Cintas Corporation Announces Fiscal 2015 Fourth Quarter and Full Year Results

CINCINNATI--(BUSINESS WIRE)--

Cintas Corporation CTAS today reported results for its fourth quarter and full fiscal year ended May 31, 2015.

Revenue for the fourth quarter was $1.14 billion. Organic growth, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations and the contribution of the Document Shredding business to Shred-it International Inc. ("Shred-it"), was 6.0%. Revenue growth for the fourth quarter was 0.7% over the prior year period. This year's fourth quarter and full year revenue does not include any Document Shredding revenue as a result of the transaction with Shred-it (the "Shred-it Transaction") that closed on April 30, 2014, whereas last year's fourth quarter and full year does include Document Shredding revenue. The impact of the Shred-it Transaction on revenue is further explained in the Revenue Results section below.

Operating income for the fourth quarter was $177.7 million. Net income was $105.2 million, and earnings per diluted share (EPS) were $0.90. Fourth quarter EPS, excluding discontinued operations, income or loss on Shred-it investment, and certain other impacts, was $0.86, representing an increase of 11.7% over the prior year period. Operating income, net income and EPS are discussed in more detail in the Income and EPS Results section below.

Revenue for the full fiscal year was $4.48 billion, and organic growth was 7.1%. Revenue growth for the full fiscal year was 0.2%. Operating income was $696.4 million, and net income was $430.6 million. Earnings per diluted share for the full fiscal year were $3.63. Earnings per diluted share, excluding discontinued operations, income or loss on Shred-it investment, and certain other impacts, were $3.35, representing an increase of 21.8% over the prior year period.

"Our solid fiscal 2015 results are the product of good execution by our employees, whom we call partners," said Scott D. Farmer, Cintas' Chief Executive Officer. "We sold profitable business, provided excellent customer service, and increased the focus on managing our cost structure as a result of the Shred-it Transaction. In addition, we purchased 6.9 million shares of our common stock during the year, including 2.9 million in the fourth quarter, demonstrating our continuing commitment to providing shareholder value."

REVENUE RESULTS

The tables below present fourth quarter and full year revenue for Cintas, reflecting the second quarter sale of the Document Storage and Imaging business and presented to exclude fiscal 2014 Document Shredding revenue. Subsequent to the closing of the Shred-it Transaction on April 30, 2014, Cintas no longer includes Document Shredding revenue in its reported revenue. As a result, we believe that revenue excluding Document Shredding revenue is more representative of the ongoing revenue of Cintas.

												Organic
4(th) Quarter Revenue Results			Q4, FY15			Q4, FY14						Growth %
(dollar amounts in millions)			(see Note 1)			(see Note 1)			Growth %			(see Note 2)
Rental Uniforms & Ancillary Products			$	873.1		$	825.0		5.8	%		6.5	%
Uniform Direct Sales				118.8			118.5		0.3	%		1.1	%
First Aid, Safety & Fire Protection				150.7			137.2		9.8	%		7.3	%
Revenue, excluding Document Shredding			$	1,142.6		$	1,080.7		5.7	%		6.0	%
Document Shredding (see Note 3)				-			53.7		-			-
Total Cintas Revenue			$	1,142.6		$	1,134.4		0.7	%		6.0	%
												Organic
Full Year Revenue Results			FY2015			FY2014						Growth %
(dollar amounts in millions)			(see Note 1)			(see Note 1)			Growth %			(see Note 2)
Rental Uniforms & Ancillary Products			$	3,455.0		$	3,224.0		7.2	%		7.7	%
Uniform Direct Sales				453.6			455.5		(0.4	%)		0.2	%
First Aid, Safety & Fire Protection				568.3			514.4		10.5	%		9.2	%
Revenue, excluding Document Shredding			$	4,476.9		$	4,193.9		6.7	%		7.1	%
Document Shredding (see Note 3)				-			275.7		-			-
Total Cintas Revenue			$	4,476.9		$	4,469.6		0.2	%		7.1	%

Note 1 –		Fiscal 2015 and 2014 revenues reflect the classification of the Document Storage and Imaging business as discontinued operations, and as a result, no revenue amounts are included in either period.
Note 2 –		Organic growth reflects the revenue growth when adjusting for the impact of acquisitions, foreign currency exchange rate fluctuations, and the Shred-it Transaction.
Note 3 –		As a result of the Shred-it Transaction, Cintas no longer includes Document Shredding revenue in its reported revenue. However, the fiscal 2014 Document Shredding revenue must continue to be included in the reported fiscal 2014 revenue in accordance with generally accepted accounting principles ("GAAP").

