Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Audited Consolidated Financial Statements for the Fiscal Years Ended May 31, 2016, 2015 and 2014

Management's Report on Internal Control over Financial Reporting	28
Reports of Independent Registered Public Accounting Firm	29
Consolidated Statements of Income	31
Consolidated Statements of Comprehensive Income	32
Consolidated Balance Sheets	33
Consolidated Statements of Shareholders' Equity	34
Consolidated Statements of Cash Flows	35
Notes to Consolidated Financial Statements	36

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, 2016. 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, 2016, 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, 2016, 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, 2016, 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, 2016 and 2015 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, 2016 and our report dated July 29, 2016 expressed an unqualified opinion thereon.

		/s/ ERNST & YOUNG LLP

Cincinnati, Ohio

July 29, 2016

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, 2016 and 2015, 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, 2016. 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, 2016 and 2015, and the consolidated results of their operations and their cash flows for each of the three years in the period ended May 31, 2016, 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, 2016, 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 29, 2016 expressed an unqualified opinion thereon.

		/s/ ERNST & YOUNG LLP

Cincinnati, Ohio

July 29, 2016

Consolidated Statements of Income
	Fiscal Years Ended May 31,
(In thousands except per share data)	2016				2015				2014
Revenue:
Uniform rental and facility services	$	3,777,801			$	3,539,843			$	3,304,635
Other	1,127,657				937,043				889,209
	4,905,458				4,476,886				4,193,844
Costs and expenses:
Cost of uniform rental and facility services	2,106,793				2,007,632				1,922,477
Cost of other	668,795				547,917				521,608
Selling and administrative expenses	1,348,122				1,224,930				1,147,039
Operating income	781,748				696,407				602,720
Gain on sale of stock of an equity method investment	—				21,739				—
Interest income	(896		)		(339		)		(229		)
Interest expense	64,522				65,161				65,822
Income before income taxes	718,122				653,324				537,127
Income taxes	261,181				242,803				199,355
Income from continuing operations	456,941				410,521				337,772
Income from discontinued operations, net of tax of $133,712, $11,110 and $34,060, respectively	236,579				20,097				36,670
Net income	$	693,520			$	430,618			$	374,442
Basic earnings per share
Continuing operations	$	4.15			$	3.51			$	2.78
Discontinued operations	2.15				0.17				0.30
Basic earnings per share	$	6.30			$	3.68			$	3.08
Diluted earnings per share
Continuing operations	$	4.09			$	3.46			$	2.75
Discontinued operations	2.12				0.17				0.30
Diluted earnings per share	$	6.21			$	3.63			$	3.05
Dividends declared and paid per share	$	1.05			$	1.70			$	0.77

See accompanying notes.

Consolidated Statements of Comprehensive Income
	Fiscal Years Ended May 31,
(In thousands)	2016				2015				2014
Net income	$	693,520			$	430,618			$	374,442
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(11,933		)		(38,538		)		(9,787		)
Cumulative translation adjustment on Shred-it	6,472				—				—
Change in fair value of derivatives	(12,156		)		37				(228		)
Amortization of interest rate lock agreements	1,952				1,952				1,952
Other	(738		)		(350		)		(1,632		)
Other comprehensive loss	(16,403		)		(36,899		)		(9,695		)
Comprehensive income	$	677,117			$	393,719			$	364,747

See accompanying notes.

Consolidated Balance Sheets
	As of May 31,
(In thousands except share data)	2016				2015
Assets
Current assets:
Cash and cash equivalents	$	139,357			$	417,073
Marketable securities	70,405				16,081
Accounts receivable, principally trade, less allowance of $19,604 and $15,674, respectively	563,178				496,130
Inventories, net	249,362				226,211
Uniforms and other rental items in service	539,956				534,005
Income taxes, current	1,712				936
Assets held for sale	—				21,341
Prepaid expenses and other current assets	26,065				24,030
Total current assets	1,590,035				1,735,807
Property and equipment, at cost, net	994,237				871,421
Investments	124,952				329,692
Goodwill	1,291,593				1,195,612
Service contracts, net	83,715				42,434
Other assets, net	19,861				17,494
	$	4,104,393			$	4,192,460
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	114,514			$	109,607
Accrued compensation and related liabilities	101,976				88,423
Accrued liabilities	349,065				309,935
Liabilities held for sale	—				704
Long-term debt due within one year	250,000				—
Total current liabilities	815,555				508,669
Long-term liabilities:
Long-term debt due after one year	1,050,000				1,300,000
Deferred income taxes	259,475				339,327
Accrued liabilities	136,704				112,009
Total long-term liabilities	1,446,179				1,751,336
Shareholders' equity:
Preferred stock, no par value:
100,000 shares authorized, none outstanding	—				—
Common stock, no par value:
425,000,000 shares authorized
2016: 179,598,516 shares issued and 104,213,479 shares outstanding
2015: 178,117,334 shares issued and 111,702,949 shares outstanding	409,682				329,248
Paid-in capital	205,260				157,183
Retained earnings	4,805,867				4,227,620
Treasury stock:
2016: 75,385,037 shares
2015: 66,414,385 shares	(3,553,276		)		(2,773,125		)
Accumulated other comprehensive loss	(24,874		)		(8,471		)
Total shareholders' equity	1,842,659				1,932,455
	$	4,104,393			$	4,192,460

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, 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
Net income	—			—				—				693,520				—				—			—				693,520
Comprehensive loss, net of tax	—			—				—				—				(16,403		)		—			—				(16,403		)
Dividends	—			—				—				(115,273		)		—				—			—				(115,273		)
Stock-based compensation	—			—				79,293				—				—				—			—				79,293
Vesting of stock-based compensation awards	605			52,208				(52,208		)		—				—				—			—				—
Stock options exercised, net of shares surrendered	876			28,226				—				—				—				—			—				28,226
Repurchase of common stock	—			—				—				—				—				(8,971	)		(780,151		)		(780,151		)
Other	—			—				20,992				—				—				—			—				20,992
Balance at May 31, 2016	179,598			$	409,682			$	205,260			$	4,805,867			$	(24,874	)		(75,385	)		$	(3,553,276	)		$	1,842,659

See accompanying notes.

Consolidated Statements of Cash Flows
	Fiscal Years Ended May 31,
(In thousands)	2016				2015				2014
Cash flows from operating activities:
Net income	$	693,520			$	430,618			$	374,442
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	149,691				140,624				168,220
Amortization of intangible assets	15,588				14,458				22,642
Stock-based compensation	79,293				47,002				29,875
Gain on Storage transactions	(15,786		)		(38,573		)		—
Loss (gain) on Shred-it	24,288				3,851				(108,441		)
Gain on sale of Shred-it	(378,359		)		—				—
Gain on sale of stock of an equity method investment	—				(21,739		)		—
Shredding Transaction asset impairment charge	—				—				16,143
Shredding Transaction costs	—				—				26,057
Deferred income taxes	(59,302		)		20,866				47,109
Change in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	(52,762		)		(1,443		)		(56,231		)
Inventories, net	(17,917		)		23,785				(11,062		)
Uniforms and other rental items in service	(6,306		)		(31,994		)		(11,435		)
Prepaid expenses and other current assets	(965		)		(3,202		)		(2,177		)
Accounts payable	(564		)		(33,445		)		30,446
Accrued compensation and related liabilities	13,512				3,234				10,931
Accrued liabilities and other	22,714				33,066				54,237
Income taxes, current	(800		)		(6,832		)		15,213
Net cash provided by operating activities	465,845				580,276				605,969
Cash flows from investing activities:
Capital expenditures	(275,385		)		(217,720		)		(145,580		)
Proceeds from redemption of marketable securities	434,179				161,938				54,196
Purchase of marketable securities and investments	(494,146		)		(195,471		)		(63,858		)
Proceeds from Storage transactions, net of cash contributed	35,338				158,428				—
Proceeds from Shredding transactions, net of cash contributed	580,837				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	—				113,400				—
Acquisitions of businesses, net of cash acquired	(156,579		)		(15,495		)		(33,441		)
Other	4,137				1,383				(5,219		)
Net cash provided by (used in) investing activities	128,381				44,987				(14,543		)
Cash flows from financing activities:
Repayment of debt	(16		)		(518		)		(8,187		)
Proceeds from exercise of stock-based compensation awards	28,226				40,230				41,902
Dividends paid	(115,273		)		(201,891		)		(93,320		)
Repurchase of common stock	(780,151		)		(551,970		)		(370,599		)
Other	490				1,589				469
Net cash used in financing activities	(866,724		)		(712,560		)		(429,735		)
Effect of exchange rate changes on cash and cash equivalents	(5,218		)		(8,918		)		(676		)
Net (decrease) increase in cash and cash equivalents	(277,716		)		(96,215		)		161,015
Cash and cash equivalents at beginning of year	417,073				513,288				352,273
Cash and cash equivalents at end of year	$	139,357			$	417,073			$	513,288

