Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Audited Consolidated Financial Statements for the Fiscal Years Ended May 31, 2015, 2014 and 2013

Management's Report on Internal Control over Financial Reporting	29
Reports of Independent Registered Public Accounting Firm	30
Consolidated Statements of Income	32
Consolidated Statements of Comprehensive Income	33
Consolidated Balance Sheets	34
Consolidated Statements of Shareholders' Equity	35
Consolidated Statements of Cash Flows	36
Notes to Consolidated Financial Statements	37

Management's Report on

Internal Control over Financial Reporting

To the Shareholders of Cintas Corporation:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

With the supervision of our Chief Executive Officer and our Chief Financial Officer, management assessed our internal control over financial reporting as of May 31, 2015. Management based its assessment on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management's assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies and our overall control environment. This assessment is supported by testing and monitoring performed by our internal audit function.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of May 31, 2015, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States.

We reviewed the results of management's assessment with the Audit Committee of our Board of Directors. Additionally, our independent registered public accounting firm, Ernst & Young LLP, independently assessed the effectiveness of Cintas Corporation's internal control over financial reporting. Ernst & Young LLP has issued an attestation report, which is included in this Annual Report on Form 10-K.

		Scott D. Farmer Chief Executive Officer
		J. Michael Hansen Vice President and Chief Financial Officer

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Cintas Corporation

We have audited Cintas Corporation’s internal control over financial reporting as of May 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Cintas Corporation’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Cintas Corporation maintained, in all material respects, effective internal control over financial reporting as of May 31, 2015, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cintas Corporation as of May 31, 2015 and 2014 and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended May 31, 2015 and our report dated July 30, 2015 expressed an unqualified opinion thereon.

		/s/ ERNST & YOUNG LLP

Cincinnati, Ohio

July 30, 2015

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Cintas Corporation

We have audited the accompanying consolidated balance sheets of Cintas Corporation as of May 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended May 31, 2015. Our audits also included the consolidated financial statement schedule listed in the Index at Item 15(a)(2). These consolidated financial statements and schedule are the responsibility of Cintas Corporation’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cintas Corporation at May 31, 2015 and 2014, and the consolidated results of their operations and their cash flows for each of the three years in the period ended May 31, 2015, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cintas Corporation’s internal control over financial reporting as of May 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated July 30, 2015 expressed an unqualified opinion thereon.

		/s/ ERNST & YOUNG LLP

Cincinnati, Ohio

July 30, 2015

Consolidated Statements of Income
	Fiscal Years Ended May 31,
(In thousands except per share data)	2015				2014				2013
Revenue:
Rental uniforms and ancillary products	$	3,454,956			$	3,223,930			$	3,044,587
Other services	1,021,930				1,245,635				1,201,377
	4,476,886				4,469,565				4,245,964
Costs and expenses:
Cost of rental uniforms and ancillary products	1,913,466				1,829,427				1,756,297
Cost of other services	642,083				766,484				736,358
Selling and administrative expenses	1,224,930				1,264,836				1,187,331
Shredding Transaction asset impairment charge	—				16,143				—
Shredding Transaction costs	—				28,481				—
Operating income	696,407				564,194				565,978
Gain on deconsolidation of Shredding	4,952				106,441				—
Gain on sale of stock of an equity method investment	21,739				—				—
Interest income	(339		)		(229		)		(409		)
Interest expense	65,161				65,822				65,712
Income before income taxes	658,276				605,042				500,675
Income taxes	244,660				231,991				184,089
(Loss) gain on investment in Shred-it Partnership, net of tax benefit of $3,264 and tax of $766, respectively	(5,539		)		1,234				—
Income from continuing operations	408,077				374,285				316,586
Income (loss) from discontinued operations, net of tax of $12,320, $658, and $377, respectively	22,541				157				(1,144		)
Net income	$	430,618			$	374,442			$	315,442
Basic earnings (loss) per share
Continuing operations	$	3.49			$	3.08			$	2.54
Discontinued operations	0.19				0.00				(0.01		)
Basic earnings per share	$	3.68			$	3.08			$	2.53
Diluted earnings (loss) per share
Continuing operations	$	3.44			$	3.05			$	2.53
Discontinued operations	0.19				0.00				(0.01		)
Diluted earnings per share	$	3.63			$	3.05			$	2.52
Dividends declared and paid per share	$	1.70			$	0.77			$	0.64

See accompanying notes.

Consolidated Statements of Comprehensive Income
	Fiscal Years Ended May 31,
(In thousands)	2015				2014				2013
Net income	$	430,618			$	374,442			$	315,442
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(38,538		)		(9,787		)		(1,087		)
Change in fair value of derivatives	37				(228		)		(187		)
Amortization of interest rate lock agreements	1,952				1,952				1,952
Other	(350		)		(1,632		)		782
Other comprehensive (loss) income	(36,899		)		(9,695		)		1,460
Comprehensive income	$	393,719			$	364,747			$	316,902

See accompanying notes.

Consolidated Balance Sheets
	As of May 31,
(In thousands except share data)	2015				2014
Assets
Current assets:
Cash and cash equivalents	$	417,073			$	513,288
Marketable securities	16,081				—
Accounts receivable, principally trade, less allowance of $15,674 and $14,906, respectively	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:
425,000,000 shares authorized
2015: 178,117,334 shares issued and 111,702,949 shares outstanding
2014: 176,378,412 shares issued and 117,037,784 shares outstanding	329,248				251,753
Paid-in capital	157,183				134,939
Retained earnings	4,227,620				3,998,893
Treasury stock:
2015: 66,414,385 shares
2014: 59,340,628 shares	(2,773,125		)		(2,221,155		)
Accumulated other comprehensive (loss) income	(8,471		)		28,428
Total shareholders' equity	1,932,455				2,192,858
	$	4,192,460			$	4,462,452

See accompanying notes.

Consolidated

Statements of Shareholders' Equity

	Common Stock							Paid-In Capital				Retained Earnings				Other Accumulated Comprehensive Income (Loss)				Treasury Stock							Total Shareholders' Equity
(In thousands)	Shares			Amount							Shares			Amount
Balance at June 1, 2012	173,746			$	148,255			$	107,019			$	3,482,073			$	36,663			(47,226	)		$	(1,634,875	)		$	2,139,135
Net income	—			—				—				315,442				—				—			—				315,442
Comprehensive income, net of tax	—			—				—				—				1,460				—			—				1,460
Dividends	—			—				—				(79,744		)		—				—			—				(79,744		)
Stock-based compensation	—			—				23,310				—				—				—			—				23,310
Vesting of stock-based compensation awards	610			23,270				(23,270		)		—				—				—			—				—
Stock options exercised, net of shares surrendered	430			14,807				—				—				—				—			—				14,807
Repurchase of common stock	—			—				—				—				—				(5,279	)		(215,681		)		(215,681		)
Other	—			—				2,763				—				—				—			—				2,763
Balance at May 31, 2013	174,786			186,332				109,822				3,717,771				38,123				(52,505	)		(1,850,556		)		2,201,492
Net income	—			—				—				374,442				—				—			—				374,442
Comprehensive loss, net of tax	—			—				—				—				(9,695		)		—			—				(9,695		)
Dividends	—			—				—				(93,320		)		—				—			—				(93,320		)
Stock-based compensation	—			—				44,746				—				—				—			—				44,746
Vesting of stock-based compensation awards	465			23,519				(23,519		)		—				—				—			—				—
Stock options exercised, net of shares surrendered	1,127			41,902				—				—				—				—			—				41,902
Repurchase of common stock	—			—				—				—				—				(6,836	)		(370,599		)		(370,599		)
Other	—			—				3,890				—				—				—			—				3,890
Balance at May 31, 2014	176,378			251,753				134,939				3,998,893				28,428				(59,341	)		(2,221,155		)		2,192,858
Net income	—			—				—				430,618				—				—			—				430,618
Comprehensive loss, net of tax	—			—				—				—				(36,899		)		—			—				(36,899		)
Dividends	—			—				—				(201,891		)		—				—			—				(201,891		)
Stock-based compensation	—			—				47,002				—				—				—			—				47,002
Vesting of stock-based compensation awards	575			37,265				(37,265		)		—				—				—			—				—
Stock options exercised, net of shares surrendered	1,164			40,230				—				—				—				—			—				40,230
Repurchase of common stock	—			—				—				—				—				(7,073	)		(551,970		)		(551,970		)
Other	—			—				12,507				—				—				—			—				12,507
Balance at May 31, 2015	178,117			$	329,248			$	157,183			$	4,227,620			$	(8,471	)		(66,414	)		$	(2,773,125	)		$	1,932,455

See accompanying notes.

Consolidated Statements of Cash Flows
	Fiscal Years Ended May 31,
(In thousands)	2015				2014				2013
Cash flows from operating activities:
Net income	$	430,618			$	374,442			$	315,442
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	140,624				168,220				165,664
Amortization of intangible assets	14,458				22,642				23,713
Stock-based compensation	47,002				29,875				23,310
Gain on sale of Storage	(38,573		)		—				—
Gain on deconsolidation of Shredding	(4,952		)		(106,441		)		—
Gain on sale of stock of an equity method investment	(21,739		)		—				—
Loss (gain) on investment in Shred-it Partnership	8,803				(2,000		)		—
Shredding Transaction asset impairment charge	—				16,143				—
Shredding Transaction costs	—				26,057				—
Deferred income taxes	20,866				47,109				48,023
Change in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	(1,443		)		(56,231		)		(42,704		)
Inventories, net	23,785				(11,062		)		10,997
Uniforms and other rental items in service	(31,994		)		(11,435		)		(44,179		)
Prepaid expenses and other current assets	(3,202		)		(2,177		)		(3,281		)
Accounts payable	(33,445		)		30,446				25,023
Accrued compensation and related liabilities	3,234				10,931				(13,161		)
Accrued liabilities and other	33,066				54,237				31,873
Income taxes, current	(6,832		)		15,213				12,028
Net cash provided by operating activities	580,276				605,969				552,748
Cash flows from investing activities:
Capital expenditures	(217,720		)		(145,580		)		(196,486		)
Proceeds from redemption of marketable securities	161,938				54,196				161,478
Purchase of marketable securities and investments	(195,471		)		(63,858		)		(178,464		)
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 Partnership investment	113,400				—				—
Acquisitions of businesses, net of cash acquired	(15,495		)		(33,441		)		(69,370		)
Other	1,383				(5,219		)		(1,339		)
Net cash provided by (used in) investing activities	44,987				(14,543		)		(284,181		)
Cash flows from financing activities:
Proceeds from issuance of debt	—				—				250,000
Repayment of debt	(518		)		(8,187		)		(225,636		)
Proceeds from exercise of stock-based compensation awards	40,230				41,902				14,807
Dividends paid	(201,891		)		(93,320		)		(79,744		)
Repurchase of common stock	(551,970		)		(370,599		)		(215,681		)
Other	1,589				469				196
Net cash used in financing activities	(712,560		)		(429,735		)		(256,058		)
Effect of exchange rate changes on cash and cash equivalents	(8,918		)		(676		)		(61		)
Net (decrease) increase in cash and cash equivalents	(96,215		)		161,015				12,448
Cash and cash equivalents at beginning of year	513,288				352,273				339,825
Cash and cash equivalents at end of year	$	417,073			$	513,288			$	352,273

See accompanying notes.

Notes to Consolidated Financial Statements

1. Significant Accounting Policies

Business description. Cintas Corporation (collectively with its majority-owned subsidiaries and any entities over which it has control, "Cintas") provides highly specialized products and services to businesses of all types primarily throughout North America, as well as Latin America, Europe and Asia. Cintas is North 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, carpet and tile cleaning services, and first aid, safety and fire protection products and services. Cintas' products and services are designed to enhance its customers' images and to provide additional safety and protection in the workplace.