INCOME AND EPS RESULTS

The tables below present summary results for the fourth quarter and full fiscal years of 2015 and 2014, as reported and as adjusted. The adjustments between results as reported and as adjusted are explained below. We present revenue, gross margin, operating income, net income from continuing operations and EPS from continuing operations, as adjusted, because we believe they are more representative of the ongoing performance of Cintas.

								Document
					Shred-it			Shredding							Percent
		As Reported			Impact			Impact							of
Q4, Fiscal 2015		(see Note 1)			(see Note 2)			(see Note 3)				As Adjusted			Revenue
(dollar amounts in millions, except EPS)
Revenue		$	1,142.6		$	-		$	-			$	1,142.6		100.0	%
Gross margin			486.7			-			-				486.7		42.6	%
Operating income			177.7			-			-				177.7		15.6	%
Net income, continuing operations			101.2			1.5			(1.0	)			100.7		8.8	%
EPS, continuing operations		$	0.86		$	0.01		$	(0.01	)		$	0.86
								Document
					Shred-it			Shredding							Percent
		As Reported			Impact			Impact							of
Q4, Fiscal 2014		(see Note 1)			(see Note 2)			(see Note 4)				As Adjusted			Revenue
(dollar amounts in millions, except EPS)
Revenue		$	1,134.4		$	-		$	53.7			$	1,080.7		100.0	%
Gross margin			480.8			-			24.6				456.2		42.2	%
Operating income			122.8			-			(43.6	)			166.4		15.4	%
Net income, continuing operations			128.1			1.2			32.2				94.7		8.8	%
EPS, continuing operations		$	1.04		$	0.01		$	0.26			$	0.77

Note 1 –		"As Reported" figures for fiscal 2015 and 2014 reflect the change in classification of Document Storage and Imaging to discontinued operations within the Consolidated Condensed Statements of Income.
Note 2 –		As a result of the Shred-it Transaction, Cintas does not include Document Shredding results in its reported revenue, gross margin and operating income. After April 30, 2014, Cintas recognized its share of the Shred-it partnership income, net of tax, in net income from continuing operations and EPS from continuing operations.
Note 3 –		Cintas recorded a loss related to the Shred-it transaction completed in fiscal 2014 due to the settlement of an outstanding Document Shredding legal claim. The expense, net of tax, was $1.0 million, or $0.01.
Note 4 –		In accordance with GAAP, the fiscal 2014 Document Shredding results must continue to be included in the reported fiscal 2014 results because of Cintas' continuing ownership in Shred-it. In addition, the fourth quarter of fiscal 2014 also included the following related to the Shred-it Transaction: an asset impairment charge of $16.1 million, transaction costs of $26.3 million, and gain on deconsolidation of Document Shredding of $106.4 million.

					Shred-it											Percent
		As Reported			Impact				Other							of
Full Year Fiscal 2015		(see Note 1)			(see Note 2)				(see Note 3)				As Adjusted			Revenue
(dollar amounts in millions, except EPS)
Revenue		$	4,476.9		$	-			$	-			$	4,476.9		100.0	%
Gross margin			1,921.3			-				-				1,921.3		42.9	%
Operating income			696.4			-				-				696.4		15.6	%
Net income, continuing operations			408.1			(5.5	)			16.7				396.9		8.9	%
EPS, continuing operations		$	3.44		$	(0.05	)		$	0.14			$	3.35
									Document
					Shred-it				Shredding							Percent
		As Reported			Impact				Impact							of
Full Year Fiscal 2014		(see Note 1)			(see Note 2)				(see Note 4)				As Adjusted			Revenue
(dollar amounts in millions, except EPS)
Revenue		$	4,469.6		$	-			$	275.7			$	4,193.9		100.0	%
Gross margin			1,873.7			-				123.9				1,749.8		41.7	%
Operating income			564.2			-				(38.5	)			602.7		14.4	%
Net income, continuing operations			374.3			1.2				35.3				337.8		8.1	%
EPS, continuing operations		$	3.05		$	0.01			$	0.29			$	2.75

