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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 | February 29, 2020

OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the transition period from to

Commission file number 0-11399
Cintas Corporation
(Exact name of registrant as specified in its charter)

Washington |  | 31-1188630
(State or Other Jurisdiction of Incorporation) |  | (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 March 31, 2020
Common Stock, no par value |  | 104,050,202 |

CINTAS CORPORATION
TABLE OF CONTENTS

|  |  |  | Page No.
Part I. | Financial Information |  |  |
| Item 1. |  | Financial Statements |
|  |  | Consolidated Condensed Statements of Income – Three and Nine Months Ended February 29, 2020 and February 28, 2019 | 3
|  |  | Consolidated Condensed Statements of Comprehensive Income – Three and Nine Months Ended February 29, 2020 and February 28, 2019 | 4
|  |  | Consolidated Condensed Balance Sheets – February 29, 2020 and May 31, 2019 | 5
|  |  | Consolidated Condensed Statements of Shareholders' Equity - Three and Nine Months ended February 29, 2020 and February 28, 2019 | 6
|  |  | Consolidated Condensed Statements of Cash Flows – Nine Months Ended February 29, 2020 and February 28, 2019 | 8
|  |  | Notes to Consolidated Condensed Financial Statements | 9
| Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 35
| Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk | 44
| Item 4. |  | Controls and Procedures | 44
Part II. | Other Information |  |  |
| Item 1. |  | Legal Proceedings | 45
| Item 1A. |  | Risk Factors | 45
| Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds | 46
| Item 6. |  | Exhibits | 47
Signatures |  |  |  | 48

2

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 |  |  |  | Nine Months Ended |  |
| February 29, 2020 |  | February 28, 2019 |  | February 29, 2020 |  | February 28, 2019
Revenue: |  |  |  |  |  |  |
Uniform rental and facility services | $ | 1,448,021 |  |  | $ | 1,358,322 |  |  | $ | 4,372,524 |  |  | $ | 4,124,038 |
Other | 362,627 |  |  | 324,008 |  |  | 1,093,012 |  |  | 974,535 |
Total revenue | 1,810,648 |  |  | 1,682,330 |  |  | 5,465,536 |  |  | 5,098,573 |
Costs and expenses: |  |  |  |  |  |  |
Cost of uniform rental and facility services | 784,930 |  |  | 748,971 |  |  | 2,338,543 |  |  | 2,256,543 |
Cost of other | 201,323 |  |  | 178,206 |  |  | 601,065 |  |  | 537,007 |
Selling and administrative expenses | 509,743 |  |  | 476,099 |  |  | 1,570,666 |  |  | 1,472,404 |
G&K Services, Inc. integration expenses | — |  |  | 799 |  |  | — |  |  | 13,496 |
Operating income | 314,652 |  |  | 278,255 |  |  | 955,262 |  |  | 819,123 |
Gain on sale of a cost method investment | — |  |  | — |  |  | — |  |  | 69,373 |
Interest income | (347) |  |  | (70) |  |  | (792) |  |  | (957) |
Interest expense | 25,943 |  |  | 26,770 |  |  | 79,441 |  |  | 75,954 |
Income before income taxes | 289,056 |  |  | 251,555 |  |  | 876,613 |  |  | 813,499 |
Income taxes | 54,536 |  |  | 50,632 |  |  | 144,838 |  |  | 157,035 |
Income from continuing operations | 234,520 |  |  | 200,923 |  |  | 731,775 |  |  | 656,464 |
Income (loss) from discontinued operations, net of tax expense of $772, tax benefit of $107 and tax expense of $768, respectively | — |  |  | 2,411 |  |  | (323) |  |  | 2,398 |
Net income | $ | 234,520 |  |  | $ | 203,334 |  |  | $ | 731,452 |  |  | $ | 658,862 |
Basic earnings per share: |  |  |  |  |  |  |
Continuing operations | $ | 2.23 |  |  | $ | 1.89 |  |  | $ | 6.98 |  |  | $ | 6.10 |
Discontinued operations | 0.00 |  |  | 0.02 |  |  | 0.00 |  |  | 0.02 |
Basic earnings per share | $ | 2.23 |  |  | $ | 1.91 |  |  | $ | 6.98 |  |  | $ | 6.12 |
Diluted earnings per share: |  |  |  |  |  |  |
Continuing operations | $ | 2.16 |  |  | $ | 1.83 |  |  | $ | 6.76 |  |  | $ | 5.91 |
Discontinued operations | 0.00 |  |  | 0.02 |  |  | 0.00 |  |  | 0.02 |
Diluted earnings per share | $ | 2.16 |  |  | $ | 1.85 |  |  | $ | 6.76 |  |  | $ | 5.93 |
Dividends declared per share | $ | — |  |  | $ | — |  |  | $ | 2.55 |  |  | $ | 2.05 |

See accompanying notes.
3

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)

| Three Months Ended |  |  |  | Nine Months Ended |  |
| February 29, 2020 |  | February 28, 2019 |  | February 29, 2020 |  | February 28, 2019
Net income | $ | 234,520 |  |  | $ | 203,334 |  |  | $ | 731,452 |  |  | $ | 658,862 |
Other comprehensive (loss) income, net of tax: |  |  |  |  |  |  |
Foreign currency translation adjustments | (4,039) |  |  | 5,025 |  |  | 4,098 |  |  | (8,617) |
Change in fair value of interest rate lock agreements | (53,582) |  |  | (8,183) |  |  | (60,724) |  |  | (6,430) |
Amortization of interest rate lock agreements | (358) |  |  | (295) |  |  | (1,011) |  |  | (884) |
Other comprehensive loss | (57,979) |  |  | (3,453) |  |  | (57,637) |  |  | (15,931) |
Comprehensive income | $ | 176,541 |  |  | $ | 199,881 |  |  | $ | 673,815 |  |  | $ | 642,931 |

See accompanying notes.
4

CINTAS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands except share data)

| February 29, 2020 |  | May 31, 2019
| (Unaudited) |  |
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 234,441 |  |  | $ | 96,645 |
Accounts receivable, net | 942,853 |  |  | 910,120 |
Inventories, net | 352,924 |  |  | 334,589 |
Uniforms and other rental items in service | 818,486 |  |  | 784,133 |
Income taxes, current | 23,485 |  |  | 7,475 |
Prepaid expenses and other current assets | 125,517 |  |  | 103,318 |
Total current assets | 2,497,706 |  |  | 2,236,280 |
Property and equipment, net | 1,434,866 |  |  | 1,430,685 |
Investments | 212,798 |  |  | 192,346 |
Goodwill | 2,873,996 |  |  | 2,842,441 |
Service contracts, net | 464,852 |  |  | 494,595 |
Operating lease right-of-use assets, net | 165,169 |  |  | — |
Other assets, net | 252,593 |  |  | 240,315 |
| $ | 7,901,980 |  |  | $ | 7,436,662 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 243,248 |  |  | $ | 226,020 |
Accrued compensation and related liabilities | 148,912 |  |  | 155,509 |
Accrued liabilities | 430,643 |  |  | 433,940 |
Operating lease liabilities, current | 44,043 |  |  | — |
Debt due within one year | 199,800 |  |  | 312,264 |
Total current liabilities | 1,066,646 |  |  | 1,127,733 |
Long-term liabilities: |  |  |
Debt due after one year | 2,539,156 |  |  | 2,537,507 |
Deferred income taxes | 423,677 |  |  | 438,179 |
Operating lease liabilities | 126,994 |  |  | — |
Accrued liabilities | 421,198 |  |  | 330,522 |
Total long-term liabilities | 3,511,025 |  |  | 3,306,208 |
Shareholders’ equity: |  |  |
Preferred stock, no par value: | — |  |  | — |
100,000 shares authorized, none outstanding |  |  |
Common stock, no par value: | 1,092,074 |  |  | 840,328 |
425,000,000 shares authorized |  |  |
FY 2020: 186,631,553 shares issued and 104,026,576 shares outstanding |  |  |
FY 2019: 184,790,626 shares issued and 103,284,401 shares outstanding |  |  |
Paid-in capital | 154,157 |  |  | 227,928 |
Retained earnings | 7,151,838 |  |  | 6,691,236 |
Treasury stock: | (4,978,946) |  |  | (4,717,619) |
FY 2020: 82,604,977 shares |  |  |
FY 2019: 81,506,225 shares |  |  |
Accumulated other comprehensive loss | (94,814) |  |  | (39,152) |
Total shareholders’ equity | 3,324,309 |  |  | 3,002,721 |
| $ | 7,901,980 |  |  | $ | 7,436,662 |

See accompanying notes.
5

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, 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) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
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 |
Net income | — |  |  | — |  |  | — |  |  | 246,120 |  |  | — |  |  | — |  |  | — |  |  | 246,120 |
Comprehensive income, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | 23,816 |  |  | — |  |  | — |  |  | 23,816 |
Dividends | — |  |  | — |  |  | — |  |  | (268,050) |  |  | — |  |  | — |  |  | — |  |  | (268,050) |
Stock-based compensation | — |  |  | — |  |  | 29,003 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 29,003 |
Vesting of stock-based compensation awards | 21 |  |  | 5,403 |  |  | (5,403) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock options exercised, net of shares surrendered | 324 |  |  | 25,286 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 25,286 |
Repurchase of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (7) |  |  | (1,911) |  |  | (1,911) |
Balance at November 30, 2019 | 186,298 |  |  | $ | 1,066,814 |  |  | $ | 134,041 |  |  | $ | 6,917,310 |  |  | $ | (36,835) |  |  | (82,595) |  |  | $ | (4,976,360) |  |  | $ | 3,104,970 |
Net income | — |  |  | — |  |  | — |  |  | 234,520 |  |  | — |  |  | — |  |  | — |  |  | 234,520 |
Comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | (57,979) |  |  | — |  |  | — |  |  | (57,979) |
Dividends | — |  |  | — |  |  | — |  |  | 8 |  |  | — |  |  | — |  |  | — |  |  | 8 |
Stock-based compensation | — |  |  | — |  |  | 27,030 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,030 |
Vesting of stock-based compensation awards | 25 |  |  | 6,914 |  |  | (6,914) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock options exercised, net of shares surrendered | 309 |  |  | 18,346 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 18,346 |
Repurchase of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (10) |  |  | (2,586) |  |  | (2,586) |
Balance at February 29, 2020 | 186,632 |  |  | $ | 1,092,074 |  |  | $ | 154,157 |  |  | $ | 7,151,838 |  |  | $ | (94,814) |  |  | (82,605) |  |  | $ | (4,978,946) |  |  | $ | 3,324,309 |

