Business Strategy Cintas helps more than one million businesses of all types and sizes, primarily inthe United States (U.S. ), as well asCanada andLatin America , 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 safety training, Cintas helps customers get Ready for the Workday®. Cintas is also the creator of the Total Clean Program™ - a first-of-its-kind service that includes scheduled delivery of essential cleaning supplies, hygienically clean laundering, and sanitizing and disinfecting projects and services. We areNorth America's leading provider of corporate identity uniforms through rental and sales programs, as well as a significant provider of related business services, including entrance mats, restroom cleaning services and supplies, first aid and safety services and fire protection products and services. Cintas' principal objective is "to exceed customers' expectations in order to maximize the long-term value of Cintas for shareholders and working partners," and it provides the framework and focus for Cintas' business strategy. This strategy is to achieve revenue growth for all our products and services by increasing our penetration at existing customers and by broadening our customer base to include market segments to which we have not historically served. We will also continue to identify additional product and service opportunities for our current and future customers. To pursue the strategy of increasing penetration, we have a highly talented and diverse team of service professionals visiting our customers on a regular basis. This frequent contact with our customers enables us to develop close personal relationships. The combination of our distribution system and these strong customer relationships provides a platform from which we launch additional products and services. We pursue the strategy of broadening our customer base in several ways. Cintas has a national sales organization introducing all its products and services to prospects in all market segments. Our broad range of products and services allows our sales organization to consider any type of business a prospect. We also broaden our customer base through geographic expansion. Finally, we evaluate strategic acquisitions as opportunities arise. Results of Operations Cintas classifies its business into two reportable operating segments and places the remainder of its operating segments in an All Other category. Cintas' two reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services reportable operating segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items. In addition to these rental items, restroom cleaning services and supplies and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas' business, which consists of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, is included in All Other. These operating segments consist of fire protection products and services and the direct sale of uniforms and related items. Cintas evaluates operating segment performance based on revenue and income before income taxes. Revenue and income before income taxes for the three months endedAugust 31, 2021 and 2020, for the two reportable operating segments and All Other are presented in Note 12 entitled Segment Information of "Notes to Consolidated Condensed Financial Statements." We have operations throughout theU.S. andCanada and participate in a global supply chain. During most of fiscal 2021, the existence of the novel strain of coronavirus (COVID-19) pandemic, the fear associated with the COVID-19 pandemic and the reactions of governments around the world in response to the COVID-19 pandemic to regulate the flow of labor and products and impede the business of our customers, impacted our ability to conduct normal business operations, which had an adverse effect on our business. Many of Cintas' customers were also impacted by the COVID-19 pandemic, and we saw an impact on some customer's ability to pay timely. While there was 19
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minimal disruption to our supply chain, Cintas did increase inventory, primarily personal protective equipment and facility services inventory, in response to the customer needs and demand associated with the safety and cleanliness requirements of COVID-19. The increase in inventory resulted in additional inventory reserves during fiscal 2021 and could result in future inventory reserve increases if demand for personal protective equipment materially declines. The on-going roll out of the COVID-19 vaccines and gradual lifting of COVID-19 restrictions had a positive impact on our business during the three months endedAugust 31, 2021 . The impact of the COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot predict the extent to which our business, consolidated results of operations, consolidated financial condition or liquidity will ultimately be impacted. Consolidated Results Three Months EndedAugust 31, 2021 Compared to Three Months EndedAugust 31, 2020 Total revenue increased 8.6% to$1,897.0 million for the three months endedAugust 31, 2021 , compared to$1,746.6 million for the three months endedAugust 