Note 1 –		The "As Reported" figures for both fiscal 2015 and 2014 reflect the change in classification of the Document Storage and Imaging business to discontinued operations within the Consolidated Condensed Statements of Income.
Note 2 –		As a result of the Shred-it Transaction, Cintas no longer includes Document Shredding results in its reported revenue, gross margin and operating income. After April 30, 2014, Cintas recognized its share of the Shred-it partnership income, net of tax, in net income from continuing operations and EPS from continuing operations.
Note 3 –		During the fiscal 2015 first quarter, Cintas recognized a gain on the sale of stock in an equity method investment in the net amount of $13.6 million, equal to EPS of $0.11. Also in the 2015 first quarter, Cintas recorded an additional gain related to the Shred-it transaction completed in fiscal 2014 due to receiving certain additional proceeds. The gain resulted in net income of $4.1 million and EPS of $0.04. Finally, in the fourth quarter of fiscal 2015, Cintas recorded a loss related to the Shred-it transaction completed in fiscal 2014 due to the settlement of an outstanding Document Shredding-related legal claim. The expense, net of tax, was $1.0 million, or $0.01.
Note 4 –		In accordance with GAAP, the fiscal 2014 Document Shredding revenue, gross margin, operating income, net income from continuing operations and EPS from continuing operations results must continue to be included in the reported fiscal 2014 results because of Cintas' continuing ownership in Shred-it. In addition, fiscal 2014 also included the following related to the Shred-it Transaction: an asset impairment charge of $16.1 million, transaction costs of $28.5 million, and gain on deconsolidation of Document Shredding of $106.4 million.

Fiscal 2015 fourth quarter gross margin was $486.7 million, or 42.6% of revenue, compared to the fiscal 2014 fourth quarter gross margin, as adjusted, of $456.2 million, or 42.2%. The gross margin increased 6.7% compared to last year's adjusted fourth quarter margin. Operating margin was $177.7 million, or 15.6% of revenue, compared to the fiscal 2014 fourth quarter operating margin, as adjusted, of $166.4 million, or 15.4%. The operating margin increased 6.8% compared to last year's adjusted operating margin. Net income from continuing operations and EPS from continuing operations, as adjusted, increased over the fiscal 2014 fourth quarter by 6.3% and 11.7%, respectively.

For the full fiscal year of 2015, gross margin improved to $1,921.3 million, or 42.9% of revenue, from adjusted gross margin of $1,749.8 million, or 41.7% of revenue, in fiscal 2014, an increase of 9.8%. Operating margin improved to $696.4 million, or 15.6% of revenue, from adjusted operating margin of $602.7 million, or 14.4% of revenue, in fiscal 2014, an increase of 15.5%. Net income from continuing operations and EPS from continuing operations, as adjusted, increased over fiscal 2014 by 17.5% and 21.8%, respectively.

During the fourth quarter and into the first quarter of fiscal 2016, Cintas purchased 4.4 million shares of common stock at a cost of $370.0 million. This share buyback had a positive impact of $0.01 on fourth quarter EPS since it occurred so late in the fourth quarter and into the first quarter of fiscal 2016. As of July 16, 2015, the Company has $130.0 million available under the current Board of Directors stock repurchase authorization. The total share purchases included acquiring 2.9 million shares at an aggregate cost of approximately $237.1 million during the fourth quarter, and the remaining 1.5 million shares were purchased between the start of fiscal 2016 and July 16, 2015 at an aggregate cost of approximately $132.9 million.

