Cintas Corporation 10-K Summary
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended May 31, 2002. Cintas Corporation is a Washington corporation primarily engaged in the corporate identity uniform rental business and ancillary services. The company operates two segments: Rentals (design, manufacture, and rental of uniforms) and Other Services (direct sale of uniforms, sanitation supplies, first aid, safety products, and cleanroom supplies). As of May 31, 2002, Cintas employed approximately 27,000 people and operated 365 facilities across 292 cities.
Key Financial Metrics
Revenue by Segment (Year Ended May 31, 2002):
| Segment | 2002 Revenue ($000s) | 2001 Revenue ($000s) |
|---|---|---|
| Rentals | $1,753,368 | $1,610,606 |
| Other Services | $517,684 | $550,094 |
| Total Revenue | $2,271,052 | $2,160,700 |
Other Financial Data:
- Dividends: $0.25 per share paid in fiscal 2002 (compared to $0.22 in 2001).
- Equity Compensation: 5,861,097 shares available for issuance under approved plans with a weighted average exercise price of $28.31.
- Allowance for Doubtful Accounts: Ended the year at $9,229,000.
- Reserve for Obsolete Inventory: Ended the year at $18,858,000.
- Debt and Liquidity: The filing text does not provide specific values for total debt, cash flow, or liquidity ratios, as the detailed financial statements are incorporated by reference.
Material Changes
- Revenue Growth: Total revenue increased by approximately $110 million (5.1%) from 2001 to 2002.
- Segment Performance: The Rentals segment grew by $142.8 million, while the Other Services segment declined by $32.4 million.
- Acquisitions: The company reported the acquisition of Omni Services, Inc. stock on May 13, 2002 (reported via Form 8-K).
- Dividend Increase: Annual dividends per share increased by $0.03.
Outlook, Risks, and Contingencies
Legal and Environmental Contingencies:
- Tempe, Arizona Site: Cintas is a potentially responsible party for environmental contamination near a rental facility. The EPA estimates a 30-year net present value of remediation costs at $22 million for the site, though no specific claim has been asserted against Cintas to date. Cintas has an undiscounted liability of $3.97 million for environmental matters related to prior acquisitions (Unitog and Omni).
- Litigation: The company faces various claims including personal injury, contract disputes, and a class action suit in California regarding overtime pay laws. Management believes these will not have a material adverse effect on financial results.
Management Commentary: The detailed Management's Discussion and Analysis (MD&A) and outlook are incorporated by reference from the Annual Report to Shareholders and are not explicitly detailed in the provided text.
Investor Verification Checklist
- Verify the full Consolidated Statements of Income and Cash Flows in the Annual Report to Shareholders to confirm profit margins and cash flow generation.
- Review the specific terms of the Omni Services acquisition and its impact on future financial statements.
- Monitor the status of the EPA Record of Decision regarding the Tempe, Arizona site to assess potential liability exposure beyond the current $3.97 million accrual.
- Confirm the details of the California class action lawsuit regarding overtime pay and any potential settlement costs.
- Check the "Eleven Year Financial Summary" referenced in Item 6 for historical trend analysis.