31, 2020 . The organic revenue growth rate, which adjusts for the impact of acquisitions, divestitures and foreign currency exchange rate fluctuations, was 8.6%. Revenue growth was negatively impacted by a net 0.5% due to acquisitions and divestitures and positively impacted by 0.5% due to foreign currency exchange rate fluctuations. Uniform Rental and Facility Services reportable operating segment revenue was$1,508.2 million for the three months endedAugust 31, 2021 , compared to$1,394.4 million for the same period in the prior fiscal year, which was an increase of 8.2%. The organic revenue grow rate for this reportable operating segment was 8.2%. Revenue growth in the Uniform Rental and Facility Services reportable operating segment was negatively impacted by a net 0.5% due to acquisitions and divestitures and positively impacted by 0.5% due to foreign currency exchange rate fluctuations. 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 of sales representatives. Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 10.4% for the three months endedAugust 31, 2021 , compared to the same period in the prior fiscal year, from$352.2 million to$388.8 million . The organic revenue grow rate for other revenue was 10.3%. Revenue growth was positively impacted by 0.1% due to foreign currency exchange rate fluctuations. Cost of uniform rental and facility services consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, shop towels and other ancillary items. Cost of uniform rental and facility services increased$63.9 million , or 8.9%, for the three months endedAugust 31, 2021 , compared to the three months endedAugust 31, 2020 . This change from prior fiscal year was primarily due to higher Uniform Rental and Facility Services reportable operating segment sales volume, as well as increased labor and energy costs. Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, personal protective equipment, uniforms, and fire protection products), delivery expenses and distribution expenses in the First Aid and Safety Services reportable operating segment and All Other. Cost of other increased$9.9 million , or 4.8%, for the three months endedAugust 31, 2021 , compared to the three months endedAugust 31, 2020 . Cost of other improved as a percentage of revenue, decreasing from 58.2% for three months endedAugust 31, 2020 to 55.3% for the three months endedAugust 31, 2021 . The decrease in cost of sales as a percent to revenue was primarily due to a favorable change sales mix, including a decrease in the proportion of sales related to personal protective equipment. Selling and administrative expenses increased$32.2 million , or 6.7%, in the three months endedAugust 31, 2021 , compared to the same period of the prior fiscal year. The increase in expense was due to increases in selling labor and increased travel and meeting expenses, partially offset by a gain on the sale of certain operating assets within the Uniform Direct Sales operating segment. Selling and administrative expenses as a percent of revenue were 26.8% for the three months endedAugust 31, 2021 , which is a 50 basis point improvement compared to 27.3% for the same period in the prior fiscal year. The improvement as a percent of revenue was primarily due to revenue growth outpacing the growth in expenses. 20
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Operating income was$394.1 million , or 20.8% of revenue, for the three months endedAugust 31, 2021 , compared to$349.7 million , or 20.0% of revenue, for the three months endedAugust 31, 2020 . The 80 basis point increase in operating income as a percent of revenue was due to both cost of sales and selling and administrative expenses decreasing as a percent of revenue for the three months endedAugust 31, 2021 . Net interest expense (interest expense less interest income) was$21.8 million for the three months endedAugust 31, 2021 , compared to$24.5 million for the three months endedAugust 31, 2020 . The change was primarily due to the refinancing of$250.0 million from senior debt with an interest rate of 4.30% which matured onJune 1, 2021 , into commercial paper which had an interest rate of 0.20% atAugust 31, 2021 . Cintas' effective tax rate for continuing operations was 11.0% and 7.8% for the three months endedAugust 31, 2021 and 2020, respectively. The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. Net income for the three months endedAugust 31, 2021 increased$31.2 million , or 10.4%, compared to the three months endedAugust 31, 2020 . Diluted earnings per share were$3.11 for the three months endedAugust 31, 2021 , which was an increase of 11.9% compared to the same period in the prior fiscal year. Diluted earnings per share increased primarily due to the increase in net income combined with the decrease in weighted average common shares outstanding. The decrease in common shares outstanding resulted from purchasing an aggregate of approximately 3.0 million shares of common stock under theOctober 30, 2018 andOctober 29, 2019 share buyback programs since the beginning of the third quarter of fiscal 2021 through the first quarter of fiscal 2022.