FISCAL YEAR 2016 GUIDANCE

Mr. Farmer concluded, "We expect fiscal 2016 revenue to be in the range of $4.70 billion to $4.78 billion, and fiscal 2016 EPS to be in the range of $3.74 to $3.83. This guidance does not include any EPS impact from the recently announced agreement to sell our investment in Shred-it, which has not yet closed. This guidance includes the impact of having two more workdays in fiscal 2016 compared to fiscal 2015 and does not include any deterioration in the U.S. economy or additional share buybacks."

The table below provides a comparison of fiscal 2015 revenue to our fiscal 2016 revenue guidance.

				Fiscal 2016				Fiscal 2016
Revenue Guidance				Low End		Growth vs.		High End		Growth vs.
(dollar amounts in millions)		Fiscal 2015		of Range		Fiscal 2015		of Range		Fiscal 2015
Revenue		$4,476.9		$4,700.0		5.0%		$4,780.0		6.8%

The table below provides a comparison of fiscal 2015 EPS to our fiscal 2016 EPS guidance.

						Fiscal 2016					Fiscal 2016
						Low End			Growth vs.		High End			Growth vs.
EPS Guidance		Fiscal 2015				of Range			Fiscal 2015		of Range			Fiscal 2015
EPS, excluding below items		$	3.35			$	3.74		11.6%		$	3.83		14.3%
Impact of Shred-it partnership			(0.05	)
Impact of sale of stock in equity investment			0.11
Impact of Shred-it Transaction			0.03
Impact of discontinued operations			0.19
Total Reported Cintas EPS		$	3.63

About Cintas

Headquartered in Cincinnati, Cintas Corporation provides highly specialized services to businesses of all types primarily throughout North America. Cintas designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom supplies, first aid, safety and fire protection products and services. Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of the Standard & Poor's 500 Index.

CAUTION CONCERNING 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 Press Release. Factors that might cause such a difference include, but are not limited to, the successful completion of the sale of Cintas' investment in the Shred-it Partnership within the expected timeframe or at all; 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; 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; disruptions caused by the inaccessibility of computer systems data; 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; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; the reactions of competitors in terms of price and service; the ultimate impact of the Affordable Care Act; and the finalization of our financial statements for the year ended May 31, 2015. 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, 2014 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.

Cintas Corporation
Consolidated Condensed Statements of Income
(In thousands except per share data)
		Three Months Ended
		(Unaudited)
		May 31,				May 31,
		2015				2014				% Change
Revenue:
Rental uniforms and ancillary products		$	873,136			$	825,046			5.8
Other services			269,447				309,369			-12.9
Total revenue			1,142,583				1,134,415			0.7
Costs and expenses:
Cost of rental uniforms and ancillary products			488,805				465,498			5.0
Cost of other services			167,118				188,071			-11.1
Selling and administrative expenses			308,941				315,612			-2.1
Shredding transaction asset impairment charge			-				16,143			-100.0
Shredding transaction costs			-				26,323			-100.0
Operating income			177,719				122,768			44.8
(Loss) gain on deconsolidation of Shredding business			(1,667	)			106,441			-101.6
Interest income			(171	)			(33	)		418.2
Interest expense			16,395				16,396			0.0
Income before income taxes			159,828				212,846			-24.9
Income taxes			60,112				85,975			-30.1
Gain on investment in Shred-it, net of tax of $898 and $766, respectively			1,488				1,234			20.6
Income from continuing operations			101,204				128,105			-21.0
Income (loss) from discontinued operations, net of tax of $116 and tax benefit of $82, respectively			4,011				(881	)		555.3
Net income		$	105,215			$	127,224			-17.3
Basic earnings (loss) per share:
Continuing operations		$	0.88			$	1.05			-16.2
Discontinued operations			0.03				(0.01	)		400.0
Basic earnings per share		$	0.91			$	1.04			-12.5
Diluted earnings (loss) per share:
Continuing operations		$	0.86			$	1.04			-17.3
Discontinued operations			0.04				(0.01	)		500.0
Diluted earnings per share		$	0.90			$	1.03			-12.6
Weighted average number of shares outstanding			113,666				119,541
Diluted average number of shares outstanding			115,383				120,886
		Twelve Months Ended
		May 31,				May 31,
		2015				2014				% Change
Revenue:
Rental uniforms and ancillary products		$	3,454,956			$	3,223,930			7.2
Other services			1,021,930				1,245,635			-18.0
Total revenue			4,476,886				4,469,565			0.2
Costs and expenses:
Cost of rental uniforms and ancillary products			1,913,466				1,829,427			4.6
Cost of other services			642,083				766,484			-16.2
Selling and administrative expenses			1,224,930				1,264,836			-3.2
Shredding transaction asset impairment charge			-				16,143			-100.0
Shredding transaction costs			-				28,481			-100.0
Operating income			696,407				564,194			23.4
Gain on deconsolidation of Shredding business			4,952				106,441			-95.3
Gain on sale of stock of an equity method investment			21,739				-			100.0
Interest income			(339	)			(229	)		48.0
Interest expense			65,161				65,822			-1.0
Income before income taxes			658,276				605,042			8.8
Income taxes			244,660				231,991			5.5
(Loss) gain on investment in Shred-it, net of tax benefit of $3,264 and tax of $766, respectively			(5,539	)			1,234			-548.9
Income from continuing operations			408,077				374,285			9.0
Income from discontinued operations, net of tax of $12,320 and $658, respectively			22,541				157			14257.3
Net income		$	430,618			$	374,442			15.0
Basic earnings per share:
Continuing operations		$	3.49			$	3.08			13.3
Discontinued operations			0.19				0.00			100.0
Basic earnings per share		$	3.68			$	3.08			19.5
Diluted earnings per share:
Continuing operations		$	3.44			$	3.05			12.8
Discontinued operations			0.19				0.00			100.0
Diluted earnings per share		$	3.63			$	3.05			19.0
Weighted average number of shares outstanding			115,900				120,377
Diluted average number of shares outstanding			117,543				121,640