See accompanying notes.
6

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(In thousands)

| Common Stock |  |  |  | Paid-In Capital |  | Retained Earnings |  | Other Accumulated Comprehensive Income |  | Treasury Stock |  |  |  | Total Shareholders' Equity
| Shares |  | Amount |  |  |  |  |  |  |  | Shares |  | Amount |  |
Balance at June 1, 2018 | 182,723 |  |  | $ | 618,464 |  |  | $ | 245,211 |  |  | $ | 5,837,827 |  |  | $ | 16,343 |  |  | (76,397) |  |  | $ | (3,701,319) |  |  | 3,016,526 |
Cumulative effect of change in accounting principle | — |  |  | — |  |  | — |  |  | 189,192 |  |  | — |  |  | — |  |  | — |  |  | 189,192 |
Net income | — |  |  | — |  |  | — |  |  | 212,515 |  |  | — |  |  | — |  |  | — |  |  | 212,515 |
Comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | (6,482) |  |  | — |  |  | — |  |  | (6,482) |
Dividends | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 1 |
Stock-based compensation | — |  |  | — |  |  | 46,172 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 46,172 |
Vesting of stock-based compensation awards | 739 |  |  | 151,012 |  |  | (151,012) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock options exercised, net of shares surrendered | 594 |  |  | 27,512 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,512 |
Repurchase of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (689) |  |  | (139,468) |  |  | (139,468) |
Balance at August 31, 2018 | 184,056 |  |  | $ | 796,988 |  |  | $ | 140,371 |  |  | $ | 6,239,535 |  |  | $ | 9,861 |  |  | (77,086) |  |  | $ | (3,840,787) |  |  | $ | 3,345,968 |
Net income | — |  |  | — |  |  | — |  |  | 243,013 |  |  | — |  |  | — |  |  | — |  |  | 243,013 |
Comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | (5,996) |  |  | — |  |  | — |  |  | (5,996) |
Dividends | — |  |  | — |  |  | — |  |  | (220,792) |  |  | — |  |  | — |  |  | — |  |  | (220,792) |
Stock-based compensation | — |  |  | — |  |  | 28,612 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 28,612 |
Vesting of stock-based compensation awards | 11 |  |  | 2,146 |  |  | (2,146) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock options exercised, net of shares surrendered | 86 |  |  | 5,100 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 5,100 |
Repurchase of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,943) |  |  | (368,661) |  |  | (368,661) |
Balance at November 30, 2018 | 184,153 |  |  | $ | 804,234 |  |  | $ | 166,837 |  |  | $ | 6,261,756 |  |  | $ | 3,865 |  |  | (79,029) |  |  | $ | (4,209,448) |  |  | $ | 3,027,244 |
Net income | — |  |  | — |  |  | — |  |  | 203,334 |  |  | — |  |  | — |  |  | — |  |  | 203,334 |
Comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | (3,453) |  |  | — |  |  | — |  |  | (3,453) |
Dividends | — |  |  | — |  |  | — |  |  | 31 |  |  | — |  |  | — |  |  | — |  |  | 31 |
Stock-based compensation | — |  |  | — |  |  | 30,769 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 30,769 |
Vesting of stock-based compensation awards | 2 |  |  | 279 |  |  | (279) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Stock options exercised, net of shares surrendered | 404 |  |  | 21,662 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 21,662 |
Repurchase of common stock | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (598) |  |  | (100,095) |  |  | (100,095) |
Balance at February 28, 2019 | 184,559 |  |  | $ | 826,175 |  |  | $ | 197,327 |  |  | $ | 6,465,121 |  |  | $ | 412 |  |  | (79,627) |  |  | $ | (4,309,543) |  |  | $ | 3,179,492 |

See accompanying notes.
7

CINTAS CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

| Nine Months Ended |  |
| February 29, 2020 |  | February 28, 2019
Cash flows from operating activities: |  |  |
Net income | $ | 731,452 |  |  | $ | 658,862 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation | 175,261 |  |  | 164,380 |
Amortization of intangible assets and capitalized contract costs | 107,232 |  |  | 101,949 |
Stock-based compensation | 96,428 |  |  | 105,553 |
Gain on sale of a cost method investment | — |  |  | (69,373) |
Gain on sale of business | — |  |  | (2,419) |
Deferred income taxes | 5,013 |  |  | 25,079 |
Change in current assets and liabilities, net of acquisitions of businesses: |  |  |  |
Accounts receivable, net | (31,135) |  |  | (61,102) |
Inventories, net | (17,780) |  |  | (70,716) |
Uniforms and other rental items in service | (33,732) |  |  | (72,336) |
Prepaid expenses and other current assets and capitalized contract costs | (95,169) |  |  | (85,123) |
Accounts payable | 14,271 |  |  | 79 |
Accrued compensation and related liabilities | (4,792) |  |  | (3,866) |
Accrued liabilities and other | 3,426 |  |  | 3,614 |
Income taxes, current | (15,926) |  |  | (23,864) |
Net cash provided by operating activities | 934,549 |  |  | 670,717 |
Cash flows from investing activities: |  |  |
Capital expenditures | (189,379) |  |  | (207,805) |
Purchases of investments | (10,461) |  |  | (17,544) |
Proceeds from sale of assets | 13,300 |  |  | — |
Proceeds from sale of a cost method investment | — |  |  | 73,342 |
Proceeds from sale of business | — |  |  | 3,200 |
Acquisitions of businesses, net of cash acquired | (47,850) |  |  | (7,403) |
Other, net | (2,090) |  |  | (6,804) |
Net cash used in investing activities | (236,480) |  |  | (163,014) |
Cash flows from financing activities: |  |  |
(Payments) issuance of commercial paper, net | (112,500) |  |  | 217,500 |
Proceeds from exercise of stock-based compensation awards | 81,547 |  |  | 54,274 |
Dividends paid | (268,042) |  |  | (220,760) |
Repurchase of common stock | (261,327) |  |  | (608,224) |
Other, net | 30 |  |  | (8,088) |
Net cash used in financing activities | (560,292) |  |  | (565,298) |
Effect of exchange rate changes on cash and cash equivalents | 19 |  |  | (270) |
Net increase (decrease) in cash and cash equivalents | 137,796 |  |  | (57,865) |
Cash and cash equivalents at beginning of period | 96,645 |  |  | 138,724 |
Cash and cash equivalents at end of period | $ | 234,441 |  |  | $ | 80,859 |

See accompanying notes.
8

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

(In thousands) | February 29, 2020 |  | May 31, 2019
Raw materials | $ | 14,308 |  |  | $ | 17,812 |
Work in process | 27,224 |  |  | 28,820 |
Finished goods | 311,392 |  |  | 287,957 |
| $ | 352,924 |  |  | $ | 334,589 |

Inventories are recorded net of reserves for obsolete inventory of $34.1 million and $32.7 million at February 29, 2020 and May 31, 2019, 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.
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.
9

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 will adopt this standard on June 1, 2020 and 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.
Note 2 - Revenue Recognition
The following table presents Cintas' total revenue disaggregated by operating segment:

| Three Months Ended |  |  |  |  |  | Nine Months Ended |  |  |  |
| February 29, 2020 |  |  | February 28, 2019 |  |  | February 29, 2020 |  |  | February 28, 2019 |
(In thousands) | Revenue | % |  | Revenue | % |  | Revenue | % |  | Revenue | %
Uniform Rental and Facility Services | $ | 1,448,021 |  | 80.0 | % |  | $ | 1,358,322 |  | 80.7 | % |  | $ | 4,372,524 |  | 80.0 | % |  | $ | 4,124,038 |  | 80.9 | %
First Aid and Safety Services | 170,541 |  | 9.4 | % |  | 149,170 |  | 8.9 | % |  | 512,299 |  | 9.4 | % |  | 455,935 |  | 8.9 | %
Fire Protection Services | 107,127 |  | 5.9 | % |  | 99,688 |  | 5.9 | % |  | 323,988 |  | 5.9 | % |  | 293,980 |  | 5.8 | %
Uniform Direct Sales | 84,959 |  | 4.7 | % |  | 75,150 |  | 4.5 | % |  | 256,725 |  | 4.7 | % |  | 224,620 |  | 4.4 | %
Total revenue | $ | 1,810,648 |  | 100.0 | % |  | $ | 1,682,330 |  | 100.0 | % |  | $ | 5,465,536 |  | 100.0 | % |  | $ | 5,098,573 |  | 100.0 | %

Fire Protection Services and Uniform Direct Sales are recorded within All Other disclosed in Note 12 entitled Segment Information.
Revenue Recognition Policy
More than 95% of the Company's revenue is 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.
10

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 or nine months ended February 29, 2020 or February 28, 2019. 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). These assets are included in other assets, net on the consolidated condensed balance sheet.
Additionally, in accordance with Topic 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
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. 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 February 29, 2020, the current and noncurrent assets related to deferred commissions totaled $74.5 million and $221.3 million, respectively. As of May 31, 2019, the current and noncurrent assets related to deferred commissions totaled $69.6 million and $206.0 million, respectively. We recorded amortization expense related to deferred commissions of $19.7 million and $18.0 million during the three months ended February 29, 2020 and February 28, 2019, respectively. During the nine months ended February 29, 2020 and February 28, 2019, we recorded amortization expense related to deferred commissions of $57.7 million and $52.7 million, respectively. These expenses are classified in selling and administrative expense on the consolidated condensed statements of income.
11

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 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 $18.0 million and $52.9 million, respectively, for the three and nine months ended February 29, 2020.
The following table provides supplemental information related to the Company's consolidated condensed statement of cash flows for the nine months ended February 29, 2020:

(In thousands) |  |
Cash paid for amounts included in the measurement of operating lease liabilities |  | $ | 38,292 |
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities |  | $ | 33,382 |

Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows at February, 29, 2020:

Weighted-average remaining lease term - operating leases |  | 5.26 years
Weighted-average discount rate - operating leases |  | 2.69% |

The contractual future minimum lease payments of Cintas' operating lease liabilities by fiscal year are as follows as of February 29, 2020:

(In thousands) |  |
2020 (remaining three months) |  | $ | 12,511 |
2021 |  | 46,151 |
2022 |  | 37,123 |
2023 |  | 28,719 |
2024 |  | 19,488 |
Thereafter |  | 40,169 |
Total payments |  | 184,161 |
Less interest |  | (13,124) |
Total present value of lease payments |  | $ | 171,037 |

12

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 February 29, 2020 |  |  |  |  |  |
(In thousands) | Level 1 |  | Level 2 |  | Level 3 |  | Fair Value
Cash and cash equivalents | $ | 234,441 |  |  | $ | — |  |  | $ | — |  |  | $ | 234,441 |
Total assets at fair value | $ | 234,441 |  |  | $ | — |  |  | $ | — |  |  | $ | 234,441 |
Long-term accrued liabilities: |  |  |  |  |  |  |
Interest rate lock agreements | $ | — |  |  | $ | 116,909 |  |  | $ | — |  |  | $ | 116,909 |
Total liabilities at fair value | $ | — |  |  | $ | 116,909 |  |  | $ | — |  |  | $ | 116,909 |

| 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.
The fair values of outstanding interest rate lock agreements are included in long-term accrued liabilities at February 29, 2020 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 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.
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 GAAP. The assets and liabilities measured at fair value on a nonrecurring basis primarily relate to assets and liabilities acquired in a business acquisition. During the nine months ended February 29, 2020 and February 28, 2019, there were no material business acquisitions.
13

Note 5 - Investments
Investments at February 29, 2020 of $212.8 million include the cash surrender value of insurance policies of $190.2 million, equity method investments of $19.4 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 nine months ended February 29, 2020 and February 28, 2019, no impairment losses were recorded.
During the nine months ended February 28, 2019, 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.
Note 6 - Earnings Per Share
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. 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.

