestic subsidiaries.

As allowed by SEC rules, the following consolidating condensed financial statements are provided as an alternative to filing separate financial statements of the guarantors. Each of the subsidiaries presented in the following consolidating condensed financial statements has been fully consolidated in Cintas’ consolidated condensed financial statements. The following consolidating condensed financial statements should be read in conjunction with the consolidated condensed financial statements of Cintas and notes thereto of which this note is an integral part. Consolidating condensed financial statements for Cintas, Corp. 2, the subsidiary guarantors and non-guarantors are presented on the following pages: 

---

Consolidating Condensed Income Statement

Three Months Ended November 30, 2019

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Uniform rental and facility services	$	—			$	1,167,960			$	194,468			$	108,195			$	(647	)		$	1,469,976
Other	—				606,540				171				24,360				(257,298		)		373,773
Equity in net income of affiliates	246,443				—				—				—				(246,443		)		—
Total revenue	246,443				1,774,500				194,639				132,555				(504,388		)		1,843,749
Costs and expenses (income):
Cost of uniform rental and facility services	—				635,235				112,505				69,362				(32,165		)		784,937
Cost of other	—				427,776				(26,862		)		18,954				(213,447		)		206,421
Selling and administrative expenses	—				591,422				(99,163		)		32,740				(7,072		)		517,927
Operating income	246,443				120,067				208,159				11,499				(251,704		)		334,464
Interest income	—				(157		)		(108		)		(20		)		2				(283		)
Interest expense (income)	—				26,264				(87		)		—				—				26,177
Income before income taxes	246,443				93,960				208,354				11,519				(251,706		)		308,570
Income taxes	—				18,660				40,652				2,851				(36		)		62,127
Income from continuing operations	246,443				75,300				167,702				8,668				(251,670		)		246,443
Loss from discontinued operations,    net of tax	(323		)		(323		)		—				—				323				(323		)
Net income	$	246,120			$	74,977			$	167,702			$	8,668			$	(251,347	)		$	246,120

---

Consolidating Condensed Income Statement

Three Months Ended November 30, 2018

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Uniform rental and facility services	$	—			$	1,134,118			$	182,876			$	101,830			$	(28,046	)		$	1,390,778
Other	—				522,081				50				25,918				(220,559		)		327,490
Equity in net income of affiliates	242,994				—				—				—				(242,994		)		—
Total revenue	242,994				1,656,199				182,926				127,748				(491,599		)		1,718,268
Costs and expenses (income):
Cost of uniform rental and facility    services	—				640,859				111,555				65,316				(56,611		)		761,119
Cost of other	—				375,764				(27,133		)		19,319				(185,959		)		181,991
Selling and administrative expenses	—				536,276				(68,617		)		32,559				(8,547		)		491,671
G&K Services, Inc. integration    expenses	—				5,973				1,270				604				—				7,847
Operating income	242,994				97,327				165,851				9,950				(240,482		)		275,640
Gain on sale of a cost method    investment	—				—				69,373				—				—				69,373
Interest income	—				(294		)		(93		)		(5		)		1				(391		)
Interest expense (income)	—				25,046				(173		)		7				—				24,880
Income before income taxes	242,994				72,575				235,490				9,948				(240,483		)		320,524
Income taxes	—				19,166				55,788				2,613				(37		)		77,530
Income from continuing operations	242,994				53,409				179,702				7,335				(240,446		)		242,994
Income from discontinued operations,    net of tax	19				19				—				—				(19		)		19
Net income	$	243,013			$	53,428			$	179,702			$	7,335			$	(240,465	)		$	243,013