Effective August 31, 2014, Cintas classifies its businesses into three reportable operating segments ("operating segments") based on the types of products and services provided. The Rental Uniforms and Ancillary Products 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 carpet and tile cleaning services are also provided within this operating segment. The Uniform Direct Sales operating segment consists of the direct sale of uniforms and related items. The First Aid, Safety and Fire Protection Services operating segment consists of first aid, safety and fire protection products and services.

Previously, Cintas classified its businesses into four operating segments. The Document Management Services operating segment is no longer considered an operating segment for fiscal 2015 and beyond. This operating segment consisted of document destruction services ("Shredding") and document imaging and retention services ("Storage"). On April 30, 2014, Cintas completed its partnership transaction with the shareholders of Shred-it International Inc. ("Shred-it") to combine Cintas' Shredding with Shred-it's shredding business ("the Shredding Transaction"). Due to the deconsolidation of Shredding, fiscal 2015 results exclude the results of Shredding. Shredding remains reported in continuing operations for fiscal 2014 (through April 30, 2014 as previously discussed) and 2013. Based on the change in reportable operating segments, the results of Shredding for the year ended May 31, 2014 are presented in Corporate. Additionally, effective August 31, 2014, Storage is reported as a discontinued operation for all periods presented and has been excluded from continuing operations and from operating segment results for all periods presented. In the quarter ended November 30, 2014, Cintas sold Storage through a series of transactions. ("Storage Transactions"). Please see Note 17 entitled Discontinued Operations for additional information.

As previously mentioned, on April 30, 2014, the Shredding Transaction was completed. Cintas Shredding represented approximately 76%, 80%, and 70% of Cintas' Document Management Services operating segment's assets, revenue, and income before income taxes, respectively, as of and for the quarter ended February 28, 2014. Under the agreement, Cintas and Shred-it each contributed its shredding business to a newly formed partnership owned 42% by Cintas and 58% by the shareholders of Shred-it ("the Shred-it Partnership"). In addition to its 42% ownership of the Shred-it Partnership, Cintas received $180.0 million in cash at the closing of the transaction. Cintas' equity interest in the partnership is accounted for under the equity method of accounting as prescribed by U.S. generally accepted accounting principles ("GAAP").

Principles of consolidation. The consolidated financial statements include the accounts of Cintas controlled majority-owned subsidiaries and any entities over which Cintas has control. Intercompany balances and transactions have been eliminated as appropriate.

Financial Statement Presentation. We have reclassified certain prior-year amounts to conform to the current year’s presentation.

Use of estimates. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue recognition. Rental revenue, which is recorded in the Rental Uniforms and Ancillary Products operating segment, is recognized when services are performed. Other Services revenue, which is recorded in the Uniform Direct Sales operating segment, the First Aid, Safety and Fire Protection Services operating segment, Shredding until April 30, 2014 and the Storage business that is reported as discontinued operations, is recognized when either services are performed or when products are shipped and the title and risks of ownership pass to the customer.

Cost of rental uniforms and ancillary products. Cost of rental uniforms and ancillary products consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, mops,

shop towels and other ancillary items. The Rental Uniforms and Ancillary Products operating segment inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs and other costs of distribution are included in the cost of rental uniforms and ancillary products.

Cost of other services. Cost of other services consists primarily of cost of goods sold (predominantly uniforms and first aid products), delivery expenses and distribution expenses. Cost of other services includes inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs and other costs of distribution.

Selling and administrative expenses. Selling and administrative expenses consist primarily of sales labor and commissions, management and administrative labor, payroll taxes, medical expense, insurance expense, legal and professional costs and amortization of finite-lived intangible assets.

Cash and cash equivalents. Cintas considers all highly liquid domestic investments with a maturity of three months or less, at date of purchase, to be cash equivalents. At May 31, 2015 and 2014, cash and cash equivalents includes $43.0 million and $33.5 million, respectively, of restricted cash used as collateral associated with the general insurance program.

Marketable securities. Marketable securities are typically comprised of fixed income securities and are classified as available-for-sale.

Accounts receivable. Accounts receivable is comprised of amounts owed through product shipments and services provided and is presented net of an allowance for doubtful accounts. The allowance is an estimate based on historical rates of collections and allowances for specific accounts identified as uncollectible. The allowance that is an estimate based on Cintas' historical rates of collections is recorded for overdue amounts, beginning with a nominal percentage and increasing substantially as the account ages. The amount provided as the account ages will differ slightly between the Rental Uniforms and Ancillary Products operating segment and the two other operating segments because of differences in customers served and the nature of each operating segment. When an account is considered uncollectible, it is written off against the allowance for doubtful accounts.

Inventories. Inventories are valued at the lower of cost (first-in, first-out) or market. Cintas applies a commonly accepted practice of using inventory turns to apply variances between actual and standard costs to the inventory balances. The judgments and estimates used to calculate inventory turns will have an impact on the valuation of inventories at the lower of cost or market. Inventory is comprised of the following amounts:

(In thousands)	2015				2014
Raw materials	$	16,935			$	17,984
Work in process	17,079				14,304
Finished goods	192,197				218,951
	$	226,211			$	251,239

Inventories are recorded net of reserves for obsolete inventory of $30.7 million at both May 31, 2015 and 2014. The inventory obsolescence reserve is determined by specific identification, as well as an estimate based on Cintas' historical rates of obsolescence.

Uniforms and other rental items in service. These items are valued at cost less amortization, calculated using the straight-line method. Uniforms in service (other than cleanroom and flame resistant clothing) are amortized over their useful life of 18 months. Other rental items, including shop towels, mats, mops, cleanroom garments, flame resistant clothing, linens and restroom dispensers, are amortized over their useful lives, which range from 8 to 60 months. The amortization rates used are based on industry experience, Cintas' specific experience and wear tests performed by Cintas. These factors are critical to determining the amount of in service inventory and related cost of uniforms and ancillary products that are presented in the consolidated financial statements.

Property and equipment. Property and equipment is stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method primarily over the following estimated useful lives of the assets based on industry and Cintas specific experience, in years:

Buildings	30 to 40
Building improvements	5 to 20
Equipment	3 to 10
Leasehold improvements	2 to 15

Investments. Investments consists primarily of equity method investments and the cash surrender value of life insurance policies. The equity method is used to account for an investment if our investment gives us the ability to exercise significant influence over the operating and financial policies of the investee. In general, equity method investments are initially measured at cost. However, an equity method investment resulting from a transaction in which a controlled group of assets that constitutes a business is deconsolidated is initially measured at fair value. Cintas recognizes its share of the investee’s earnings or losses in income. Cintas also adjusts its share of the investee's earnings for intra-entity transactions, basis differences, investee capital transactions and other comprehensive income through income or other comprehensive income as appropriate. Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable.

Long-lived assets. When events or circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the estimated undiscounted future cash flows are compared to the carrying amount of the assets. If the estimated undiscounted future cash flows are less than the carrying amount of the assets, an impairment loss is recorded based on the excess of the carrying amount of the assets over their respective fair values. Fair value is generally determined by discounted cash flows or based on prices of similar assets, as appropriate.

Goodwill. Goodwill, obtained through acquisitions of businesses, is valued at cost less any impairment. Cintas completes an annual impairment test, which may include an assessment of qualitative factors including, but not limited to, macroeconomic conditions, industry and market conditions, and entity specific factors such as strategies and financial performance. We test for goodwill impairment at the reporting unit level, which for the Company is at the operating segment level. We determined that our reporting units are our Rental Uniforms and Ancillary Products, Uniform Direct Sales, and First Aid, Safety and Fire Protection Services operating segments. The test may also include the determination of the estimated fair value of Cintas' reporting units via comparisons to current market values, where available, and discounted cash flow analyses. Significant assumptions may include growth rates based on historical trends and margin improvement leveraged from such growth, as well as discount rates. In addition to the annual test in fiscal 2014, Cintas was required to perform an impairment test as of April 30, 2014 on the business remaining within the former Document Management Services operating segment as a result of the Shredding Transaction. Based on the results of this test and the annual impairment tests, Cintas was not required to recognize an impairment of goodwill for the fiscal years ended May 31, 2015, 2014 or 2013. Cintas will continue to perform impairment tests as of March 1 in future years and when indicators of impairment exist.

Service contracts and other assets. Service contracts and other assets, which consist primarily of noncompete and consulting agreements obtained through acquisitions of businesses, are amortized by use of the straight-line method over the estimated lives of the agreements, which are generally 5 to 10 years. Certain noncompete agreements, as well as all service contracts, require that a valuation be determined using a discounted cash flow model. The assumptions and judgments used in these models involve estimates of cash flows and discount rates, among other factors. Because of the assumptions used to value these intangible assets, actual results over time could vary from original estimates. Impairment of service contracts and other assets is accomplished through specific identification. No impairment has been recognized by Cintas for the fiscal years ended May 31, 2015, 2014 or 2013.

Accrued liabilities. Current accrued liabilities are recorded when it is probable that a liability has occurred and the amount of the liability can be reasonably estimated. Current accrued liabilities include the following amounts:

(In thousands)	2015				2014
General insurance liabilities	$	113,714			$	106,083
Employee benefit related liabilities	68,907				64,445
Taxes and related liabilities	6,064				7,531
Accrued interest	26,628				26,726
Other	94,622				94,942
	$	309,935			$	299,727

General insurance liabilities represent the estimated ultimate cost of all asserted and unasserted claims incurred, primarily related to worker's compensation, auto liability and other general liability exposure through the consolidated balance sheet dates. Our reserves are estimated through actuarial procedures of the insurance industry and by using industry assumptions, adjusted for specific expectations based on our claims history. Cintas records an increase or decrease in selling and administrative expenses related to development of prior claims, higher claims activity and other

environmental factors in the period in which it becomes known. These changes in estimates may be material to the consolidated financial statements.

Long-term accrued liabilities consists primarily of reserves associated with unrecognized tax benefits, which are described in more detail in Note 8 entitled Income Taxes, and retirement obligations, which are described in more detail in Note 10 entitled Defined Contribution Plans.

Stock-based compensation. Compensation expense is recognized for all share-based payments to employees, including stock options and restricted stock awards, in the consolidated statements of income based on the fair value of the awards that are granted. The fair value of stock options is estimated at the date of grant using the Black-Scholes option-pricing model. Measured compensation cost, net of estimated forfeitures, is recognized on a straight-line basis over the vesting period of the related share-based compensation award.

Derivatives and hedging activities. Cintas formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. Derivatives are recorded at fair value on the consolidated balance sheet, and gains and losses are recorded as adjustments to income or other comprehensive income, as appropriate.

Income taxes. Deferred tax assets and liabilities are determined by the differences between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities. See Note 8 entitled Income Taxes of "Notes to Consolidated Financial Statements" for the types of items that give rise to significant deferred income tax assets and liabilities. Deferred income taxes are classified as assets or liabilities based on the classification of the related asset or liability for financial reporting purposes. Deferred income taxes that are not related to an asset or liability for financial reporting are classified according to the expected reversal date. Cintas regularly reviews deferred tax assets for recoverability based upon projected future taxable income and the expected timing of the reversals of existing temporary differences. Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets, as adjusted for valuation allowances, will be realized.

Cintas is periodically reviewed by domestic and foreign tax authorities regarding the amount of taxes due. These reviews include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, Cintas records reserves as deemed appropriate. Based on Cintas' evaluation of current tax positions, Cintas believes its tax related accruals are appropriate.

Fair Value Measurements. Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. It also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

	Level 1 —	Quoted prices in active markets for identical assets or liabilities.
	Level 2 —	Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
	Level 3 —	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Cintas' assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

In order to meet the requirements of ASC 820, Cintas utilizes two basic valuation approaches to determine the fair value of its assets and liabilities required to be recorded on a recurring basis at fair value. The first approach is the cost approach. The cost approach is generally the value a market participant would expect to replace the respective asset or liability. The second approach is the market approach. The market approach looks at what a market participant would consider valuing an exact or similar asset or liability to that of Cintas, including those traded on exchanges.

