Add files using upload-large-folder tool

3M CO_10-Q_2022-07-27_66740-0000066740-22-000065.html

@@ -0,0 +1 @@
+MD&A section not found.

ADOBE INC._10-Q_2022-09-28_796343-0000796343-22-000196.html

@@ -0,0 +1 @@
+MD&A section not found.

AFLAC INC_10-Q_2022-08-02_4977-0000004977-22-000125.html

@@ -0,0 +1 @@
+MD&A section not found.

AMERICAN ELECTRIC POWER CO INC_10-Q_2022-07-27_4904-0000004904-22-000074.html

@@ -0,0 +1 @@
+MD&A section not found.

AMERICAN EXPRESS CO_10-Q_2022-07-22_4962-0000004962-22-000041.html

@@ -0,0 +1 @@
+MD&A section not found.

AMERICAN INTERNATIONAL GROUP, INC._10-Q_2022-08-09_5272-0000005272-22-000021.html

@@ -0,0 +1 @@
+MD&A section not found.

AMERIPRISE FINANCIAL INC_10-Q_2022-08-01_820027-0000820027-22-000070.html

@@ -0,0 +1 @@
+MD&A section not found.

AMERISOURCEBERGEN CORP_10-Q_2022-08-03_1140859-0001140859-22-000041.html

@@ -0,0 +1 @@
+MD&A section not found.

AMPHENOL CORP -DE-_10-Q_2022-07-29_820313-0001558370-22-011379.html

@@ -0,0 +1 @@
+MD&A section not found.

ANALOG DEVICES INC_10-Q_2022-08-17_6281-0000006281-22-000224.html

@@ -0,0 +1 @@
+MD&A section not found.

APPLIED MATERIALS INC -DE_10-Q_2022-08-25_6951-0000006951-22-000032.html

@@ -0,0 +1 @@
+MD&A section not found.

ARCH CAPITAL GROUP LTD._10-Q_2022-11-03_947484-0000947484-22-000077.html

@@ -0,0 +1 @@
+MD&A section not found.

ASSURANT, INC._10-Q_2022-08-04_1267238-0001267238-22-000031.html

@@ -0,0 +1 @@
+MD&A section not found.

AT&T INC._10-Q_2022-08-04_732717-0000732717-22-000093.html

@@ -0,0 +1 @@
+MD&A section not found.

ATMOS ENERGY CORP_10-Q_2022-08-03_731802-0000731802-22-000030.html

@@ -0,0 +1 @@
+MD&A section not found.

AVALONBAY COMMUNITIES INC_10-Q_2022-11-08_915912-0000915912-22-000020.html

@@ -0,0 +1 @@
+MD&A section not found.

AbbVie Inc._10-Q_2022-08-04_1551152-0001551152-22-000030.html

@@ -0,0 +1 @@
+MD&A section not found.

Airbnb, Inc._10-Q_2022-08-03_1559720-0001559720-22-000012.html

@@ -0,0 +1 @@
+MD&A section not found.

American Water Works Company, Inc._10-Q_2022-07-27_1410636-0001410636-22-000144.html

@@ -0,0 +1 @@
+MD&A section not found.

Aptiv PLC_10-Q_2022-08-04_1521332-0001521332-22-000043.html

@@ -0,0 +1 @@
+MD&A section not found.

Archer-Daniels-Midland Co_10-Q_2022-07-26_7084-0000007084-22-000023.html

@@ -0,0 +1 @@
+MD&A section not found.

Autodesk, Inc._10-Q_2022-08-31_769397-0000769397-22-000123.html

@@ -0,0 +1 @@
+MD&A section not found.

BANK OF AMERICA CORP -DE-_10-Q_2022-07-29_70858-0000070858-22-000112.html

@@ -0,0 +1 @@
+MD&A section not found.

BERKLEY W R CORP_10-Q_2022-08-02_11544-0000011544-22-000027.html

@@ -0,0 +1 @@
+MD&A section not found.

BEST BUY CO INC_10-Q_2022-09-08_764478-0000764478-22-000037.html

@@ -0,0 +1 @@
+MD&A section not found.