CINTAS CORPORATION SUPPLEMENTAL DATA
			Three Months Ended
			May 31,				May 31,
			2015				2014
Rental uniforms and ancillary products gross margin			44.0	%			43.6	%
Other services gross margin(1)			38.0	%			39.2	%
Total gross margin(1)			42.6	%			42.4	%
Net margin, continuing operations(1)			8.9	%			11.3	%
			Twelve Months Ended
			May 31,				May 31,
			2015				2014
Rental uniforms and ancillary products gross margin			44.6	%			43.3	%
Other services gross margin(1)			37.2	%			38.5	%
Total gross margin(1)			42.9	%			41.9	%
Net margin, continuing operations(1)			9.1	%			8.4	%

⁽¹⁾ Amounts presented for the three months and twelve months ended May 31, 2014 have been adjusted to reflect the results of continuing operations.

Computation of Diluted Earnings Per Share from Continuing Operations
			Three Months Ended
			May 31,				May 31,
			2015				2014
Income from continuing operations			$	101,204			$	128,105
Less: income from continuing operations allocated to participating securities				1,432				2,233
Income from continuing operations available to common shareholders			$	99,772			$	125,872
Basic weighted average common shares outstanding				113,666				119,541
Effect of dilutive securities - employee stock options & awards				1,717				1,345
Diluted weighted average common shares outstanding				115,383				120,886
Diluted earnings per share from continuing operations			$	0.86			$	1.04
			Twelve Months Ended
			May 31,				May 31,
			2015				2014
Income from continuing operations			$	408,077			$	374,285
Less: income from continuing operations allocated to participating securities				3,876				3,450
Income from continuing operations available to common shareholders			$	404,201			$	370,835
Basic weighted average common shares outstanding				115,900				120,377
Effect of dilutive securities - employee stock options & awards				1,643				1,263
Diluted weighted average common shares outstanding				117,543				121,640
Diluted earnings per share from continuing operations			$	3.44			$	3.05

Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

The press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To supplement its consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides additional measures of revenue and related growth, gross margin, operating income, net income, earnings per diluted share, and cash flow. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance. Reconciliations of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP are shown in the tables within the narrative of the press release or below.

Computation of Free Cash Flow
			Twelve Months Ended
			May 31,					May 31,
			2015					2014
Net cash provided by operations			$	580,276				$	605,969
Capital expenditures				(217,720	)				(145,580	)
Free cash flow			$	362,556				$	460,389

Management uses free cash flow to assess the financial performance of the Company. Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.