Cintas' non-financial assets and liabilities not permitted or required to be measured at fair value on a recurring basis primarily relate to assets and liabilities acquired in a business acquisition unless otherwise noted in Note 2 entitled Fair Value Disclosures. Cintas is required to provide additional disclosures about fair value measurements as part of the consolidated financial statements for each major category of assets and liabilities measured at fair value on a non-recurring basis (including business acquisitions). Based on the nature of Cintas' business acquisitions, which occur regularly throughout the fiscal year, the majority of the assets acquired and liabilities assumed consist of working capital, primarily valued using Level 2 inputs, property and equipment, also primarily valued using Level 2 inputs and goodwill and other identified intangible assets valued using Level 3 inputs. In general, non-recurring fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities, which generally are not applicable to non-financial assets and liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability and include situations where there is little, if any, market activity for the asset or liability, such as internal estimates of future cash flows and company specific discount rates.

New accounting pronouncements. In February 2013, the FASB issued Accounting Standards Update ("ASU") 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." ASU 2013-02 requires an entity to present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income if the item reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For reclassification items not required under GAAP to be reclassified directly to net income in their entirety in the same reporting period, an entity is required to cross-reference to other disclosures currently required under GAAP that provide additional detail about those amounts. The Company adopted ASU 2013-02 effective June 1, 2013. See Note 14 entitled Accumulated Other Comprehensive Income (Loss) for details of required disclosure.

In May 2014, the FASB) issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," to clarify revenue recognition principles. This guidance is intended to improve disclosure requirements and enhance the comparability of revenue recognition practices. Improved disclosures under the amended guidance relate to the nature, amount, timing and uncertainty of revenue that is recognized from contracts with customers. This guidance will be effective for reporting periods beginning after December 15, 2017 and will be required to be applied retrospectively. Early application of the amendments in this update is not permitted. Cintas is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements.

No other new accounting pronouncement recently issued or newly effective had or is expected to have a material

impact on the Consolidated Financial Statements.

2. Fair Value Disclosures

All financial instruments that are measured at fair value on a recurring basis (at least annually) have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the consolidated balance sheet date. These financial instruments measured at fair value on a recurring basis are summarized below:

	As of May 31, 2015
(In thousands)	Level 1				Level 2				Level 3				Fair Value
Cash and cash equivalents	$	417,073			$	—			$	—			$	417,073
Marketable securities:
Canadian treasury securities	—				16,081				—				16,081
Total assets at fair value	$	417,073			$	16,081			$	—			$	433,154

	As of May 31, 2014
(In thousands)	Level 1				Level 2				Level 3				Fair Value
Cash and cash equivalents	$	513,288			$	—			$	—			$	513,288
Total assets at fair value	$	513,288			$	—			$	—			$	513,288
Current accrued liabilities	$	—			$	286			$	—			$	286
Total liabilities at fair value	$	—			$	286			$	—			$	286

Cintas' cash and cash equivalents and marketable securities are generally classified within Level 1 or Level 2 of the fair value hierarchy. Financial instruments classified as Level 1 are based on quoted market prices in active markets, and financial instruments classified as Level 2 are based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. The types of financial instruments Cintas classifies within Level 1 include most bank deposits and money market securities. Cintas does not adjust the quoted market price for such financial instruments.

The types of financial instruments Cintas classifies within Level 2 are primarily Canadian treasury securities (federal). The valuation technique used for Cintas’ marketable securities classified within Level 2 of the fair value hierarchy is primarily the market approach. The primary inputs to value Cintas’ marketable securities is the respective instrument's future cash flows based on its stated yield and the amount a market participant would pay for a similar instrument. Primarily all of Cintas’ marketable securities are actively traded and the recorded fair value reflects current market conditions. However, due to the inherent volatility in the investment market, there is at least a possibility that recorded investment values may change in the near term.

The funds invested in Canadian treasury securities are not presently expected to be repatriated, but instead are expected to be invested indefinitely in foreign subsidiaries. Interest, realized gains and losses and declines in value determined to be other than temporary on available-for-sale securities are included in interest income or expense. The cost of the securities sold is based on the specific identification method. The amortized cost basis of marketable securities as of May 31, 2015 was $16.1 million. There were no outstanding marketable securities as of May 31, 2014. Purchases of marketable securities were $179.2 million, $48.5 million and $167.1 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively. All outstanding marketable securities as of May 31, 2015 had contractual maturities due within one year.

Foreign currency forward contracts were included in current accrued liabilities as of May 31, 2014. The fair value of Cintas' foreign currency forward contracts are based on similar exchange traded derivatives (market approach) and are, therefore, included within Level 2 of the fair value hierarchy.

The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated balance sheet date.

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a nonrecurring basis as required under GAAP. As a result of the Shredding Transaction, Cintas recorded an asset impairment charge of $16.1 million in fiscal 2014 related to the abandonment of certain information systems assets. These assets were measured at a fair value of $5.4 million as of April 30, 2014 determined as the price that a market participant would be willing to pay for the continued use of the assets over their remaining useful lives. Also as a result of the Shredding Transaction and in accordance with GAAP requirements, Cintas' equity method investment in the Shred-it Partnership was initially measured at fair value. See Note 4 entitled Investments for additional information on the measurement of the investment in the Shred-it Partnership.

3. Property and Equipment

(In thousands)	2015				2014
Land	$	116,172			$	116,989
Buildings and improvements	501,742				521,113
Equipment	1,446,041				1,427,356
Leasehold improvements	26,023				35,821
Construction in progress	104,300				42,384
	2,194,278				2,143,663
Less: accumulated depreciation	1,322,857				1,287,961
	$	871,421			$	855,702

Interest expense is net of capitalized interest of $0.6 million for the fiscal year ended May 31, 2015. Interest was not capitalized during the fiscal years ended May 31, 2014 and 2013.

4. Investments

Investments at May 31, 2015 of $329.7 million include the cash surrender value of insurance policies of $101.8 million, equity method investments of $225.7 million, and cost method investments of $2.2 million. Investments at May 31, 2014 of $458.4 million include the cash surrender value of insurance policies of $86.5 million, equity method investments of $371.1 million, and cost method investments of $0.8 million.

Investments are evaluated for impairment on an annual basis or when indicators of impairment exist. For fiscal years 2015, 2014, and 2013, no losses due to impairment were recorded.

On April 30, 2014, Cintas completed the Shredding Transaction to combine Cintas’ Shredding with Shred-it’s shredding business. Under the agreement, Cintas and Shred-it each contributed its shredding business to the newly formed Shred-it Partnership owned 42% by Cintas and 58% by Shred-it. The resulting equity method investment (Level 3) in the Shred-it Partnership was initially recorded at fair value at $339.4 million derived with a primary reliance upon the income approach utilizing various discounted cash flow models. Fair value was determined by an independent valuation specialist. Management ultimately oversees the independent valuation specialist to ensure that the transaction-specific assumptions are appropriate for Cintas. The following table details quantitative information about significant unobservable inputs used in the initial valuation of Cintas' investment in the Shred-it Partnership:

										Range
(Dollars in millions)		Fair Value at April 30, 2014				Valuation Technique		Input		Low			High
Equity method investment - Shred-it Partnership		$	339.4			Discounted Cash Flow		EBITDA margin		20.0	%		22.0	%
								Ratio of capital expenditures to revenues		4.5	%		5.5	%
								Long-term revenue growth		1.5	%		2.0	%
								WACC rate		9.0	%		9.0	%

The carrying value of the investment in the Shred-it Partnership was $210.1 million and $341.4 million at May 31, 2015 and 2014, respectively. In May 2015, the Company received a dividend on our investment in the Shred-it Partnership of $113.4 million, which reduced the carrying value of the investment. As of May 31, 2015, Cintas’ carrying value of its investment in the Shred-it Partnership exceeded its share of the underlying equity in the net assets of the Shred-it Partnership by approximately $94.0 million (basis difference). The remaining basis difference is being amortized over the weighted average estimated useful lives of the underlying assets which generated the basis difference (approximately 9 years) and is recorded as a reduction in the income (loss) on the investment in the Shred-it Partnership, net of tax. Cintas records its share of the partnership's income on a one month lag. For the fiscal year ended May 31, 2015, Cintas recorded a net loss on the investment in the Shred-it Partnership of $5.5 million, which included amortization of basis differences of approximately $11.0 million. For the fiscal year ended May 31, 2014, Cintas recorded a net gain on the investment in the Shred-it Partnership of $1.2 million.

Cintas provides the following unaudited summary information regarding the Shred-it Partnership's financial position and results of operations as of and for the twelve months ended April 30, 2015:

Summary Balance Sheet Information	As of			As of
(in thousands)	April 30, 2015			April 30, 2014
Assets
Current assets	$	150,792		$	108,377
Non-current assets	$	968,956		$	924,196
Liabilities
Current liabilities	$	73,971		$	57,241
Non-current liabilities	$	532,673		$	427,569

Summary Income Statement Information	For the 12 Months Ended
(in thousands)	April 30, 2015
Net sales	$	695,628
Gross profit	$	432,532
Net income	$	10,385

Also during fiscal 2015, Cintas sold stock in an equity method investment. In conjunction with the sale of the equity method investment, Cintas also received a cash dividend of $5.2 million. Total cash received from the transaction was $35.2 million. The sale resulted in the recording of a gain, net of tax, of approximately $13.6 million in the fiscal year ended May 31, 2015. As a result, the Company no longer has the ability to exercise significant influence over the investee. Therefore, effective July 1, 2014, the remaining investment retained by Cintas is accounted for under the cost method.

5. Goodwill, Service Contracts and Other Assets

Effective August 31, 2014, Storage was classified as discontinued operations. As a result, goodwill and service contracts related to this business, which were previously included in the former Document Management Services operating segment, are included within Corporate. Storage was sold in three separate transactions during the quarter ended November 30, 2014 ("Storage Transactions"). See Note 17 entitled Discontinued Operations for more information.

Changes in the carrying amount of goodwill and service contracts for the fiscal years ended May 31, 2015 and 2014, by operating segment, are as follows:

Goodwill (in thousands)	Rental Uniforms & Ancillary Products				Uniform Direct Sales				First Aid, Safety & Fire Protection				Corporate				Total
Balance as of June 1, 2013	$	944,325			$	23,942			$	216,989			$	332,304			$	1,517,560
Goodwill acquired	—				—				4,922				8,794				13,716
Goodwill divested in Shredding Transaction	—				—				—				(265,487		)		(265,487		)
Foreign currency translation	(809		)		(37		)		—				2,468				1,622
Balance as of May 31, 2014	$	943,516			$	23,905			$	221,911			$	78,079			$	1,267,411
Goodwill acquired	70				—				8,578				—				8,648
Goodwill divested in Storage Transactions	—				—				—				(75,660		)		(75,660		)
Foreign currency translation	(2,141		)		(227		)		—				(2,419		)		(4,787		)
Balance as of May 31, 2015	$	941,445			$	23,678			$	230,489			$	—			$	1,195,612

Service Contracts (in thousands)	Rental Uniforms & Ancillary Products				Uniform Direct Sales				First Aid, Safety & Fire Protection				Corporate				Total
Balance as of June 1, 2013	$	23,135			$	—			$	32,811			$	36,207			$	92,153
Service contracts acquired	—				—				3,149				4,589				7,738
Service contracts divested in Shredding Transaction	—				—				—				(23,990		)		(23,990		)
Service contracts amortization	(5,961		)		—				(7,926		)		(6,908		)		(20,795		)
Foreign currency translation	(3		)		—				—				572				569
Balance as of May 31, 2014	$	17,171			$	—			$	28,034			$	10,470			$	55,675
Service contracts acquired	313				—				9,543				265				10,121
Service contracts divested in Storage Transactions	—				—				—				(9,570		)		(9,570		)
Service contracts amortization	(5,619		)		—				(7,005		)		(597		)		(13,221		)
Foreign currency translation	(3		)		—				—				(568		)		(571		)
Balance as of May 31, 2015	$	11,862			$	—			$	30,572			$	—			$	42,434

Information regarding Cintas' service contracts and other assets is as follows:

	As of May 31, 2015
(In thousands)	Carrying Amount				Accumulated Amortization				Net
Service contracts	$	340,816			$	298,382			$	42,434
Noncompete and consulting agreements	$	41,828			$	40,379			$	1,449
Other	23,595				7,550				16,045
Total	$	65,423			$	47,929			$	17,494

	As of May 31, 2014
(In thousands)	Carrying Amount				Accumulated Amortization				Net
Service contracts	$	360,634			$	304,959			$	55,675
Noncompete and consulting agreements	$	49,080			$	47,036			$	2,044
Other	23,826				6,244				17,582
Total	$	72,906			$	53,280			$	19,626

Amortization expense for continuing operations was $13.7 million, $19.8 million and $20.4 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively. Estimated amortization expense for continuing operations, excluding any future acquisitions, for each of the next five years is $11.0 million, $6.9 million, $5.9 million, $5.6 million and $5.2 million, respectively.