BIO-TECHNE Corp_10-K_2022-08-24_842023-0001558370-22-013935.html

@@ -0,0 +1 @@
+ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONSThe following management discussion and analysis (“MD&A”) provides information that we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative information about the material sales drivers including the effect of acquisitions and changes in foreign currency at the corporate and segment level. We also provide quantitative information about discrete tax items and other significant factors we believe are useful for understanding our results. The MD&A should be read in conjunction with the consolidated financial information and related notes included in this Form 10-K. This discussion contains various “Non-GAAP Financial Measures” and also contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statements entitled “Non-GAAP Financial Measures” located at the end of this MD&A and “Forward-Looking Information and Cautionary Statements” and “Risk Factors” within Items 1 and 1A of this Form 10-K.OVERVIEWBio-Techne develops, manufactures and sells life science reagents, instruments and services for the research and clinical diagnostic markets worldwide. With our deep product portfolio and application expertise, we sell integral components of scientific investigations into biological processes and molecular diagnostics, revealing the nature, diagnosis, etiology and progression of specific diseases. Our products aid in drug discovery efforts and provide the means for accurate clinical tests and diagnoses.We manage the business in two operating segments – our Protein Sciences segment and our Diagnostics and Genomics segment. Our Protein Sciences segment is a leading developer and manufacturer of high-quality biological reagents used in all aspects of life science research, diagnostics and cell and gene therapy. This segment also includes proteomic analytical tools, both manual and automated, that offer researchers and pharmaceutical manufacturers efficient and streamlined options for automated western blot and multiplexed ELISA workflow. Our Diagnostics and Genomics segment develops and manufactures diagnostic products, including controls, calibrators, and diagnostic assays for the regulated diagnostics market, exosome-based molecular diagnostic assays, advanced tissue-based in-situ hybridization assays for spatial genomic and tissue biopsy analysis, and genetic and oncology kits for research and clinical applications.RECENT ACQUISITIONSA key component of the Company's strategy is to augment internal growth at existing businesses with complementary acquisitions. The Company did not make any acquisitions in fiscal year 2022. As disclosed in Note 1, the Company made a $25 million investment in a forward contract, which allows the Company to acquire Wilson Wolf based on certain revenue or EBITDA thresholds being met. As further disclosed in Note 13, the Company closed on the acquisition of Namocell, Inc on July 1, 2022. OVERALL RESULTSOperational UpdateFor fiscal 2022, consolidated net sales increased 19% as compared to fiscal 2021. Organic growth was 17%, with acquisitions having a favorable impact of 3% and foreign currency translation having an unfavorable impact of 1%. Organic revenue growth was broad based and driven by overall execution of the Company's long-term growth strategy.​Consolidated earnings, including non-controlling interest, increased 88% compared to fiscal 2021. The increase in earnings was driven by non-operating mark-to-market gain of $16 million on our ChemoCentryx investment in fiscal year 2022, compared to a loss on the investment of $67.9 million in the prior fiscal year. Additionally, fiscal year 2022 had adjustments of $20.4 million of benefit related to contingent considerations as compared to a charge of $5.3 million in the prior fiscal year. After adjusting for acquisition related costs, intangibles amortization, stock-based compensation, 32 Table of Contentsrestructuring costs, the gain on investment, and impact from partially-owned consolidated subsidiaries, adjusted net earnings increased 18% in fiscal 2022 as compared to fiscal 2021. Adjusted earnings growth was primarily driven by sales growth. For fiscal 2021, consolidated net sales increased 26% as compared to fiscal 2020. Organic growth was 22%, with currency translation and acquisitions having a 3% and 1% impact on revenue respectively. Organic revenue growth was broad based and driven by accelerated momentum of the Company's long-term growth strategy as well as customer site closures in the latter half of fiscal 2020 due to the COVID-19 pandemic. For fiscal 2021, consolidated earnings, including non-controlling interest, decreased 39% compared to fiscal 2020. The decrease in earnings was primarily due to a non-operating loss of approximately $67.9 million on our ChemoCentryx investment, compared to a gain on investment of $137 million in the last fiscal year. After adjusting for acquisition related costs, intangibles amortization, stock-based compensation, restructuring costs, the loss on investment, certain income tax items in both years, and non-controlling interest, adjusted net earnings increased 52% in fiscal 2021 as compared to fiscal 2020. Adjusted earnings growth was driven by the reopening of customer sites closing during the latter half of fiscal 2020, volume leverage, operational productivity, and product mix.​Business Strategy Update​Environmental​The Company’s key business strategies for long-term growth and profitability continue to be geographic expansion, core product innovation, acquisitions and talent retention and development. The Company was also focused on evaluating how climate change impacts from our business operations might be measured and mitigated, with the plan of integrating consideration of greenhouse gas emissions and other climate variables into those key business strategies.​In response to the COVID-19 pandemic, the Company took additional steps to monitor and strengthen our supply chain to maintain an uninterrupted supply of our critical products and services. The Company has maintained these procedures while incorporating additional considerations regarding potential adverse weather events associated with climate change.​The financial impact of potential environmental regulations pertaining to carbon emissions or the integration of climate change impacts into our core business strategies are not expected to materially alter the Company’s near-term financial results. Additionally, the Company is creating a cross-functional internal council to evaluate potential long-term business impacts while driving long-term sustainability solutions.​Digital​In driving our four key business strategies, the Company utilizes digital networks and systems for data transmission, transaction processing, and storing of electronic information. As disclosed in “Item 1A. Risk Factors”, increased cybersecurity attack activity poses a risk for our business. In response to this risk, the Company actively completes system patching and required maintenance, performs internal and third-party employee training, monitors network and system activity, and completes data backups for our systems. However, even with the Company’s procedures performed, our digital networks and systems are still potentially vulnerable to cyberattacks.​The financial impact of our cybersecurity initiatives and activities are ongoing and not expected to have a material impact on our financial results. However, the impact on our business operations and financial results from a material cyber breach would be unknown and dependent on the nature of the breach.​RESULTS OF OPERATIONSNet SalesConsolidated organic net sales exclude the impact of companies acquired during the first 12 months post-acquisition and the effect of the change from the prior year in exchange rates used to convert sales in foreign currencies (primarily the euro, British pound sterling, and Chinese yuan) into U.S. dollars.33 Table of Contents​Consolidated net sales growth was as follows:​​​​​​​​​ Year Ended June 30, ​ 2022 2021 2020 ​​​​​​​​Organic sales growth 17% 22% 4%Acquisitions sales growth 3% 1% 0%Impact of foreign currency fluctuations (1)% 3% 0%Consolidated net sales growth 19% 26% 4%​Consolidated net sales by segment were as follows (in thousands):​​​​​​​​​​​ Year Ended June 30, ​ 2022 2021 2020Protein Sciences​$ 832,311​$ 704,564​$ 555,352Diagnostics and Genomics​ 274,843​ 227,744​ 184,549Intersegment​ (1,555)​ (1,276)​ (1,210)Consolidated net sales​$ 1,105,599​$ 931,032​$ 738,691​In fiscal 2022, Protein Sciences segment net sales increased 18% compared to fiscal 2021. Organic growth for the segment was 19% for the fiscal year, with currency translation having an unfavorable 1% impact on revenue.Overall segment growth was driven by strong BioPharma demand resulting in broad-based growth across our proteomic research reagents and analytical tools.In fiscal 2022, Diagnostics and Genomics segment net sales increased 21% compared to fiscal 2021. Organic growth for the segment was 10% with acquisitions contributing 11% and currency translation having an immaterial impact on revenue growth.Segment growth was driven by the full year impact of the Asuragen acquisition and organic growth. Organic growth was driven by an exclusive agreement entered into for development, finalization and commercialization of our ExoTRU kidney transplant rejection test, and continued strength in our diagnostic reagent product lines.