| Three Months Ended |  |  |  | Nine Months Ended |  |
Basic Earnings per Share from Continuing Operations (in thousands except per share data) | February 29, 2020 |  | February 28, 2019 |  | February 29, 2020 |  | February 28, 2019
Income from continuing operations | $ | 234,520 |  |  | $ | 200,923 |  |  | $ | 731,775 |  |  | $ | 656,464 |
Less: income from continuing operations allocated to participating securities | 2,193 |  |  | 2,783 |  |  | 6,864 |  |  | 8,977 |
Income from continuing operations available to common shareholders | $ | 232,327 |  |  | $ | 198,140 |  |  | $ | 724,911 |  |  | $ | 647,487 |
Basic weighted average common shares outstanding | 104,245 |  |  | 105,080 |  |  | 103,840 |  |  | 106,147 |
Basic earnings per share from continuing operations | $ | 2.23 |  |  | $ | 1.89 |  |  | $ | 6.98 |  |  | $ | 6.10 |

| Three Months Ended |  |  |  | Nine Months Ended |  |
Diluted Earnings per Share from Continuing Operations (in thousands except per share data) | February 29, 2020 |  | February 28, 2019 |  | February 29, 2020 |  | February 28, 2019
Income from continuing operations | $ | 234,520 |  |  | $ | 200,923 |  |  | $ | 731,775 |  |  | $ | 656,464 |
Less: income from continuing operations allocated to participating securities | 2,193 |  |  | 2,783 |  |  | 6,864 |  |  | 8,977 |
Income from continuing operations available to common shareholders | $ | 232,327 |  |  | $ | 198,140 |  |  | $ | 724,911 |  |  | $ | 647,487 |
Basic weighted average common shares outstanding | 104,245 |  |  | 105,080 |  |  | 103,840 |  |  | 106,147 |
Effect of dilutive securities – employee stock options | 3,343 |  |  | 3,082 |  |  | 3,440 |  |  | 3,436 |
Diluted weighted average common shares outstanding | 107,588 |  |  | 108,162 |  |  | 107,280 |  |  | 109,583 |
Diluted earnings per share from continuing operations | $ | 2.16 |  |  | $ | 1.83 |  |  | $ | 6.76 |  |  | $ | 5.91 |

For both the three and nine months ended February 29, 2020, both basic and diluted earnings per share from discontinued operations rounded to zero. For both the three and nine months ended February 28, 2019, both basic and diluted earnings per share from discontinued operations were $0.02.
14

For the three months ended February 29, 2020 and February 28, 2019, options granted to purchase 0.2 million and 0.7 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. For the nine months ended February 29, 2020 and February 28, 2019, options granted to purchase 0.2 million and 0.5 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 February 29, 2020. For the nine months ended February 29, 2020, 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. In the period subsequent to February 29, 2020, through March 31, 2020, we purchased 0.8 million shares of Cintas common stock under the October 30, 2018 share buyback program at an average price of $263.07 for a total purchase price of $202.6 million. From the inception of the October 30, 2018 share buyback program through March 31, 2020, Cintas has purchased a total of $4.3 million shares of Cintas common stock at an average price of $219.40 for a total purchase price of $939.1 million.
For the three months ended February 29, 2020, Cintas acquired less than 0.1 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the three months ended February 29, 2020. These shares were acquired at an average price of $278.21 per share for a total purchase price of $2.5 million. During the nine months ended February 29, 2020, Cintas acquired 0.3 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the nine months ended February 29, 2020. These shares were acquired at an average price of $261.48 per share for a total purchase price of $68.4 million.
Note 7 - Goodwill, Service Contracts and Other Assets
Changes in the carrying amount of goodwill and service contracts for the nine months ended February 29, 2020, 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 | 18,362 |  |  | 164 |  |  | 10,639 |  |  | 29,165 |
Foreign currency translation | 2,205 |  |  | 177 |  |  | 8 |  |  | 2,390 |
Balance as of February 29, 2020 | $ | 2,516,969 |  |  | $ | 243,800 |  |  | $ | 113,227 |  |  | $ | 2,873,996 |

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 | 8,619 |  |  | 325 |  |  | 3,074 |  |  | 12,018 |
Service contracts amortization | (35,472) |  |  | (2,910) |  |  | (4,072) |  |  | (42,454) |
Foreign currency translation | 675 |  |  | 18 |  |  | — |  |  | 693 |
Balance as of February 29, 2020 | $ | 418,838 |  |  | $ | 20,813 |  |  | $ | 25,201 |  |  | $ | 464,852 |

15

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

| As of February 29, 2020 |  |  |  |
(In thousands) | Carrying Amount |  | Accumulated Amortization |  | Net
Service contracts | $ | 941,606 |  |  | $ | 476,754 |  |  | $ | 464,852 |
Capitalized contract costs (1) | $ | 349,988 |  |  | $ | 128,722 |  |  | $ | 221,266 |
Noncompete and consulting agreements | 43,573 |  |  | 41,143 |  |  | 2,430 |
Other | 51,491 |  |  | 22,594 |  |  | 28,897 |
Total other assets | $ | 445,052 |  |  | $ | 192,459 |  |  | $ | 252,593 |

| 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 February 29, 2020, is $74.5 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 $35.7 million and $33.7 million for the three months ended February 29, 2020 and February 28, 2019, respectively. For the nine months ended February 29, 2020 and February 28, 2019, amortization expense for service contracts and other assets for continuing operations was $105.6 million and $99.9 million, respectively. The estimated future amortization expense for service contracts and other assets, excluding any future acquisitions and commissions to be earned, as of February 29, 2020 is as follows:

Fiscal Year (In thousands) |  |
2020 (remaining three months) |  | $ | 34,641 |
2021 |  | 129,941 |
2022 |  | 118,066 |
2023 |  | 98,914 |
2024 |  | 87,387 |
Thereafter |  | 297,951 |
Total future amortization expense |  | $ | 766,900 |

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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 |  | February 29, 2020 |  | May 31, 2019
Debt due within one year |  |  |  |  |  |  |  |  |
Commercial paper | 2.68 | % | (1) | 2019 |  | 2020 |  | $ | — |  |  | $ | 112,500 |
Term loan | 2.25 | % | (2) | 2019 |  | 2020 |  | 200,000 |  |  | 200,000 |
Debt issuance costs |  |  |  |  |  |  | (200) |  |  | (236) |
Total debt due within one year |  |  |  |  |  |  | $ | 199,800 |  |  | $ | 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 |  | 51,359 |  |  | 51,684 |
Senior notes (4) | 3.11 | % |  | 2015 |  | 2025 |  | 51,721 |  |  | 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 |  |  |  |  |  |  | (13,924) |  |  | (16,150) |
Total debt due after one year |  |  |  |  |  |  | $ | 2,539,156 |  |  | $ | 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 February 29, 2020.
(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 February 29, 2020 were $2,750.0 million and $3,028.5 million, respectively, and as of May 31, 2019 were $2,866.2 million and $2,998.7 million, respectively. During the nine months ended February 29, 2020, 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 is May 23, 2020, which can be extended 12 months, annually, for up to four years. As of February 29, 2020, 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
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2007, fiscal 2012, fiscal 2013 and fiscal 2017. The amortization of the cash flow hedges resulted in an increase to other comprehensive loss of $0.4 million and $0.3 million for the three months ended February 29, 2020 and February 28, 2019, respectively. For the nine months ended February 29, 2020 and February 28, 2019, the amortization of the cash flow hedges resulted in a increase to other comprehensive loss of $1.0 million and $0.9 million, respectively. During the nine months ended February 29, 2020, Cintas entered into interest rate lock agreements with a notional value of $700.0 million for a forecasted debt issuance in connection with the upcoming debt maturities. As of February 29, 2020, the fair values of these interest rate locks were a liability of $27.1 million and were recorded in long-term accrued liabilities and in other comprehensive loss, 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 in connection with the upcoming debt maturities. As of February 29, 2020 and May 31, 2019, the fair values of these interest rate locks were a liability of $89.8 million and $36.4 million, respectively, and were recorded in long-term accrued liabilities and in other comprehensive loss, net of tax. These interest rate locks had no impact on net income or cash flows from continuing operations for the three and nine months ended February 29, 2020 or February 28, 2019.
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 February 29, 2020, Cintas was in compliance with all debt covenants.
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 February 29, 2020 and May 31, 2019, recorded unrecognized tax benefits were $34.4 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 2016. 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.
Cintas’ effective tax rate for continuing operations was 18.9% and 20.1% for the three months ended February 29, 2020 and February 28, 2019, respectively. For the nine months ended February 29, 2020 and February 28, 2019, Cintas' effective tax rate for continuing operations was 16.5% and 19.3%, respectively. The effective tax rate for all periods were 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 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 |  |  |  | Nine Months Ended |  |
(In thousands) | February 29, 2020 |  | February 28, 2019 |  | February 29, 2020 |  | February 28, 2019
Interest cost | $ | 720 |  |  | $ | 781 |  |  | $ | 2,161 |  |  | $ | 2,343 |
Expected return on assets | (740) |  |  | (720) |  |  | (2,221) |  |  | (2,161) |
Net periodic benefit cost | $ | (20) |  |  | $ | 61 |  |  | $ | (60) |  |  | $ | 182 |

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Note 11 - Accumulated Other Comprehensive Income (Loss)
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) |
Other comprehensive loss before reclassifications | (4,039) |  |  | (53,582) |  |  | — |  |  | (57,621) |
Amounts reclassified from accumulated other comprehensive income (loss) | — |  |  | (358) |  |  | — |  |  | (358) |
Net current period other comprehensive loss | (4,039) |  |  | (53,940) |  |  | — |  |  | (57,979) |
Balance at February 29, 2020 | $ | (10,924) |  |  | $ | (78,066) |  |  | $ | (5,824) |  |  | $ | (94,814) |

(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 |
Other comprehensive (loss) income before reclassifications | 5,025 |  |  | (8,183) |  |  | — |  |  | (3,158) |
Amounts reclassified from accumulated other comprehensive income (loss) | — |  |  | (295) |  |  | — |  |  | (295) |
Net current period other comprehensive income (loss) | 5,025 |  |  | (8,478) |  |  | — |  |  | (3,453) |
Balance at February 28, 2019 | $ | (2,067) |  |  | $ | 3,135 |  |  | $ | (656) |  |  | $ | 412 |

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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 |  |  |  | Nine Months Ended |  |  |
(In thousands) | February 29, 2020 |  | February 28, 2019 |  | February 29, 2020 |  | February 28, 2019 |
Amortization of interest rate locks | $ | 474 |  |  | $ | 474 |  |  | $ | 1,422 |  |  | $ | 1,422 |  | Interest expense |
Tax expense | (116) |  |  | (179) |  |  | (411) |  |  | (538) |  | Income taxes |
Amortization of interest rate locks, net of tax | $ | 358 |  |  | $ | 295 |  |  | $ | 1,011 |  |  | $ | 884 |  | Net income |