Results from Continuing Operations as Reported and as Adjusted
					Shred-it
		As Reported			Impact				Other							Percent of
For the twelve months ended May 31, 2015		(see Note 1)			(see Note 2)				(see Note 3)				As Adjusted			Revenue
Revenue		$	4,476,886		$	-			$	-			$	4,476,886		100.0	%
Gross margin		$	1,921,337		$	-			$	-			$	1,921,337		42.9	%
Operating income		$	696,407		$	-			$	-			$	696,407		15.6	%
Net income, continuing operations		$	408,077		$	(5,539	)		$	16,704			$	396,912		8.9	%
Diluted earnings per share, continuing operations		$	3.44		$	(0.05	)		$	0.14			$	3.35
									Document
					Shred-it				Shredding
		As Reported			Impact				Impact							Percent of
For the twelve months ended May 31, 2014		(see Note 1)			(see Note 2)				(see Note 4)				As Adjusted			Revenue
Revenue		$	4,469,565		$	-			$	275,721			$	4,193,844		100.0	%
Gross margin		$	1,873,654		$	-			$	123,895			$	1,749,759		41.7	%
Operating income		$	564,194		$	-			$	(38,526	)		$	602,720		14.4	%
Net income, continuing operations		$	374,285		$	1,234			$	35,279			$	337,772		8.1	%
Diluted earnings per share, continuing operations		$	3.05		$	0.01			$	0.29			$	2.75

Note 1 - The "As Reported" figures for both fiscal 2015 and 2014 reflect the change in classification of the Document Storage and Imaging business to discontinued operations within the Consolidated Condensed Statements of Income.
Note 2 - As a result of the Shred-it transaction, Cintas no longer includes Document Shredding results in its reported revenue, gross margin and operating income. After April 30, 2014, Cintas recognized its share of the Shred-it partnership income, net of tax, in net income from continuing operations and EPS from continuing operations.
Note 3 - During the fiscal 2015 first quarter, Cintas recognized a gain on the sale of stock in an equity method investment in the net amount of $13.6 million, equal to EPS of $0.11. Also in the 2015 first quarter, Cintas recorded an additional gain related to the Shred-it transaction completed in fiscal 2014 due to receiving certain additional proceeds. The gain resulted in net income of $4.1 million and EPS of $0.04. Finally, in the fourth quarter of fiscal 2015, Cintas recorded a loss related to the Shred-it transaction completed in fiscal 2014 due to the settlement of an outstanding Document Shredding-related legal claim. The expense, net of tax, was $1.0 million, or $0.01.
Note 4 - In accordance with GAAP, the fiscal 2014 Document Shredding revenue, gross margin, operating income, net income from continuing operations and EPS from continuing operations must continue to be included in the reported fiscal 2014 results because of Cintas' continuing ownership in Shred-it. In addition, fiscal 2014 also included the following related to the Shred-it Transaction: an asset impairment charge of $16.1 million, transaction costs of $28.5 million, and gain on deconsolidation of Document Shredding of $106.4 million.