The decreases in goodwill, service contracts, noncompete and consulting agreements since May 31, 2013 primarily relate to the consummation of the Shredding Transaction and Storage Transactions. See Note 9 entitled Acquisitions and Deconsolidations for more information.

6. Long-Term Debt and Derivatives

(In thousands)	2015				2014
Unsecured term notes due through 2036 at an average rate of 4.6%	$	1,300,000			$	1,300,980
Less: amounts due within one year	—				503
	$	1,300,000			$	1,300,477

Cintas' senior notes are recorded at cost. The fair value of the senior notes is estimated using level 2 inputs based on general market prices. The carrying value and fair value of Cintas' long-term debt as of May 31, 2015 were $1,300.0 million and $1,418.6 million, respectively, and as of May 31, 2014 were $1,301.0 million and $1,421.0 million, respectively.

Letters of credit outstanding were $82.7 million and $85.1 million at May 31, 2015 and 2014, respectively. Maturities of long-term debt during each of the next five years are zero, $250.0 million, $300.0 million, zero and zero, respectively.

Interest paid was $65.3 million, $65.9 million and $68.4 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

Cintas' commercial paper program has a capacity of $300.0 million that is fully supported by a backup revolving credit facility through a credit agreement with its banking group. This revolving credit facility has an accordion feature that allows for a maximum borrowing capacity of $450.0 million. The revolving credit facility was amended on May 29, 2014, to extend the maturity date from October 6, 2016 to May 28, 2019, and to adjust the applicable margin used to calculate the interest payable on any outstanding loans and the facility fee payable under the agreement. No commercial paper or borrowings on our revolving credit facility were outstanding at May 31, 2015 or 2014.

Cintas used interest rate lock agreements to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2007, fiscal 2008, fiscal 2011 and fiscal 2013. The amortization of the cash flow hedges resulted in an increase to other comprehensive income of $2.0 million, $2.0 million and $2.0 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

To hedge the exposure of movements in the foreign currency rates, Cintas may use foreign currency hedges. These hedges reduce the impact on cash flows from movements in the foreign currency exchange rates. Examples of foreign currency hedge instruments that Cintas may use are average rate options and forward contracts. Cintas had foreign currency forward contracts included in current accrued liabilities of $0.3 million at May 31, 2014. These instruments did not impact foreign currency exchange during fiscal 2015, 2014 or 2013.

Cintas has certain covenants related to debt agreements. These covenants limit Cintas' 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 EBITDA and interest coverage ratios. Cross-default provisions exist between certain debt instruments. Cintas is in compliance with all of the debt covenants for all periods presented. 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.

7. Leases

Cintas conducts certain operations from leased facilities and leases certain equipment. Most leases contain renewal options for periods from 1 to 10 years. The lease agreements provide for increases in rent expense if the options are exercised based on increases in certain price level factors or other prearranged factors. Step rent provisions, escalation clauses, capital improvements funding and other lease concessions are taken into account in computing minimum lease payments. Minimum lease payments are recognized on a straight-line basis over the minimum lease term. Lease payments are not dependent on an existing index or rate and are not included in minimum lease payments. It is anticipated that expiring leases will be renewed or replaced.

The minimum rental payments under noncancelable lease arrangements for each of the next five years and thereafter are $27.0 million, $21.2 million, $16.9 million, $11.1 million, $7.6 million and $14.9 million, respectively.

Rent expense for continuing operations under operating leases during the fiscal years ended May 31, 2015, 2014 and 2013, was $34.9 million, $43.5 million and $41.9 million, respectively.

8. Income Taxes

(In thousands)	2015				2014				2013
Income before income taxes for continuing operations consists of the following components:
U.S. operations	$	630,740			$	594,840			$	482,679
Foreign operations	18,733				12,202				17,996
	$	649,473			$	607,042			$	500,675

(In thousands)	2015				2014				2013
Income tax expense for continuing operations consists of the following components:
Current:
Federal	$	201,992			$	162,679			$	109,739
State and local	25,230				21,268				12,453
	227,222				183,947				122,192
Deferred	14,174				48,810				61,897
	$	241,396			$	232,757			$	184,089

(In thousands)	2015				2014				2013
Reconciliation of income tax expense for continuing operations using the statutory rate and actual income tax expense is as follows:
Income taxes at the U.S. federal statutory rate	$	227,316			$	212,464			$	175,237
State and local income taxes, net of federal benefit	16,623				20,252				12,211
Other	(2,543		)		41				(3,359		)
	$	241,396			$	232,757			$	184,089

The components of deferred income taxes included on the consolidated balance sheets are as follows:

(In thousands)	2015				2014
Deferred tax assets:
Allowance for doubtful accounts	$	4,857			$	4,835
Inventory obsolescence	12,266				11,682
Insurance and contingencies	38,522				36,032
Stock-based compensation	29,910				23,890
Foreign related carry-forwards	16,862				19,129
Treasury locks	5,829				6,924
Other	9,461				15,663
	117,707				118,155
Valuation allowance	(14,690		)		(13,358		)
	103,017				104,797
Deferred tax liabilities:
In service inventory	169,629				150,439
Property	77,871				90,155
Intangibles	84,218				81,215
Investment in partnerships	86,098				93,227
State taxes and other	24,528				24,650
	442,344				439,686
Net deferred tax liability	$	339,327			$	334,889

On April 30, 2014, Cintas completed the Shredding Transaction. Due to differences in accounting for the book and tax basis in the Shred-it Partnership and other partnerships, a deferred tax liability was recorded. Additionally, Cintas re-characterized the existing deferred tax liabilities associated with Shredding assets contributed to the partnership from "Property" and "Intangibles" to "Investment in Partnerships."

Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets, net of valuation allowances, will be realized.

The progression of the valuation allowance is as follows:

(In thousands)	2015				2014
Balance at beginning of year	$	(13,358	)		$	(12,789	)
Additions	(2,433		)		(1,701		)
Subtractions	1,101				1,132
Balance at end of year	$	(14,690	)		$	(13,358	)

Income taxes paid were $236.7 million, $172.5 million and $122.2 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

Undistributed earnings of foreign subsidiaries were approximately $147.1 million, $172.7 million and $194.0 million as of May 31, 2015, 2014 and 2013, respectively, for which deferred taxes have not been provided. Such earnings are considered to be permanently reinvested in Cintas' foreign subsidiaries. If such earnings were repatriated, additional tax expense may result. The current calculation of such additional taxes is not practicable.

As of May 31, 2015 and 2014, there was $11.9 million and $9.7 million, respectively, in total unrecognized tax benefits, which, if recognized, would favorably impact Cintas' effective tax rate. Cintas recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense in the consolidated statements of income, which is consistent with the recognition of these items in prior reporting periods. The total amount accrued for interest and

penalties as of May 31, 2015 and 2014, was $0.9 million and $0.7 million, respectively. Cintas records this tax liability as current and long-term accrued liabilities on the consolidated balance sheets, as appropriate.

In the normal course of business, Cintas provides for uncertain tax positions and the related interest, and adjusts its unrecognized tax benefits and accrued interest accordingly. Unrecognized tax benefits increased by $1.4 million in fiscal 2015 and decreased by $0.2 million and $29.2 million in fiscal 2014 and 2013, respectively. Accrued interest increased by $0.2 million in fiscal 2015 and decreased by $0.4 million and $0.9 million in fiscal 2014 and 2013, respectively.

A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits (exclusive of interest and penalties) is as follows:

(In thousands)
Balance at June 1, 2012	$	44,531
Additions based on tax positions related to the current year	1,843
Additions for tax positions of prior years	2,960
Change in tax regulations	(33,600		)
Statute expirations	(2,025		)
Balance at May 31, 2013	$	13,709
Additions for tax positions of prior years	2,586
Statute expirations	(1,963		)
Settlements	(1,270		)
Balance at May 31, 2014	$	13,062
Additions for tax positions of prior years	4,001
Statute expirations	(1,603		)
Settlements	(48		)
Balance at May 31, 2015	$	15,412

On September 13, 2013, the U.S. Department of the Treasury and the Internal Revenue Service released final tangible property regulations under Sections 162(a) and 263(a) of the Internal Revenue Code regarding amounts paid to improve tangible property and acquire or produce tangible property, as well as proposed regulations regarding the disposition of property. The effective date of the final regulations was for Cintas' fiscal year ending May 31, 2015, and there was not a material impact on the consolidated financial statements.

The majority of Cintas' operations are in North America. Cintas is required to file federal income tax returns, as well as state income tax returns in a majority of the domestic states and also in certain Canadian provinces. At times, Cintas is subject to audits in these jurisdictions. The audits, by nature, are sometimes complex and can require several years to resolve. The final resolution of any such tax audit could result in either a reduction in Cintas' accruals or an increase in its income tax provision, either of which could have an impact on the consolidated results of operation in any given period.

All U.S. federal income tax returns are closed to audit through fiscal 2011. Cintas is currently in advanced stages of various audits in certain foreign jurisdictions and certain domestic states. The years under foreign and domestic state audits cover fiscal years back to 2009. Based on the resolution of the various audits and other potential regulatory developments, it is reasonably possible that the balance of unrecognized tax benefits will not change for the fiscal year ending May 31, 2016.

9. Acquisitions and Deconsolidations

Acquisitions

The purchase price paid for each acquisition has been allocated to the fair value of the assets acquired and liabilities assumed. During fiscal 2015, Cintas acquired one Rental Uniforms and Ancillary Products operating segment business and eleven First Aid, Safety and Fire Protection Services operating segment businesses. During fiscal 2014, Cintas acquired three First Aid, Safety and Fire Protection Services operating segment businesses and three businesses in the former Document Management Services operating segment.

The following summarizes the aggregate purchase price for all businesses acquired:

(In thousands)	2015				2014
Fair value of tangible assets acquired	$	177			$	11,415
Fair value of service contracts acquired	9,856				6,343
Fair value of other intangibles acquired	945				924
Net goodwill recognized	8,648				13,865
Total fair value of assets acquired	19,626				32,547
Fair value of liabilities assumed (settled) and incurred	4,131				(894		)
Total cash paid for acquisitions	$	15,495			$	33,441

The results of operations for the acquired businesses are included in the consolidated statements of income from the dates of acquisition. The proforma revenue, net income and earnings per share information relating to acquired businesses are not presented because they are not significant to Cintas.

Deconsolidations

On April 30, 2014, Cintas completed the Shredding Transaction. Under the agreement, Cintas and Shred-it each contributed its shredding business to the newly formed Shred-it Partnership. In fiscal 2014,the Company realized a $106.4 million gain on the deconsolidation of Shredding, which is primarily related to the remeasurement of its retained interest in Shredding as part of its investment in the Shred-it Partnership. The gain was computed as follows: the fair value of consideration received of $180.0 million plus the fair value of Cintas' retained non-controlling interest in the Shred-it Partnership of $339.4 million less the carrying amount of Shredding of $413.0 million. During fiscal 2015, the Company realized a pre-tax gain of $5.0 million related to the Shred-it Transaction primarily as a result of receiving additional proceeds.