---

Consolidating Condensed Income Statement

Six Months Ended November 30, 2019

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Uniform rental and facility services	$	—			$	2,326,851			$	385,203			$	213,589			$	(1,140	)		$	2,924,503
Other	—				1,189,516				268				47,606				(507,005		)		730,385
Equity in net income of affiliates	497,255				—				—				—				(497,255		)		—
Total revenue	497,255				3,516,367				385,471				261,195				(1,005,400		)		3,654,888
Costs and expenses (income):
Cost of uniform rental and facility services	—				1,257,116				224,239				134,957				(62,699		)		1,553,613
Cost of other	—				831,260				(49,539		)		36,653				(418,632		)		399,742
Selling and administrative expenses	—				1,190,825				(183,420		)		67,194				(13,676		)		1,060,923
Operating income	497,255				237,166				394,191				22,391				(510,393		)		640,610
Interest income	—				(307		)		(107		)		(34		)		3				(445		)
Interest expense (income)	—				53,624				(140		)		14				—				53,498
Income before income taxes	497,255				183,849				394,438				22,411				(510,396		)		587,557
Income taxes	—				26,861				57,630				5,872				(61		)		90,302
Income from continuing operations	497,255				156,988				336,808				16,539				(510,335		)		497,255
Loss from discontinued operations,    net of tax	(323		)		(323		)		—				—				323				(323		)
Net income	$	496,932			$	156,665			$	336,808			$	16,539			$	(510,012	)		$	496,932

---

Consolidating Condensed Income Statement

Six Months Ended November 30, 2018

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Uniform rental and facility services	$	—			$	2,273,247			$	366,039			$	201,513			$	(75,083	)		$	2,765,716
Other	—				1,013,371				93				50,250				(413,187		)		650,527
Equity in net income of affiliates	455,541				—				—				—				(455,541		)		—
Total revenue	455,541				3,286,618				366,132				251,763				(943,811		)		3,416,243
Costs and expenses (income):
Cost of uniform rental and facility    services	—				1,284,600				221,105				129,329				(127,462		)		1,507,572
Cost of other	—				717,097				(49,162		)		37,461				(346,595		)		358,801
Selling and administrative expenses	—				1,081,186				(133,238		)		66,922				(18,565		)		996,305
G&K Services, Inc. integration    expenses	—				8,649				3,133				915				—				12,697
Operating income	455,541				195,086				324,294				17,136				(451,189		)		540,868
Gain on sale of a cost method    investment	—				—				69,373				—				—				69,373
Interest income	—				(503		)		(365		)		(21		)		2				(887		)
Interest expense (income)	—				49,707				(535		)		12				—				49,184
Income before income taxes	455,541				145,882				394,567				17,145				(451,191		)		561,944
Income taxes	—				29,829				71,832				4,800				(58		)		106,403
Income from continuing operations	455,541				116,053				322,735				12,345				(451,133		)		455,541
Loss from discontinued operations,    net of tax	(13		)		(13		)		—				—				13				(13		)
Net income	$	455,528			$	116,040			$	322,735			$	12,345			$	(451,120	)		$	455,528

---

Consolidating Condensed Statement of Comprehensive Income

Three Months Ended November 30, 2019

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Net income	$	246,120			$	74,977			$	167,702			$	8,668			$	(251,347	)		$	246,120
Other comprehensive income    (loss), net of tax:
Foreign currency translation adjustments	1,413				—				—				1,413				(1,413		)		1,413
Change in fair value of interest rate lock agreements	22,761				22,761				—				—				(22,761		)		22,761
Amortization of interest rate    lock agreements	(358		)		(358		)		—				—				358				(358		)
Other comprehensive income	23,816				22,403				—				1,413				(23,816		)		23,816
Comprehensive income	$	269,936			$	97,380			$	167,702			$	10,081			$	(275,163	)		$	269,936

---

Consolidating Condensed Statement of Comprehensive Income

Three Months Ended November 30, 2018

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Net income	$	243,013			$	53,428			$	179,702			$	7,335			$	(240,465	)		$	243,013
Other comprehensive (loss)    income, net of tax:
Foreign currency translation adjustments	(10,623		)		—				—				(10,623		)		10,623				(10,623		)
Change in fair value of interest    rate lock agreements	4,921				4,921				—				—				(4,921		)		4,921
Amortization of interest rate lock agreements	(294		)		(294		)		—				—				294				(294		)
Other comprehensive (loss)    income	(5,996		)		4,627				—				(10,623		)		5,996				(5,996		)
Comprehensive income (loss)	$	237,017			$	58,055			$	179,702			$	(3,288	)		$	(234,469	)		$	237,017

