CTAS

Cintas Corporation 10-K Summary: Fiscal Year Ended May 31, 1998

Business Context and Reporting Period

This Form 10-K covers the fiscal year ended May 31, 1998, for Cintas Corporation, a Washington-incorporated company founded in 1929. Cintas specializes in designing, manufacturing, and implementing corporate identity uniform programs, along with the rental and cleaning of uniforms and ancillary products such as walk-off mats, fender covers, and first aid supplies. The company serves a diverse customer base ranging from small service firms to major corporations across the United States and Canada. As of May 31, 1998, the company employed 16,957 individuals, with 770 represented by labor unions.

Key Financial Metrics

Based on the revenue table provided in Item 1, the following financial data is available for the fiscal years ended May 31:

Other Financial Data:

• Dividends: Paid annually; $0.18 per share in fiscal 1998 and $0.15 per share in fiscal 1997.
• Market Value: As of August 21, 1998, the aggregate market value of nonaffiliate common stock was approximately $4.92 billion (based on a closing price of $46.94).
• Outstanding Shares: 104,879,612 shares as of August 21, 1998.
• Reserves: Allowance for Doubtful Accounts ended at $5,696,000; Reserve for Obsolete Inventory ended at $18,393,000.

Note: The filing text incorporates detailed financial statements (Balance Sheets, Income Statements, Cash Flows) by reference to the Annual Report to Shareholders. Specific figures for net profit, operating margins, total debt, and cash flow are not explicitly stated in the provided text.

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased by approximately 20.4% from $995.2 million in 1997 to $1.198 billion in 1998. Net rentals grew by 18.1%, while other service revenue grew by 27.2%.
• Acquisitions: Significant growth was driven by acquisitions. During the quarter ended May 31, 1998, the company issued 2,493,569 shares for 11 separate transactions and 3,959,262 shares for the acquisition of Uniforms To You in April 1998.
• Dividend Increase: The annual dividend per share increased from $0.15 in 1997 to $0.18 in 1998.

Outlook, Risks, and Contingencies

Management Commentary and Outlook: The filing incorporates the Management's Discussion and Analysis (MD&A) by reference. The company operates 193 facilities in 154 cities and considers its facilities adequate. It does not anticipate material capital expenditures for environmental controls.

Risks and Contingencies:

• Legal Proceedings: In December 1992, the California Department of Toxic Substances Control issued an order regarding soil and groundwater contamination at the San Leandro, California facility. While the loss cannot be estimated, management does not believe the matter will have a material adverse effect on financial condition or operations.
• Competition: The uniform rental market is highly fragmented. Competition varies by location, with primary competitive factors being quality, service, design, and price.
• Vendor Dependence: The company manufactures a substantial amount of its own uniforms and purchases fabric from several suppliers, mitigating the risk of losing a single vendor.

Key Facts for Investor Verification

• Verify the specific net income, operating margins, and cash flow figures in the incorporated Annual Report to Shareholders, as they are not detailed in this text.
• Confirm the financial impact and integration status of the Uniforms To You acquisition and the 11 other transactions completed in the final quarter of 1998.
• Review the status of the San Leandro, California environmental remediation order to ensure no new material liabilities have emerged since the 1992 order.
• Assess the sustainability of the 20.4% revenue growth rate in the context of the fragmented competitive landscape.
• Verify the details of the 1998 Annual Report to Shareholders, which is incorporated by reference for detailed financial statements and MD&A.