As a result of the Shredding Transaction, in fiscal 2014 the Company recorded an asset impairment charge of $16.1 million and other transaction costs of $28.5 million. The impairment charge was related to the abandonment of information systems assets that were not contributed to the Shred-it Partnership and cannot be used by the Company for other purposes. The other transaction costs consisted of the following: $4.7 million of professional and legal fees; $0.7 million of employee termination benefit costs; $12.4 million of stock compensation expense resulting from the immediate vesting of Cintas stock options and awards of employees contributed to the Shred-it Partnership; a $4.2 million charge for information systems contracts for which no future economic benefit exists; and $6.5 million of incremental profit sharing and employee compensation resulting from the gain net of the impairment charge and other transaction costs. If applicable, these amounts were settled in fiscal 2015 at amounts that approximated their recorded values.

In conjunction with the partnership agreement, Cintas agreed to provide certain transition services such as information technology and accounting in support of the Shred-it Partnership. This agreement is set to expire on September 30, 2015.

Additionally, in fiscal 2015, Cintas sold Storage. Storage, excluding related real estate owned by Cintas, was sold in three separate transactions to three separate buyers. The business was previously included in the former Document Management Services operating segment. See Note 17 entitled Discontinued Operations for additional information.

10. Defined Contribution Plans

Cintas' Partners' Plan ("the Plan") is a non-contributory profit sharing plan and Employee Stock Ownership Plan ("ESOP") for the benefit of substantially all U.S. Cintas employee-partners who have completed one year of service. The Plan also includes a 401(k) savings feature covering substantially all U.S. employee-partners. The amounts of contributions to the Plan and ESOP, as well as the matching contribution to the 401(k), are made at the discretion of the Board of Directors. Total contributions, including Cintas' matching contributions, which approximate cost, were $38.4 million, $33.7 million and $28.4 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

Cintas has a non-contributory deferred profit sharing plan ("DPSP"), which covers substantially all Canadian employee-partners. In addition, a registered retirement savings plan ("RRSP") is offered to those employees. The amounts of contributions to the DPSP, as well as the matching contribution to the RRSP, are made at the discretion of the Board of Directors. Total contributions, which approximate cost, were $1.5 million, $1.6 million and $1.4 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

Cintas has a supplemental executive retirement plan ("SERP") subject to Section 409A of the Internal Revenue Code for the benefit of certain highly compensated Cintas employee-partners. The SERP allows participants to defer the receipt of compensation which would otherwise become payable to them. Matching contributions are made at the discretion of the Board of Directors. Total matching contributions were $6.1 million, $6.0 million and $4.7 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

11. Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share from continuing operations using the two-class method for amounts attributable to Cintas' common shares:

(In thousands except per share data)	2015				2014				2013
Basic Earnings per Share from Continuing Operations
Income from continuing operations	$	408,077			$	374,285			$	316,586
Less: income from continuing operations allocated to participating securities	3,877				3,450				2,547
Income from continuing operations available to common shareholders	$	404,200			$	370,835			$	314,039
Basic weighted average common shares outstanding	115,900				120,377				123,956
Basic earnings per share from continuing operations	$	3.49			$	3.08			$	2.54

(In thousands except per share data)	2015				2014				2013
Diluted Earnings per Share from Continuing Operations
Income from continuing operations	$	408,077			$	374,285			$	316,586
Less: income from continuing operations allocated to participating securities	3,877				3,450				2,547
Income from continuing operations available to common shareholders	$	404,200			$	370,835			$	314,039
Basic weighted average common shares outstanding	115,900				120,377				123,956
Effect of dilutive securities – employee stock options & awards	1,643				1,263				575
Diluted weighted average common shares outstanding	117,543				121,640				124,531
Diluted earnings per share from continuing operations	$	3.44			$	3.05			$	2.53

Basic and diluted earnings (loss) per share from discontinued operations were $0.19, $0.00 and $(0.01) for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

For the fiscal years ended May 31, 2015, 2014 and 2013, options granted to purchase 0.6 million, 0.7 million and 0.7 million shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. The exercise prices of these options were greater than the average market price of the common shares (anti-dilutive).

On October 18, 2011, Cintas announced that the Board of Directors authorized a $500 million share buyback program. This program was completed in April 2014. On July 30, 2013, we announced that the Board of Directors authorized a $500.0 million share buyback program. This program was completed in February 2015. On January 13, 2015, we announced that the Board of Directors authorized a new $500.0 million share buyback program, which does not have an expiration date. The following table summarizes the buyback activity by program and fiscal year:

(In thousands except per share data)	2015											2014
Buyback Program	Shares			Avg. Price per Share				Purchase Price				Shares			Avg. Price per Share				Purchase Price
October 18, 2011	—			$	—			$	—			3,324			$	48.87			$	162,460
July 30, 2013	3,981			$	75.49			$	300,500			3,341			$	59.72			$	199,500
January 13, 2015	2,870			$	82.60			$	237,072			—			$	—			$	—
	6,851			$	78.47			537,572				6,665			$	54.31			$	361,960

In June 2015, we purchased 1.5 million shares at an average price of $86.08 per share for a total purchase price of $132.9 million. Under the January 13, 2015 program through July 30, 2015, Cintas has purchased a total of 4.4 million shares of Cintas common stock at an average price of $83.82 per share for a total purchase price of $370.0 million.

In addition to the buyback program, Cintas acquired shares of Cintas common stock in satisfaction of employee payroll taxes due on restricted stock awards that vested during the fiscal year. For the fiscal year ended May 31, 2015, Cintas acquired 0.2 million shares at an average price of $64.58 per share for a total purchase price of $14.4 million. For the fiscal year ended May 31, 2014, Cintas acquired 0.2 million shares at an average price of $50.45 per share for a total purchase price of $8.6 million.

12. Stock-Based Compensation

Under the 2005 Equity Compensation Plan, as amended, Cintas may grant officers and key employee-partners equity compensation in the form of stock options, stock appreciation rights, restricted and unrestricted stock awards, performance awards and other stock unit awards up to an aggregate of 21,000,000 shares of Cintas' common stock. At May 31, 2015, 9,281,640 shares of common stock are reserved for future issuance under the 2005 Equity Compensation Plan. As a result of the Shredding Transaction in the fiscal year ended May 31, 2014, we immediately vested 249,335 options and 71,882 restricted stock awards held by employees contributed to the Shred-it Partnership. The immediate vesting resulted in $12.4 million of additional stock compensation expense for the fiscal year ended May 31, 2014. Total compensation cost for stock-based awards for continuing operations was $44.9 million, $44.2 million and $23.0 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively. The total income tax benefit recognized in the consolidated income statement for share-based compensation arrangements for continuing operations was $16.7 million, $16.9 million and $8.4 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

Stock Options

Stock options are granted at the fair market value of the underlying common stock on the date of grant. The option terms are determined by the Compensation Committee of the Board of Directors, but no stock option may be exercised later than 10 years after the date of the grant. The option awards generally have 10-year terms with graded vesting in years 3 through 5 based on continuous service during that period. Cintas recognizes compensation expense for these options using the straight-line recognition method over the vesting period.

Except for the options that early vested as a result of the Shredding Transaction in fiscal 2014, the fair value of options was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

	2015			2014			2013
Risk-free interest rate	2.0	%		2.0	%		1.3	%
Dividend yield	1.6	%		1.7	%		1.8	%
Expected volatility of Cintas' common stock	28.0	%		28.0	%		28.0	%
Expected life of the option in years	7.5			7.5			7.5

The risk-free interest rate is based on U.S. government issues with a remaining term equal to the expected life of the stock options. The determination of expected volatility is based on historical volatility of Cintas' common stock over the period commensurate with the expected term of stock options, as well as other relevant factors. The weighted average expected term was determined based on the historical employee exercise behavior of the options. The weighted-average fair value of stock options granted during fiscal 2015, 2014 and 2013 was $22.64, $16.63 and $9.60, respectively.

The information presented in the following table relates primarily to stock options granted and outstanding under either the 2005 Equity Compensation Plan or under previously adopted plans:

	Shares			Weighted Average Exercise Price
Outstanding, June 1, 2012 (2,105,705 shares exercisable)	7,609,117			$	36.04
Granted	1,722,081			44.67
Canceled	(884,384	)		38.69
Exercised	(561,176	)		36.44
Outstanding, May 31, 2013 (1,815,795 shares exercisable)	7,885,638			37.60
Granted	2,111,649			61.04
Canceled	(699,314	)		42.42
Exercised	(1,272,179	)		39.03
Outstanding, May 31, 2014 (1,583,413 shares exercisable)	8,025,794			43.12
Granted	1,590,185			84.59
Canceled	(486,720	)		55.50
Exercised	(1,293,689	)		38.11
Outstanding, May 31, 2015 (1,426,550 shares exercisable)	7,835,570			$	51.59

The intrinsic value of stock options exercised was $44.3 million, $19.8 million and $3.7 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively. The total cash received from employees as a result of employee stock option exercises for the fiscal years ended May 31, 2015, 2014 and 2013 was $40.2 million, $41.9 million and $14.8 million, respectively.

The fair value of stock options vested was $10.9 million, $17.7 million and $13.2 million for the fiscal years ended May 31, 2015, 2014 and 2013, respectively.

The following table summarizes the information related to stock options outstanding at May 31, 2015:

			Outstanding Options						Exercisable Options
Range of Exercise Prices	Number Outstanding		Average Remaining Option Life		Weighted Average Exercise Price				Number Exercisable			Weighted Average Exercise Price
$ 20.29 – $ 34.45	1,845,741		5.35		$	30.16			928,968			$	28.43
34.46 – 42.58	1,685,350		6.15		38.19				255,562			38.55
42.59 – 62.88	1,360,216		7.62		48.57				223,399			50.34
62.89 – 86.09	2,944,263		9.55		74.50				18,621			63.45
$ 20.29 – $ 86.09	7,835,570		7.49		$	51.59			1,426,550			$	34.13

At May 31, 2015, the aggregate intrinsic value of stock options outstanding and exercisable was $269.1 million and $74.1 million, respectively. The weighted-average remaining contractual term of stock options exercisable is 4.6 years.

Restricted Stock Awards

Restricted stock awards consist of Cintas' common stock that is subject to such conditions, restrictions and limitations as the Compensation Committee of the Board of Directors determines to be appropriate. The vesting period is generally three years after the grant date. The recipient of restricted stock awards will have all rights of a shareholder of Cintas, including the right to vote and the right to receive cash dividends, during the vesting period. Cintas recognizes compensation expense for these restricted stock awards using the straight-line recognition method over the vesting period.

The information presented in the following table relates to restricted stock awards granted and outstanding under either the 2005 Equity Compensation Plan or under previously adopted plans:

	Shares			Weighted Average Grant Price
Outstanding, unvested grants at June 1, 2012	1,888,996			$	29.93
Granted	810,453			41.72
Canceled	(73,856	)		31.78
Vested	(610,570	)		25.40
Outstanding, unvested grants at May 31, 2013	2,015,023			35.97
Granted	661,514			60.66
Canceled	(52,124	)		37.95
Vested	(465,635	)		28.76
Outstanding, unvested grants at May 31, 2014	2,158,778			45.04
Granted	627,033			80.73
Canceled	(50,277	)		49.33
Vested	(525,421	)		34.39
Outstanding, unvested grants at May 31, 2015	2,210,113			$	57.60

The remaining unrecognized compensation cost related to unvested stock options and restricted stock at May 31, 2015 was $105.0 million. The weighted-average period of time over which this cost will be recognized is 2.1 years.

13. Litigation and Other Contingencies

Cintas is subject to 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.

Cintas records an accrual for legal contingencies when Cintas determines that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. During the fourth quarter of fiscal year 2014, Cintas accrued additional sums, in excess of its other legal contingency accruals, for adverse jury verdicts arising in the ordinary course of its business. The aggregate liability will not materially affect the consolidated financial position, consolidated results of operations or consolidated cash flows of Cintas.