		Rental
		Uniforms &						First Aid,
		Ancillary			Uniform Direct			Safety & Fire			Document
SUPPLEMENTAL SEGMENT DATA		Products			Sales			Protection			Management(1)			Corporate(2)				Total
For the three months ended May 31, 2015
Revenue		$	873,136		$	118,802		$	150,645		$	-		$	-			$	1,142,583
Gross margin		$	384,331		$	35,420		$	66,909		$	-		$	-			$	486,660
Selling and administrative expenses		$	239,467		$	20,653		$	48,821		$	-		$	-			$	308,941
Loss on deconsolidation of Shredding business		$	-		$	-		$	-		$	-		$	(1,667	)		$	(1,667	)
Interest income		$	-		$	-		$	-		$	-		$	(171	)		$	(171	)
Interest expense		$	-		$	-		$	-		$	-		$	16,395			$	16,395
Income (loss) before income taxes		$	144,864		$	14,767		$	18,088		$	-		$	(17,891	)		$	159,828
For the three months ended May 31, 2014
Revenue		$	825,046		$	118,462		$	137,226		$	53,681		$	-			$	1,134,415
Gross margin		$	359,548		$	35,508		$	61,158		$	24,632		$	-			$	480,846
Selling and administrative expenses		$	224,334		$	20,598		$	44,891		$	25,789		$	-			$	315,612
Gain on deconsolidation of Shredding business, net of impairment charges and other Shredding transaction costs		$	-		$	-		$	-		$	63,975		$	-			$	63,975
Interest income		$	-		$	-		$	-		$	-		$	(33	)		$	(33	)
Interest expense		$	-		$	-		$	-		$	-		$	16,396			$	16,396
Income (loss) before income taxes		$	135,214		$	14,910		$	16,267		$	62,818		$	(16,363	)		$	212,846
As of and for the twelve months ended May 31, 2015
Revenue		$	3,454,956		$	453,653		$	568,277		$	-		$	-			$	4,476,886
Gross margin		$	1,541,490		$	129,446		$	250,401		$	-		$	-			$	1,921,337
Selling and administrative expenses		$	948,455		$	85,317		$	191,158		$	-		$	-			$	1,224,930
Gain on deconsolidation of Shredding business		$	-		$	-		$	-		$	-		$	4,952			$	4,952
Gain on sale of stock of an equity method investment		$	-		$	-		$	-		$	-		$	21,739			$	21,739
Interest income		$	-		$	-		$	-		$	-		$	(339	)		$	(339	)
Interest expense		$	-		$	-		$	-		$	-		$	65,161			$	65,161
Income (loss) before income taxes		$	593,035		$	44,129		$	59,243		$	-		$	(38,131	)		$	658,276
Assets		$	2,853,740		$	122,658		$	436,149		$	-		$	779,913			$	4,192,460
As of and for the twelve months ended May 31, 2014
Revenue		$	3,223,930		$	455,485		$	514,429		$	275,721		$	-			$	4,469,565
Gross margin		$	1,394,503		$	130,018		$	225,238		$	123,895		$	-			$	1,873,654
Selling and administrative expenses		$	887,444		$	83,309		$	176,286		$	117,797		$	-			$	1,264,836
Gain on deconsolidation of Shredding business, net of impairment charges and other Shredding transaction costs		$	-		$	-		$	-		$	61,817		$	-			$	61,817
Interest income		$	-		$	-		$	-		$	-		$	(229	)		$	(229	)
Interest expense		$	-		$	-		$	-		$	-		$	65,822			$	65,822
Income (loss) before income taxes		$	507,059		$	46,709		$	48,952		$	67,915		$	(65,593	)		$	605,042
Assets		$	2,875,014		$	142,033		$	422,015		$	344,264		$	679,126			$	4,462,452

(1) As a result of the Shred-it Transaction and the Document Storage and Imaging Transactions, we no longer have a Document Management Services operating segment. For illustrative purposes in this press release, we have shown the results of the document destruction business and the value of our investment in the Shred-it partnership within the Document Management Services segment for the three and twelve month periods ended May 31, 2014. However, this information will be included within the Corporate segment for reporting purposes in the Form 10-K.
(2) Corporate assets as of May 31, 2015 include the investment in the Shred-it partnership. Corporate assets also include the real estate assets of the Document Storage and Imaging business that were not included in the sale transactions. Corporate assets as of May 31, 2014 include the assets of the Document Storage and Imaging business.