Uniform Rental and Facility Services Reportable Operating Segment
Three Months Ended
Uniform Rental and Facility Services reportable operating segment revenue was$1,508.2 million for the three months endedAugust 31, 2021 compared to$1,394.4 million for the same period of the prior fiscal year, and the cost of uniform rental and facility services increased$63.9 million , or 8.9%. The organic revenue grow rate for the reportable operating segment was 8.2%. The reportable operating segment's gross margin was$728.9 million , or 48.3% of revenue. The gross margin was 40 basis points lower than the prior fiscal year's first quarter gross margin of 48.7%. The difference in gross margin as a percent to revenue was driven primarily by an increase in labor and energy costs. Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased$35.5 million in the three months endedAugust 31, 2021 compared to the same period of the prior fiscal year. Selling and administrative expenses as a percent of revenue for the three months endedAugust 31, 2021 was 26.5% compared to 26.1% in the first quarter of the prior fiscal year. The increase as a percent of revenue was primarily due to increases in selling labor and increased travel and meeting expenses. Income before income taxes increased$14.4 million , or 4.6%, for the Uniform Rental and Facility Services reportable operating segment for the three months endedAugust 31, 2021 , compared to the same period in the prior fiscal year. Income before income taxes was 21.8% of the reportable operating segment's revenue, which was a 80 basis point decrease compared to the first quarter of the prior fiscal year of 22.6%. This decrease was primarily due to the previously discussed changes in gross margin and selling and administrative expenses as a percent of revenue.
First Aid and Safety Services Reportable Operating Segment
Three Months Ended
First Aid and Safety Services reportable operating segment revenue decreased from$204.5 million to$199.1 million , or 2.6%, for the three months endedAugust 31, 2021 , over the same period in the prior fiscal year. Revenue for the reportable operating segment declined organically by 3.3%. First Aid and Safety Services reportable operating segment revenue was positively impacted by 0.5% due to acquisitions and by 0.2% due to foreign currency exchange rate fluctuations. The change in revenue was caused by a decrease in demand for personal protective equipment. 21
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Cost of first aid and safety services decreased$12.5 million , or 10.2%, for the three months endedAugust 31, 2021 , over the three months endedAugust 31, 2020 , due to lower sales volume. The gross margin as a percent of revenue was 44.8% for the quarter endedAugust 31, 2021 , compared to the gross margin as a percent of revenue of 40.2% in the same period of the prior fiscal year. The improvement in gross margin from the first quarter of the prior year was primarily driven by a decrease in the proportion of sales related to personal protective equipment, which typically have lower gross margins than first aid cabinet sales. Selling and administrative expenses remained at$63.5 million , which is in line with the first quarter of the prior fiscal year, but increased as a percent of revenue to 31.9%, compared to 31.1% in the first quarter of the prior fiscal year. The change as a percent of revenue from the prior year was primarily due to lower revenue. Income before income taxes for the First Aid and Safety Services reportable operating segment increased$7.2 million to$25.7 million for the three months endedAugust 31, 2021 , compared to the same period in the prior fiscal year. Income before income taxes was 12.9% of the reportable operating segment's revenue compared to the first quarter of the prior fiscal year of 9.1%. This change was primarily due to the previously discussed increase in gross margin. Liquidity and Capital Resources The following is a summary of our cash flows and cash and cash equivalents as of and for the three months endedAugust 31 : (In thousands) 2021
2020
Net cash provided by operating activities$ 262,141 $
312,292
Net cash used in investing activities$ (84,321) $
(39,942)
Net cash (used in) provided by financing activities
Cash and cash equivalents at the end of the period
Cash and cash equivalents as of