---

Consolidating Condensed Statement of Comprehensive Income

Six Months Ended November 30, 2019

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Net income	$	496,932			$	156,665			$	336,808			$	16,539			$	(510,012	)		$	496,932
Other comprehensive income    (loss), net of tax:
Foreign currency translation adjustments	8,137				—				—				8,137				(8,137		)		8,137
Change in fair value of interest rate lock agreements	(7,142		)		(7,142		)		—				—				7,142				(7,142		)
Amortization of interest rate    lock agreements	(653		)		(653		)		—				—				653				(653		)
Other comprehensive income      (loss)	342				(7,795		)		—				8,137				(342		)		342
Comprehensive income	$	497,274			$	148,870			$	336,808			$	24,676			$	(510,354	)		$	497,274

---

Consolidating Condensed Statement of Comprehensive Income

Six Months Ended November 30, 2018

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Net income	$	455,528			$	116,040			$	322,735			$	12,345			$	(451,120	)		$	455,528
Other comprehensive (loss)    income, net of tax:
Foreign currency translation adjustments	(13,642		)		—				—				(13,642		)		13,642				(13,642		)
Change in fair value of interest    rate lock agreements	1,753				1,753				—				—				(1,753		)		1,753
Amortization of interest rate lock agreements	(589		)		(589		)		—				—				589				(589		)
Other comprehensive (loss)    income	(12,478		)		1,164				—				(13,642		)		12,478				(12,478		)
Comprehensive income (loss)	$	443,050			$	117,204			$	322,735			$	(1,297	)		$	(438,642	)		$	443,050

---

Consolidating Condensed Balance Sheet

As of November 30, 2019

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—			$	50,716			$	127,948			$	47,871			$	—			$	226,535
Accounts receivable, net	—				744,116				133,546				71,460				—				949,122
Inventories, net	—				297,396				29,796				21,112				—				348,304
Uniforms and other rental     items in service	—				677,309				92,726				63,349				(15,525		)		817,859
Income taxes, current	—				3,831				15,457				5,590				—				24,878
Prepaid expenses and    other current assets	—				85,738				35,962				1,889				—				123,589
Total current assets	—				1,859,106				435,435				211,271				(15,525		)		2,490,287
Property and equipment, net	—				968,662				357,032				99,890				—				1,425,584
Investments (1)	321,083				3,589,691				990,871				1,697,996				(6,380,768		)		218,873
Goodwill	—				—				2,592,194				260,719				(112		)		2,852,801
Service contracts, net	—				405,201				—				64,732				—				469,933
Operating lease right-of-use    assets, net	—				141,697				12,905				14,631				—				169,233
Other assets, net	2,318,640				233,167				5,847,006				1,298				(8,139,485		)		260,626
	$	2,639,723			$	7,197,524			$	10,235,443			$	2,350,537			$	(14,535,890	)		$	7,887,337
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	(465,247	)		$	(1,998,351	)		$	2,753,017			$	(72,014	)		$	37,206			$	254,611
Accrued compensation   and related liabilities	—				77,493				36,653				10,203				—				124,349
Accrued liabilities	—				78,371				580,340				15,529				—				674,240
Operating lease liabilities,    current	—				35,402				4,533				4,328				—				44,263
Debt due within one year	—				199,788				—				—				—				199,788
Total current liabilities	(465,247		)		(1,607,297		)		3,374,543				(41,954		)		37,206				1,297,251
Long-term liabilities:
Debt due after one year	—				2,538,606				—				—				—				2,538,606
Deferred income taxes	—				311,326				101,464				31,067				—				443,857
Operating lease liabilities	—				110,833				9,010				10,737				—				130,580
Accrued liabilities	—				132,109				223,232				16,732				—				372,073
Total long-term liabilities	—				3,092,874				333,706				58,536				—				3,485,116
Total shareholders’ equity	3,104,970				5,711,947				6,527,194				2,333,955				(14,573,096		)		3,104,970
	$	2,639,723			$	7,197,524			$	10,235,443			$	2,350,537			$	(14,535,890	)		$	7,887,337

(1)	Investments include inter-company investment activity. Corp 2 and Subsidiary Guarantors hold $20.3 million and $198.6 million, respectively, of the $218.9 million consolidated net investments.