​In fiscal 2021, Protein Sciences segment net sales increased 27% compared to fiscal 2020. Organic growth for the segment was 24% for the fiscal year, with foreign currency translation having a favorable impact of 3%, and acquisitions contributing an immaterial amount. Overall segment growth was driven by continued market acceptance of our portfolio of productivity enhancing solutions across end-markets and geographies combined with the reopening of customer sites that were closed in the latter half of fiscal 2020 due to COVID-19. In fiscal 2021, Diagnostics and Genomics segment net sales increased 23% compared to fiscal 2020. Organic growth was 18% with acquisitions and foreign currency having a favorable impact of 4% and 1% impact on revenue, respectively. Overall segment revenue growth was driven by broad based organic growth across product lines and geographies and the acquisition of Asuragen in the fourth quarter of fiscal year 2021. RNAscope products had an exceptional year in both the Academia and Bio-Pharma end markets, while the Exosome product line also provided year over year growth despite navigating limitations and/or customer avoidance of non-essential medical procedures throughout fiscal 2021 associated with the COVID-19 pandemic. 34 Table of ContentsGross MarginsConsolidated gross margins were 68.4%, 68.0%, and 65.4% in fiscal 2022, 2021, and 2020. Consolidated gross margins were positively impacted as a result of broad based revenue growth. Excluding the impact of acquired inventory sold, amortization of intangibles, stock compensation expense, and the impact of partially-owned consolidated subsidiaries, adjusted gross margins were 72.5%, 72.3%, and 70.3% in fiscal 2022, 2021, and 2020 respectively. Fiscal 2022 adjusted gross margin was positively impacted by volume leverage and product mix, partially offset by additional investments made in the business to support future growth, when compared to fiscal 2020 and fiscal 2019.A reconciliation of the reported consolidated gross margin percentages, adjusted for acquired inventory sold and intangible amortization included in cost of sales, is as follows:​​​​​​​​​​​​​ ​Year Ended June 30, ​​2022 2021 2020 ​​​​​​​Consolidated gross margin percentage 68.4% 68.0% 65.4%Identified adjustments:​ ​Costs recognized upon sale of acquired inventory 0.1% 0.2% —%Amortization of intangibles 3.7% 3.8% 4.7%Stock compensation expense - COGS 0.1% 0.2% 0.2%Impact of partially owned consolidated subsidiaries(1) 0.2% 0.1% —%Non-GAAP adjusted gross margin percentage 72.5% 72.3% 70.3%​(1)Adjusted gross margin percentages for fiscal 2021 have been updated for comparability to fiscal 2022 for the inclusion of the impact of partially-owned consolidated subsidiaries on the Company’s adjusted gross margin percentage.​Fluctuations in adjusted gross margins, as a percentage of net sales, have primarily resulted from changes in foreign currency exchange rates and changes in product mix. We expect that, in the future, gross margins will continue to be impacted by the mix of our portfolio growing at different rates as well as future acquisitions.Management uses adjusted operating results to monitor and evaluate performance of the Company’s two segments. Segment gross margins, as a percentage of net sales, were as follows:​​​​​​​​​​ Year Ended June 30, ​​2022 2021 2020 ​​​​​​​​Protein Sciences 75.5% 76.0% 75.0%Diagnostics and Genomics 63.1% 60.5% 55.6%​The changes in the Protein Sciences segment’s gross margin percentage for fiscal 2022 as compared to fiscal 2021 and 2020 was primarily attributable to mix of product sales within the segment.The increase in the Diagnostics and Genomics segment’s gross margin for fiscal 2022 as compared to fiscal 2021 and fiscal 2020 was primarily due to volume leverage. Selling, General and Administrative ExpensesSelling, general and administrative expenses increased $47.8 million (15%) in fiscal 2022 when compared to fiscal 2021. Selling, general, and administrative expenses increased primarily due to the full year impact of prior year’s Asuragen acquisition and strategic investments made in the business to support future growth. Selling, general and administrative expenses increased $64.4 million (25%) in fiscal 2021 when compared to fiscal 2020. Selling, general, and administrative expenses increased primarily due to investments made by the Company to support volume growth within each of the segments as well as additional expenses related to the acquisition of Asuragen, Inc.35 Table of ContentsConsolidated selling, general and administrative expenses were composed of the following (in thousands):​​​​​​​​​​​ Year Ended June 30, ​​2022​2021​2020​​​​​​​​​​Protein Sciences​$ 195,328​$ 159,489​$ 138,792Diagnostics and Genomics​ 93,578​ 75,160​ 65,407Total segment expenses​ 288,906​ 234,649​ 204,199Amortization of intangibles​ 32,492​ 27,788​ 26,358Acquisition related expenses​ (19,082)​ 7,097​ 415Eminence impairment(1)​​ 18,715​​ —​​ —Gain on escrow litigation​ —​ —​ (7,159)Restructuring costs​ 1,640​ 142​ 87Stock-based compensation​ 45,085​ 50,200​ 32,667Corporate selling, general and administrative expenses​ 5,010​ 5,075​ 4,016Total selling, general and administrative expenses​$ 372,766​$ 324,951​$ 260,583(1)Refer to the Goodwill Impairment section within the Critical Accounting Policies for further details on the Eminence impairment. ​Research and Development ExpensesResearch and development expenses increased $16.5 million (23%) and $5.4 million (8%) in fiscal 2022 and 2021, respectively, as compared to prior year periods. The increase in research and development expenses in fiscal 2022 as compared to 2021 was primarily attributable to strategic growth investments and the Asuragen acquisition in the fourth quarter of fiscal 2021. The increase in research and development expenses in fiscal 2021 as compared to fiscal 2020 was primarily attributable to continued investment in future growth platforms of the Company and recent acquisitions. ​​​​​​​​​​​ Year Ended June 30, ​​2022​2021​2020​​​​​​​​​​Protein Sciences​$ 56,370​$ 46,361​$ 43,022Diagnostics and Genomics​ 30,770​ 24,242​ 22,170Total segment expenses​ 87,140​ 70,603​ 65,192Unallocated corporate expenses​ —​ —​ —Total research and development expenses​$ 87,140​$ 70,603​$ 65,192​Net Interest Income / (Expense)Net interest income/(expense) for fiscal 2022, 2021, and 2020 was ($10.5) million, $(13.5) million, and $(18.6) million, respectively. Net interest expense in fiscal 2022 decreased when compared to fiscal 2021 due to a reduction in our average long-term debt, which coincided with a reduction in the notional amount on our variable interest derivative. Net interest expense in fiscal 2021 decreased when compared to fiscal 2020 due to a reduction in our average long-term debt, which coincided with a reduction in the notional amount on our variable interest derivative. ​36 Table of ContentsOther Non-Operating Expense, NetOther non-operating expense, net, consists of foreign currency transaction gains and losses, rental income, building expenses related to rental property and the Company’s gains and losses on investments as follows (in thousands):​​​​​​​​​​​ Year Ended June 30, ​​2022​2021​2020​​​​​​​​​​Foreign currency gains (losses)​$ 699​$ (6,650)​$ 1,703Rental income​ 599​ 1,036​ 1,140Real estate taxes, depreciation and utilities​ (2,035)​ (1,845)​ (1,915)Gain (loss) on investment​ 15,186​ (68,047)​ 137,508Miscellaneous (expense) income​ 862​ (136)​ (786)Other non-operating income (expense), net​$ 15,311​$ (75,642)​$ 137,650​During fiscal 2022, the Company recognized gains of $16.1 million related to changes in fair value associated with changes in