Cintas is party to additional litigation not considered in the ordinary course of business, including the litigation discussed below. Cintas is a defendant in a purported Equal Employment Opportunity Commission (EEOC) systemic gender discrimination lawsuit, Mirna E. Serrano, et al. v. Cintas Corporation (Serrano), filed on May 10, 2004, and pending in the United States District Court, Eastern District of Michigan, Southern Division. The Serrano plaintiffs alleged that Cintas discriminated against women in hiring into various service sales representative (SSR) positions in the Rental Uniforms and Ancillary Products operating segment. On November 15, 2005, the (EEOC) intervened in the Serrano lawsuit. The Serrano plaintiffs seek lost pay, injunctive relief, compensatory damages, punitive damages, attorneys' fees and other remedies on behalf of unsuccessful female candidates for SSR positions. On October 27, 2008, the United States District Court in the Eastern District of Michigan granted summary judgment in favor of Cintas limiting the scope of the action to female applicants for SSR positions at Cintas locations within the state of Michigan. Consequently, all claims brought by or on behalf of female applicants for SSR positions outside of the state of Michigan were dismissed. Similarly, any claims brought by the EEOC on behalf of similarly situated female applicants outside of the state of Michigan have also been dismissed from the Serrano lawsuit. In September 2010, the Court in Serrano dismissed all private individual claims and all claims of the EEOC and the 13 individuals it claimed to represent. The EEOC appealed the District Court's summary judgment decisions and various other rulings to the United States Court of Appeals for the Sixth Circuit. On November 9, 2012, the Sixth Circuit Court of Appeals reversed the District Court's opinion and remanded the claims back to the District Court. On April 16, 2013, Cintas filed with the United States Supreme Court a Petition for a Writ of Certiorari seeking to review the judgment of the United States Court of Appeals for the Sixth Circuit. On October 7, 2013, the Court denied Cintas’ Petition, thus remanding the claims back to the District Court consistent with the Sixth Circuit Court’s November 9, 2012 decision.

The litigation discussed above, if decided or settled adversely to Cintas, may result in liability material to Cintas' consolidated financial condition, consolidated results of operation or consolidated cash flows and could increase costs of operations on an ongoing basis. Any estimated liability relating to these proceedings is not determinable at this time. Cintas may enter into discussions regarding settlement of these and other lawsuits, and may enter into settlement agreements if it believes such settlement is in the best interest of Cintas' shareholders.

14. Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive income (loss), net of tax:

(In thousands)	Foreign Currency				Unrealized Loss on Derivatives				Other				Total
Balance at May 31, 2013	$	51,312			$	(14,339	)		$	1,150			$	38,123
Other comprehensive loss before reclassifications	(9,787		)		(228		)		(1,632		)		(11,647		)
Amounts reclassified from accumulated other comprehensive income (loss)	—				1,952				—				1,952
Net current period other comprehensive (loss) income	(9,787		)		1,724				(1,632		)		(9,695		)
Balance at May 31, 2014	41,525				(12,615		)		(482		)		28,428
Other comprehensive (loss) income before reclassifications	(38,538		)		37				(350		)		(38,851		)
Amounts reclassified from accumulated other comprehensive income (loss)	—				1,952				—				1,952
Net current period other comprehensive (loss) income	(38,538		)		1,989				(350		)		(36,899		)
Balance at May 31, 2015	$	2,987			$	(10,626	)		$	(832	)		$	(8,471	)

The following table summarizes the reclassifications out of accumulated other comprehensive income (loss) during the fiscal years 2015 and 2014:

Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Income (Loss) Components (In thousands)	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)									Affected Line in the Consolidated Condensed Statements of Income
	2015				2014
Amortization of interest rate locks	$	(3,130	)		$	(3,130	)			Interest expense
Tax benefit	1,178				1,178					Income taxes
Amortization of interest rate locks, net of tax	$	(1,952	)		$	(1,952	)			Net of tax

15. Operating Segment Information

Cintas classifies its businesses into three operating segments based on the types of products and services provided. The Rental Uniforms and Ancillary Products 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 carpet and tile cleaning services are also provided within this operating segment. The Uniform Direct Sales operating segment consists of the direct sale of uniforms and related items. The First Aid, Safety and Fire Protection Services operating segment consists of first aid, safety and fire protection products and services.

Prior to August 31, 2014, Cintas classified its business into four operating segments. The Document Management Services operating segment is no longer considered an operating segment for fiscal 2015 and beyond. This operating segment consisted of the Shredding and Storage businesses. On April 30, 2014, Cintas completed the Shredding Transaction. Shredding is reported in Corporate for fiscal years ended 2014 and 2013. Additionally, effective August 31, 2014, Storage is classified as discontinued operations. Storage has been excluded from segment results for all periods presented. Please see Note 17 entitled Discontinued Operations for additional information.

Cintas evaluates the performance of each operating segment based on several factors of which the primary financial measures are operating segment revenue and income before income taxes. The accounting policies of the operating segments are the same as those described in Note 1 entitled Significant Accounting Policies. Information related to the operations of Cintas' operating segments is set forth below:

(In thousands)	Rental Uniforms & Ancillary Products				Uniform Direct Sales				First Aid, Safety & Fire Protection				Corporate(1)				Total
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 admin. expenses	948,455				85,317				191,158				—				1,224,930
Gain on deconsolidation of Shredding	—				—				—				4,952				4,952
Gain on sale of stock of an equity method investment	—				—				—				21,739				21,739
Interest expense, net	—				—				—				64,822				64,822
Income (loss) before income taxes	$	593,035			$	44,129			$	59,243			$	(38,131	)		$	658,276
Depreciation and amortization	$	121,743			$	8,391			$	22,461			$	—			$	152,595
Capital expenditures	$	183,459			$	9,495			$	23,864			$	902			$	217,720
Total assets	$	2,856,716			$	123,044			$	436,651			$	776,049			$	4,192,460
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 admin. expenses	887,444				83,309				176,286				117,797				1,264,836
Gain on deconsolidation of Shredding, net of impairment charges and other transaction costs	—				—				—				61,817				61,817
Interest expense, net	—				—				—				65,593				65,593
Income before income taxes	$	507,059			$	46,709			$	48,952			$	2,322			$	605,042
Depreciation and amortization	$	117,869			$	8,307			$	21,113			$	33,756			$	181,045
Capital expenditures	$	94,190			$	2,482			$	14,512			$	34,396			$	145,580
Total assets	$	2,875,014			$	142,033			$	422,015			$	1,023,390			$	4,462,452
May 31, 2013
Revenue	$	3,044,587			$	461,328			$	460,592			$	279,457			$	4,245,964
Gross margin	$	1,288,290			$	134,985			$	199,314			$	130,720			$	1,753,309
Selling and admin. expenses	835,249				81,739				156,232				114,111				1,187,331
Interest expense, net	—				—				—				65,303				65,303
Income (loss) before income taxes	$	453,041			$	53,246			$	43,082			$	(48,694	)		$	500,675
Depreciation and amortization	$	116,867			$	8,049			$	20,832			$	34,161			$	179,909
Capital expenditures	$	140,327			$	6,908			$	11,809			$	37,442			$	196,486
Total assets	$	2,830,941			$	152,551			$	398,614			$	963,526			$	4,345,632

(1) Corporate assets as of May 31, 2015 include the investment in the Shred-it Partnership. Corporate assets also include the real estate assets of Storage that were not included in the sale transactions. Corporate results and assets as of and for the fiscal year ended 2014 include the revenue ($275.7 million), loss before income taxes ($38.5 million) and assets ($344.3 million) of Shredding. Corporate results and assets as of and for the fiscal year ended 2013 include the revenue ($279.5 million), income before income taxes ($16.6 million) and assets ($456.3 million) of Shredding. Corporate assets as of May 31, 2014 and 2013 include the assets of Storage.

16. Quarterly Financial Data (Unaudited)

The following is a summary of the results of operation for each of the quarters within the fiscal years ended May 31, 2015 and 2014:

May 31, 2015 (in thousands) (1) (2) (3)	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Revenue	$	1,102,077			$	1,123,379			$	1,108,847			$	1,142,583
Gross margin	$	477,946			$	481,424			$	475,307			$	486,660
Net income, continuing operations	$	109,791			$	103,446			$	93,636			$	101,204
Basic earnings per share, continuing operations	$	0.94			$	0.87			$	0.80			$	0.88
Diluted earnings per share, continuing operations	$	0.93			$	0.86			$	0.79			$	0.86
Weighted average number of shares outstanding	116,659				117,115				116,178				113,666

May 31, 2014 (in thousands) (1) (2) (4)	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Revenue	$	1,100,246			$	1,123,931			$	1,110,973			$	1,134,415
Gross margin	$	456,095			$	467,079			$	469,634			$	480,847
Net income, continuing operations	$	77,398			$	84,456			$	84,326			$	128,105
Basic earnings per share, continuing operations	$	0.63			$	0.70			$	0.70			$	1.05
Diluted earnings per share, continuing operations	$	0.63			$	0.69			$	0.69			$	1.04
Weighted average number of shares outstanding	122,130				119,907				119,913				119,541

(1) The figures for both fiscal 2015 and 2014 reflect the change in classification of Storage to discontinued operations within the Consolidated Statements of Income. See Note 17 entitled Discontinued Operations for additional information.

(2) As a result of the Shredding Transaction, Cintas no longer includes 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 diluted earnings per share ("EPS") from continuing operations. As a result of its investment in the Shred-it Partnership, Cintas recognized a net loss of $5.5 million and a net gain of $1.2 million during the years end May 31, 2015 and 2014, respectively.

(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. In the fiscal 2015 first quarter, Cintas also recorded an net gain of $4.1 million, related to the Shredding Transaction completed in fiscal 2014 as a result of receiving certain additional proceeds. Finally, in the fourth quarter of fiscal 2015, Cintas recorded a net loss of $1.0 million related to the Shredding Transaction completed in fiscal 2014 due to the settlement of an outstanding Shredding-related legal claim.

(4) In accordance with GAAP, the fiscal 2014 Shredding revenue, gross margin, operating income, net income and EPS must continue to be included in the reported fiscal 2014 results because of Cintas' continuing ownership in the Shred-it Partnership. In addition, the fiscal 2014 results also included the following related to the Shredding Transaction: a $106.4 million gain on deconsolidation of Shredding, an asset impairment charge of $16.1 million and transaction costs of $28.5 million. All of these impacts were recorded in the fourth quarter except for $2.2 million of transaction costs that were recorded in the third quarter. Please see Note 9 entitled Acquisitions and Deconsolidations for additional information on the transaction.

17. Discontinued Operations

Effective August 31, 2014, Cintas' Storage was classified as discontinued operations. The business was previously included in the former Document Management Services operating segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of Storage have been excluded from both continuing operations and segment results for all periods presented.

In the quarter ended November 30, 2014, Cintas sold Storage. Storage, excluding related real estate owned by Cintas, was sold in three separate transactions to three separate buyers. For the fiscal year ended May 31, 2015, cash proceeds received at the closing of each transaction or upon the settlement of contingencies totaled $158.4 million, net of cash contributed. Each transaction involved contingent consideration, and the Company has opportunities to receive additional proceeds if specified future events occur. Because of the uncertainty surrounding the future events, these amounts represent gain contingencies that have not been recorded. Certain real estate owned by Cintas is being leased by the buyers. These lease payments do not represent a material direct cash flow of the disposed Storage business and therefore do not impact the classification of Storage as a discontinued operation.

Following is selected financial information included in net income (loss) from discontinued operations for Storage:

(In thousands)	2015				2014				2013
Revenue	$	31,379			$	82,246			$	70,507
(Loss) income before income taxes	(3,712		)		815				(767		)
Income tax (benefit) expense	(3,232		)		658				377
Gain on sale of business	38,573				—				—
Income tax expense on gain	15,552				—				—
Net income (loss) from discontinued operations	$	22,541			$	157			$	(1,144	)

Certain real estate assets and related liabilities were not included in the Storage Transactions and are classified as held for sale as of May 31, 2015. As allowed under applicable accounting guidance, the May 31, 2014 balance sheet amounts for these assets and liabilities remain in their natural classifications.