---

Consolidating Condensed Balance Sheet

As of May 31, 2019

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—			$	54,963			$	13,151			$	28,531			$	—			$	96,645
Accounts receivable, net	—				719,914				121,803				68,403				—				910,120
Inventories, net	—				278,666				35,081				20,842				—				334,589
Uniforms and other rental    items in service	—				645,862				90,458				60,061				(12,248		)		784,133
Income taxes, current	—				(9,728		)		11,722				5,481				—				7,475
Prepaid expenses and   other current assets	—				81,117				20,334				1,867				—				103,318
Total current assets	—				1,770,794				292,549				185,185				(12,248		)		2,236,280
Property and equipment, net	—				948,830				369,006				112,849				—				1,430,685
Investments (1)	321,083				3,589,234				964,802				1,716,870				(6,399,643		)		192,346
Goodwill	—				—				2,586,406				256,147				(112		)		2,842,441
Service contracts, net	—				427,437				—				67,158				—				494,595
Other assets, net	2,216,391				211,102				5,424,413				1,716				(7,613,307		)		240,315
	$	2,537,474			$	6,947,397			$	9,637,176			$	2,339,925			$	(14,025,310	)		$	7,436,662
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	(465,247	)		$	(2,090,954	)		$	2,793,558			$	(48,769	)		$	37,432			$	226,020
Accrued compensation   and related liabilities	—				117,404				26,870				11,235				—				155,509
Accrued liabilities	—				84,296				328,267				21,377				—				433,940
Debt due within one year	—				312,264				—				—				—				312,264
Total current liabilities	(465,247		)		(1,576,990		)		3,148,695				(16,157		)		37,432				1,127,733
Long-term liabilities:
Debt due after one year	—				2,537,507				—				—				—				2,537,507
Deferred income taxes	—				307,334				100,162				30,683				—				438,179
Accrued liabilities	—				116,469				197,934				16,119				—				330,522
Total long-term liabilities	—				2,961,310				298,096				46,802				—				3,306,208
Total shareholders’ equity	3,002,721				5,563,077				6,190,385				2,309,280				(14,062,742		)		3,002,721
	$	2,537,474			$	6,947,397			$	9,637,176			$	2,339,925			$	(14,025,310	)		$	7,436,662

(1)	Investments include inter-company investment activity. Corp 2 and Subsidiary Guarantors hold $19.8 million and $172.5 million, respectively, of the $192.3 million consolidated net investments.

---

Consolidating Condensed Statement of Cash Flows

Six Months Ended November 30, 2019

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Cash flows from operating activities:
Net income	$	496,932			$	156,665			$	336,808			$	16,539			$	(510,012	)		$	496,932
Adjustments to reconcile net income to net cash provided by operating     activities
Depreciation	—				75,691				32,499				7,177				—				115,367
Amortization of intangible assets and     capitalized contract costs	—				64,325				2,559				4,079				—				70,963
Stock-based compensation	69,398				—				—				—				—				69,398
Deferred income taxes	—				6,490				1,309				(167		)		—				7,632
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—				(24,190		)		(11,743		)		(2,007		)		—				(37,940		)
Inventories, net	—				(18,709		)		6,042				(735		)		—				(13,402		)
Uniforms and other rental items    in service	—				(31,448		)		(2,268		)		(2,305		)		3,277				(32,744		)
Prepaid expenses and other current    assets and capitalized contract costs	—				(52,765		)		(15,629		)		(15		)		—				(68,409		)
Accounts payable	—				92,602				(65,280		)		959				(226		)		28,055
Accrued compensation and related liabilities	—				(39,911		)		9,298				1,287				—				(29,326		)
Accrued liabilities and other	—				3,820				(18,688		)		(3,015		)		—				(17,883		)
Income taxes, current	—				(13,559		)		(3,732		)		(1		)		—				(17,292		)
Net cash provided by operating activities	566,330				219,011				271,175				21,796				(506,961		)		571,351
Cash flows from investing activities:
Capital expenditures	—				(95,361		)		(20,584		)		(10,222		)		—				(126,167		)
Purchases of investments	—				(457		)		(9,664		)		—				—				(10,121		)
Proceeds from sale of assets	—				—				—				13,300				—				13,300
Acquisitions of businesses, net of cash acquired	—				(6,582		)		—				—				—				(6,582		)
Other, net	(370,790		)		(6,406		)		(126,130		)		(5,738		)		506,961				(2,103		)
Net cash used in investing activities	(370,790		)		(108,806		)		(156,378		)		(2,660		)		506,961				(131,673		)
Cash flows from financing activities:
Payments of commercial paper, net	—				(112,500		)		—				—				—				(112,500		)
Proceeds from exercise of stock-based compensation awards	63,201				—				—				—				—				63,201
Repurchase of common stock	(258,741		)		—				—				—				—				(258,741		)
Other, net	—				(1,952		)		—				—				—				(1,952		)
Net cash used in financing activities	(195,540		)		(114,452		)		—				—				—				(309,992		)
Effect of exchange rate changes on cash     and cash equivalents	—				—				—				204				—				204
Net (decrease) increase in cash and cash    equivalents	—				(4,247		)		114,797				19,340				—				129,890
Cash and cash equivalents at beginning of period	—				54,963				13,151				28,531				—				96,645
Cash and cash equivalents at end of period	$	—			$	50,716			$	127,948			$	47,871			$	—			$	226,535