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) helps more than 900,000 businesses of all types and sizes, primarily in North America, as well as Latin America, Europe and Asia, get Ready™ to open their doors with confidence every day by providing a wide range of products and services that enhance our customers’ image and help keep their facilities and employees clean, safe and looking their best. With products and services including uniforms, floor care, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety and compliance training, Cintas helps customers get Ready for the Workday™.

U.S. Generally Accepted Accounting Principles (GAAP) requires companies to evaluate their reportable operating segments periodically and when certain events occur. As a result of a recent evaluation, effective June 1, 2015, Cintas realigned its organizational structure and updated its reportable operating segments in light of certain changes in its business, including the acquisition of ZEE Medical Inc. (ZEE) in the first quarter of fiscal 2016. Cintas’ updated reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services reportable 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, carpet and tile cleaning services and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas’ business, which consists primarily of Fire Protection Services and its Direct Sale business, is included in All Other. All prior fiscal year results presented in the table below have been recast to reflect these new operating segments. Cintas evaluates operating segment performance based on revenue and income before income taxes. Revenue and income before income taxes for each of these reportable operating segments for the years ended May 31, 2016, 2015 and 2014 are presented in Note 14 entitled Operating Segment Information. The Company regularly reviews its operating segments for reporting purposes based on the information its chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance and makes changes when appropriate.

Prior to June 1, 2015, Cintas classified its business into the following three reportable operating segments: the Rental Uniforms and Ancillary Products operating segment consisted 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 were also provided within this operating segment. The Uniform Direct Sales operating segment consisted of the direct sale of uniforms and related items. The First Aid and Safety and Fire Protection Services operating segment consisted of first aid and safety products and services, and fire protection products and services.

In fiscal 2014, Cintas completed its partnership transaction with the shareholders of Shred-it International Inc. to combine Cintas' shredding business (Shredding) with the shredding business of Shred-it International Inc. (the Shredding Transaction). Pursuant to the Shredding Transaction, the newly formed partnership (the Shred-it Partnership) was owned 42% by Cintas and 58% by the shareholders of Shred-it International Inc. Cintas' investment in the Shred-it Partnership (Shred-it) and the results of Shredding are classified as discontinued operations for all periods presented as a result of selling the investment during fiscal 2016. During fiscal 2015, Cintas sold the storage business (Storage) and, as a result, its operations are also classified as discontinued operations for all periods presented. Shredding and Storage were previously included in the former Document Management Services reportable operating segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets and discontinued operations, the results of Shredding and Storage have been excluded from both continuing operations and operating segment results for all periods presented. Please see Note 16 entitled Discontinued Operations for additional information.

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 U.S. 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 Uniform Rental and Facility Services reportable operating segment, is recognized when services are performed. Other revenue, which is recorded in the First Aid and Safety Services reportable operating segment and All Other, 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 uniform rental and facility services. Cost of uniform rental and facility services consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, shop towels and other ancillary items. The Uniform Rental and Facility Services reportable operating segment inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs and other costs of distribution are included in the cost of uniform rental and facility services.

Cost of other. Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, uniforms and fire protection products), delivery expenses and distribution expenses in the First Aid and Safety Services reportable operating segment and All Other. Cost of other 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, 2016 and 2015, cash and cash equivalents includes $50.6 million and $43.0 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 Uniform Rental and Facility Services reportable operating segment, the First Aid and Safety Services reportable operating segment and All Other because of differences in customers served and the nature of each business. 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)	2016				2015
Raw materials	$	17,794			$	16,935
Work in process	14,731				17,079
Finished goods	216,837				192,197
	$	249,362			$	226,211

Inventories are recorded net of reserves for obsolete inventory of $32.9 million and $30.7 million at May 31, 2016 and 2015, respectively. 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 the cash surrender value of life insurance policies and equity method investments. 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. Cintas did not identify any indicators of impairment for the years ended May 21, 2016, 2015 and 2014.

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. 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. We determine discount rates separately for each reporting unit using the weighted average cost of capital, which includes a calculation of cost of equity, which is developed using the capital asset pricing model and comparable company betas (a measure of systemic risk), and cost of debt. We also use comparable market earnings multiple data and our market capitalization to corroborate our reporting unit valuations. We test for goodwill impairment at the reporting unit level. As a result of Cintas’ operating segment realignment, the composition of Cintas’ reporting units for the evaluation of goodwill impairment has changed. Historically, Cintas’ reporting units were the same as the reportable operating segments, Rental Uniforms and Ancillary Products, Uniform Direct Sales and First Aid, Safety and Fire Protection Services. Effective June 1, 2015, Cintas identified five reporting units for purposes of evaluating goodwill impairment, Uniform Rental and Facility Services, First Aid and Safety Services, and three reporting units within All Other. As a result of the change in reporting units, Cintas was required to perform an interim impairment test on goodwill at June 1, 2015. 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, 2016, 2015 or 2014. 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, 2016, 2015 or 2014.

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)	2016				2015
General insurance liabilities	$	128,759			$	113,714
Employee benefit related liabilities	75,587				68,907
Taxes and related liabilities	5,783				6,064
Accrued interest	26,682				26,628
Other	112,254				94,622
	$	349,065			$	309,935

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 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. 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.

Accounting for uncertain tax positions requires the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Companies may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

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.

Litigation and other contingencies. Cintas is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. GAAP requires that a liability for contingencies be recorded when it is probable that a liability has occurred and the amount of the liability can be reasonably estimated. 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 or consolidated results of operations of Cintas.

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. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk. 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 13 entitled Accumulated Other Comprehensive Income (Loss) for details of required disclosure.

In April 2014, the FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which amended accounting guidance related to the reporting of discontinued operations and disclosures of disposals of components of an entity. The amended guidance changes the thresholds for disposals to qualify as discontinued operations and requires additional disclosures. This guidance is effective for reporting periods beginning after December 15, 2014 and is required to be applied prospectively. Cintas adopted ASU 2014-08 during the quarter ended August 31, 2015 and applied the amended accounting guidance to Shred-it and will apply it to future transactions, as appropriate.

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.

