Cintas Corp. 10-K Summary: Fiscal Year Ended May 31, 1997
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended May 31, 1997, for Cintas Corporation, a Washington-incorporated entity providing specialized uniform rental, cleaning, and corporate identity programs. The company serves a diverse customer base ranging from small service firms to major corporations across the United States and Canada. As of the reporting date, Cintas employed 11,996 individuals, with 87 represented by labor unions.
Key Financial Metrics
Revenue by Segment (in thousands):
| Segment | 1997 | 1996 |
|---|---|---|
| Uniform Rental | $557,659 | $492,369 |
| Uniform Sales | $94,065 | $81,373 |
| Non-Uniform Rentals | $173,414 | $148,652 |
| Other | $14,811 | $7,736 |
| Total Revenue | $839,949 | $730,130 |
Other Financial Data:
- Dividends: $0.30 per share paid in fiscal 1997 (compared to $0.25 in 1996).
- Market Capitalization: Approximately $3.36 billion based on a closing price of $69.25 on August 15, 1997.
- Shares Outstanding: 48,563,693 shares as of August 15, 1997.
- Profit, Cash Flow, Debt, and Margins: The filing text incorporates the Consolidated Statements of Income, Cash Flows, and Balance Sheets by reference to the Annual Report to Shareholders. Specific numerical values for net income, operating margins, cash flow, and total debt are not explicitly stated in the provided text.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased by approximately 15.0% from $730.1 million in 1996 to $840.0 million in 1997.
- Segment Growth: Uniform Rental revenue grew by 13.3%, while Non-Uniform Rentals grew by 16.7%. Uniform Sales increased by 15.6%.
- Dividend Increase: The annual dividend per share increased by 20% from the prior year.
- Equity Issuance: The company issued 121,989 shares of Common Stock during the quarter ended May 31, 1997, as consideration for an acquisition.
Outlook, Risks, and Contingencies
Management Commentary and Outlook: The detailed Management's Discussion and Analysis (MD&A) is incorporated by reference and not included in the text. The company anticipates no material capital expenditures for environmental controls that would significantly affect financial condition.
Risks and Contingencies:
- Legal Proceedings: Cintas is subject to a 1992 "Imminent and Substantial Endangerment and Remedial Action Order" from the California Department of Toxic Substances Control regarding soil and groundwater contamination at a leased facility in San Leandro. The company cannot estimate the loss but does not believe the matter will have a material adverse effect on financial condition.
- Competition: The uniform rental market is highly fragmented. Competitive factors are ranked as quality, service, design, and price.
- Supply Chain: The company manufactures a substantial portion of its uniforms and sources fabric from multiple suppliers, mitigating the risk of vendor loss.
Investor Verification Checklist
- Verify the specific Net Income, Operating Margin, and Free Cash Flow figures in the referenced Annual Report to Shareholders (pages 15-25).
- Confirm the total debt load and liquidity ratios (Current Ratio, Quick Ratio) from the Consolidated Balance Sheets.
- Review the detailed MD&A (page 26 of the Annual Report) for management's specific guidance on future growth and capital allocation.
- Assess the potential financial impact of the San Leandro environmental remediation order, despite management's current assessment of immateriality.
- Confirm the details of the acquisition funded by the issuance of 121,989 shares.