---

Consolidating Condensed Statement of Cash Flows

Six Months Ended November 30, 2018

(In thousands)

	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Cash flows from operating activities:
Net income	$	455,528			$	116,040			$	322,735			$	12,345			$	(451,120	)		$	455,528
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation	—				68,929				31,274				6,909				—				107,112
Amortization of intangible assets and    capitalized contract costs	—				61,044				2,339				4,176				—				67,559
Stock-based compensation	74,784				—				—				—				—				74,784
Gain on sale of a cost method investment	—				—				(69,373		)		—				—				(69,373		)
Deferred income taxes	—				10,865				5,519				2,843				—				19,227
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—				(52,953		)		(20,151		)		(10,183		)		(2,461		)		(85,748		)
Inventories, net	—				(52,989		)		3,546				(2,153		)		(1,631		)		(53,227		)
Uniforms and other rental items in service	—				(39,481		)		(11,051		)		(7,152		)		—				(57,684		)
Prepaid expenses and other current    assets and capitalized contract costs	—				(52,392		)		(5,570		)		(199		)		—				(58,161		)
Accounts payable	—				(98,465		)		90,324				6,502				(316		)		(1,955		)
Accrued compensation and related    liabilities	—				(16,186		)		(6,468		)		1,685				—				(20,969		)
Accrued liabilities and other	—				(1,908		)		(9,983		)		(3,431		)		—				(15,322		)
Income taxes, current	—				(5,329		)		(7,109		)		(4,766		)		—				(17,204		)
Net cash provided by (used in) operating    activities	530,312				(62,825		)		326,032				6,576				(455,528		)		344,567
Cash flows from investing activities:
Capital expenditures	—				(92,461		)		(37,357		)		(7,796		)		—				(137,614		)
Purchases of investments	—				(466		)		(13,605		)		—				—				(14,071		)
Proceeds from sale of a cost method    investment	—				—				73,342				—				—				73,342
Acquisitions of businesses, net of cash acquired	—				(6,580		)		—				—				—				(6,580		)
Other, net	(54,795		)		(2,534		)		(398,963		)		(953		)		455,528				(1,717		)
Net cash used in investing activities	(54,795		)		(102,041		)		(376,583		)		(8,749		)		455,528				(86,640		)
Cash flows from financing activities:
Issuance of commercial paper, net	—				173,500				—				—				—				173,500
Proceeds from exercise of stock-based compensation awards	32,612				—				—				—				—				32,612
Repurchase of common stock	(508,129		)		—				—				—				—				(508,129		)
Other, net	—				(5,362		)		—				—				—				(5,362		)
Net cash (used in) provided by financing activities	(475,517		)		168,138				—				—				—				(307,379		)
Effect of exchange rate changes on cash and    cash equivalents	—				—				—				(793		)		—				(793		)
Net increase (decrease) in cash and cash    equivalents	—				3,272				(50,551		)		(2,966		)		—				(50,245		)
Cash and cash equivalents at beginning of period	—				44,499				60,310				33,915				—				138,724
Cash and cash equivalents at end of period	$	—			$	47,771			$	9,759			$	30,949			$	—			$	88,479

---

---

---

---

---

---

---

(1)	Variable rate debt instrument. The rate presented is the variable borrowing rate at May 31, 2019.

(2)	Variable rate debt instrument. The rate presented is the variable borrowing rate at November 30, 2019.

---

---

---

---

---