In April 2015, the FASB issued ASU 2015-17, “Balance Sheet Classifications of Deferred Taxes,” which amended accounting guidance related to the presentation of deferred tax liabilities and assets. The amended guidance requires that all deferred tax liabilities and assets be classified as noncurrent on the balance sheet. This guidance is effective for reporting periods beginning after December 15, 2016; however, early adoption is permitted. This guidance can also be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Cintas adopted ASU 2015-17 during the quarter ended November 30, 2015 and has applied this amended accounting guidance to its deferred tax liabilities and assets for all periods presented. The impact of this change in accounting principle on balances previously reported as of May 31, 2015 was a reclassification of $112.4 million from current liabilities to long term liabilities.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. Topic 842 supersedes the previous leases standard, ASC 840, Leases.This guidance is effective for reporting periods beginning after December 15, 2018; however, early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Cintas is currently evaluating the impact that ASU 2016-02 will have on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting." ASU 2016-09 is intended to simplify accounting for share-based payments. Upon adoption, ASU 2016-09 will require that excess tax benefits for share-based payments be recorded as a reduction of income tax expense and reflected within operating cash flows rather than being recorded within equity and reflected within financing cash flows. The standard also permits the repurchase of more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. This update is effective for interim and annual periods beginning after December 15, 2016; however, early adoption is permitted. The Company is currently assessing the effect that adoption of ASU 2016-09 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, 2016
(In thousands)	Level 1				Level 2				Level 3				Fair Value
Cash and cash equivalents	$	139,357			$	—			$	—			$	139,357
Marketable securities:
Canadian treasury securities	—				70,405				—				70,405
Total assets at fair value	$	139,357			$	70,405			$	—			$	209,762
Long term accrued liabilities:
Interest rate lock agreement	$	—			$	19,628			$	—			$	19,628
Total liabilities at fair value	$	—			$	19,628			$	—			$	19,628

	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

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 high grade domestic commercial paper and 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, 2016 and 2015 was $70.4 million and $16.1 million, respectively. Purchases of marketable securities were $488.8 million, $179.2 million and $48.5 million for the fiscal years ended May 31, 2016, 2015 and 2014, respectively. All outstanding marketable securities as of May 31, 2016 and 2015 had contractual maturities due within one year.

As of May 31, 2016, long-term accrued liabilities include interest rate lock agreements. The fair value of Cintas' interest rate lock agreements are based on similar exchange traded derivatives (market approach) and are, therefore, included within Level 2 of the fair value hierarchy. All other amounts included in long-term liabilities are not recorded at fair value.

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. The Company's acquisition of ZEE was recorded at fair value. See Note 9 entitled Acquisitions and Divestitures for additional information on the measurement of the ZEE assets acquired and liabilities assumed.

3. Property and Equipment

(In thousands)	2016				2015
Land	$	117,881			$	116,172
Buildings and improvements	509,316				501,742
Equipment	1,584,478				1,446,041
Leasehold improvements	28,530				26,023
Construction in progress	173,367				104,300
	2,413,572				2,194,278
Less: accumulated depreciation	1,419,335				1,322,857
	$	994,237			$	871,421

Interest expense is net of capitalized interest of $1.1 million and $0.6 million for the fiscal years ended May 31, 2016 and 2015, respectively. Interest was not capitalized during the fiscal year ended May 31, 2014.

4. Investments

Investments at May 31, 2016 of $125.0 million include the cash surrender value of insurance policies of $108.1 million, equity method investments of $14.5 million and cost method investments of $2.4 million. 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.

Shred-it is classified as discontinued operations for all periods presented as a result of selling the investment during fiscal 2016. As allowed under applicable accounting guidance, the May 31, 2015 consolidated balance sheet amounts for these assets and liabilities remain in their natural classifications. See Note 16 entitled Discontinued Operations for additional information.

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.

Investments are evaluated for impairment on an annual basis or when indicators of impairment exist. For fiscal years 2016, 2015 and 2014, no losses due to impairment were recorded.

5. Goodwill, Service Contracts and Other Assets

In fiscal 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 fiscal 2014. See Note 16 entitled Discontinued Operations for more information.

Changes in the carrying amount of goodwill and service contracts for the fiscal year ended May 31, 2015, by historical reportable 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, 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, 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

Effective June 1, 2015, Cintas realigned its organizational structure and updated its reportable operating segments in light of certain changes in its business, including the acquisition of ZEE. Cintas’ updated reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The remainder of Cintas’ business, which consists primarily of Fire Protection Services and its Direct Sale business, are included in All Other. For additional information regarding Cintas’ realignment and reportable operating segment determination, see Note 14 entitled Operating Segment Information.

As a result of Cintas’ operating segment realignment, the composition of Cintas’ reporting units for the evaluation of goodwill impairment also changed. Historically, Cintas’ reporting units were the same as the reportable operating segments, Rental Uniforms and Ancillary Products, Uniform Direct Sales and First Aid, Safety and Fire Protection Services. Effective June 1, 2015, Cintas identified five reporting units for purposes of evaluating goodwill impairment, which were Uniform Rental and Facility Services, First Aid and Safety Services, and three reporting units within All Other.

As the composition of the reporting units changed, the Company allocated historical goodwill to the new reporting units based on a relative fair value allocation approach. Fair value of each reporting unit was determined using a combination of the market approach and the income approach. Under the market approach, fair value is based on revenue and earnings multiples for guideline public companies in the reporting unit's peer group. Under the income approach, value is dependent on the present value of net cash flows to be derived from the ownership. The relative fair value allocation approach yielded the following allocation of total goodwill as of June 1, 2015: Uniform Rental and Facility Services reportable operating segment goodwill of $943.9 million, First Aid and Safety Services reportable operating segment goodwill of $155.0 million and All Other goodwill of $96.7 million.

The following table illustrates the changes in Goodwill as a result of the segment realignment:

Goodwill Allocation as of June 1, 2015 (in thousands)	Total
Uniform Rental and Facility Services
Rental Uniforms and Ancillary Products segment goodwill reassigned	$	929.4
Uniform Direct Sales segment goodwill reassigned	14.5
	$	943.9
First Aid and Safety Services
First Aid, Safety and Fire Protection segment goodwill reassigned	$	155.0
All Other
First Aid, Safety and Fire Protection segment goodwill reassigned	$	75.5
Rental Uniforms and Ancillary Products segment goodwill reassigned	12.0
Uniform Direct Sales segment goodwill reassigned	9.2
	$	96.7

As a result of the change in reporting units, Cintas was required to perform an interim impairment test on goodwill at June 1, 2015. There was no impairment recorded as a result of the interim impairment test.

Changes in the carrying amount of goodwill and service contracts for the fiscal year ended May 31, 2016, by reportable operating segment and All Other, are as follows:

Goodwill (in thousands)	Uniform Rental and Facility Services				First Aid and Safety Services				All Other				Total
Balance at June 1, 2015	$	943,909			$	154,954			$	96,749			1,195,612
Goodwill acquired	10,020				86,874				203				97,097
Foreign currency translation	(713		)		(380		)		(23		)		(1,116		)
Balance as of May 31, 2016	$	953,216			$	241,448			$	96,929			$	1,291,593

Service Contracts (in thousands)	Uniform Rental and Facility Services				First Aid and Safety Services				All Other				Total
Balance at June 1, 2015	$	6,677			$	1,576			$	34,181			$	42,434
Service contracts acquired	18,912				34,052				2,730				55,694
Service contracts amortization	(4,398		)		(3,355		)		(6,639		)		(14,392		)
Foreign currency translation	—				(21		)		—				(21		)
Balance as of May 31, 2016	$	21,191			$	32,252			$	30,272			$	83,715

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

	As of May 31, 2016
(In thousands)	Carrying Amount				Accumulated Amortization				Net
Service contracts	$	395,482			$	311,767			$	83,715
Noncompete and consulting agreements	$	42,378			$	40,928			$	1,450
Other	27,943				9,532				18,411
Total	$	70,321			$	50,460			$	19,861

	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

Amortization expense for continuing operations was $15.6 million, $13.7 million and $15.2 million for the fiscal years ended May 31, 2016, 2015 and 2014, respectively. Estimated amortization expense for continuing operations, excluding any future acquisitions, for each of the next five years is $13.8 million, $12.3 million, $11.7 million, $11.3 million and $9.4 million, respectively.