Cintas Corporation
Consolidated Balance Sheets
(In thousands except share data)
		May 31,					May 31,
ASSETS		2015					2014
Current assets:
Cash and cash equivalents		$	417,073				$	513,288
Marketable securities			16,081					-
Accounts receivable, net			496,130					508,427
Inventories, net			226,211					251,239
Uniforms and other rental items in service			534,005					506,537
Income taxes, current			936					-
Assets held for sale			21,341					-
Prepaid expenses and other current assets			24,030					26,190
Total current assets			1,735,807					1,805,681
Property and equipment, at cost, net			871,421					855,702
Investments			329,692					458,357
Goodwill			1,195,612					1,267,411
Service contracts, net			42,434					55,675
Other assets, net			17,494					19,626
		$	4,192,460				$	4,462,452
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		$	109,607				$	150,070
Accrued compensation and related liabilities			88,423					85,026
Accrued liabilities			309,935					299,727
Income taxes, current			-					5,960
Deferred tax liability			112,389					88,845
Liabilities held for sale			704					-
Long-term debt due within one year			-					503
Total current liabilities			621,058					630,131
Long-term liabilities:
Long-term debt due after one year			1,300,000					1,300,477
Deferred income taxes			226,938					246,044
Accrued liabilities			112,009					92,942
Total long-term liabilities			1,638,947					1,639,463
Shareholders' equity:
Preferred stock, no par value:			-					-
100,000 shares authorized, none outstanding
Common stock, no par value:			329,248					251,753
425,000,000 shares authorized
FY15: 178,117,334 issued and 111,702,949 outstanding
FY14: 176,378,412 issued and 117,037,784 outstanding
Paid-in capital			157,183					134,939
Retained earnings			4,227,620					3,998,893
Treasury stock:			(2,773,125	)				(2,221,155	)
FY15: 66,414,385 shares
FY14: 59,340,628 shares
Accumulated other comprehensive (loss) income			(8,471	)				28,428
Total shareholders' equity			1,932,455					2,192,858
		$	4,192,460				$	4,462,452

Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(In thousands)
					Twelve Months Ended
					May 31, 2015					May 31, 2014
Cash flows from operating activities:
Net income					$	430,618				$	374,442
Adjustments to reconcile net income to net cash provided
by operating activities:
	Depreciation					140,624					168,220
	Amortization of intangible assets					14,458					22,642
	Stock-based compensation					47,002					29,875
	Gain on sale of Storage business					(38,573	)				-
	Gain on deconsolidation of Shredding business					(4,952	)				(106,441	)
	Gain on sale of stock of an equity method investment					(21,739	)				-
	Loss (gain) on investment in Shred-it					8,803					(2,000	)
	Shredding transaction asset impairment charge					-					16,143
	Shredding transaction costs					-					26,057
	Deferred income taxes					20,866					47,109
	Change in current assets and liabilities, net of
	acquisitions of businesses:
		Accounts receivable, net				(1,443	)				(56,231	)
		Inventories, net				23,785					(11,062	)
		Uniforms and other rental items in service				(31,994	)				(11,435	)
		Prepaid expenses and other current assets				(3,202	)				(2,177	)
		Accounts payable				(33,445	)				30,446
		Accrued compensation and related liabilities				3,234					10,931
		Accrued liabilities and other				33,066					54,237
		Income taxes, current				(6,832	)				15,213
	Net cash provided by operating activities					580,276					605,969
Cash flows from investing activities:
Capital expenditures						(217,720	)				(145,580	)
Proceeds from redemption of marketable securities						161,938					54,196
Purchase of marketable securities and investments						(195,471	)				(63,858	)
Proceeds from Storage transactions, net of cash contributed						158,428					-
Proceeds from Shredding transaction, net of cash contributed						3,344					179,359
Proceeds from sale of stock of an equity method investment						29,933					-
Dividends received on equity method investment						5,247					-
Dividends received on Shred-it investment						113,400					-
Acquisitions of businesses, net of cash acquired						(15,495	)				(33,441	)
Other, net						1,383					(5,219	)
	Net cash provided by (used in) investing activities					44,987					(14,543	)
Cash flows from financing activities:
Repayment of debt						(518	)				(8,187	)
Proceeds from exercise of stock-based compensation awards						40,230					41,902
Dividends paid						(201,891	)				(93,320	)
Repurchase of common stock						(551,970	)				(370,599	)
Other, net						1,589					469
	Net cash used in financing activities					(712,560	)				(429,735	)
Effect of exchange rate changes on cash and cash equivalents						(8,918	)				(676	)
Net (decrease) increase in cash and cash equivalents						(96,215	)				161,015
Cash and cash equivalents at beginning of year						513,288					352,273
Cash and cash equivalents at end of year					$	417,073				$	513,288

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