the stock price of our ChemoCentryx, Inc. (CCXI) investment. Additionally, the Company recognized losses of $1.1 million related to changes in fair value associated with changes in the stock price of our exchange traded investment grade bond funds. As described in Note 13, on August 4, 2022, the Company sold all of its shares in CCXI.During fiscal 2021, the Company recognized losses of $67.9 million related to changes in fair value associated with changes in the stock price of our ChemoCentryx, Inc. (CCXI) investment.During fiscal 2020, the Company recognized gains of $137.5 million related to changes in fair value associated with changes in the stock price of our ChemoCentryx, Inc. (CCXI) investment.Income TaxesIncome taxes for fiscal 2022, 2021, and 2020 were at effective rates of 12.7%, 5.8%, and 17.1%, respectively, of consolidated earnings before income taxes. The change in the effective tax rate for fiscal 2022 compared to fiscal 2021 was driven by a mix of increased net income and the dilutive effect the increased net income has on the favorable rate benefits, which are mainly related to share-based compensation. The Company had share-based compensation excess tax benefits of $29.3 million in fiscal 2022. The Company’s discrete tax benefits in fiscal 2021 primarily related to share-based compensation excess tax benefits of $28.1 million. The Company’s discrete tax benefits in fiscal 2020 primarily related to share-based compensation excess tax benefits of $17.7 million. ​37 Table of ContentsNet EarningsNon-GAAP adjusted consolidated net earnings and earnings per share are as follows (in thousands):​​​​​​​​​​​​​​​​​​​ ​Year Ended June 30, ​​2022​2021​2020 ​​​​​​​​​​Net earnings before taxes - GAAP$ 301,386​$ 148,175​$ 276,477​Identified adjustments attributable to Bio-Techne: ​​ ​​ ​Costs recognized upon sale of acquired inventory 1,596​ 1,565​ —​Amortization of intangibles 73,054​ 64,239​ 60,865​Acquisition related expenses (18,694)​ 7,489​ 793​Gain on escrow settlement —​ —​ (7,170)​Eminence impairment​ 18,715​​ —​​​​Stock based compensation, inclusive of employer taxes 46,401​ 51,846​ 34,262​Restructuring costs 1,640​ 142​ 87​Investment (gain) loss and other (16,171)​ 68,391​ (136,716)​Impact of partially owned subsidiaries(1) 2,675​ 1,390​ —​Earnings before taxes - Adjusted$ 410,602​$ 343,237​$ 228,598​​���​​​​​​​​Non-GAAP tax rate 21.2% 20.2% 21.6%Non-GAAP tax expense 87,090​ 69,478​ 49,280​Non-GAAP adjusted net earnings attributable to Bio-Techne(1)$ 323,512​ 273,759​ 179,318​Earnings per share - diluted - Adjusted 7.89​ 6.76​ 4.55​​(1)Adjusted consolidated net earnings and earnings per share for fiscal 2021 have been updated for comparability to fiscal 2022 for the inclusion of the impact of partially-owned consolidated subsidiaries on the Company’s adjusted consolidated net earnings and earnings per share.​Depending on the nature of discrete tax items, our reported tax rate may not be consistent on a period to period basis. The Company independently calculates a non-GAAP adjusted tax rate considering the impact of discrete items and jurisdictional mix of the identified non-GAAP adjustments. The following table summarizes the reported GAAP tax rate and the effective Non-GAAP adjusted tax rate for the periods ended June 30, 2022, 2021, and 2020.​​​​​​​​​​​​​ ​Year Ended June 30, ​​2022​2021​2020 ​​​​​​​GAAP effective tax rate 12.7% 5.8% 17.1%Discrete items 11.3 19.0 7.0​Long-term GAAP tax rate 24.0% 24.8% 24.1​​​​​​​​Rate impact items ​Stock based compensation (1.9)% (5.7)% (2.4)%Acquisition costs (0.0) (0.2) 0.4​Change in fair value of investments (0.1) 0.5 (0.4)​Other (0.8) 0.8 (0.1)​Total rate impact items (2.8)% (4.6)% (2.5)%Non-GAAP adjusted tax rate(1) 21.2% 20.2% 21.6%​Refer to Note 11 for additional discussion relating to the change in discrete tax items between fiscal 2022 and fiscal 2021.38 Table of ContentsLIQUIDITY AND CAPITAL RESOURCESCash, cash equivalents and available-for-sale investments at June 30, 2022 were $247.0 million compared to $231.6 million at June 30, 2021. Included in available-for-sale investments at June 30, 2022 and June 30, 2021 was the fair value of the Company’s investment in CCXI of $36.0 million and $20.0 million, respectively, as well as the Company’s exchange traded investment grade bond funds of $23.9 million as of June 30, 2022. The Company purchased these bond funds during the year ended June 30, 2022.At June 30, 2022, approximately 31% of the Company’s cash and equivalent account balances of $172.6 million were located in the U.S., with the remainder located in primarily in Canada, China, the U.K. and other European countries.At June 30, 2022, approximately 48% of the Company’s available-for-sale investment account balances of $74.5 million were located in the U.S., with the remaining 32% in Canada and 20% in China.The Company has either paid U.S. taxes on its undistributed foreign earnings or intends to indefinitely reinvest the undistributed earnings in the foreign operations or expects the earnings will be remitted in a tax neutral transaction. Management of the Company expects to be able to meet its cash and working capital requirements for operations, facility expansion, capital additions, and cash dividends for the foreseeable future, and at least the next 12 months, through currently available funds, including funds available through our line-of-credit and cash generated from operations.Future acquisition strategies may or may not require additional borrowings under the line-of-credit facility or other outside sources of funding.Cash Flows From Operating ActivitiesThe Company generated cash from operations of $325.3 million, $352.2 million, and $205.2 million in fiscal 2022, 2021, and 2020 respectively. The decrease in cash generated from operating activities in fiscal 2022 as compared to fiscal 2021 was mainly a result of changes in the timing of cash payments on certain operating assets and liabilities, largely offset by an increase in year over year net earnings. The increase in cash generated from operating activities in fiscal 2021 as compared to fiscal 2020 was mainly a result of an increase in year over year operating income of $79.9 million and a $29.3 million benefit to operating cash from year-over-year changes in operating assets and liabilities as well as a non-cash stock-based compensation expense of $16.6 million. Cash Flows From Investing ActivitiesWe continue to make investments in our business, including capital expenditures. There are no cash payments for acquisitions during fiscal year 2022. The Company acquired Eminence Biotechnology and Asuragen, Inc. during fiscal year 2021 for a total of approximately $225.4 million, net of cash acquired. The Company did not make any acquisitions in fiscal 2020. The Company’s net proceeds (outflow) from the purchase, sale and maturity of available-for-sale investments in fiscal 2022, 2021, and 2020 were $(26.9) million, $26.7 million, and $76.9 million, respectively. The decrease in fiscal 2022 compared to fiscal 2021 was driven by the purchase of the exchange traded investment grade bond funds, which have a cost basis of $25.0 million. The decrease in fiscal 2021 compared to fiscal 2020 was driven by the sale of a portion of the CCXI investment in fiscal year 2020, which did not reoccur in fiscal year 2021. The Company’s investment policy is to place excess cash in certificates of deposit with the objective of obtaining the highest possible return while minimizing risk and keeping the funds accessible.Capital additions in fiscal year 2022, 2021, and 2020 were $44.9 million, $44.3 million, and $51.7 million. Fiscal 2022 capital expenditures related to investments in new buildings, machinery, and IT equipment. Fiscal 2021 capital expenditures related to investments in new buildings, in particular, the Company’s GMP manufacturing facility. Capital additions planned for fiscal 2023 are approximately $62 million and are expected to be financed through currently available cash and cash generated from operations. Increase in expected additions in fiscal 2023 is related to increasing capacity to meet expected sales growth across the Company.39 Table of ContentsDuring the year ended June 30, 2022, the Company paid $25 million to enter into a two-part forward contract which requires the Company to purchase the full equity interest in Wilson Wolf Corporation (Wilson Wolf) if certain annual revenue or EBITDA thresholds are met. The Company is currently forecasting the first option payment of $231 million to occur in fiscal 2023 with the second option payment of