6. Long-Term Debt and Derivatives

(In thousands)	2016				2015
Unsecured term notes due through 2036 at an average rate of 4.6%	$	1,300,000			$	1,300,000
Less: amounts due within one year	250,000				—
	$	1,050,000			$	1,300,000

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, 2016 were $1,300.0 million and $1,416.6 million, respectively, and as of May 31, 2015 were $1,300.0 million and $1,418.6 million, respectively.

Letters of credit outstanding were $83.4 million and $82.7 million at May 31, 2016 and 2015, respectively. Maturities of long-term debt during each of the next five years are $250.0 million, $300.0 million, $0, $0 and $0, respectively.

Interest paid was $64.5 million, $65.3 million and $65.9 million for the fiscal years ended May 31, 2016, 2015 and 2014, respectively.

Cintas' commercial paper program has a capacity of $300.0 million at May 31, 2016, 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. On June 23, 2016, the revolving credit facility was amended to extend the maturity date from May 28, 2019 to June 22, 2021, increase the capacity to $450.0 million, and add an accordion feature that allows for a maximum borrowing capacity of $600.0 million. No commercial paper or borrowings on our revolving credit facility were outstanding at May 31, 2016 or 2015. On June 1, 2016, Cintas paid the $250.0 million 5-year senior notes that matured on that date with cash and $218.5 million proceeds from the issuance of commercial paper.

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 in each of the fiscal years ended May 31, 2016, 2015 and 2014. During the third quarter of fiscal 2016, Cintas entered into an interest rate lock agreement with a notional value of $550.0 million for a forecasted debt issuance. As of May 31, 2016, the fair value of this treasury lock was $19.6 million and is recorded in long-term liabilities and other comprehensive income, net of tax. The interest rate lock had no impact on net income or cash flows from continuing operations for fiscal 2016.

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. These instruments did not impact foreign currency exchange during fiscal 2016, 2015 or 2014. Cintas had no foreign currency forward contracts as of May 31, 2016 or 2015.

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 consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) and interest coverage ratios. Cross-default provisions exist between certain debt instruments. Cintas was 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 $30.5 million, $26.8 million, $20.8 million, $16.5 million, $12.5 million and $26.9 million, respectively.

Rent expense for continuing operations under operating leases during the fiscal years ended May 31, 2016, 2015 and 2014, was $41.5 million, $34.9 million and $32.3 million, respectively.

8. Income Taxes

(In thousands)	2016				2015				2014
Income before income taxes for continuing operations consists of the following components:
U.S. operations	$	697,974			$	635,270			$	519,386
Foreign operations	20,148				18,054				17,741
	$	718,122			$	653,324			$	537,127

(In thousands)	2016				2015				2014
Income tax expense for continuing operations consists of the following components:
Current:
Federal	$	284,046			$	203,202			$	139,102
State and local	25,926				25,346				18,286
	309,972				228,548				157,388
Deferred	(48,791		)		14,255				41,967
	$	261,181			$	242,803			$	199,355

(In thousands)	2016				2015				2014
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	$	251,352			$	228,727			$	187,375
State and local income taxes, net of federal benefit	16,672				16,705				17,934
Other	(6,843		)		(2,629		)		(5,954		)
	$	261,181			$	242,803			$	199,355

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

(In thousands)	2016				2015
Deferred tax assets:
Allowance for doubtful accounts	$	7,416			$	4,857
Inventory obsolescence	13,702				12,266
Insurance and contingencies	42,717				38,522
Stock-based compensation	45,720				29,910
Foreign related carry-forwards	17,883				16,862
Treasury locks	12,055				5,829
Other	8,100				9,461
	147,593				117,707
Valuation allowance	(17,047		)		(14,690		)
	130,546				103,017
Deferred tax liabilities:
In service inventory	172,704				169,629
Property	93,784				77,871
Intangibles	104,585				84,218
Investment in partnerships	2,563				86,098
State taxes and other	16,385				24,528
	390,021				442,344
Net deferred tax liability	$	259,475			$	339,327

Due to differences in accounting for the book and tax basis in Shred-it and other partnerships, a deferred tax liability was recorded. After the sale of Shred-it in fiscal 2016, the related deferred tax liability was reclassified to current taxes payable. See Note 16 entitled Discontinued Operations for additional information.

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)	2016				2015
Balance at beginning of year	$	(14,690	)		$	(13,358	)
Additions	(3,437		)		(2,433		)
Subtractions	1,080				1,101
Balance at end of year	$	(17,047	)		$	(14,690	)

Income taxes paid were $452.6 million, $236.7 million and $172.5 million for the fiscal years ended May 31, 2016, 2015 and 2014, respectively.

Undistributed earnings of foreign subsidiaries were approximately $117.2 million, $147.1 million and $172.7 million as of May 31, 2016, 2015 and 2014, 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, 2016 and 2015, there was $12.9 million and $11.9 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, 2016 and 2015, was $1.1 million and $0.9 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 in fiscal 2016 and 2015 by $0.8 million and $1.4 million, respectively, and decreased in fiscal 2014 by $0.2 million. Accrued interest increased by $0.2 million in both fiscal 2016 and 2015, and decreased by $0.4 million in fiscal 2014.

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, 2013	$	13,709
Additions for tax positions of prior years	2,586
Settlements	(1,270		)
Statute expirations	(1,963		)
Balance at May 31, 2014	$	13,062
Additions for tax positions of prior years	4,001
Settlements	(48		)
Statute expirations	(1,603		)
Balance at May 31, 2015	$	15,412
Additions for tax positions of prior years	3,259
Settlements	(48		)
Statute expirations	(2,092		)
Balance at May 31, 2016	$	16,531

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 for any period presented.

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 decrease by $3.1 million for the fiscal year ending May 31, 2017.

9. Acquisitions and Divestitures

Acquisitions

The purchase price paid for each acquisition has been allocated to the fair value of the assets acquired and liabilities assumed. During fiscal 2016, Cintas acquired two businesses included in the Uniform Rental and Facility Services reportable operating segment, two businesses included in the First Aid and Safety Services reportable operating segment and six businesses included in All Other. During fiscal 2015, Cintas acquired one business included in the Uniform Rental and Facility Services reportable operating segment, three businesses included in the First Aid and Safety Services reportable operating segment and eight businesses included in All Other.

The following summarizes the aggregate purchase price and fair value allocations for all businesses acquired:

(In thousands)	2016				2015
Fair value of tangible assets acquired	$	26,759			$	177
Fair value of service contracts acquired	55,694				9,856
Fair value of other intangibles acquired	4,639				945
Net goodwill recognized	97,097				8,648
Total fair value of assets acquired	184,189				19,626
Fair value of liabilities assumed and incurred	27,610				4,131
Total cash paid for acquisitions	$	156,579			$	15,495

On August 1, 2015, the Company acquired all of the shares of ZEE for acquisition-date fair value consideration of$134.0 million, consisting of cash of $120.6 million and contingent consideration, subject to certain holdback provisions of $13.4 million. ZEE operates within the First Aid and Safety Services reportable operating segment. This acquisition has expanded our footprint in van delivered first aid, safety, training and emergency products and will allow us to serve an even greater number of customers in North America.