Note 12 - Segment Information
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 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) | Uniform Rental and Facility Services |  | First Aid and Safety Services |  | All Other |  | Corporate (1) |  | Total
For the three months ended February 29, 2020 |  |  |  |  |  |  |  |  |
Revenue | $ | 1,448,021 |  |  | $ | 170,541 |  |  | $ | 192,086 |  |  | $ | — |  |  | $ | 1,810,648 |
Income (loss) before income taxes | $ | 271,629 |  |  | $ | 24,692 |  |  | $ | 18,331 |  |  | $ | (25,596) |  |  | $ | 289,056 |
For the three months ended February 28, 2019 |  |  |  |  |  |  |  |  |
Revenue | $ | 1,358,322 |  |  | $ | 149,170 |  |  | $ | 174,838 |  |  | $ | — |  |  | $ | 1,682,330 |
Income (loss) before income taxes | $ | 239,138 |  |  | $ | 21,622 |  |  | $ | 17,495 |  |  | $ | (26,700) |  |  | $ | 251,555 |
As of and for the nine months ended February 29, 2020 |  |  |  |  |  |  |  |  |
Revenue | $ | 4,372,524 |  |  | $ | 512,299 |  |  | $ | 580,713 |  |  | $ | — |  |  | $ | 5,465,536 |
Income (loss) before income taxes | $ | 826,999 |  |  | $ | 74,102 |  |  | $ | 54,161 |  |  | $ | (78,649) |  |  | $ | 876,613 |
Total assets | $ | 6,695,002 |  |  | $ | 552,455 |  |  | $ | 420,082 |  |  | $ | 234,441 |  |  | $ | 7,901,980 |
As of and for the nine months ended February 28, 2019 |  |  |  |  |  |  |  |  |
Revenue | $ | 4,124,038 |  |  | $ | 455,935 |  |  | $ | 518,600 |  |  | $ | — |  |  | $ | 5,098,573 |
Income (loss) before income taxes | $ | 713,563 |  |  | $ | 64,933 |  |  | $ | 40,627 |  |  | $ | (5,624) |  |  | $ | 813,499 |
Total assets | $ | 6,451,590 |  |  | $ | 508,865 |  |  | $ | 392,359 |  |  | $ | 80,859 |  |  | $ | 7,433,673 |

(1) Corporate assets include cash and marketable securities in all periods.
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Note 13 - G&K Services, Inc. Integration Expenses
As a result of the acquisition of G&K in fiscal 2017, the Company incurred $0.8 million and $13.5 million in expenses during the three and nine months ended February 28, 2019, respectively, which represented integration expenses directly related to the acquisition, primarily facility closure expenses. No such costs were incurred during the three or nine months ended February 29, 2020.
As of February 29, 2020 and May 31, 2019, employee termination benefits included in accrued compensation and related liabilities on the consolidated condensed balance sheet was $2.2 million and $2.8 million, respectively. The amount of employee termination benefits paid during the three and nine months ended February 29, 2020 was $0.3 million and $0.6 million, respectively. During the three and nine months ended February 28, 2019, the amount of employee termination benefits paid was $0.5 million and $3.8 million, respectively. We anticipate the remaining accrued employee termination benefits will be paid by the end of this fiscal year.
Note 14 - Supplemental Guarantor Information
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 February 29, 2020, 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:
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Consolidating Condensed Income Statement
Three Months Ended February 29, 2020
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Revenue: |  |  |  |  |  |  |  |  |  |  |
Uniform rental and facility services | $ | — |  |  | $ | 1,150,780 |  |  | $ | 189,333 |  |  | $ | 108,599 |  |  | $ | (691) |  |  | $ | 1,448,021 |
Other | — |  |  | 578,950 |  |  | 64 |  |  | 22,319 |  |  | (238,706) |  |  | 362,627 |
Equity in net income of affiliates | 234,520 |  |  | — |  |  | — |  |  | — |  |  | (234,520) |  |  | — |
Total revenue | 234,520 |  |  | 1,729,730 |  |  | 189,397 |  |  | 130,918 |  |  | (473,917) |  |  | 1,810,648 |
Costs and expenses (income): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of uniform rental and facility services | — |  |  | 634,638 |  |  | 112,865 |  |  | 70,279 |  |  | (32,852) |  |  | 784,930 |
Cost of other | — |  |  | 408,832 |  |  | (25,807) |  |  | 17,003 |  |  | (198,705) |  |  | 201,323 |
Selling and administrative expenses | — |  |  | 576,433 |  |  | (94,155) |  |  | 35,171 |  |  | (7,706) |  |  | 509,743 |
Operating income | 234,520 |  |  | 109,827 |  |  | 196,494 |  |  | 8,465 |  |  | (234,654) |  |  | 314,652 |
Interest income | — |  |  | (131) |  |  | (195) |  |  | (22) |  |  | 1 |  |  | (347) |
Interest expense (income) | — |  |  | 26,033 |  |  | (91) |  |  | 1 |  |  | — |  |  | 25,943 |
Income before income taxes | 234,520 |  |  | 83,925 |  |  | 196,780 |  |  | 8,486 |  |  | (234,655) |  |  | 289,056 |
Income taxes | — |  |  | 15,717 |  |  | 36,380 |  |  | 2,464 |  |  | (25) |  |  | 54,536 |
Net income | $ | 234,520 |  |  | $ | 68,208 |  |  | $ | 160,400 |  |  | $ | 6,022 |  |  | $ | (234,630) |  |  | $ | 234,520 |

23

Consolidating Condensed Income Statement
Three Months Ended February 28, 2019
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Revenue: |  |  |  |  |  |  |  |  |  |  |
Uniform rental and facility services | $ | — |  |  | $ | 1,092,594 |  |  | $ | 176,787 |  |  | $ | 99,866 |  |  | $ | (10,925) |  |  | $ | 1,358,322 |
Other | — |  |  | 519,294 |  |  | 44 |  |  | 21,982 |  |  | (217,312) |  |  | 324,008 |
Equity in net income of affiliates | 200,923 |  |  | — |  |  | — |  |  | — |  |  | (200,923) |  |  | — |
Total revenue | 200,923 |  |  | 1,611,888 |  |  | 176,831 |  |  | 121,848 |  |  | (429,160) |  |  | 1,682,330 |
Costs and expenses (income): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of uniform rental and facility services | — |  |  | 612,167 |  |  | 111,103 |  |  | 64,976 |  |  | (39,275) |  |  | 748,971 |
Cost of other | — |  |  | 373,168 |  |  | (25,811) |  |  | 15,649 |  |  | (184,800) |  |  | 178,206 |
Selling and administrative expenses | — |  |  | 527,720 |  |  | (74,507) |  |  | 31,042 |  |  | (8,156) |  |  | 476,099 |
G&K Services, Inc. integration expenses | — |  |  | (141) |  |  | (379) |  |  | 1,319 |  |  | — |  |  | 799 |
Operating income | 200,923 |  |  | 98,974 |  |  | 166,425 |  |  | 8,862 |  |  | (196,929) |  |  | 278,255 |
Interest (income) expense | — |  |  | (56) |  |  | 1 |  |  | (18) |  |  | 3 |  |  | (70) |
Interest expense (income) | — |  |  | 26,872 |  |  | (104) |  |  | 2 |  |  | — |  |  | 26,770 |
Income before income taxes | 200,923 |  |  | 72,158 |  |  | 166,528 |  |  | 8,878 |  |  | (196,932) |  |  | 251,555 |
Income taxes | — |  |  | 12,330 |  |  | 35,665 |  |  | 2,656 |  |  | (19) |  |  | 50,632 |
Income from continuing operations | 200,923 |  |  | 59,828 |  |  | 130,863 |  |  | 6,222 |  |  | (196,913) |  |  | 200,923 |
Income from discontinued operations, net of tax | 2,411 |  |  | 2,411 |  |  | — |  |  | — |  |  | (2,411) |  |  | 2,411 |
Net income | $ | 203,334 |  |  | $ | 62,239 |  |  | $ | 130,863 |  |  | $ | 6,222 |  |  | $ | (199,324) |  |  | $ | 203,334 |

24

Consolidating Condensed Income Statement
Nine Months Ended February 29, 2020
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Revenue: |  |  |  |  |  |  |  |  |  |  |
Uniform rental and facility services | $ | — |  |  | $ | 3,477,631 |  |  | $ | 574,536 |  |  | $ | 322,188 |  |  | $ | (1,831) |  |  | $ | 4,372,524 |
Other | — |  |  | 1,768,466 |  |  | 332 |  |  | 69,925 |  |  | (745,711) |  |  | 1,093,012 |
Equity in net income of affiliates | 731,775 |  |  | — |  |  | — |  |  | — |  |  | (731,775) |  |  | — |
Total revenue | 731,775 |  |  | 5,246,097 |  |  | 574,868 |  |  | 392,113 |  |  | (1,479,317) |  |  | 5,465,536 |
Costs and expenses (income): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of uniform rental and facility services | — |  |  | 1,891,754 |  |  | 337,104 |  |  | 205,236 |  |  | (95,551) |  |  | 2,338,543 |
Cost of other | — |  |  | 1,240,092 |  |  | (75,346) |  |  | 53,656 |  |  | (617,337) |  |  | 601,065 |
Selling and administrative expenses | — |  |  | 1,767,258 |  |  | (277,575) |  |  | 102,365 |  |  | (21,382) |  |  | 1,570,666 |
Operating income | 731,775 |  |  | 346,993 |  |  | 590,685 |  |  | 30,856 |  |  | (745,047) |  |  | 955,262 |
Interest income | — |  |  | (438) |  |  | (302) |  |  | (56) |  |  | 4 |  |  | (792) |
Interest expense (income) | — |  |  | 79,657 |  |  | (231) |  |  | 15 |  |  | — |  |  | 79,441 |
Income before income taxes | 731,775 |  |  | 267,774 |  |  | 591,218 |  |  | 30,897 |  |  | (745,051) |  |  | 876,613 |
Income taxes | — |  |  | 42,578 |  |  | 94,010 |  |  | 8,336 |  |  | (86) |  |  | 144,838 |
Income from continuing operations | 731,775 |  |  | 225,196 |  |  | 497,208 |  |  | 22,561 |  |  | (744,965) |  |  | 731,775 |
Loss from discontinued operations, net of tax | (323) |  |  | (323) |  |  | — |  |  | — |  |  | 323 |  |  | (323) |
Net income | $ | 731,452 |  |  | $ | 224,873 |  |  | $ | 497,208 |  |  | $ | 22,561 |  |  | $ | (744,642) |  |  | $ | 731,452 |

25

Consolidating Condensed Income Statement
Nine Months Ended February 28, 2019
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Revenue: |  |  |  |  |  |  |  |  |  |  |
Uniform rental and facility services | $ | — |  |  | $ | 3,365,841 |  |  | $ | 542,826 |  |  | $ | 301,379 |  |  | $ | (86,008) |  |  | $ | 4,124,038 |
Other | — |  |  | 1,532,665 |  |  | 137 |  |  | 72,232 |  |  | (630,499) |  |  | 974,535 |
Equity in net income of affiliates | 656,464 |  |  | — |  |  | — |  |  | — |  |  | (656,464) |  |  | — |
Total revenue | 656,464 |  |  | 4,898,506 |  |  | 542,963 |  |  | 373,611 |  |  | (1,372,971) |  |  | 5,098,573 |
Costs and expenses (income): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of uniform rental and facility services | — |  |  | 1,896,767 |  |  | 332,208 |  |  | 194,305 |  |  | (166,737) |  |  | 2,256,543 |
Cost of other | — |  |  | 1,090,265 |  |  | (74,973) |  |  | 53,110 |  |  | (531,395) |  |  | 537,007 |
Selling and administrative expenses | — |  |  | 1,608,906 |  |  | (207,745) |  |  | 97,964 |  |  | (26,721) |  |  | 1,472,404 |
G&K Services, Inc. integration expenses | — |  |  | 8,508 |  |  | 2,754 |  |  | 2,234 |  |  | — |  |  | 13,496 |
Operating income | 656,464 |  |  | 294,060 |  |  | 490,719 |  |  | 25,998 |  |  | (648,118) |  |  | 819,123 |
Gain on sale of a cost method investment | — |  |  | — |  |  | 69,373 |  |  | — |  |  | — |  |  | 69,373 |
Interest income | — |  |  | (559) |  |  | (364) |  |  | (39) |  |  | 5 |  |  | (957) |
Interest expense (income) | — |  |  | 76,579 |  |  | (639) |  |  | 14 |  |  | — |  |  | 75,954 |
Income before income taxes | 656,464 |  |  | 218,040 |  |  | 561,095 |  |  | 26,023 |  |  | (648,123) |  |  | 813,499 |
Income taxes | — |  |  | 42,159 |  |  | 107,497 |  |  | 7,456 |  |  | (77) |  |  | 157,035 |
Income from continuing operations | 656,464 |  |  | 175,881 |  |  | 453,598 |  |  | 18,567 |  |  | (648,046) |  |  | 656,464 |
Income from discontinued operations, net of tax | 2,398 |  |  | 2,398 |  |  | — |  |  | — |  |  | (2,398) |  |  | 2,398 |
Net income | $ | 658,862 |  |  | $ | 178,279 |  |  | $ | 453,598 |  |  | $ | 18,567 |  |  | $ | (650,444) |  |  | $ | 658,862 |