approximately $1 billion plus potential contingent consideration occurring between fiscal 2026 and fiscal 2028.Cash Flows From Financing ActivitiesIn fiscal 2022, 2021, and 2020, the Company paid cash dividends of $50.2 million, $49.6 million, $48.9 million, respectively. The Board of Directors periodically considers the payment of cash dividends.The Company received $77.2 million, $65.1 million, $71.0 million, for the exercise of options for 613,000, 627,000, 743,000 shares of common stock in fiscal 2022, 2021 and 2020, respectively.During fiscal 2022, 2021, and 2020, the Company repurchased $161.0 million, $43.2 million, and $50.1 million, respectively, in share repurchases included as a cash outflow within Financing Activities.During fiscal 2022, 2021, and 2020, the Company drew $90.0 million, $256.0 million, and $40.0 million, respectively, under its revolving line-of-credit facility. Repayments of $175.5 million, $271.5 million, and $188.5 million were made on its line-of-credit in fiscal 2022, 2021, and 2020, respectively.During fiscal 2022, the Company made $4.0 million in cash payments towards the Quad contingent consideration liability. Of the $4.0 million in total payments, $0.7 million is classified as financing on the statement of cash flows. The remaining $3.3 million is recorded as operating on the statement of cash flows as it represents the consideration liability that exceeds the amount of the contingent consideration liability recognized at the acquisition date. During fiscal 2021, there were no payments related to contingent consideration classified as financing activities. The Company made $0.3 million in contingent consideration payments, which were classified within operating activities. During fiscal 2020, the Company made $4.4 million ($4 million for Quad and $0.4 million for B-MoGen) in cash payments towards the Quad, Exosome, and B-MoGen contingent consideration liabilities. Of the $4.4 million in total payments, $3.4 million is classified as financing on the statement of cash flows. The remaining $1 million is recorded as operating on the statement of cash flows. During fiscal 2022, 2021 and 2020, the Company paid $23.5 million, $19.3 million and $3.8 million, respectively, for taxes remitted on behalf of participants in net share settlement transactions and restricted stock units. This is included as a cash outflow within the other financing activities line of the consolidated statements of cash flows.CRITICAL ACCOUNTING POLICIESManagement’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.The Company has identified the policies outlined below as critical to its business operations and an understanding of results of operations. The listing is not intended to be a comprehensive list of all accounting policies; investors should also refer to Note 1 to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.Business CombinationsWe allocate the purchase price of acquired businesses to the estimated fair values of the assets acquired and liabilities assumed as of the date of the acquisition. The calculations used to determine the fair value of the long-lived assets acquired, 40 Table of Contentsprimarily intangible assets, can be complex and require significant judgment. We weigh many factors when completing these estimates including, but not limited to, the nature of the acquired company’s business; its competitive position, strengths, and challenges; its historical financial position and performance; estimated customer retention rates; discount rates; and future plans for the combined entity. We may also engage independent valuation specialists, when necessary, to assist in the fair value calculations for significant acquired long-lived assets.The fair value of acquired technology is generally the primary asset identified and therefore estimated using the multi-period excess earnings method. The multi-period excess earnings method model estimates revenues and cash flows derived from the primary asset and then deducts portions of the cash flow that can be attributed to supporting assets, such as Trade Names and in-process research and development, that contributed to the generation of the cash flows. The resulting cash flow, which is attributable solely to the primary asset acquired, is then discounted at a rate of return commensurate with the risk of the asset to calculate a present value. The Trade Name is generally calculated using the relief from royalty method, which calculates the cost savings associated with owning rather than licensing the technology. Assumed royalty rates are applied to the projected revenues for the remaining useful life of the technology to estimate the royalty savings. In-process research and development assets are valued using the multi-period excess earnings method when the cash flows from the in-process research and development assets are separately identifiable from the primary asset. In circumstances that Customer Relationship assets are identified that are not the primary asset, they are valued using the distributor model income approach, which isolates revenues and cash flow associated with the sales and distribution function of the entity and attributable to customer-related assets, which are then discounted at a rate of return commensurate with the risk of the asset to calculate a present value.We estimate the fair value of liabilities for contingent consideration by discounting to present value the probability weighted contingent payments expected to be made. For potential payments related to financial performance based milestones, projected revenue and/or EBITDA amounts, volatility and discount rates assumptions are included in the estimated amounts. For potential payments related to product development milestones, the fair value is based on the probability of achievement of such milestones. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. Goodwill is not amortized, but is subject to impairment testing on at least an annual basis.We are also required to estimate the useful lives of the acquired intangible assets, which determines the amount of acquisition-related amortization expense we will record in future periods. Each reporting period, we evaluate the remaining useful lives of our amortizable intangibles to determine whether events or circumstances warrant a revision to the remaining period of amortization.While we use our best estimates and assumptions, our fair value estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Any adjustments required after the measurement period are recorded in the consolidated statements of earnings.The judgments required in determining the estimated fair values and expected useful lives assigned to each class of assets and liabilities acquired can significantly affect net income. For example, different classes of assets will have useful lives that differ. Consequently, to the extent a longer-lived asset is ascribed greater value than a shorter-lived asset, net income in a given period may be higher. Additionally, assigning a lower value to amortizable intangibles would result in a higher amount assigned to goodwill. As goodwill is not amortized, this would benefit net income in a given period, although goodwill is subject to annual impairment analysis.Impairment of GoodwillGoodwillGoodwill was $822.1 million as of June 30, 2022, which represented 36% of total assets. Goodwill is tested for impairment on an annual basis in the fourth quarter of each year, or more frequently if events occur or circumstances change that could indicate a possible impairment.41 Table of ContentsTo analyze goodwill for impairment, we must assign our goodwill to individual reporting units. Identification of reporting units includes an analysis of the components that comprise each of our operating segments, which considers, among other things, the manner in which we operate our business and the availability of discrete financial information. Components of an operating segment are aggregated to form one reporting unit if the components have similar economic characteristics. We periodically review our reporting units to ensure that they continue to reflect the manner in which we operate our business.In the first quarter of fiscal 2022, the Company combined the management of the Exosome Diagnostics and Asuragen reporting units, both of which are included in the Diagnostics and Genomics operating segment. In conjunction with the combination of the reporting units, a qualitative goodwill impairment assessment was performed. The qualitative assessment identified no indicators of impairment.In the