The table below summarizes the preliminary purchase price allocation of ZEE as determined by management with the assistance of third-party valuation specialists. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. None of the goodwill is deductible for income tax purposes. The assets acquired and liabilities assumed are valued at the estimated fair value at the acquisition date as required by GAAP.

Assets:
Cash and cash equivalents	$	333
Accounts receivable	16,705
Inventory	5,987
Other current assets	1,443
Property, plant and equipment	849
Goodwill	86,392
Service contracts	34,000
Other intagibles	4,500
Liabilities:
Accounts payable	(7,195		)
Accrued liabilities	(4,428		)
Deferred income taxes	(4,586		)
Total consideration	$	134,000

The estimated useful life of the acquired service contracts is 10 years.

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 nonrecurring basis (including business acquisitions). The working capital assets and liabilities, as well as the property and equipment acquired, were

valued using Level 2 inputs which included data points that are observable, such as definitive sales agreements, appraisals or established market values of comparable assets (market approach). Goodwill, service contracts and other intangibles were valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flow using a discount rate of 11% (income approach). The results of operations of ZEE are not material to the consolidated financial statements.

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.

Divestitures

In fiscal 2014, Cintas completed the Shredding Transaction with Shred-it International, Inc. to combine Cintas’ Shredding with Shred-it International Inc.’s shredding business and created the Shred-it Partnership. In fiscal 2016, Cintas sold Shred-it. In fiscal 2015, Cintas sold Storage. Storage, excluding related real estate owned by Cintas, was sold in three separate transactions to three separate buyers. In fiscal 2016, Cintas sold the remaining Storage assets classified as held for sale. Both Shredding and Storage were previously included in the former Document Management Services operating segment. As a result of the transactions noted above, the results from Shredding, Shred-it and Storage are reported under discontinued operations for all periods presented and are excluded from continuing operations and from operating segment results for all periods presented. See Note 16 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 $43.1 million, $38.4 million and $33.7 million for the fiscal years ended May 31, 2016, 2015 and 2014, 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 $1.6 million, $1.5 million and $1.6 million for the fiscal years ended May 31, 2016, 2015 and 2014, 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 $6.6 million, $6.1 million and $6.0 million for the fiscal years ended May 31, 2016, 2015 and 2014, 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)	2016				2015				2014
Basic Earnings per Share from Continuing Operations
Income from continuing operations	$	456,941			$	410,521			$	337,772
Less: income from continuing operations allocated to participating securities	7,405				3,900				3,082
Income from continuing operations available to common shareholders	$	449,536			$	406,621			$	334,690
Basic weighted average common shares outstanding	108,221				115,900				120,377
Basic earnings per share from continuing operations	$	4.15			$	3.51			$	2.78

(In thousands except per share data)	2016				2015				2014
Diluted Earnings per Share from Continuing Operations
Income from continuing operations	$	456,941			$	410,521			$	337,772
Less: income from continuing operations allocated to participating securities	7,405				3,900				3,082
Income from continuing operations available to common shareholders	$	449,536			$	406,621			$	334,690
Basic weighted average common shares outstanding	108,221				115,900				120,377
Effect of dilutive securities – employee stock options	1,735				1,643				1,263
Diluted weighted average common shares outstanding	109,956				117,543				121,640
Diluted earnings per share from continuing operations	$	4.09			$	3.46			$	2.75

Basic and diluted earnings per share from discontinued operations was calculated using the two-class method. Basic earnings per share from discontinued operations were $2.15, $0.17 and $0.30 for the fiscal years ended May 31, 2016, 2015 and 2014, respectively. Diluted earnings per share from discontinued operations were $2.12, $0.17 and $0.30 for the fiscal years ended May 31, 2016, 2015 and 2014, respectively.

For the fiscal years ended May 31, 2016, 2015 and 2014, options granted to purchase 0.5 million, 0.6 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 July 30, 2013, Cintas 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 $500.0 million share buyback program. This program was completed in September 2015. On August 4, 2015, we announced that the Board of Directors authorized a new $500.0 million share buyback program. The following table summarizes the buyback activity by program and fiscal period:

(In thousands except per share data)	2016											2015
Buyback Program	Shares			Avg. Price per Share				Purchase Price				Shares			Avg. Price per Share				Purchase Price
July 30, 2013	—			$	—			$	—			3,981			$	75.49			$	300,500
January 13, 2015	3,078			$	85.44			$	262,928			2,870			$	82.60			$	237,072
August 4, 2015	5,649			$	87.85			$	496,309			—			$	—			$	—
	8,727			$	87.00			$	759,237			6,851			$	78.47			$	537,572

In June 2016, we purchased 0.1 million shares at an average price of $94.09 per share for a total purchase price of $3.7 million. This completed the August 4, 2015 program through which Cintas purchased a total of 5.7 million shares of Cintas common stock at an average price of $87.89 per share for a total purchase price of $500.0 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, 2016, Cintas acquired 0.2 million shares at an average price of $86.07 per share for a total purchase price of $20.9 million. 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.

12. Stock-Based Compensation

Under Cintas' 2005 Equity Compensation Plan, as amended, (the 2005 Equity Compensation Plan) 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, 2016, 7,174,600 shares of common stock are reserved for future issuance under the 2005 Equity Compensation Plan. Total compensation cost for stock-based awards for continuing operations was $79.3 million, $44.9 million and $27.5 million for the fiscal years ended May 31, 2016, 2015 and 2014, respectively. The total income tax benefit recognized in the consolidated income statement for share-based compensation arrangements for continuing operations was $28.9 million, $16.7 million and $10.2 million for the fiscal years ended May 31, 2016, 2015 and 2014, 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.

The fair value of options was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

	2016			2015			2014
Risk-free interest rate	2.0	%		2.0	%		2.0	%
Dividend yield	1.4	%		1.6	%		1.7	%
Expected volatility of Cintas' common stock	23.3	%		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 2016, 2015 and 2014 was $21.60, $20.64 and $16.63, 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, 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
Granted	1,739,767			93.55
Canceled	(235,455	)		60.01
Exercised	(919,975	)		35.07
Outstanding, May 31, 2016 (1,649,236 shares exercisable)	8,419,907			$	61.83

The intrinsic value of stock options exercised was $48.5 million, $44.3 million and $19.8 million for the fiscal years ended May 31, 2016, 2015 and 2014, respectively. The total cash received from employees as a result of employee stock option exercises for the fiscal years ended May 31, 2016, 2015 and 2014 was $28.2 million, $40.2 million and $41.9 million, respectively.

The fair value of stock options vested was $11.0 million, $10.9 million and $17.7 million for the fiscal years ended May 31, 2016, 2015 and 2014, respectively.

The following table summarizes the information related to stock options outstanding at May 31, 2016:

			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 – $ 37.75	1,555,054		4.44		$	31.22			1,122,463			$	29.87
37.76 – 47.22	2,105,731		6.33		42.33				437,534			39.91
47.23 – 86.09	1,824,303		8.17		64.90				89,239			62.96
86.10 – 95.09	2,934,819		9.58		90.54				—			—
$ 20.29 – $ 95.09	8,419,907		7.51		$	61.83			1,649,236			$	34.32

At May 31, 2016, the aggregate intrinsic value of stock options outstanding and exercisable was $276.5 million and $99.7 million, respectively. The weighted-average remaining contractual term of stock options exercisable is 4.7 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, 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
Granted	1,069,748			92.10
Canceled	(70,998	)		65.79
Vested	(605,427	)		38.76
Outstanding, unvested grants at May 31, 2016	2,603,436			$	75.94

The remaining unrecognized compensation cost related to unvested stock options and restricted stock at May 31, 2016 was $149.4 million. The weighted-average period of time over which this cost will be recognized is 1.9 years.