On July 10, 2015, Cintas sold the remaining Storage assets classified as held for sale. Proceeds from the transaction were $24.4 million. It is anticipated that Cintas will recognize a gain of approximately $4.5 million before taxes.

18. Supplemental Guarantor Information

Cintas Corporation No. 2 ("Corp. 2") is the indirectly, wholly-owned principal operating subsidiary of Cintas. Corp. 2 is the issuer of the $1,300.0 million of long-term senior notes, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly-owned, direct and indirect domestic subsidiaries.

As allowed by SEC rules, the following condensed consolidating financial statements are provided as an alternative to filing separate financial statements of the guarantors. Each of the subsidiaries presented in the following condensed consolidating financial statements has been fully consolidated in Cintas' consolidated financial statements. The following condensed consolidating financial statements should be read in conjunction with the consolidated financial statements of Cintas and notes thereto of which this note is an integral part.

Condensed consolidating financial statements for Cintas, Corp. 2, the subsidiary guarantors and non-guarantors are presented on the following pages:

Condensed Consolidating Income Statement

Year Ended May 31, 2015 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Rental uniforms and ancillary products	$	—			$	2,657,177			$	719,122			$	215,491			$	(136,834	)		$	3,454,956
Other services	—				1,421,861				31,222				71,249				(502,402		)		1,021,930
Equity in net income of affiliates	408,077				—				—				—				(408,077		)		—
	408,077				4,079,038				750,344				286,740				(1,047,313		)		4,476,886
Costs and expenses (income):
Cost of rental uniforms and ancillary products	—				1,600,457				441,171				148,075				(276,237		)		1,913,466
Cost of other services	—				949,694				(17,547		)		44,153				(334,217		)		642,083
Selling and administrative expenses	—				1,276,745				(100,025		)		74,524				(26,314		)		1,224,930
Operating income	408,077				252,142				426,745				19,988				(410,545		)		696,407
Gain on deconsolidation of Shredding	—				4,952				—				—				—				4,952
Gain on sale of stock of an equity method investment	—				—				21,739				—				—				21,739
Interest income	—				(12		)		(250		)		(79		)		2				(339		)
Interest expense (income)	—				66,298				(1,134		)		(3		)		—				65,161
Income before income taxes	408,077				190,808				449,868				20,070				(410,547		)		658,276
Income taxes	—				68,516				168,708				7,502				(66		)		244,660
Loss on investment in Shred-it Partnership, net of tax	—				(5,123		)		—				(416		)		—				(5,539		)
Income from continuing operations	408,077				117,169				281,160				12,152				(410,481		)		408,077
Income from discontinued operations, net of tax	22,541				17,692				—				4,849				(22,541		)		22,541
Net income	$	430,618			$	134,861			$	281,160			$	17,001			$	(433,022	)		$	430,618

Condensed Consolidating Income Statement

Year Ended May 31, 2014 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Rental uniforms and ancillary products	$	—			$	2,460,666			$	663,512			$	220,969			$	(121,217	)		$	3,223,930
Other services	—				1,600,265				31,511				86,263				(472,404		)		1,245,635
Equity in net income of affiliates	374,285				—				—				—				(374,285		)		—
	374,285				4,060,931				695,023				307,232				(967,906		)		4,469,565
Costs and expenses (income):
Cost of rental uniforms and ancillary products	—				1,520,893				417,388				153,726				(262,580		)		1,829,427
Cost of other services	—				1,041,990				(15,441		)		54,426				(314,491		)		766,484
Selling and administrative expenses	—				1,282,356				(81,765		)		82,348				(18,103		)		1,264,836
Shredding Transaction asset impairment charge	—				—				16,143				—				—				16,143
Shredding Transaction costs	—				—				28,481				—				—				28,481
Operating income	374,285				215,692				330,217				16,732				(372,732		)		564,194
Gain (loss) on deconsolidation of Shredding	—				111,661				—				(5,220		)		—				106,441
Interest income	—				(43		)		(178		)		(15,279		)		15,271				(229		)
Interest expense (income)	—				66,461				(635		)		(4		)		—				65,822
Income before income taxes	374,285				260,935				331,030				26,795				(388,003		)		605,042
Income taxes	—				99,789				126,021				6,260				(79		)		231,991
Gain on investment in Shred-it Partnership	—				1,141				—				93				—				1,234
Income from continuing operations	374,285				162,287				205,009				20,628				(387,924		)		374,285
Income (loss) from discontinued operations, net of tax	157				(24		)		—				181				(157		)		157
Net income	$	374,442			$	162,263			$	205,009			$	20,809			$	(388,081	)		$	374,442

Condensed Consolidating Income Statement

Year Ended May 31, 2013 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Rental uniforms and ancillary products	$	—			$	2,314,386			$	616,726			$	220,946			$	(107,471	)		$	3,044,587
Other services	—				1,552,687				31,210				88,040				(470,560		)		1,201,377
Equity in net income of affiliates	316,586				—				—				—				(316,586		)		—
	316,586				3,867,073				647,936				308,986				(894,617		)		4,245,964
Costs and expenses (income):
Cost of rental uniforms and ancillary products	—				1,454,791				392,134				155,490				(246,118		)		1,756,297
Cost of other services	—				1,000,471				(12,440		)		55,703				(307,376		)		736,358
Selling and administrative expenses	—				1,192,205				(66,640		)		81,671				(19,905		)		1,187,331
Operating income	316,586				219,606				334,882				16,122				(321,218		)		565,978
Interest income	—				(40		)		(272		)		(28,334		)		28,237				(409		)
Interest expense (income)	—				66,584				(875		)		3				—				65,712
Income before income taxes	316,586				153,062				336,029				44,453				(349,455		)		500,675
Income taxes	—				54,350				119,302				10,480				(43		)		184,089
Income from continuing operations	316,586				98,712				216,727				33,973				(349,412		)		316,586
(Loss) income from discontinued operations, net of tax	(1,144		)		36				—				(1,180		)		1,144				(1,144		)
Net income	$	315,442			$	98,748			$	216,727			$	32,793			$	(348,268	)		$	315,442

Condensed Consolidating Statement of Comprehensive Income

Year Ended May 31, 2015 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Net income	$	430,618			$	134,861			$	281,160			$	17,001			$	(433,022	)		$	430,618
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	—				—				—				(38,538		)		—				(38,538		)
Change in fair value of derivatives	—				—				—				37				—				37
Amortization of interest rate lock agreements	—				1,952				—				—				—				1,952
Other	—				—				(361		)		11				—				(350		)
Other comprehensive income (loss)	—				1,952				(361		)		(38,490		)		—				(36,899		)
Comprehensive income (loss)	$	430,618			$	136,813			$	280,799			$	(21,489	)		$	(433,022	)		$	393,719

Condensed Consolidating Statement of Comprehensive Income

Year Ended May 31, 2014 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Net income	$	374,442			$	162,263			$	205,009			$	20,809			$	(388,081	)		$	374,442
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	—				—				—				(9,787		)		—				(9,787		)
Change in fair value of derivatives	—				—				—				(228		)		—				(228		)
Amortization of interest rate lock agreements	—				1,952				—				—				—				1,952
Other	—				—				(1,629		)		(3		)		—				(1,632		)
Other comprehensive income (loss)	—				1,952				(1,629		)		(10,018		)		—				(9,695		)
Comprehensive income	$	374,442			$	164,215			$	203,380			$	10,791			$	(388,081	)		$	364,747

Condensed Consolidating Statement of Comprehensive Income

Year Ended May 31, 2013 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Net income	$	315,442			$	98,748			$	216,727			$	32,793			$	(348,268	)		$	315,442
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	—				(12		)		—				(1,075		)		—				(1,087		)
Change in fair value of derivatives	—				(187		)		—				—				—				(187		)
Amortization of interest rate lock agreements	—				1,952				—				—				—				1,952
Other	—				—				782				—				—				782
Other comprehensive income (loss)	—				1,753				782				(1,075		)		—				1,460
Comprehensive income	$	315,442			$	100,501			$	217,509			$	31,718			$	(348,268	)		$	316,902

Condensed Consolidating Balance Sheet

As of May 31, 2015 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—			$	74,145			$	249,203			$	93,725			$	—			$	417,073
Marketable securities	—				—				—				16,081				—				16,081
Accounts receivable, net	—				358,560				104,964				32,606				—				496,130
Inventories, net	—				193,594				21,149				8,870				2,598				226,211
Uniforms and other rental items in service	—				399,017				117,473				36,478				(18,963		)		534,005
Income taxes, current	—				1,191				(339		)		84				—				936
Assets held for sale	—				21,341				—				—				—				21,341
Prepaid expenses and other current assets	—				5,514				17,492				1,024				—				24,030
Total current assets	—				1,053,362				509,942				188,868				(16,365		)		1,735,807
Property and equipment, at cost, net	—				523,690				275,072				72,659				—				871,421
Investments	321,083				1,956,320				895,393				956,461				(3,799,565		)		329,692
Goodwill	—				—				1,180,527				15,197				(112		)		1,195,612
Service contracts, net	—				42,400				34				—				—				42,434
Other assets, net	1,154,596				12,373				2,741,950				3,572				(3,894,997		)		17,494
	$	1,475,679			$	3,588,145			$	5,602,918			$	1,236,757			$	(7,711,039	)		$	4,192,460
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	(465,247	)		$	(877,042	)		$	1,391,999			$	21,876			$	38,021			$	109,607
Accrued compensation and related liabilities	—				59,752				23,989				4,682				—				88,423
Accrued liabilities	—				65,022				232,500				13,137				(724		)		309,935
Deferred tax (asset) liability	—				(299		)		104,663				8,025				—				112,389
Liabilities held for sale	—				704				—				—				—				704
Long-term debt due within one year	—				293				(293		)		—				—				—
Total current liabilities	(465,247		)		(751,570		)		1,752,858				47,720				37,297				621,058
Long-term liabilities:
Long-term debt due after one year	—				1,308,452				(9,766		)		590				724				1,300,000
Deferred income taxes	—				(5		)		229,266				(2,323		)		—				226,938
Accrued liabilities	—				—				111,105				904				—				112,009
Total long-term liabilities	—				1,308,447				330,605				(829		)		724				1,638,947
Total shareholders' equity	1,940,926				3,031,268				3,519,455				1,189,866				(7,749,060		)		1,932,455
	$	1,475,679			$	3,588,145			$	5,602,918			$	1,236,757			$	(7,711,039	)		$	4,192,460

Condensed Consolidating Balance Sheet

As of May 31, 2014 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—			$	73,540			$	399,525			$	40,223			$	—			$	513,288
Accounts receivable, net	—				366,629				97,869				43,929				—				508,427
Inventories, net	—				215,974				20,745				9,650				4,870				251,239
Uniforms and other rental items in service	—				374,666				112,467				38,240				(18,836		)		506,537
Income taxes, current	—				1,549				(1,549		)		—				—				—
Prepaid expenses and other current assets	—				7,058				14,752				4,380				—				26,190
Total current assets	—				1,039,416				643,809				136,422				(13,966		)		1,805,681
Property and equipment, at cost, net	—				533,665				225,677				96,360				—				855,702
Investments	321,083				2,081,094				893,647				1,015,343				(3,852,810		)		458,357
Goodwill	—				—				1,211,716				55,807				(112		)		1,267,411
Service contracts, net	—				51,248				53				4,374				—				55,675
Other assets, net	1,378,100				8,900				2,189,527				9,044				(3,565,945		)		19,626
	$	1,699,183			$	3,714,323			$	5,164,429			$	1,317,350			$	(7,432,833	)		$	4,462,452
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	(465,247	)		$	(545,526	)		$	1,092,545			$	30,281			$	38,017			$	150,070
Accrued compensation and related liabilities	—				56,581				22,590				5,855				—				85,026
Accrued liabilities	—				79,614				208,983				11,876				(746		)		299,727
Income taxes, current	—				—				4,915				1,045				—				5,960
Deferred tax (asset) liability	—				(510		)		80,575				8,780				—				88,845
Long-term debt due within one year	—				773				(270		)		—				—				503
Total current liabilities	(465,247		)		(409,068		)		1,409,338				57,837				37,271				630,131
Long-term liabilities:
Long-term debt due after one year	—				1,309,611				(10,380		)		500				746				1,300,477
Deferred income taxes	—				(6		)		251,924				(5,874		)		—				246,044
Accrued liabilities	—				—				92,069				873				—				92,942
Total long-term liabilities	—				1,309,605				333,613				(4,501		)		746				1,639,463
Total shareholders' equity	2,164,430				2,813,786				3,421,478				1,264,014				(7,470,850		)		2,192,858
	$	1,699,183			$	3,714,323			$	5,164,429			$	1,317,350			$	(7,432,833	)		$	4,462,452