second quarter of fiscal 2022, Changzhou Eminence Biotechnology Co., Ltd. (Eminence) notified the Company of its need for additional capital to execute its growth plan. The Company first attempted to find outside equity financing support for the Eminence investment but was unable to do so. The Company then reviewed the additional financing needs required to successfully ramp Eminence’s business, which ultimately did not meet the Company’s return on capital requirements. Therefore, the Company did not provide additional funding to Eminence. As a result of not obtaining additional financing, Eminence notified the Company of its plans to cease operations and liquidate its business.Given the upcoming liquidation process to dispose of the Eminence assets, the Company identified a triggering event and performed impairment testing during the second quarter of fiscal 2022. The impairment testing resulted in a full impairment of the Eminence goodwill and intangible assets, which resulted in charges of $8.3 million and $8.6 million, respectively, for the year ended June 30, 2022. The Company also recognized inventory and fixed asset impairment charges of $0.9 million and $0.9 million, respectively. The Company recorded the impairment charges within the General and Administrative line in the Consolidated Income Statement. The impairment charges recorded within Net Earnings Attributable to Bio-Techne were reduced by approximately $8 million recorded within Net Earnings Attributable to Noncontrolling Interests. The remaining net tangible assets of Eminence included in our Consolidated Balance Sheet as of June 30 2022, were $4.3 million and primarily consisted of fixed assets and related deposits of $3.1 million, inventory of $0.6 million, receivables of $0.4 million, and other current assets of $0.1 million. The Company also had $4.5 million related to current liabilities. The Company holds a financial interest of approximately 57.4% in those tangible assets in the upcoming liquidation process.2022 Goodwill Impairment AnalysesIn completing our 2022 annual goodwill impairment analyses, we elected to perform a quantitative assessment for all five of our reporting units. A quantitative assessment involves comparing the carrying value of the reporting unit, including goodwill, to its estimated fair value. Carrying value is based on the assets and liabilities associated with the operations of the reporting unit, which often requires the allocation of shared or corporate items among reporting units. In accordance with ASU 2017‑04, a goodwill impairment charge is recorded for the amount by which the carrying value of a reporting unit exceeds the fair value of the reporting unit. In determining the fair values of our reporting units, we utilized the income approach. The income approach is a valuation technique under which we estimated future cash flows using the reporting unit’s financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we projected revenue and applied our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value- weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair value of a reporting unit, we were required to estimate a number of factors, including projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, the discount rate and the allocation of shared or corporate items.The result of our quantitative assessment indicated that all of the reporting units had a substantial amount of headroom as of April 1, 2022. This impairment assessment is sensitive to changes in forecasted cash flows, as well as our selected discount rate. Changes in the reporting unit’s results, forecast assumptions and estimates could materially affect the estimation of the fair value of the reporting units. The Company did not identify any triggering events after our annual 42 Table of Contentsgoodwill impairment through June 30, 2022, the date of our consolidated balance sheet, that would require an additional goodwill impairment assessment to be performed.2021 Goodwill Impairment AnalysesIn completing our 2021 annual goodwill impairment analyses, we elected to perform a quantitative assessment for each of our five reporting units. A quantitative assessment involves comparing the carrying value of the reporting unit, including goodwill, to its estimated fair value. Carrying value is based on the assets and liabilities associated with the operations of the reporting unit, which often requires the allocation of shared or corporate items among reporting units. In accordance with ASU 2017-04, a goodwill impairment charge is recorded for the amount by which the carrying value of a reporting unit exceeds the fair value of the reporting unit. In determining the fair values of our reporting units, we utilized the income approach. The income approach is a valuation technique under which we estimated future cash flows using the reporting unit’s financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we projected revenue and applied our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair value of a reporting unit, we were required to estimate a number of factors, including projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, the discount rate and the allocation of shared or corporate items.Because our 2021 quantitative analyses included all of our reporting units, the summation of our reporting units’ fair values, as indicated by our discounted cash flow calculations, were compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. This impairment assessment is sensitive to changes in forecasted cash flows, as well as our selected discount rate. Changes in the reporting unit’s results, forecast assumptions and estimates could materially affect the estimation of the fair value of the reporting units.The quantitative assessment completed as of April 1, 2021 indicated that all of the reporting units had a substantial amount of headroom. Accordingly, the Company determined there was no indication of impairment of goodwill in our annual goodwill impairment analysis. Further, no triggering events were identified in the year ended June 30, 2021 that would require an additional goodwill impairment assessment beyond our required annual goodwill impairment assessment.2020 Goodwill Impairment AnalysesIn completing our 2020 annual goodwill impairment analyses, we elected to perform a quantitative assessment for all of our reporting units. A quantitative assessment involves comparing the carrying value of the reporting unit, including goodwill, to its estimated fair value. Carrying value is based on the assets and liabilities associated with the operations of the reporting unit, which often requires the allocation of shared or corporate items among reporting units. In accordance with ASU 2017-04, a goodwill impairment charge is recorded for the amount by which the carrying value of a reporting unit exceeds the fair value of the reporting unit. In determining the fair values of our reporting units, we utilized the income approach. The income approach is a valuation technique under which we estimated future cash flows using the reporting unit’s financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, we projected revenue and applied our fixed and variable cost experience rates to the projected revenue to arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair value of a reporting unit, we were required to estimate a number of factors, including projected operating results, terminal growth rates, economic conditions, anticipated future cash flows, the discount rate and the allocation of shared or corporate items.Because our 2020 quantitative analyses included all of our reporting units, the summation of our reporting units’ fair values, as indicated by our discounted cash flow calculations, were compared to our consolidated fair value, as indicated by our market capitalization, to evaluate the reasonableness of our calculations. This impairment assessment is sensitive to changes in forecasted cash flows, as well as our selected discount rate. Changes in the reporting unit’s results, forecast assumptions and estimates could materially affect the estimation of the fair value of the reporting units.43 Table of ContentsThe quantitative assessment completed as of April 1, 2020 indicated that all of the reporting units had a substantial amount of headroom. Accordingly, the Company determined there was no indication of impairment of goodwill in our annual goodwill impairment analysis. Further, no triggering events were identified in the year ended June 30, 2020 that would require an additional goodwill