13. 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, 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		)
Other comprehensive loss before reclassifications	(11,933		)		(12,156		)		(738		)		(24,827		)
Amounts reclassified from accumulated other comprehensive income (loss)	6,472				1,952				—				8,424
Net current period other comprehensive loss	(5,461		)		(10,204		)		(738		)		(16,403		)
Balance at May 31, 2016	$	(2,474	)		$	(20,830	)		$	(1,570	)		$	(24,874	)

The following table summarizes the reclassifications out of accumulated other comprehensive loss during fiscal years ended May 31, 2016 and 2015:

Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other Comprehensive Loss Components		Amount Reclassified from Accumulated Other Comprehensive Loss								Affected Line in the Consolidated Statements of Income
(in thousands)		2016				2015
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
(in thousands)		2016				2015
Cumulative translation adjustment on Shred-it (1)		$	(10,381	)		$	—			Income from discontinued operations
Tax benefit		3,909				—				Income from discontinued operations
Cumulative translation adjustment on Shred-it, net of tax (1)		$	(6,472	)		$	—			Net of tax

(1) The cumulative translation adjustment was reclassified out of accumulated other comprehensive income due to the sale of Shred-it.

14. Operating Segment Information

GAAP requires companies to evaluate their reportable operating segments periodically and when certain events occur. As a result of a periodic evaluation, effective June 1, 2015, Cintas realigned its organizational structure and updated its reportable operating segments in light of certain changes in its business including the acquisition of ZEE in the first quarter of fiscal 2016. Cintas’ updated reportable operating segments are Uniform Rental and Facility Services and First Aid and Safety Services. The Uniform Rental and Facility Services reportable 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, carpet and tile cleaning services and the sale of items from our catalogs to our customers on route are included within this reportable operating segment. The First Aid and Safety Services reportable operating segment consists of first aid and safety products and services. The remainder of Cintas’ business, which consists primarily of Fire Protection Services and its Direct Sale business, is included in All Other. All prior fiscal year results presented in the table below have been recast to reflect these new operating segments.

Prior to June 1, 2015, Cintas classified its businesses into three operating segments based on the types of products and services provided. The Rental Uniforms and Ancillary Products operating segment consisted 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 were also provided within this operating segment. The Uniform Direct Sales operating segment consisted of the direct sale of uniforms and related items. The First Aid, Safety and Fire Protection Services operating segment consisted of first aid, safety and fire protection products and services.

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)	Uniform Rental and Facility Services				First Aid and Safety Services				All Other				Corporate(1)				Total
May 31, 2016
Revenue	$	3,777,801			$	461,783			$	665,874			$	—			$	4,905,458
Gross margin	$	1,671,008			$	197,010			$	261,852			$	—			$	2,129,870
Selling and administrative expenses	998,069				147,503				202,550				—				1,348,122
Interest expense, net	—				—				—				63,626				63,626
Income before income taxes	$	672,939			$	49,507			$	59,302			$	(63,626	)		$	718,122
Depreciation and amortization	$	130,822			$	16,021			$	18,436			$	—			$	165,279
Capital expenditures	$	237,884			$	22,364			$	15,137			$	—			$	275,385
Total assets	$	3,114,159			$	421,789			$	358,683			$	209,762			$	4,104,393
May 31, 2015
Revenue	$	3,539,843			$	326,593			$	610,450			$	—			$	4,476,886
Gross margin	$	1,532,211			$	152,339			$	236,787			$	—			$	1,921,337
Selling and administrative expenses	926,176				107,226				191,528				—				1,224,930
Gain on sale of stock of an equity method investment	—				—				—				21,739				21,739
Interest expense, net	—				—				—				64,822				64,822
Income before income taxes	$	606,035			$	45,113			$	45,259			$	(43,083	)		$	653,324
Depreciation and amortization	$	123,577			$	9,774			$	19,244			$	—			$	152,595
Capital expenditures	$	184,246			$	13,589			$	18,983			$	902			$	217,720
Total assets	$	2,845,326			$	255,202			$	345,201			$	746,731			$	4,192,460
May 31, 2014
Revenue	$	3,304,635			$	294,966			$	594,243			$	—			$	4,193,844
Gross margin	$	1,382,158			$	136,136			$	231,465			$	—			$	1,749,759
Selling and administrative expenses	860,311				96,246				190,482				—				1,147,039
Interest expense, net	—				—				—				65,593				65,593
Income before income taxes	$	521,847			$	39,890			$	40,983			$	(65,593	)		$	537,127
Depreciation and amortization	$	118,828			$	8,283			$	20,178			$	—			$	147,289
Capital expenditures	$	94,619			$	9,195			$	7,370			$	34,396			$	145,580
Total assets	$	2,840,809			$	257,603			$	340,650			$	1,023,390			$	4,462,452

(1) Corporate assets include cash and marketable securities in all periods. Corporate assets as of May 31, 2015 include Shred-it and real estate assets of Storage that were not included in the sale transactions. Corporate assets as of May 31, 2014 include Shred-it and the assets of Storage.

15. 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, 2016 and 2015:

May 31, 2016 (in thousands)	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Revenue	$	1,198,890			$	1,219,080			$	1,216,083			$	1,271,405
Gross margin	$	524,144			$	527,400			$	524,608			$	553,718
Net income, continuing operations	$	106,198			$	115,453			$	117,279			$	118,011
Basic earnings per share, continuing operations	$	0.94			$	1.05			$	1.07			$	1.09
Diluted earnings per share, continuing operations	$	0.93			$	1.03			$	1.05			$	1.08
Weighted average number of shares outstanding	110,597				108,301				107,843				106,136

May 31, 2015 (in thousands) (1) (2)	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	$	105,905			$	103,701			$	100,331			$	100,584
Basic earnings per share, continuing operations	$	0.90			$	0.88			$	0.86			$	0.87
Diluted earnings per share, continuing operations	$	0.89			$	0.86			$	0.85			$	0.86
Weighted average number of shares outstanding	116,659				117,115				116,178				113,666

(1) The figures for fiscal 2015 reflect the change in classification of Shred-it to discontinued operations within the Consolidated Statements of Income. See Note 16 entitled Discontinued Operations for additional information.

(2) 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.

16. Discontinued Operations

The results of Shred-it and Shredding are classified as discontinued operations for all periods presented as a result of entering into a definitive agreement during fiscal 2016 to sell the investment. During fiscal 2015, Cintas sold Storage and, as a result, its operations are also classified as discontinued operations for all periods presented. Shredding and Storage were previously included in the former Document Management Services reportable operating segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of Shredding and Storage have been excluded from both continuing operations and operating segment results for all periods presented.

In fiscal 2014, Cintas completed the Shredding Transaction and realized a $106.4 million gain. 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 Shred-it of $339.4 million less the carrying amount of Shredding of $413.0 million. As a result of the Shredding Transaction, the Company recorded an asset impairment charge of $16.1 million and other transaction costs of $28.5 million in fiscal 2014. The impairment charge was related to the abandonment of information systems assets that were not contributed to Shred-it 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 Shred-it; 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. All of the impacts from the Shredding Transaction have been included in discontinued operations. For the fiscal year ended May 31, 2014, Cintas recorded a net gain on Shred-it of $1.2 million. Also, in conjunction with the partnership agreement, Cintas agreed to provide certain transition services such as information technology and accounting in support of Shred-it. The agreement expired in September 2015.