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. We expect our cash flows from operating activities to remain sufficient to provide us with adequate levels of short-term liquidity. In addition, we have access to$1.0 billion of short-term debt from our revolving credit facility. Although the impact of the COVID-19 pandemic is fluid and continues to evolve, we believe our long-term liquidity position remains strong. We believe the Company has sufficient liquidity to operate in the current business environment. Acquisitions and dividends remain strategic objectives, but they will be dependent on the economic outlook and liquidity of the Company. Net cash provided by operating activities was$262.1 million for the three months endedAugust 31, 2021 , compared to$312.3 million for the three months endedAugust 31, 2020 . The change from the prior fiscal year was primarily due to an increase in accounts receivable and uniforms and other rental items in service which resulted from the growth in sales. Additionally, there were uses of cash from the change in accrued compensation and other related liabilities, which was caused by the differences in the annual bonus payments and accounts payable, which was due to timing. These uses of cash were partially offset by increased net income and favorable changes in working capital, specifically, inventories, net. Net cash used in investing activities includes capital expenditures, purchases of investments, proceeds from sale of operating assets and cash paid for acquisitions of businesses. Capital expenditures were$48.7 million and$30.9 million for the three months endedAugust 31, 2021 and 2020, respectively. Capital expenditures in three months endedAugust 31, 2021 included$34.5 million for the Uniform Rental and Facility Services reportable operating segment and$10.7 million for the First Aid and Safety Services reportable operating segment. Cash paid for acquisitions of businesses was$35.7 million and$2.0 million for the three months endedAugust 31, 2021 and 22
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2020, respectively. The acquisitions during the three months endedAugust 31, 2021 occurred in our Uniform Rental and Facility Services reportable operating segment and our Fire Protection operating segment, which is included in All Other. The acquisitions during the three months endedAugust 31, 2020 occurred in our Uniform Rental and Facility Services reportable operating segment. Also, during the three months endedAugust 31, 2021 , the Company received proceeds of$15.1 million from the sale of certain operating assets in All Other. Net cash used in investing activities also includes$8.7 million and$4.9 million of purchases of investments during the three months endedAugust 31, 2021 and 2020, respectively. Net cash used in financing activities was$590.1 million for the three months endedAugust 31, 2021 , and net cash provided by financing activities was$2.2 million for the three months endedAugust 31, 2020 . The change in cash used in financing activities was primarily due to the increase in share buyback activity, debt payments and dividend payments, partially offset by the net issuance of commercial paper in the three months endedAugust 31, 2021 . OnOctober 29, 2019 , we announced the Board of Directors authorized a$1.0 billion share buyback program, which was completed during the first quarter of fiscal 2022. OnJuly 27, 2021 , we announced that the Board of Directors authorized a new$1.5 billion share buyback program, which does not have an expiration date. The following table summarizes the buyback activity by program and for the three months endedAugust 31 : 2021 2020 Buyback Program (In thousands except per Avg. Price Purchase Avg. Price Purchase share data) Shares per Share Price Shares per Share Price October 29, 2019 1,590$ 365.41 $ 581,220 - $ - $ - July 27, 2021 - $ - $ - - $ - $ - 1,590 $ -$ 581,220 - $ - $ - There were no share buybacks in the period subsequent toAugust 31, 2021 , throughOctober 7, 2021 under any share buyback program. In addition, for the three months endedAugust 31, 2021 , Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the three months endedAugust 31, 2021 . These shares were acquired at an average price of$394.19 per share for a total purchase price of$78.0 million . For the three months endedAugust 31, 2020 , Cintas acquired 0.2 million shares of Cintas common stock for employee payroll taxes due on restricted stock awards that vested during the three months endedAugust 31, 2020 . These shares were acquired at an average price of$300.01 per share for a total purchase price of$69.0 million . OnApril 13, 2021 , our Board of Directors declared a quarterly dividend of$0.75 per share on outstanding common stock. These dividends, totaling$79.1 million , were paid onJune 15, 2021 , to shareholders of record as ofMay 15, 2021 . OnJuly 27, 2021 , the Board of Directors declared a quarterly dividend of$0.95 per share on outstanding common stock. This dividend of$98.8 million was accrued on theAugust 31, 2021 consolidated condensed balance sheet and was paid onSeptember 15, 2021 , during the second quarter of fiscal 2022, to shareholders of record as ofAugust 13, 2021 . Any future dividend declarations, including the amount of any dividends, are