impairment assessment beyond our required annual goodwill impairment assessment.NEW ACCOUNTING PRONOUNCEMENTSInformation regarding the accounting policies adopted during fiscal 2022 and those not yet adopted can be found under caption “Note 1: Description of Business and Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial Statements appear in Item 8 of this report.SUBSEQUENT EVENTSOn July 1, 2022, the Company completed the acquisition of Namocell, Inc. for approximately $100 million, plus contingent consideration of up to $25 million upon the achievement of certain future milestones. On August 4, 2022, the Company sold its remaining shares of CCXI for approximately $73.3 million. The cost basis of the investment was $6.6 million. NON-GAAP FINANCIAL MEASURESThis Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:●Organic growth●Adjusted gross margin●Adjusted operating margin●Adjusted net earnings●Adjusted effective tax rate​We provide these measures as additional information regarding our operating results. We use these non-GAAP measures internally to evaluate our performance and in making financial and operational decisions, including with respect to incentive compensation. We believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations and that these measures are useful for period-to-period comparison of results.Our non-GAAP financial measure of organic growth represents revenue growth excluding revenue from acquisitions within the preceding 12 months, the impact of foreign currency, as well as the impact of partially-owned consolidated subsidiaries. Excluding these measures provides more useful period-to-period comparison of revenue results as it excludes the impact of foreign currency exchange rates, which can vary significantly from period to period, and revenue from acquisitions that would not be included in the comparable prior period. Revenue from partially-owned subsidiaries consolidated in our financial statements are also excluded from our organic revenue calculation, as those revenues are not fully attributable to the Company. Revenue from partially-owned subsidiaries was $4.6 million for the year ended June 30, 2022.44 Table of ContentsOur non-GAAP financial measures for adjusted gross margin, adjusted operating margin, and adjusted net earnings, in total and on a per share basis, exclude stock-based compensation, the costs recognized upon the sale of acquired inventory, amortization of acquisition intangibles, acquisition related expenses inclusive of the changes in fair value of contingent consideration, and other non-recurring items including non-recurring costs, goodwill and long-lived asset impairments, and gains. Stock-based compensation is excluded from non-GAAP adjusted net earnings because of the nature of this charge, specifically the varying available valuation methodologies, subjection assumptions, variety of award types, and unpredictability of amount and timing of employer related tax obligations. The Company excludes amortization of purchased intangible assets, purchase accounting adjustments, including costs recognized upon the sale of acquired inventory and acquisition-related expenses inclusive of the changes in fair value contingent consideration, and other non-recurring items including gains or losses on legal settlements, goodwill and long-lived asset impairment charges, and one-time assessments from this measure because they occur as a result of specific events, and are not reflective of our internal investments, the costs of developing, producing, supporting and selling our products, and the other ongoing costs to support our operating structure. Additionally, these amounts can vary significantly from period to period based on current activity. The Company also excludes revenue and expense attributable to partially-owned consolidated subsidiaries in the calculation of our non-GAAP financial measures as the revenues and expenses are not fully attributable to the Company.The Company’s non-GAAP adjusted operating margin and adjusted net earnings, in total and on a per share basis, also excludes stock-based compensation expense, which is inclusive of the employer portion of payroll taxes on those stock awards, restructuring, impairments of equity method investments, gain and losses from investments, and certain adjustments to income tax expense. Impairments of equity investments are excluded as they are not part of our day-to-day operating decisions. Additionally, gains and losses from other investments that are either isolated or cannot be expected to occur again with any predictability are excluded. Costs related to restructuring activities, including reducing overhead and consolidating facilities, are excluded because we believe they are not indicative of our normal operating costs. The Company independently calculates a non-GAAP adjusted tax rate to be applied to the identified non-GAAP adjustments considering the impact of discrete items on these adjustments and the jurisdictional mix of the adjustments. In addition, the tax impact of other discrete and non-recurring charges which impact our reported GAAP tax rate are adjusted from net earnings. We believe these tax items can significantly affect the period-over-period assessment of operating results and not necessarily reflect costs and/or income associated with historical trends and future results.The Company periodically reassesses the components of our non-GAAP adjustments for changes in how we evaluate our performance, changes in how we make financial and operational decisions, and considers the use of these measures by our competitors and peers to ensure the adjustments are still relevant and meaningful.Readers are encouraged to review the reconciliations of the adjusted financial measures used in management’s discussion and analysis of the financial condition of the Company to their most directly comparable GAAP financial measures provided within the Company’s consolidated financial statements.​45 Table of ContentsITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISKThe Company operates internationally, and thus is subject to potentially adverse movements in foreign currency exchange rates. Approximately 34% of the Company’s consolidated net sales in fiscal 2022 were made in foreign currencies, including 12% in euro, 4% in British pound sterling, 7% in Chinese yuan and the remaining 11% in other currencies. The Company is exposed to market risk primarily from foreign exchange rate fluctuations of the euro, British pound sterling, Chinese yuan and Canadian dollar as compared to the U.S. dollar as the financial position and operating results of the Company’s foreign operations are translated into U.S. dollars for consolidation.Month-end exchange rates between the euro, British pound sterling, Chinese yuan, Canadian dollar and the U.S. dollar, which have not been weighted for actual sales volume in the applicable months in the periods, were as follows:​​​​​​​​​​​​​​​​​​​Year Ended June 30, ​2022​2021​2020Euro​ ​ ​ High$ 1.19​$ 1.23​$ 1.12Low 1.05​ 1.16​ 1.09Average 1.12​ 1.20​ 1.11British pound sterling ​​ ​ High$ 1.39​$ 1.42​$ 1.32Low 1.21​ 1.29​ 1.22Average 1.32​ 1.35​ 1.26Chinese yuan ​​ ​ High$ 0.16​$ 0.16​$ 0.15Low 0.15​ 0.14​ 0.14Average 0.15​ 0.15​ 0.14Canadian dollar ​​ ​ High$ 0.81​$ 0.83​$ 0.77Low 0.78​ 0.75​ 0.71Average 0.79​ 0.78​ 0.74​The Company’s exposure to foreign exchange rate fluctuations also arises from trade receivables and intercompany payables denominated in one currency in the financial statements, but receivable or payable in another currency.The Company does not enter into foreign currency forward contracts to reduce its exposure to foreign currency rate changes on forecasted intercompany sales transactions or on intercompany foreign currency denominated balance sheet positions. Foreign currency transaction gains and losses are included in "Other non-operating expense, net" in the Consolidated Statement of Earnings and Comprehensive Income. The effect of translating net assets of foreign subsidiaries into U.S. dollars are recorded on the Consolidated Balance Sheet as part of "Accumulated other comprehensive income (loss)."The effects of a hypothetical simultaneous 10% appreciation in the U.S. dollar from June 30, 2022 levels against the euro, British pound sterling, Chinese yuan and Canadian dollar are as follows (in thousands):​​​​Decrease in translation of earnings of foreign subsidiaries (annualized) $ 4,618Decrease in translation of net assets of foreign subsidiaries​ 74,218Additional transaction losses​ 3,177​​​46 Table of Contents