At May 31, 2015, the carrying value of Shred-it was $210.1 million. In May of fiscal 2015, the Company received a dividend on Shred-it of $113.4 million, which reduced the carrying value of the investment. As of May 31, 2015, Cintas’ carrying value of Shred-it 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 was to be amortized over the weighted average estimated useful lives of the underlying assets which generated the basis difference (approximately 9 years) and recorded as a reduction in the income (loss) on Shred-it, net of tax. Cintas recorded 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 Shred-it of $5.5 million, which included amortization of basis differences of approximately $11.0 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
(in thousands)	April 30, 2015
Assets
Current assets	$	150,792
Non-current assets	$	968,956
Liabilities
Current liabilities	$	73,971
Non-current liabilities	$	532,673

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

In fiscal 2015, Cintas received additional proceeds related to the Shred-it Transaction. The Company realized a $4.1 million gain, net of tax, as a result of the additional consideration received. During fiscal 2015, we also recorded a loss related to the Shred-it Transaction due to the settlement of an outstanding Shredding-related legal claim. The expense, net of tax, was $1.0 million.

In fiscal 2016, we completed the transaction to sell Shred-it. Cintas’ share of the proceeds from the sale were $578.3 million. During the fourth quarter of fiscal 2016, Cintas received additional proceeds and consideration related to the sale of Shred-it. The Company realized a pre-tax gain of $4.3 million as a result of the additional consideration received. At May 31, 2016, Cintas still has the opportunity to receive up to $30 million in additional consideration in the future, subject to certain holdback provisions. Because of the uncertainty surrounding the holdback provisions, this amount represents a gain contingency that has not been recorded. During the fiscal year ended May 31, 2016, Cintas recorded a net loss on Shred-it of $24.3 million, which included amortization of basis differences of approximately $4.8 million. After the sale Shred-it, the basis difference no longer exists and Cintas no longer records income or loss from Shred-it.

In fiscal 2015, Cintas sold Storage, excluding certain real estate owned by Cintas, in three separate transactions to three separate buyers. Certain real estate assets and related liabilities were not included in the Storage transactions in 2015 and were classified as held for sale as of May 31, 2015. This real estate was leased by a buyer of part of Storage. These lease payments did not represent a material direct cash flow of the disposed Storage business, and therefore, do not impact the classification of the Storage business as a discontinued operation. 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 had opportunities to receive additional proceeds if specified future events occurred. Because of the uncertainty surrounding the future events, these amounts represented gain contingencies and were not recorded until realized. During fiscal 2016, Cintas received additional proceeds on the sale of Storage related to the contingent consideration and realized a pre-tax gain of $10.9 million. During fiscal 2016, Cintas also sold the remaining Storage assets classified as held for sale. Cintas received proceeds of $24.4 million from the sale of these assets and realized a pretax gain of $4.8 million.

Following is selected financial information included in net income from discontinued operations for the Shredding and Storage businesses:

(In thousands)	2016				2015(1)				2014(1)
Revenue	$	—			$	31,379			$	357,967
Income (loss) before income taxes, excluding gains (losses) from sale transactions and investments	434				(3,515		)		6,913
Gain on Storage transactions	15,786				38,573				—
(Loss) gain on Shred-it (1)	(24,288		)		(3,851		)		63,817
Gain on sale of Shred-it	378,359				—				—
Income tax expense	(133,712		)		(11,110		)		(34,060		)
Net income from discontinued operations	$	236,579			$	20,097			$	36,670

(1) Results for the fiscal years ended May 31, 2015 and 2014 related to Shred-it and Shredding were previously presented in continuing operations and were reclassified to discontinued operations as previously discussed.

17. 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, 2016 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Uniform rental and facility services	$	—			$	2,913,812			$	805,722			$	213,526			$	(155,259	)		$	3,777,801
Other	—				1,576,078				8,542				66,270				(523,233		)		1,127,657
Equity in net income of affiliates	456,941				—				—				—				(456,941		)		—
	456,941				4,489,890				814,264				279,796				(1,135,433		)		4,905,458
Costs and expenses (income):
Cost of uniform rental and facility services	—				1,709,912				490,383				142,601				(236,103		)		2,106,793
Cost of other	—				1,070,064				(41,762		)		48,539				(408,046		)		668,795
Selling and administrative expenses	—				1,427,424				(121,514		)		69,257				(27,045		)		1,348,122
Operating income	456,941				282,490				487,157				19,399				(464,239		)		781,748
Interest income	—				—				(666		)		(232		)		2				(896		)
Interest expense (income)	—				65,534				(1,027		)		15				—				64,522
Income before income taxes	456,941				216,956				488,850				19,616				(464,241		)		718,122
Income taxes	—				71,323				180,100				9,874				(116		)		261,181
Income from continuing operations	456,941				145,633				308,750				9,742				(464,125		)		456,941
Income (loss) from discontinued operations, net of tax	236,579				242,416				—				(5,837		)		(236,579		)		236,579
Net income	$	693,520			$	388,049			$	308,750			$	3,905			$	(700,704	)		$	693,520

Condensed Consolidating Income Statement

Year Ended May 31, 2015 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Revenue:
Uniform rental and facility services	$	—			$	2,699,466			$	748,185			$	229,391			$	(137,199	)		$	3,539,843
Other	—				1,379,572				2,159				57,349				(502,037		)		937,043
Equity in net income of affiliates	410,521				—				—				—				(410,521		)		—
	410,521				4,079,038				750,344				286,740				(1,049,757		)		4,476,886
Costs and expenses (income):
Cost of uniform rental and facility services	—				1,660,625				407,505				154,601				(215,099		)		2,007,632
Cost of other	—				889,524				16,120				37,628				(395,355		)		547,917
Selling and administrative expenses	—				1,276,745				(100,024		)		74,523				(26,314		)		1,224,930
Operating income	410,521				252,144				426,743				19,988				(412,989		)		696,407
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	410,521				185,858				449,866				20,070				(412,991		)		653,324
Income taxes	—				66,498				168,706				7,665				(66		)		242,803
Income from continuing operations	410,521				119,360				281,160				12,405				(412,925		)		410,521
Income from discontinued operations, net of tax	20,097				15,501				—				4,596				(20,097		)		20,097
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:
Uniform rental and facility services	$	—			$	2,500,618			$	690,831			$	235,118			$	(121,932	)		$	3,304,635
Other	—				1,302,715				4,192				53,990				(471,688		)		889,209
Equity in net income of affiliates	337,772				—				—				—				(337,772		)		—
	337,772				3,803,333				695,023				289,108				(931,392		)		4,193,844
Costs and expenses (income):
Cost of uniform rental and facility services	—				1,576,226				386,556				160,795				(201,100		)		1,922,477
Cost of other	—				843,675				16,570				37,334				(375,971		)		521,608
Selling and administrative expenses	—				1,172,858				(83,765		)		76,049				(18,103		)		1,147,039
Operating income	337,772				210,574				375,662				14,930				(336,218		)		602,720
Interest income	—				(43		)		(178		)		(15,279		)		15,271				(229		)
Interest expense (income)	—				66,461				(635		)		(4		)		—				65,822
Income before income taxes	337,772				144,156				376,475				30,213				(351,489		)		537,127
Income taxes	—				43,327				148,332				7,774				(78		)		199,355
Income from continuing operations	337,772				100,829				228,143				22,439				(351,411		)		337,772
Income (loss) from discontinued operations, net of tax	36,670				61,434				(23,134		)		(1,630		)		(36,670		)		36,670
Net income	$	374,442			$	162,263			$	205,009			$	20,809			$	(388,081	)		$	374,442