at the discretion of the Board of Directors and dependent upon then-existing conditions, including the Company's consolidated operating results and consolidated financial condition, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors may deem relevant. During the three months endedAugust 31, 2021 , Cintas issued$326.0 million , net of commercial paper borrowings. OnJune 1, 2021 , in accordance with the terms of the notes, Cintas paid the$250.0 million aggregate principal amount of its 4.30%, 10-year senior notes that matured on that date with cash on hand. During the next 12 months, Cintas expects to issue long-term debt to pay the$650 million principal amount of its 2.90%, 5-year senior notes that mature in the fourth quarter of fiscal 2022 and the$300 million principal amount of its 3.25%, 10-year senior notes that mature in the first quarter of fiscal 2023. 23
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The following table summarizes Cintas' outstanding debt:
Interest Fiscal Year Fiscal Year May 31, (In thousands) Rate Issued Maturity August 31, 2021 2021 Debt due within one year Senior notes 4.30 % 2012 2022 $ -$ 250,000 Senior notes 2.90 % 2017 2022 650,000 650,000 Senior notes 3.25 % 2013 2023 300,000 - Commercial paper 0.20 % (1) 2022 2022 326,000 - Debt issuance costs (833) (930) Total debt due within one year$ 1,275,167 $ 899,070 Debt due after one year Senior notes 3.25 % 2013 2023 $ -$ 300,000 Senior notes (2) 2.78 % 2013 2023 50,707 50,815 Senior notes (3) 3.11 % 2015 2025 51,217 51,301 Senior notes 3.70 % 2017 2027 1,000,000 1,000,000 Senior notes 6.15 % 2007 2037 250,000 250,000 Debt issuance costs (8,702) (9,283) Total debt due after one year$ 1,343,222 $ 1,642,833 (1) Variable rate debt instrument. The rate presented is the variable borrowing rate atAugust 31, 2021 . (1) Cintas assumed these senior notes with the acquisition ofG&K Services, Inc. (G&K) in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is$50.0 million with a stated interest rate of 3.73%. (2) Cintas assumed these senior notes with the acquisition of G&K in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is$50.0 million with a stated interest rate of 3.88%. The credit agreement that supports our commercial paper program has a revolving credit facility with capacity to$1.0 billion . The credit agreement has an accordion feature that provides Cintas the ability to request increases to the borrowing commitments under the revolving credit facility of up to$250.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit facility isMay 23, 2024 . As ofAugust 31, 2021 , there was$326.0 million of commercial paper outstanding and no borrowings on our revolving credit facility. As ofMay 31, 2021 , there was no commercial paper outstanding and no borrowings on our revolving credit facility. Cintas has certain covenants related to debt agreements. These covenants limit our ability to incur certain liens, to engage in sale-leaseback transactions and to merge, consolidate or sell all or substantially all of Cintas' assets. These covenants also require Cintas to maintain certain debt to earnings before interest, taxes, depreciation and amortization (EBITDA) and interest coverage ratios. Cross-default provisions exist between certain debt instruments. If a default of a significant covenant were to occur, the default could result in an acceleration of the maturity of the indebtedness, impair liquidity and limit the ability to raise future capital. Cintas was in compliance with all of the debt covenants for all periods presented. Our access to the commercial paper and long-term debt markets has historically provided us with sources of liquidity. We do not anticipate having difficulty in obtaining financing from those markets in the future in view of our favorable experiences in the debt markets in the recent past, including, without limitation, to repay our long-term debt that is maturing in the next twelve months. However, the COVID-19 pandemic, which has caused disruption in the capital markets, could make financing more difficult and/or expensive. Additionally, our ability to continue to access the commercial paper and long-term debt markets on favorable interest rate and other terms will depend, to 24
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a significant degree, on the ratings assigned by the credit rating agencies to
our indebtedness. As of
Commercial Long-term Rating Agency Outlook Paper 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, long-term debt and standby letters of credit. 25