26

Consolidating Condensed Statement of Comprehensive Income
Three Months Ended February 29, 2020
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Net income | $ | 234,520 |  |  | $ | 68,208 |  |  | $ | 160,400 |  |  | $ | 6,022 |  |  | $ | (234,630) |  |  | $ | 234,520 |
Other comprehensive (loss) income, net of tax: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments | (4,039) |  |  | — |  |  | — |  |  | (4,039) |  |  | 4,039 |  |  | (4,039) |
Change in fair value of interest rate lock agreements | (53,582) |  |  | (53,582) |  |  | — |  |  | — |  |  | 53,582 |  |  | (53,582) |
Amortization of interest rate lock agreements | (358) |  |  | (358) |  |  | — |  |  | — |  |  | 358 |  |  | (358) |
Other comprehensive loss | (57,979) |  |  | (53,940) |  |  | — |  |  | (4,039) |  |  | 57,979 |  |  | (57,979) |
Comprehensive income | $ | 176,541 |  |  | $ | 14,268 |  |  | $ | 160,400 |  |  | $ | 1,983 |  |  | $ | (176,651) |  |  | $ | 176,541 |

27

Consolidating Condensed Statement of Comprehensive Income
Three Months Ended February 28, 2019
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Net income | $ | 203,334 |  |  | $ | 62,239 |  |  | $ | 130,863 |  |  | $ | 6,222 |  |  | $ | (199,324) |  |  | $ | 203,334 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments | 5,025 |  |  | — |  |  | — |  |  | 5,025 |  |  | (5,025) |  |  | 5,025 |
Change in fair value of interest rate lock agreements | (8,183) |  |  | (8,183) |  |  | — |  |  | — |  |  | 8,183 |  |  | (8,183) |
Amortization of interest rate lock agreements | (295) |  |  | (295) |  |  | — |  |  | — |  |  | 295 |  |  | (295) |
Other comprehensive (loss) income | (3,453) |  |  | (8,478) |  |  | — |  |  | 5,025 |  |  | 3,453 |  |  | (3,453) |
Comprehensive income | $ | 199,881 |  |  | $ | 53,761 |  |  | $ | 130,863 |  |  | $ | 11,247 |  |  | $ | (195,871) |  |  | $ | 199,881 |

28

Consolidating Condensed Statement of Comprehensive Income
Nine Months Ended February 29, 2020
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Net income | $ | 731,452 |  |  | $ | 224,873 |  |  | $ | 497,208 |  |  | $ | 22,561 |  |  | $ | (744,642) |  |  | $ | 731,452 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments | 4,098 |  |  | — |  |  | — |  |  | 4,098 |  |  | (4,098) |  |  | 4,098 |
Change in fair value of interest rate lock agreements | (60,724) |  |  | (60,724) |  |  | — |  |  | — |  |  | 60,724 |  |  | (60,724) |
Amortization of interest rate lock agreements | (1,011) |  |  | (1,011) |  |  | — |  |  | — |  |  | 1,011 |  |  | (1,011) |
Other comprehensive (loss) income | (57,637) |  |  | (61,735) |  |  | — |  |  | 4,098 |  |  | 57,637 |  |  | (57,637) |
Comprehensive income | $ | 673,815 |  |  | $ | 163,138 |  |  | $ | 497,208 |  |  | $ | 26,659 |  |  | $ | (687,005) |  |  | $ | 673,815 |

29

Consolidating Condensed Statement of Comprehensive Income
Nine Months Ended February 28, 2019
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Net income | $ | 658,862 |  |  | $ | 178,279 |  |  | $ | 453,598 |  |  | $ | 18,567 |  |  | $ | (650,444) |  |  | $ | 658,862 |
Other comprehensive loss, net of tax: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments | (8,617) |  |  | — |  |  | — |  |  | (8,617) |  |  | 8,617 |  |  | (8,617) |
Change in fair value of interest rate lock agreements | (6,430) |  |  | (6,430) |  |  | — |  |  | — |  |  | 6,430 |  |  | (6,430) |
Amortization of interest rate lock agreements | (884) |  |  | (884) |  |  | — |  |  | — |  |  | 884 |  |  | (884) |
Other comprehensive loss | (15,931) |  |  | (7,314) |  |  | — |  |  | (8,617) |  |  | 15,931 |  |  | (15,931) |
Comprehensive income | $ | 642,931 |  |  | $ | 170,965 |  |  | $ | 453,598 |  |  | $ | 9,950 |  |  | $ | (634,513) |  |  | $ | 642,931 |

30

Consolidating Condensed Balance Sheet
As of February 29, 2020
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
ASSETS |  |  |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | — |  |  | $ | 56,577 |  |  | $ | 152,528 |  |  | $ | 25,336 |  |  | $ | — |  |  | $ | 234,441 |
Accounts receivable, net | — |  |  | 744,013 |  |  | 127,338 |  |  | 71,502 |  |  | — |  |  | 942,853 |
Inventories, net | — |  |  | 304,972 |  |  | 27,382 |  |  | 20,570 |  |  | — |  |  | 352,924 |
Uniforms and other rental items in service | — |  |  | 678,365 |  |  | 95,211 |  |  | 62,178 |  |  | (17,268) |  |  | 818,486 |
Income taxes, current | — |  |  | 2,135 |  |  | 17,456 |  |  | 3,894 |  |  | — |  |  | 23,485 |
Prepaid expenses and other current assets | — |  |  | 85,754 |  |  | 37,876 |  |  | 1,887 |  |  | — |  |  | 125,517 |
Total current assets | — |  |  | 1,871,816 |  |  | 457,791 |  |  | 185,367 |  |  | (17,268) |  |  | 2,497,706 |
Property and equipment, net | — |  |  | 980,850 |  |  | 351,800 |  |  | 102,216 |  |  | — |  |  | 1,434,866 |
Investments (1) | 321,083 |  |  | 3,755,219 |  |  | 984,460 |  |  | 1,344,134 |  |  | (6,192,098) |  |  | 212,798 |
Goodwill | — |  |  | — |  |  | 2,615,570 |  |  | 258,538 |  |  | (112) |  |  | 2,873,996 |
Service contracts, net | — |  |  | 402,393 |  |  | — |  |  | 62,459 |  |  | — |  |  | 464,852 |
Operating lease right-of-use assets, net | — |  |  | 136,339 |  |  | 15,547 |  |  | 13,283 |  |  | — |  |  | 165,169 |
Other assets, net | 2,537,979 |  |  | 226,623 |  |  | 5,782,580 |  |  | 1,078 |  |  | (8,295,667) |  |  | 252,593 |
| $ | 2,859,062 |  |  | $ | 7,373,240 |  |  | $ | 10,207,748 |  |  | $ | 1,967,075 |  |  | $ | (14,505,145) |  |  | $ | 7,901,980 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable | $ | (465,247) |  |  | $ | (2,100,124) |  |  | $ | 2,821,104 |  |  | $ | (49,552) |  |  | $ | 37,067 |  |  | $ | 243,248 |
Accrued compensation and related liabilities | — |  |  | 97,236 |  |  | 41,698 |  |  | 9,978 |  |  | — |  |  | 148,912 |
Accrued liabilities | — |  |  | 85,636 |  |  | 329,595 |  |  | 15,412 |  |  | — |  |  | 430,643 |
Operating lease liabilities, current | — |  |  | 35,108 |  |  | 4,784 |  |  | 4,151 |  |  | — |  |  | 44,043 |
Debt due within one year | — |  |  | 199,800 |  |  | — |  |  | — |  |  | — |  |  | 199,800 |
Total current liabilities | (465,247) |  |  | (1,682,344) |  |  | 3,197,181 |  |  | (20,011) |  |  | 37,067 |  |  | 1,066,646 |
Long-term liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt due after one year | — |  |  | 2,539,156 |  |  | — |  |  | — |  |  | — |  |  | 2,539,156 |
Deferred income taxes | — |  |  | 295,861 |  |  | 96,423 |  |  | 31,393 |  |  | — |  |  | 423,677 |
Operating lease liabilities | — |  |  | 105,948 |  |  | 11,494 |  |  | 9,552 |  |  | — |  |  | 126,994 |
Accrued liabilities | — |  |  | 189,728 |  |  | 214,926 |  |  | 16,544 |  |  | — |  |  | 421,198 |
Total long-term liabilities | — |  |  | 3,130,693 |  |  | 322,843 |  |  | 57,489 |  |  | — |  |  | 3,511,025 |
Total shareholders’ equity | 3,324,309 |  |  | 5,924,891 |  |  | 6,687,724 |  |  | 1,929,597 |  |  | (14,542,212) |  |  | 3,324,309 |
| $ | 2,859,062 |  |  | $ | 7,373,240 |  |  | $ | 10,207,748 |  |  | $ | 1,967,075 |  |  | $ | (14,505,145) |  |  | $ | 7,901,980 |

(1) Investments include inter-company investment activity. Corp 2 and Subsidiary Guarantors hold $20.6 million and $192.2 million, respectively, of the $212.8 million consolidated net investments.
31