Condensed Consolidating Statement of Cash Flows

Year Ended May 31, 2015 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Cash flows from operating activities:
Net income	$	430,618			$	134,861			$	281,160			$	17,001			$	(433,022	)		$	430,618
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	—				87,186				43,013				10,425				—				140,624
Amortization of intangible assets	—				13,972				60				426				—				14,458
Stock-based compensation	47,002				—				—				—				—				47,002
Gain on sale of Storage	—				(31,113		)		—				(7,460		)		—				(38,573		)
Gain on deconsolidation of Shredding	—				(4,952		)		—				—				—				(4,952		)
Gain on sale of stock of an equity method investment	—				—				(21,739		)		—				—				(21,739		)
Loss on investment in Shred-it Partnership	—				8,142				—				661				—				8,803
Deferred income taxes	—				67				18,565				2,234				—				20,866
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—				4,370				(7,095		)		1,282				—				(1,443		)
Inventories, net	—				22,405				(405		)		(487		)		2,272				23,785
Uniforms and other rental items in service	—				(24,351		)		(5,006		)		(2,764		)		127				(31,994		)
Prepaid expenses and other current assets	—				(345		)		(2,740		)		(117		)		—				(3,202		)
Accounts payable	—				(322,461		)		289,110				(98		)		4				(33,445		)
Accrued compensation and related liabilities	—				3,171				1,400				(1,337		)		—				3,234
Accrued liabilities and other	—				(15,829		)		42,551				6,322				22				33,066
Income taxes, current	—				358				(6,155		)		(1,035		)		—				(6,832		)
Net cash provided by (used in) operating activities	477,620				(124,519		)		632,719				25,053				(430,597		)		580,276
Cash flows from investing activities:
Capital expenditures	—				(110,658		)		(92,600		)		(14,462		)		—				(217,720		)
Proceeds from redemption of marketable securities	—				—				—				161,938				—				161,938
Purchase of marketable securities and investments	—				(1,827		)		38,731				(179,130		)		(53,245		)		(195,471		)
Proceeds from Storage Transactions, net of cash contributed	—				93,387				—				65,041				—				158,428
Proceeds from Shredding Transaction, net of cash contributed	—				3,344				—				—				—				3,344
Proceeds from sale of stock of an equity method investment	—				—				29,933				—				—				29,933
Dividends received on equity method investment	—				—				5,247				—				—				5,247
Dividends received on Shred-it Partnership investment	—				113,400				—				—				—				113,400
Acquisitions of businesses, net of cash acquired	—				(15,495		)		—				—				—				(15,495		)
Other	235,951				42,199				(764,336		)		3,705				483,864				1,383
Net cash provided by (used in) investing activities	235,951				124,350				(783,025		)		37,092				430,619				44,987
Cash flows from financing activities:
Proceeds from the issuances of debt	—				—				(2,615		)		2,615				—				—
Repayment of debt	—				(1,178		)		2,962				(2,280		)		(22		)		(518		)
Proceeds from exercise of stock-based compensation awards	40,230				—				—				—				—				40,230
Dividends paid	(201,831		)		—				—				(60		)		—				(201,891		)
Repurchase of common stock	(551,970		)		—				—				—				—				(551,970		)
Other	—				1,952				(363		)		—				—				1,589
Net cash (used in) provided by financing activities	(713,571		)		774				(16		)		275				(22		)		(712,560		)
Effect of exchange rate changes on cash and cash equivalents	—				—				—				(8,918		)		—				(8,918		)
Net increase (decrease) in cash and cash equivalents	—				605				(150,322		)		53,502				—				(96,215		)
Cash and cash equivalents at beginning of year	—				73,540				399,525				40,223				—				513,288
Cash and cash equivalents at end of year	$	—			$	74,145			$	249,203			$	93,725			$	—			$	417,073

Condensed Consolidating Statement of Cash Flows

Year Ended May 31, 2014 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Cash flows from operating activities:
Net income	$	374,442			$	162,263			$	205,009			$	20,809			$	(388,081	)		$	374,442
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	—				110,100				44,856				13,264				—				168,220
Amortization of intangible assets	—				20,547				153				1,942				—				22,642
Stock-based compensation	29,875				—				—				—				—				29,875
(Gain) loss on deconsolidation of Shredding	—				(111,661		)		—				5,220				—				(106,441		)
Gain on investment in Shred-it Partnership	—				(1,850		)		—				(150		)		—				(2,000		)
Shredding Transaction asset impairment charge	—				—				16,143				—				—				16,143
Shredding Transaction costs	—				—				26,057				—				—				26,057
Deferred income taxes	—				(2		)		47,373				(262		)		—				47,109
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—				(53,053		)		(1,300		)		(1,878		)		—				(56,231		)
Inventories, net	—				(14,735		)		4,839				450				(1,616		)		(11,062		)
Uniforms and other rental items in service	—				(11,004		)		557				(973		)		(15		)		(11,435		)
Prepaid expenses and other current assets	—				(386		)		(1,844		)		53				—				(2,177		)
Accounts payable	—				25,573				23,246				(18,374		)		1				30,446
Accrued compensation and related liabilities	—				5,778				4,947				206				—				10,931
Accrued liabilities and other	—				50,008				4,897				(689		)		21				54,237
Income taxes, current	—				2,621				9,902				2,690				—				15,213
Net cash provided by operating activities	404,317				184,199				384,835				22,308				(389,690		)		605,969
Cash flows from investing activities:
Capital expenditures	—				(123,978		)		(9,591		)		(12,011		)		—				(145,580		)
Proceeds from redemption of marketable securities	—				—				5,659				48,537				—				54,196
Purchase of marketable securities and investments	—				(151,063		)		(242,956		)		(48,387		)		378,548				(63,858		)
Proceeds from Shredding Transaction, net of cash contributed	—				180,000				—				(641		)		—				179,359
Acquisitions of businesses, net of cash acquired	—				(13,199		)		—				(20,242		)		—				(33,441		)
Other	13,783				(50,446		)		8,108				12,173				11,163				(5,219		)
Net cash provided by (used in) investing activities	13,783				(158,686		)		(238,780		)		(20,571		)		389,711				(14,543		)
Cash flows from financing activities:
Proceeds from the issuance of debt	—				—				(2,445		)		2,445				—				—
Repayment of debt	—				(8,436		)		(106		)		376				(21		)		(8,187		)
Proceeds from exercise of stock-based compensation awards	41,902				—				—				—				—				41,902
Dividends paid	(93,293		)		—				—				(27		)		—				(93,320		)
Repurchase of common stock	(370,599		)		—				—				—				—				(370,599		)
Other	3,890				1,952				8,951				(14,324		)		—				469
Net cash (used in) provided by financing activities	(418,100		)		(6,484		)		6,400				(11,530		)		(21		)		(429,735		)
Effect of exchange rate changes on cash and cash equivalents	—				—				—				(676		)		—				(676		)
Net increase (decrease) in cash and cash equivalents	—				19,029				152,455				(10,469		)		—				161,015
Cash and cash equivalents at beginning of year	—				54,511				247,070				50,692				—				352,273
Cash and cash equivalents at end of year	$	—			$	73,540			$	399,525			$	40,223			$	—			$	513,288

Condensed Consolidating Statement of Cash Flows

Year Ended May 31, 2013 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Cash flows from operating activities:
Net income	$	315,442			$	98,748			$	216,727			$	32,793			$	(348,268	)		$	315,442
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	—				16,647				135,345				13,672				—				165,664
Amortization of intangible assets	—				21,077				200				2,436				—				23,713
Stock-based compensation	23,310				—				—				—				—				23,310
Deferred income taxes	—				—				53,916				(5,893		)		—				48,023
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—				(25,206		)		(15,326		)		(2,172		)		—				(42,704		)
Inventories, net	—				9,034				(5,292		)		626				6,629				10,997
Uniforms and other rental items in service	—				(26,364		)		(11,590		)		(4,077		)		(2,148		)		(44,179		)
Prepaid expenses and other current assets	—				507				(3,620		)		(168		)		—				(3,281		)
Accounts payable	—				(55,802		)		75,034				5,794				(3		)		25,023
Accrued compensation and related liabilities	—				(9,206		)		(3,977		)		22				—				(13,161		)
Accrued liabilities and other	—				(5,416		)		38,099				(829		)		19				31,873
Income taxes, current	—				1,110				206				10,712				—				12,028
Net cash provided by operating activities	338,752				25,129				479,722				52,916				(343,771		)		552,748
Cash flows from investing activities:
Capital expenditures	—				(39,975		)		(131,208		)		(25,303		)		—				(196,486		)
Proceeds from redemption of marketable securities	—				—				13,899				147,579				—				161,478
Purchase of marketable securities and investments	—				(683		)		(31,075		)		(158,378		)		11,672				(178,464		)
Acquisitions of businesses, net of cash acquired	—				(67,431		)		112				(2,051		)		—				(69,370		)
Other	(60,918		)		58,589				(315,519		)		(15,609		)		332,118				(1,339		)
Net cash used in investing activities	(60,918		)		(49,500		)		(463,791		)		(53,762		)		343,790				(284,181		)
Cash flows from financing activities:
Proceeds from the issuance of debt	—				250,000				638				(638		)		—				250,000
Repayment of debt	—				(225,866		)		445				(196		)		(19		)		(225,636		)
Proceeds from exercise of stock-based compensation awards	14,807				—				—				—				—				14,807
Dividends paid	(79,723		)		—				—				(21		)		—				(79,744		)
Repurchase of common stock	(215,681		)		—				—				—				—				(215,681		)
Other	2,763				(3,989		)		769				653				—				196
Net cash (used in) provided by financing activities	(277,834		)		20,145				1,852				(202		)		(19		)		(256,058		)
Effect of exchange rate changes on cash and cash equivalents	—				—				—				(61		)		—				(61		)
Net (decrease) increase in cash and cash equivalents	—				(4,226		)		17,783				(1,109		)		—				12,448
Cash and cash equivalents at beginning of year	—				58,737				229,287				51,801				—				339,825
Cash and cash equivalents at end of year	$	—			$	54,511			$	247,070			$	50,692			$	—			$	352,273

19. Subsequent Events

On June 29, 2015, Cintas entered into an agreement to acquire the shares of an entity for approximately $130 million in cash consideration. The entity will operate within the First Aid, Safety and Fire Protection Services operating segment and is expected to have annual revenues between $110 million and $120 million. The transaction is pending regulatory approval. The transaction is expected to close in the first quarter of fiscal 2016.

On July 15, 2015, Cintas announced that it entered into a definitive agreement to sell its investment in the Shred-it Partnership to Stericycle, Inc. (Nasdaq: SRCL), a global business to business compliance solutions provider specializing in complex and highly regulated arenas, for consideration of approximately $550 million to $600 million before taxes. The transaction is expected to close in the second quarter of fiscal 2016, subject to obtaining regulatory approvals and satisfaction of other customary closing conditions. Upon closing of the transaction, the Shred-it Partnership will become a wholly owned subsidiary of Stericycle.