Condensed Consolidating Statement of Comprehensive Income

Year Ended May 31, 2016 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Net income	$	693,520			$	388,049			$	308,750			$	3,905			$	(700,704	)		$	693,520
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	—				—				—				(11,933		)		—				(11,933		)
Cumulative translation adjustment on Shred-it	—				5,875				—				597				—				6,472
Change in fair value of derivatives	—				(12,156		)		—				—				—				(12,156		)
Amortization of interest rate lock agreements	—				1,952				—				—				—				1,952
Other	—				—				(730		)		(8		)		—				(738		)
Other comprehensive loss	—				(4,329		)		(730		)		(11,344		)		—				(16,403		)
Comprehensive income (loss)	$	693,520			$	383,720			$	308,020			$	(7,439	)		$	(700,704	)		$	677,117

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 Balance Sheet

As of May 31, 2016 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—			$	55,821			$	57,464			$	26,072			$	—			$	139,357
Marketable securities	—				—				—				70,405				—				70,405
Accounts receivable, net	—				402,846				125,005				35,327				—				563,178
Inventories, net	—				222,822				19,150				11,235				(3,845		)		249,362
Uniforms and other rental items in service	—				410,696				112,370				36,612				(19,722		)		539,956
Income taxes, current	—				(151		)		1,215				648				—				1,712
Prepaid expenses and other current assets	—				6,668				18,435				962				—				26,065
Total current assets	—				1,098,702				333,639				181,261				(23,567		)		1,590,035
Property and equipment, at cost, net	—				577,936				342,356				73,945				—				994,237
Investments	321,083				1,770,303				901,772				941,396				(3,809,602		)		124,952
Goodwill	—				—				1,256,662				35,043				(112		)		1,291,593
Service contracts, net	—				81,462				13				2,240				—				83,715
Other assets, net	1,081,203				4,665				3,526,051				9,110				(4,601,168		)		19,861
	$	1,402,286			$	3,533,068			$	6,360,493			$	1,242,995			$	(8,434,449	)		$	4,104,393
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	(465,247	)		$	(1,408,002	)		$	1,932,977			$	16,781			$	38,005			$	114,514
Accrued compensation and related liabilities	—				70,045				26,551				5,380				—				101,976
Accrued liabilities	—				82,770				252,717				13,578				—				349,065
Long-term debt due within one year	—				250,000				—				—				—				250,000
Total current liabilities	(465,247		)		(1,005,187		)		2,212,245				35,739				38,005				815,555
Long-term liabilities:
Long-term debt due after one year	—				1,049,610				—				390				—				1,050,000
Deferred income taxes	—				(427		)		252,149				7,753				—				259,475
Accrued liabilities	—				19,628				116,091				985				—				136,704
Total long-term liabilities	—				1,068,811				368,240				9,128				—				1,446,179
Total shareholders' equity	1,867,533				3,469,444				3,780,008				1,198,128				(8,472,454		)		1,842,659
	$	1,402,286			$	3,533,068			$	6,360,493			$	1,242,995			$	(8,434,449	)		$	4,104,393

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
Liabilities held for sale	—				704				—				—				—				704
Long-term debt due within one year	—				293				(293		)		—				—				—
Total current liabilities	(465,247		)		(751,271		)		1,648,195				39,695				37,297				508,669
Long-term liabilities:
Long-term debt due after one year	—				1,308,452				(9,766		)		590				724				1,300,000
Deferred income taxes	—				(304		)		333,929				5,702				—				339,327
Accrued liabilities	—				—				111,105				904				—				112,009
Total long-term liabilities	—				1,308,148				435,268				7,196				724				1,751,336
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 Statement of Cash Flows

Year Ended May 31, 2016 (in thousands)	Cintas Corporation				Corp. 2				Subsidiary Guarantors				Non- Guarantors				Eliminations				Cintas Corporation Consolidated
Cash flows from operating activities:
Net income	$	693,520			$	388,049			$	308,750			$	3,905			$	(700,704	)		$	693,520
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	—				96,885				43,441				9,365				—				149,691
Amortization of intangible assets	—				14,830				304				454				—				15,588
Stock-based compensation	79,293				—				—				—				—				79,293
Gain on Storage transactions	—				(12,547		)		—				(3,239		)		—				(15,786		)
Loss on Shred-it	—				22,470				—				1,818				—				24,288
(Gain) loss on sale of Shred-it	—				(388,930		)		—				10,571				—				(378,359		)
Deferred income taxes	—				(83,648		)		22,025				2,321				—				(59,302		)
Changes in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	—				(30,570		)		(20,007		)		(2,185		)		—				(52,762		)
Inventories, net	—				(23,917		)		2,011				(2,454		)		6,443				(17,917		)
Uniforms and other rental items in service	—				(10,329		)		5,104				(1,840		)		759				(6,306		)
Prepaid expenses and other current assets	—				(142		)		(939		)		116				—				(965		)
Accounts payable	—				(461,203		)		465,539				(4,884		)		(16		)		(564		)
Accrued compensation and related liabilities	—				9,959				2,982				571				—				13,512
Accrued liabilities and other	—				(2,926		)		24,761				155				724				22,714
Income taxes, current	—				1,342				(1,565		)		(577		)		—				(800		)
Net cash provided by (used in) operating activities	772,813				(480,677		)		852,406				14,097				(692,794		)		465,845
Cash flows from investing activities:
Capital expenditures	—				(151,063		)		(111,392		)		(12,930		)		—				(275,385		)
Proceeds from redemption of marketable securities	—				—				—				434,179				—				434,179
Purchase of marketable securities and investments	—				(3,333		)		(12,085		)		(488,765		)		10,037				(494,146		)
Proceeds from Storage transactions, net of cash contributed	—				32,099				—				3,239				—				35,338
Proceeds from sale of Shred-it	—				568,223				—				12,614				—				580,837
Acquisitions of businesses, net of cash acquired	—				(130,786		)		—				(25,793		)		—				(156,579		)
Other	94,344				154,412				(929,997		)		1,897				683,481				4,137
Net cash provided by (used in) investing activities	94,344				469,552				(1,053,474		)		(75,559		)		693,518				128,381
Cash flows from financing activities:
Proceeds from the issuances of debt	—				—				(165		)		165				—				—
Repayment of debt	—				(9,151		)		10,224				(365		)		(724		)		(16		)
Proceeds from exercise of stock-based compensation awards	28,226				—				—				—				—				28,226
Dividends paid	(115,232		)		—				—				(41		)		—				(115,273		)
Repurchase of common stock	(780,151		)		—				—				—				—				(780,151		)
Other	—				1,952				(730		)		(732		)		—				490
Net cash (used in) provided by financing activities	(867,157		)		(7,199		)		9,329				(973		)		(724		)		(866,724		)
Effect of exchange rate changes on cash and cash equivalents	—				—				—				(5,218		)		—				(5,218		)
Net decrease in cash and cash equivalents	—				(18,324		)		(191,739		)		(67,653		)		—				(277,716		)
Cash and cash equivalents at beginning of year	—				74,145				249,203				93,725				—				417,073
Cash and cash equivalents at end of year	$	—			$	55,821			$	57,464			$	26,072			$	—			$	139,357

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 Storage transactions	—				(31,113		)		—				(7,460		)		—				(38,573		)
Loss on Shred-it	—				3,190				—				661				—				3,851
Gain on sale of stock of an equity method investment	—				—				(21,739		)		—				—				(21,739		)
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	—				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	—				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 issuance 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 Shred-it	—				(113,511		)		—				5,070				—				(108,441		)
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