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.
32

Consolidating Condensed Statement of Cash Flows
Nine Months Ended February 29, 2020
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |
Net income | $ | 731,452 |  |  | $ | 224,873 |  |  | $ | 497,208 |  |  | $ | 22,561 |  |  | $ | (744,642) |  |  | $ | 731,452 |
Adjustments to reconcile net income to net cash provided by operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation | — |  |  | 115,229 |  |  | 49,181 |  |  | 10,851 |  |  | — |  |  | 175,261 |
Amortization of intangible assets and capitalized contract costs | — |  |  | 97,267 |  |  | 3,838 |  |  | 6,127 |  |  | — |  |  | 107,232 |
Stock-based compensation | 96,428 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 96,428 |
Deferred income taxes | — |  |  | 8,319 |  |  | (3,735) |  |  | 429 |  |  | — |  |  | 5,013 |
Changes in current assets and liabilities, net of acquisitions of businesses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable, net | — |  |  | (23,027) |  |  | (5,536) |  |  | (2,572) |  |  | — |  |  | (31,135) |
Inventories, net | — |  |  | (25,914) |  |  | 8,346 |  |  | (212) |  |  | — |  |  | (17,780) |
Uniforms and other rental items in service | — |  |  | (32,368) |  |  | (4,754) |  |  | (1,630) |  |  | 5,020 |  |  | (33,732) |
Prepaid expenses and other current assets and capitalized contract costs | — |  |  | (77,609) |  |  | (17,543) |  |  | (17) |  |  | — |  |  | (95,169) |
Accounts payable | — |  |  | 24,315 |  |  | (9,136) |  |  | (543) |  |  | (365) |  |  | 14,271 |
Accrued compensation and related liabilities | — |  |  | (20,168) |  |  | 14,343 |  |  | 1,033 |  |  | — |  |  | (4,792) |
Accrued liabilities and other | — |  |  | (7,377) |  |  | 13,777 |  |  | (2,974) |  |  | — |  |  | 3,426 |
Income taxes, current | — |  |  | (11,863) |  |  | (5,733) |  |  | 1,670 |  |  | — |  |  | (15,926) |
Net cash provided by operating activities | 827,880 |  |  | 271,677 |  |  | 540,256 |  |  | 34,723 |  |  | (739,987) |  |  | 934,549 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures | — |  |  | (140,144) |  |  | (32,026) |  |  | (17,209) |  |  | — |  |  | (189,379) |
Purchases of investments | — |  |  | (793) |  |  | (9,668) |  |  | — |  |  | — |  |  | (10,461) |
Proceeds from sale of assets | — |  |  | — |  |  | — |  |  | 13,300 |  |  | — |  |  | 13,300 |
Acquisitions of businesses, net of cash acquired | — |  |  | (47,777) |  |  | — |  |  | (73) |  |  | — |  |  | (47,850) |
Other, net | (380,159) |  |  | 31,121 |  |  | (359,185) |  |  | (33,854) |  |  | 739,987 |  |  | (2,090) |
Net cash used in investing activities | (380,159) |  |  | (157,593) |  |  | (400,879) |  |  | (37,836) |  |  | 739,987 |  |  | (236,480) |
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payments of commercial paper, net | — |  |  | (112,500) |  |  | — |  |  | — |  |  | — |  |  | (112,500) |
Proceeds from exercise of stock-based compensation awards | 81,547 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 81,547 |
Dividends paid | (267,941) |  |  | — |  |  | — |  |  | (101) |  |  | — |  |  | (268,042) |
Repurchase of common stock | (261,327) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (261,327) |
Other, net | — |  |  | 30 |  |  | — |  |  | — |  |  | — |  |  | 30 |
Net cash used in financing activities | (447,721) |  |  | (112,470) |  |  | — |  |  | (101) |  |  | — |  |  | (560,292) |
Effect of exchange rate changes on cash and cash equivalents | — |  |  | — |  |  | — |  |  | 19 |  |  | — |  |  | 19 |
Net increase (decrease) in cash and cash equivalents | — |  |  | 1,614 |  |  | 139,377 |  |  | (3,195) |  |  | — |  |  | 137,796 |
Cash and cash equivalents at beginning of period | — |  |  | 54,963 |  |  | 13,151 |  |  | 28,531 |  |  | — |  |  | 96,645 |
Cash and cash equivalents at end of period | $ | — |  |  | $ | 56,577 |  |  | $ | 152,528 |  |  | $ | 25,336 |  |  | $ | — |  |  | $ | 234,441 |

33

Consolidating Condensed Statement of Cash Flows
Nine Months Ended February 28, 2019
(In thousands)

| Cintas Corporation |  | Corp. 2 |  | Subsidiary Guarantors |  | Non- Guarantors |  | Eliminations |  | Cintas Corporation Consolidated
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |
Net income | $ | 658,862 |  |  | $ | 178,279 |  |  | $ | 453,598 |  |  | $ | 18,567 |  |  | $ | (650,444) |  |  | $ | 658,862 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation | — |  |  | 106,577 |  |  | 47,116 |  |  | 10,687 |  |  | — |  |  | 164,380 |
Amortization of intangible assets and capitalized contract costs | — |  |  | 91,912 |  |  | 3,801 |  |  | 6,236 |  |  | — |  |  | 101,949 |
Stock-based compensation | 105,553 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 105,553 |
Gain on sale of a cost method investment | — |  |  | — |  |  | (69,373) |  |  | — |  |  | — |  |  | (69,373) |
Gain on sale of business | — |  |  | (2,419) |  |  | — |  |  | — |  |  | — |  |  | (2,419) |
Deferred income taxes | — |  |  | 16,059 |  |  | 5,654 |  |  | 3,366 |  |  | — |  |  | 25,079 |
Changes in current assets and liabilities, net of acquisitions of businesses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts receivable, net | — |  |  | (51,317) |  |  | 2,522 |  |  | (8,027) |  |  | (4,280) |  |  | (61,102) |
Inventories, net | — |  |  | (64,014) |  |  | 1,395 |  |  | (4,317) |  |  | (3,780) |  |  | (70,716) |
Uniforms and other rental items in service | — |  |  | (51,696) |  |  | (12,329) |  |  | (8,311) |  |  | — |  |  | (72,336) |
Prepaid expenses and other current assets and capitalized contract costs | — |  |  | (74,606) |  |  | (10,067) |  |  | (450) |  |  | — |  |  | (85,123) |
Accounts payable | — |  |  | (205,528) |  |  | 204,336 |  |  | 1,632 |  |  | (361) |  |  | 79 |
Accrued compensation and related liabilities | — |  |  | 1,832 |  |  | (4,143) |  |  | (1,555) |  |  | — |  |  | (3,866) |
Accrued liabilities and other | — |  |  | (274) |  |  | 4,567 |  |  | (679) |  |  | — |  |  | 3,614 |
Income taxes, current | — |  |  | 7,059 |  |  | (24,957) |  |  | (5,966) |  |  | — |  |  | (23,864) |
Net cash provided by (used in) operating activities | 764,415 |  |  | (48,136) |  |  | 602,120 |  |  | 11,183 |  |  | (658,865) |  |  | 670,717 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures | — |  |  | (147,744) |  |  | (44,151) |  |  | (15,910) |  |  | — |  |  | (207,805) |
Purchases of investments | — |  |  | (1,938) |  |  | (16,356) |  |  | — |  |  | 750 |  |  | (17,544) |
Proceeds from sale of a cost method investment | — |  |  | — |  |  | 73,342 |  |  | — |  |  | — |  |  | 73,342 |
Proceeds from sale of business | — |  |  | 3,200 |  |  | — |  |  | — |  |  | — |  |  | 3,200 |
Acquisitions of businesses, net of cash acquired | — |  |  | (7,403) |  |  | — |  |  | — |  |  | — |  |  | (7,403) |
Other, net | 10,201 |  |  | (5,216) |  |  | (663,791) |  |  | (6,113) |  |  | 658,115 |  |  | (6,804) |
Net cash provided by (used in) investing activities | 10,201 |  |  | (159,101) |  |  | (650,956) |  |  | (22,023) |  |  | 658,865 |  |  | (163,014) |
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Issuance of commercial paper, net | — |  |  | 217,500 |  |  | — |  |  | — |  |  | — |  |  | 217,500 |
Proceeds from exercise of stock-based compensation awards | 54,274 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 54,274 |
Dividends paid | (220,666) |  |  | — |  |  | — |  |  | (94) |  |  | — |  |  | (220,760) |
Repurchase of common stock | (608,224) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (608,224) |
Other, net | — |  |  | (8,088) |  |  | — |  |  | — |  |  | — |  |  | (8,088) |
Net cash (used in) provided by financing activities | (774,616) |  |  | 209,412 |  |  | — |  |  | (94) |  |  | — |  |  | (565,298) |
Effect of exchange rate changes on cash and cash equivalents | — |  |  | — |  |  | — |  |  | (270) |  |  | — |  |  | (270) |
Net increase (decrease) in cash and cash equivalents | — |  |  | 2,175 |  |  | (48,836) |  |  | (11,204) |  |  | — |  |  | (57,865) |
Cash and cash equivalents at beginning of period | — |  |  | 44,499 |  |  | 60,310 |  |  | 33,915 |  |  | — |  |  | 138,724 |
Cash and cash equivalents at end of period | $ | — |  |  | $ | 46,674 |  |  | $ | 11,474 |  |  | $ | 22,711 |  |  | $ | — |  |  | $ | 80,859 |

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF 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, as well as Canada, Latin America, Europe and Asia, get 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 training and compliance courses, Cintas helps customers get Ready for the Workday™.
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, carpet and tile cleaning services, 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 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 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. 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, 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 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. Revenue and income before income taxes for the three and nine months ended February 29, 2020 and February 28, 2019 for the two reportable operating segments and All Other is 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 to a number of other countries, including the United States. In March 2020, the World Health Organization characterized COVID-19 as a pandemic. Through the nine months ended February 29, 2020, the COVID-19 pandemic did not have a significant impact on our business. However, efforts to contain the spread of COVID-19 have intensified. Several states in the United States, including Ohio, where we are headquartered, have declared states of emergency, and several countries around the world, including the United States, have taken steps to restrict travel. A number of countries, as well as certain states and cities within the United States, have also enacted temporary closures of businesses, issued quarantine orders and taken other restrictive measures in
35