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Financial and Nonfinancial Disclosure About Issuers and Guarantors of Cintas' Senior NotesCintas Corporation No. 2 (Corp. 2) is the indirectly, wholly owned principal operating subsidiary ofCintas. Corp. 2 is the issuer of the$2,300.0 million aggregate principal amount of senior notes outstanding as ofAugust 31, 2021 , which are unconditionally guaranteed, jointly and severally, byCintas Corporation and its wholly owned, direct and indirect domestic subsidiaries. Basis of Preparation of the Summarized Financial Information The following tables include summarized financial information ofCintas Corporation (Issuer), Corp. 2 and subsidiary guarantors (together, theObligor Group ). Investments in and equity in the earnings of non-guarantors, which are not members of theObligor Group , have been excluded. Non-guarantor subsidiaries are located outside theU.S. , and therefore, excluded from theObligor Group . The summarized financial information of theObligor Group is presented on a combined basis with intercompany balances and transactions between entities in theObligor Group eliminated.The Obligor Group's amounts due from, amounts due to and transactions with non-guarantors have been presented in separate line items, if they are material. Summarized financial information of theObligor Group is as follows: Three Months Ended Summarized Consolidated Condensed Statement of Income August 31, August 31, (In thousands) 2021
2020
Net sales to unrelated parties$ 1,788,303 $ 1,647,338 Net sales to non-guarantors$ 1,493 $ 831 Operating income$ 380,322 $ 338,962 Net income$ 320,957 $ 292,039
Summarized Consolidated Condensed Balance Sheets
2021 2021
ASSETS
Receivables due from non-obligor subsidiaries
2,292 Total other current assets$ 2,283,848 $ 2,652,810 Total other noncurrent assets$ 4,935,913 $ 4,924,550 LIABILITIES Amounts due to non-obligor subsidiaries$ 1,446 $ 457 Current liabilities$ 2,234,867 $ 1,893,352 Noncurrent liabilities$ 2,216,902 $ 2,549,911 26
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Litigation and Other Contingencies Cintas is subject to other legal proceedings, insurance receipts, legal settlements and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such ordinary course of business actions will not have a material adverse effect on the consolidated financial position, consolidated results of operations or consolidated cash flows of Cintas. Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as "estimates," "anticipates," "predicts," "projects," "plans," "expects," "intends," "target," "forecast," "believes," "seeks," "could," "should," "may" and "will" or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Quarterly Report. Factors that might cause such a difference include, but are not limited to, the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions; fluctuations in costs of materials and labor including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; the cost, results and ongoing assessment of internal controls for financial reporting; the effect of new accounting pronouncements; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events including viral pandemics such as the COVID-19 coronavirus; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year endedMay 31, 2021 and in our reports on Forms 10-Q and 8-K. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us, or that we currently believe to be immaterial, may also harm our business. 27
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Table of Contents ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In our normal operations, Cintas has market risk exposure to interest
rates. There has been no material change to this market risk exposure to
interest rates from that which was previously disclosed on page 29 of our Annual
Report on Form 10-K for the year ended
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
ITEM 4.
CONTROLS AND PROCEDURES Disclosure Controls and Procedures With the participation of Cintas' management, including Cintas' President and Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, Cintas has evaluated the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)) as ofAugust 31, 2021 . Based on such evaluation, Cintas' management, including Cintas' President and Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, has concluded that Cintas' disclosure controls and procedures were effective as ofAugust 31, 2021 , in ensuring (i) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in theSecurities and Exchange Commission's rules and forms and (ii) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is accumulated and communicated to Cintas' management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Internal Control over Financial Reporting There were no changes in Cintas' internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter endedAugust 31, 2021 , that have materially affected, or are reasonably likely to materially affect, Cintas' internal control over financial reporting. 28
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