response to the COVID-19 pandemic. Within the United States, our business has been designated an essential business, which allows us to continue to serve customers that remain open.
We have operations throughout the United States and participate in a global supply chain, and the existence of the 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 began in March 2020 to impact our ability to conduct normal business operations, which is likely to adversely affect our business. If we need to close any 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. The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot predict the extent to which our business, results of operations, financial condition or liquidity will ultimately be impacted.
Consolidated Results
Three Months Ended February 29, 2020 Compared to Three Months Ended February 28, 2019
Total revenue increased 7.6% for the three months ended February 29, 2020, over the same period in the prior fiscal year, from $1,682.3 million to $1,810.6 million. Revenue also increased organically by 5.7% as a result of increased sales volume. Organic growth adjusts for the impact of acquisitions, foreign currency exchange rate fluctuations and workday differences. Total revenue was positively impacted by 0.2% due to acquisitions, 0.1% due to foreign currency exchange rate fluctuations and 1.6% due to one more workday in the three months ended February 29, 2020 compared to the three months ended February 28, 2019.
Uniform Rental and Facility Services reportable operating segment revenue increased 6.6% for the three months ended February 29, 2020, over the same period in the prior fiscal year, from $1,358.3 million to $1,448.0 million. Revenue increased organically by 4.8%. Revenue growth was a result of new business, the penetration of additional products and services into existing customers and price increases, partially offset by lost business. New business growth resulted from an increase in the number and productivity of sales representatives. Generally, sales productivity improvements are due to increased tenure and improved training, which produce a higher number of products and services sold. Revenue growth was positively impacted by 0.1% due to acquisitions, 0.1% due to foreign currency exchange rate fluctuations and 1.6% due to one more workday in the three months ended February 29, 2020, compared to the three months ended February 28, 2019.
Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 11.9% for the three months ended February 29, 2020, compared to the same period in the prior fiscal year, from $324.0 million to $362.6 million. Revenue increased organically by 9.6%. Revenue growth was positively impacted by 0.6% due to growth derived through acquisitions primarily in our Fire Protection operating segment, which is included in All Other and our First Aid and Safety Services reportable operating segment. In addition, revenue growth was positively impacted by 1.7% due to one more workday in the three months ended February 29, 2020, compared to the three months ended February 28, 2019.
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 increased $36.0 million, or 4.8%, for the three months ended February 29, 2020, compared to the three months ended February 28, 2019. This increase was due to higher Uniform Rental and Facility Services reportable operating segment sales volume.
Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, 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 $23.1 million, or 13.0%, for the three months ended February 29, 2020, compared to the three months ended February 28, 2019. The increase was primarily due to higher sales volume in the First Aid and Safety Services reportable operating segment and All Other.
Selling and administrative expenses increased $33.6 million, but decreased as a percent of revenue to 28.2% for the three months ended February 29, 2020, compared to 28.3% for the same period in the prior fiscal year. The decrease as a percent of revenue was due to efficiencies in labor and employee-partner related expenses.
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Operating income was $314.7 million for the three months ended February 29, 2020, compared to $278.3 million for the three months ended February 28, 2019. Operating income was positively impacted by higher sales and lower cost of sales as a percent to revenue for the three months ended February 29, 2020. Operating income in the three months ended February 28, 2019 was negatively impacted by $0.8 million of integration expenses incurred in connection with the G&K acquisition. The after-tax effect of these integration expenses was a negative impact of $0.01 per share on diluted earnings per share.
Net interest expense (interest expense less interest income) was $25.6 million for the three months ended February 29, 2020, compared to $26.7 million for the three months ended February 28, 2019. The decrease was primarily due to the decrease in outstanding commercial paper and the associated variable interest rate.
Cintas’ effective tax rate for continuing operations was 18.9% and 20.1% for the three months ended February 29, 2020 and February 28, 2019, respectively. The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting for stock-based compensation.
Net income from continuing operations for the three months ended February 29, 2020 increased $33.6 million, or 16.7%, compared to the three months ended February 28, 2019. Diluted earnings per share from continuing operations was $2.16 for the three months ended February 29, 2020, which was an increase of 18.0% compared to the same period in the prior fiscal year. Diluted earnings per share from continuing operations increased due to the increase in earnings from continuing operations.
Uniform Rental and Facility Services Reportable Operating Segment
Three Months Ended February 29, 2020 Compared to Three Months Ended February 28, 2019
Uniform Rental and Facility Services reportable operating segment revenue increased from $1,358.3 million to $1,448.0 million, or 6.6%, for the three months ended February 29, 2020, over the same period in the prior fiscal year, and the cost of uniform rental and facility services increased $36.0 million, or 4.8%. Revenue increased organically by 4.8%. The reportable operating segment’s gross margin was $663.1 million, or 45.8% of revenue. The gross margin was 90 basis points higher than the prior fiscal year’s third quarter gross margin of 44.9%. The increase in gross margin as a percent to revenue was driven by the increase in revenue and continuous improvements in process efficiency.
Selling and administrative expenses increased $22.0 million, but decreased as a percent of revenue to 27.0%, compared to 27.2% in the third quarter of the prior fiscal year. The decrease as a percent of revenue was primarily due to efficiencies in labor and employee-partner related expenses.
Income before income taxes increased $32.5 million, or 13.6%, for the Uniform Rental and Facility Services reportable operating segment for the three months ended February 29, 2020, compared to the same period in the prior fiscal year. Income before income taxes was 18.8% of the reportable operating segment’s revenue, which was a 120 basis point increase compared to the third quarter of the prior fiscal year of 17.6%. This increase was primarily due to the increase in sales and gross margin and the elimination of G&K integration expenses.
First Aid and Safety Services Reportable Operating Segment
Three Months Ended February 29, 2020 Compared to Three Months Ended February 28, 2019
First Aid and Safety Services reportable operating segment revenue increased from $149.2 million to $170.5 million, or 14.3%, for the three months ended February 29, 2020, over the same period in the prior fiscal year. Revenue also increased organically by 12.5%. Growth was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers and strong customer retention.
Cost of first aid and safety services increased $11.4 million, or 14.7%, for the three months ended February 29, 2020, over the three months ended February 28, 2019, due to higher sales volume. The gross margin as a percent of revenue was 48.0% for the quarter ended February 29, 2020, which was a decrease of 20 basis points compared to the gross margin as a percent of revenue of 48.2% in the same period of the prior fiscal year. The decrease was driven primarily by a change in revenue mix due to the growth in lower margin products, such as safety and personal protective equipment product sales, outpacing growth in higher margin products.
37

Selling and administrative expenses increased $7.0 million, but decreased as a percent of revenue to 33.6%, compared to 33.7% in the third quarter of the prior fiscal year. The decrease as a percent of revenue was primarily due to efficiencies in labor and employee-partner related expenses.
Income before income taxes for the First Aid and Safety Services reportable operating segment increased $3.1 million to $24.7 million for the three months ended February 29, 2020, compared to the same period in the prior fiscal year, due to the previously discussed growth in revenue and improvement in the selling and administrative expenses as a percentage of revenue. Income before income taxes was 14.5% of the reportable operating segment’s revenue for both the three months ended February 29, 2020 and February 28, 2019.
Consolidated Results
Nine Months Ended February 29, 2020 Compared to Nine Months Ended February 28, 2019
Total revenue increased 7.2% for the nine months ended February 29, 2020, over the same period in the prior fiscal year, from $5,098.6 million to $5,465.5 million. Revenue increased organically by 7.1% as a result of increased sales volume. Organic growth adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations. Total revenue was positively impacted by 0.1% due to acquisitions.
Uniform Rental and Facility Services reportable operating segment revenue increased 6.0% for the nine months ended February 29, 2020, over the same period in the prior fiscal year, from $4,124.0 million to $4,372.5 million. Revenue also increased organically by 6.0%. Revenue growth was a result of new business, the penetration of additional products and services into existing customers and price increases, partially offset by lost business. New business growth resulted from an increase in the number and productivity of sales representatives. Generally, sales productivity improvements are due to increased tenure and improved training, which produce a higher number of products and services sold.
Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 12.2% for the nine months ended February 29, 2020, compared to the same period in the prior fiscal year, from $974.5 million to $1,093.0 million. Revenue increased organically by 11.7%. Revenue growth was positively impacted by 0.5% due to growth derived through acquisitions primarily in our Fire Protection operating segment, which is included in All Other and our First Aid and Safety Services reportable operating segment.
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 increased $82.0 million, or 3.6%, for the nine months ended February 29, 2020, compared to the nine months ended February 28, 2019. This increase was due to higher Uniform Rental and Facility Services reportable operating segment sales volume.
Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, 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 $64.1 million, or 11.9%, for the nine months ended February 29, 2020, compared to the nine months ended February 28, 2019. The increase was primarily due to higher sales volume in the First Aid and Safety Services reportable operating segment and All Other.
Selling and administrative expenses increased $98.3 million, or 6.7%, but decreased as a percent of revenue from 28.9% to 28.7% for the nine months ended February 29, 2020, compared to the same period in the prior fiscal year. The decrease as a percent of revenue was due to efficiencies in labor and employee-partner related expenses.
Operating income was $955.3 million for the nine months ended February 29, 2020, compared to $819.1 million for the nine months ended February 28, 2019. Operating income was positively impacted by higher sales and lower cost of sales as a percent to revenue for the nine months ended February 29, 2020. Operating income in the nine months ended February 28, 2019 was negatively impacted by $13.5 million of integration expenses incurred in connection with the G&K acquisition. The after-tax effect of these integration expenses was a negative impact of $0.09 per share on diluted earnings per share.
During the nine months ended February 28, 2019, Cintas sold a cost method investment for $73.3 million, resulting in a pre-tax gain of $69.4 million. For the nine months ended February 28, 2019, the after-tax effect of the gain represents a positive impact of $0.47 per share on diluted earnings per share.
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Net interest expense (interest expense less interest income) was $78.6 million for the nine months ended February 29, 2020, compared to $75.0 million for the nine months ended February 28, 2019. The increase was primarily due to interest incurred on commercial paper borrowings and the term loan during the nine months ended February 29, 2020.
Cintas’ effective tax rate for continuing operations was 16.5% and 19.3% for the nine months ended February 29, 2020 and February 28, 2019, respectively. The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting for stock-based compensation.
Net income from continuing operations for the nine months ended February 29, 2020, increased $75.3 million, or 11.5%, compared to the nine months ended February 28, 2019. Diluted earnings per share from continuing operations was $6.76 for the nine months ended February 29, 2020, which was an increase of 14.4% compared to the same period in the prior fiscal year. Diluted earnings per share from continuing operations increased due to the increase in earnings from continuing operations and a decrease in the diluted average shares outstanding.
Uniform Rental and Facility Services Reportable Operating Segment
Nine Months Ended February 29, 2020 Compared to Nine Months Ended February 28, 2019
Uniform Rental and Facility Services reportable operating segment revenue increased from $4,124.0 million to $4,372.5 million, or 6.0%, for the nine months ended February 29, 2020, over the same period in the prior fiscal year, and the cost of uniform rental and facility services increased $82.0 million, or 3.6%. Revenue increased organically by 6.0%. The reportable operating segment’s gross margin was $2,034.0 million, or 46.5% of revenue. The gross margin was 120 basis points higher than the prior fiscal year’s gross margin of 45.3% for the nine months ended February 28, 2019. The increase in gross margin as a percent to revenue was driven by the increase in revenue and continuous improvements in process efficiency.
Selling and administrative expenses increased $66.5 million, but decreased as a percent of revenue from 27.7% to 27.6% for the nine months ended February 29, 2020. The decrease was primarily due to lower labor and employee-partner related expenses, as a percent of revenue.
Income before income taxes increased $113.4 million, or 15.9%, for the Uniform Rental and Facility Services reportable operating segment for the nine months ended February 29, 2020, compared to the same period in the prior fiscal year. Income before income taxes was 18.9% of the reportable operating segment’s revenue, which was a 160 basis point increase compared to 17.3% for the nine months ended February 28, 2019. This increase was primarily due to the increase in sales and gross margin and the elimination of G&K integration expenses.
First Aid and Safety Services Reportable Operating Segment
Nine Months Ended February 29, 2020 Compared to Nine Months Ended February 28, 2019
First Aid and Safety Services reportable operating segment revenue increased from $455.9 million to $512.3 million, or 12.4%, for the nine months ended February 29, 2020, over the same period in the prior fiscal year. Revenue increased organically by 12.3% as a result of increased sales volume. Revenue growth was positively impacted by 0.1% due to growth derived through acquisitions. Growth was driven by many factors including new business sold by sales representatives, penetration of additional products and services into existing customers and strong customer retention.
Cost of first aid and safety services increased $27.1 million, or 11.5%, for the nine months ended February 29, 2020, over the nine months ended February 28, 2019, due to higher sales volume. The gross margin as a percent of revenue was 48.5% for the nine months ended February 29, 2020, which was an increase of 50 basis points compared to the gross margin as a percent of revenue of 48.0% in the same period of the prior fiscal year. The increase was driven primarily by improved sourcing, leveraging of existing warehouses and optimization of delivery routes.
Selling and administrative expenses increased $20.1 million, and increased as a percent of revenue to 34.0%, compared to 33.8% for the nine months ended February 28, 2019. The increase was primarily due to higher labor and employee-partner related expenses, particularly medical expense, as a percent of revenue.
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Income before income taxes for the First Aid and Safety Services reportable operating segment increased $9.2 million to $74.1 million for the nine months ended February 29, 2020, compared to the same period in the prior fiscal year, due to the previously discussed growth in revenue and improvement in the gross margin percentage. Income before income taxes, at 14.5% of the reportable operating segment’s revenue, was a 30 basis point increase compared to the same period of the prior fiscal year due to the reasons previously mentioned.
Liquidity and Capital Resources
The following is a summary of our cash flows and cash and cash equivalents as of and for the nine months ended February 29, 2020 and February 28, 2019:

(In thousands) | 2020 |  | 2019
Net cash provided by operating activities | $ | 934,549 |  |  | $ | 670,717 |
Net cash used in investing activities | $ | (236,480) |  |  | $ | (163,014) |
Net cash used in financing activities | $ | (560,292) |  |  | $ | (565,298) |
Cash and cash equivalents at the end of the period | $ | 234,441 |  |  | $ | 80,859 |

Cash and cash equivalents as of February 29, 2020 and February 28, 2019 include $25.3 million and $22.7 million, respectively, that is located outside of the United States.
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.
Net cash provided by operating activities was $934.5 million for the nine months ended February 29, 2020, an increase of $263.8 million compared to the nine months ended February 28, 2019. The increase was primarily the result of increased net income and favorable changes in working capital, specifically inventories, accounts receivable and accounts payable.
Net cash used in investing activities includes capital expenditures, purchases of investments, proceeds from the sale of assets and cost method investments and cash paid for acquisitions of businesses. Capital expenditures were $189.4 million and $207.8 million for the nine months ended February 29, 2020 and February 28, 2019, respectively. Capital expenditures in fiscal 2020 primarily relate to expansion efforts in the Uniform Rental and Facility Services reportable operating segment, representing $151.9 million of the current fiscal year amount. Cash paid for acquisitions of businesses was $47.9 million and $7.4 million for the nine months ended February 29, 2020 and February 28, 2019, respectively. The acquisitions during the nine months ended February 29, 2020 occurred in our Uniform Rental and Facility Services reportable operating segment, our First Aid and Safety Services reportable operating segment and our Fire Protection operating segment, which is included in All Other. Also, during the nine months ended February 29, 2020, the Company received proceeds of $13.3 million from the sale of assets and during the nine months ended February 28, 2019, received proceeds of $73.3 million from the sale of a cost method investment and $3.2 million from the sale of a business. Net cash used in investing activities also includes $10.5 million and $17.5 million from purchases of investments during the nine months ended February 29, 2020 and February 28, 2019, respectively.
Net cash used in financing activities was $560.3 million and $565.3 million for the nine months ended February 29, 2020 and February 28, 2019, respectively. On August 2, 2016, we announced that the Board of Directors authorized a $500.0 million share buyback program, which did not have an expiration date. During the first half of fiscal 2019, under the August 2, 2016 plan, we purchased a total of 2.1 million shares of Cintas common stock at an average price of $192.55 for a total purchase price of $410.0 million, which completed the August 2, 2016 buyback program. On October 30, 2018, we announced that the Board of Directors authorized a $1.0 billion share buyback program, which does not have an expiration date. During the nine months ended February 28, 2019, under this program, we purchased 0.8 million shares of Cintas common stock at an average price of $170.87 for a total purchase price of $136.6 million. During the nine months ended February 29, 2020, under the October 30, 2018 program, we purchased 0.8 million shares of Cintas common stock at an average price of $230.66 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
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billion share buyback program, which does not have an expiration date. There have been no share buybacks under this new share buyback program. In the period subsequent to February 29, 2020, through March 31, 2020, under the October 30, 2018 share buyback program, we purchased 0.8 million shares of Cintas common stock at an average price of $263.07 per share for a total purchase price of $202.6 million. From the inception of the October 30, 2018 share buyback plan through March 31, 2020, Cintas has purchased a total of 4.3 million shares of Cintas common stock at an average price of $219.40 for a total purchase price of $939.1 million. In addition, for the nine months ended February 29, 2020, Cintas acquired 0.3 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the nine months ended February 29, 2020. These shares were acquired at an average price of $261.48 per share for a total purchase price of $68.4 million.
During the nine months ended February 29, 2020, Cintas made payments of $112.5 million, net on commercial paper borrowings, and during the nine months ended February 28, 2019, issued $217.5 million, net, of commercial paper borrowings.
The following table summarizes Cintas' outstanding debt:

(In thousands) | Interest Rate |  | Fiscal Year Issued |  | Fiscal Year Maturity |  | February 29, 2020 |  | May 31, 2019
Debt due within one year |  |  |  |  |  |  |  |  |
Commercial paper | 2.68 | % | (1) | 2019 |  | 2020 |  | $ | — |  |  | $ | 112,500 |
Term loan | 2.25 | % | (2) | 2019 |  | 2020 |  | 200,000 |  |  | 200,000 |
Debt issuance costs |  |  |  |  |  |  | (200) |  |  | (236) |
Total debt due within one year |  |  |  |  |  |  | $ | 199,800 |  |  | $ | 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 |  | 51,359 |  |  | 51,684 |
Senior notes (4) | 3.11 | % |  | 2015 |  | 2025 |  | 51,721 |  |  | 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 |  |  |  |  |  |  | (13,924) |  |  | (16,150) |
Total debt due after one year |  |  |  |  |  |  | $ | 2,539,156 |  |  | $ | 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 February 29, 2020.
(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 3.73%.
(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%.
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 is May 23, 2020, which can be extended 12 months, annually, for up to four years. We intend to extend the term loan for 12 months subject to the agreement of our lenders. As of February 29, 2020, 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 and no borrowings on our revolving credit facility.
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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. As of February 29, 2020, Cintas was in compliance with all debt covenants.
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. However, the recent COVID-19 outbreak, 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 a significant degree, on the ratings assigned by the credit rating agencies to our indebtedness. As of February 29, 2020, our ratings were as follows:

Rating Agency |  | Outlook |  | Commercial Paper |  | Long-term Debt
Standard & Poor’s |  | Stable |  | A-2 |  | A-
Moody’s Investors Service |  | Stable |  | P-2 |  | A3

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, obligations under capital leases due in one year, long-term debt and long-term obligations under capital leases.
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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 or results of operation 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, risks inherent with the G&K transaction in the achievement of cost synergies and the timing thereof, including whether the transaction will be accretive and within the expected timeframe and the actual amounts of future integration expenses; 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, including G&K; 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; the effect of new accounting pronouncements; costs of our SAP system implementation; 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, 2019 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 31 of our Annual Report on Form 10-K for the year ended May 31, 2019.
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’ 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 February 29, 2020. Based on such evaluation, Cintas’ management, including Cintas’ Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, has concluded that Cintas’ disclosure controls and procedures were effective as of February 29, 2020, 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 SEC’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 ended February 29, 2020, 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
The Company and three executive officers are defendants in a purported class action, filed on December 12, 2019, pending in the U.S. District Court for the Southern District of Ohio alleging violations of federal securities laws. The lawsuit asserts that the defendants made material misstatements regarding the Company’s margins, earnings guidance and regulatory compliance that caused the Company's stock to trade at artificially inflated prices between March 2017 and November 2019. The defendants deny liability.
The Company, the Board of Directors, CEO and the Investment Policy Committee are defendants in a purported class action, filed on December 13, 2019, pending in the U.S. District Court for the Southern District of Ohio alleging violations of ERISA. The lawsuit asserts that the defendants improperly managed the costs of the employee retirement plan, breached their fiduciary duties in failing to investigate and select lower cost alternative funds, and failed to monitor and control the employee retirement plan’s recordkeeping costs. The defendants deny liability.
Cintas is also 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 or results of operation of Cintas.
ITEM 1A. RISK FACTORS
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, 2019. 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.
Negative global economic factors may adversely affect our financial performance.
Negative economic conditions, in North America and our other markets, may adversely affect our financial performance. Higher levels of unemployment, inflation, tax rates and other changes in tax laws and other economic factors, including the potential negative impact of viral pandemics such as the COVID-19 coronavirus, could adversely affect the demand for Cintas’ products and services. Increases in labor costs, including the cost to provide employee-partner related healthcare benefits, minimum wages, labor shortages or shortages of skilled labor, regulations regarding the classification of employees and/or their eligibility for overtime wages, higher material costs for items such as fabrics and textiles, the inability to obtain insurance coverage at cost-effective rates, higher interest rates, inflation, higher tax rates and other changes in tax laws and other economic factors could increase our costs of rental uniforms and facility services, cost of other services and selling and administrative expenses. As a result, these factors could adversely affect our sales and consolidated results of operations.
Changes in the fuel and energy industry could adversely affect our financial condition and results of operations.
The price of fuel and energy needed to run our vehicles and equipment is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for fuel and other energy related products, actions by energy producers, war and unrest in oil producing countries, regional production patterns, limits on refining capacities, natural disasters, environmental concerns and viral pandemics such as the COVID-19 coronavirus. Increases in fuel and energy costs could adversely affect our consolidated financial condition and consolidated results of operations.
Risks associated with the suppliers from whom our products are sourced could adversely affect our results of operations.
The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the products we sell is an important factor in our financial performance. We require all our suppliers to comply with applicable laws, including labor and environmental laws, and otherwise be certified as meeting our
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required supplier standards of conduct. Our ability to find qualified suppliers who meet our standards, and to access products in a timely and efficient manner is a significant challenge, especially with respect to suppliers located and goods sourced outside the United States. Political and economic stability in the countries in which foreign suppliers are located, the financial stability of suppliers, suppliers' failure to meet our supplier standards, labor problems experienced by our suppliers, the availability of raw materials to suppliers, currency exchange rates, transport availability and cost, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control. In addition, U.S. and foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our control. These and other factors, including the potential negative impact of viral pandemics such as the COVID-19 coronavirus affecting our suppliers and our access to products could adversely affect our consolidated results of operations.
Unexpected events could negatively impact our operations and adversely affect our results of operations.
Unexpected events, including fires or explosions at facilities, severe weather conditions, natural disasters such as hurricanes and tornadoes, war or terrorist activities, unplanned outages, viral pandemics such as the COVID-19 coronavirus, supply disruptions, failure of equipment or systems or changes in laws and/or regulations impacting our businesses, could adversely affect our consolidated results of operations. These events could result in customer disruption, including the shutdown of our customers' facilities and operations, physical damage to one or more key operating facilities, the temporary closure of one or more key operating facilities or the temporary disruption of information systems. In addition, negative publicity, whether warranted or not, impacting brand image perception could adversely affect our consolidated results of operations.
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)
December 1 - 31, 2019 (2) | 135 |  |  | $ | 268.36 |  |  | — |  |  | $ | 1,263.5 |
January 1 - 31, 2020 (3) | 8,190 |  |  | $ | 276.97 |  |  | — |  |  | $ | 1,263.5 |
February 1 - 29, 2020 (4) | 796 |  |  | $ | 292.62 |  |  | — |  |  | $ | 1,263.5 |
Total | 9,121 |  |  | $ | 278.21 |  |  | — |  |  | $ | 1,263.5 |

(1) 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. From the inception of the October 30, 2018 share buyback program through February 29, 2020, Cintas has purchased a total of 3.5 million shares of Cintas common stock at an average price of $209.82 per share for a total purchase price of $736.5 million. Additionally, on October 29, 2019, Cintas announced that the Board of Directors authorized a new $1.0 billion share buyback program, which does not have an expiration date. Cintas has not made any purchases under the October 29, 2019 share buyback program through February 29, 2020.
(2) During December 2019, Cintas acquired 135 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 $268.36 per share for a total purchase price of less than $0.1 million.
(3) During January 2020, Cintas acquired 8,190 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 $276.97 per share for a total purchase price of $2.3 million.
(4) During February 2020, Cintas acquired 796 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 $292.62 per share for a total purchase price of $0.2 million.
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ITEM 6. EXHIBITS

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 |  | XBRL Instance Document
101.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB | XBRL Taxonomy Extension Label Linkbase Document
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document
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: | March 31, 2020 |  | /s/ | J. Michael Hansen |  |
|  |  |  | J. Michael Hansen |  |
|  |  |  | Executive Vice President and Chief Financial Officer |  |
|  |  |  | (Principal Financial and Accounting Officer) |  |

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