BOEING CO_10-Q_2022-07-27_12927-0000012927-22-000058.html

@@ -0,0 +1 @@
+MD&A section not found.

BOSTON SCIENTIFIC CORP_10-Q_2022-11-03_885725-0000885725-22-000028.html

@@ -0,0 +1 @@
+MD&A section not found.

BROWN & BROWN, INC._10-Q_2022-07-26_79282-0000950170-22-013113.html

@@ -0,0 +1 @@
+MD&A section not found.

Bank of New York Mellon Corp_10-Q_2022-08-05_1390777-0001390777-22-000075.html

@@ -0,0 +1 @@
+MD&A section not found.

Blackstone Inc._10-Q_2022-08-05_1393818-0001193125-22-213575.html

@@ -0,0 +1 @@
+MD&A section not found.

Block, Inc._10-Q_2022-08-04_1512673-0001628280-22-021091.html

@@ -0,0 +1 @@
+MD&A section not found.

Builders FirstSource, Inc._10-Q_2022-08-01_1316835-0000950170-22-013626.html

@@ -0,0 +1 @@
+MD&A section not found.

CADENCE DESIGN SYSTEMS INC_10-Q_2022-07-25_813672-0000813672-22-000037.html

@@ -0,0 +1 @@
+MD&A section not found.

CAMDEN PROPERTY TRUST_10-Q_2022-10-28_906345-0000906345-22-000042.html

@@ -0,0 +1 @@
+MD&A section not found.

CAPITAL ONE FINANCIAL CORP_10-Q_2022-11-04_927628-0000927628-22-000306.html

@@ -0,0 +1 @@
+MD&A section not found.

CARDINAL HEALTH INC_10-K_2022-08-11_721371-0000721371-22-000058.html

@@ -0,0 +1 @@
+MD&A section not found.

CARNIVAL CORP_10-Q_2022-09-30_815097-0000815097-22-000073.html

@@ -0,0 +1 @@
+MD&A section not found.

CBRE GROUP, INC._10-Q_2022-08-05_1138118-0001138118-22-000027.html

@@ -0,0 +1 @@
+MD&A section not found.

CENTERPOINT ENERGY INC_10-Q_2022-08-02_1130310-0001130310-22-000103.html

@@ -0,0 +1 @@
+MD&A section not found.

CF Industries Holdings, Inc._10-Q_2022-08-02_1324404-0001324404-22-000022.html

@@ -0,0 +1 @@
+MD&A section not found.

CHARTER COMMUNICATIONS, INC. -MO-_10-Q_2022-07-29_1091667-0001091667-22-000090.html

@@ -0,0 +1 @@
+MD&A section not found.

CHEVRON CORP_10-Q_2022-11-03_93410-0000093410-22-000075.html

@@ -0,0 +1 @@
+MD&A section not found.

CINTAS CORP_10-K_2022-07-27_723254-0000723254-22-000019.html

@@ -0,0 +1 @@
+Item 7. Management's Discussion andAnalysis of Financial Condition and Results of OperationsBusiness StrategyCintas helps more than one million businesses of all types and sizes, primarily in the U.S., as well as Canada and Latin America, 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, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training, Cintas helps customers get Ready for the Workday®. We are North America's leading provider of corporate identity uniforms through rental and sales programs, as well as a significant provider of related business services, including entrance mats, restroom cleaning services and supplies, first aid and safety services and fire protection products and services.Cintas' principal objective is "to exceed customers' expectations in order to maximize the long-term value of Cintas for shareholders and working partners," and it provides the framework and focus for Cintas' business strategy. This strategy is to achieve revenue growth for all our products and services by increasing our penetration at existing customers and by broadening our customer base to include market segments to which we have not historically served. We will also continue to identify additional product and service opportunities for our current and future customers.To pursue the strategy of increasing penetration, we have a highly talented and diverse team of service professionals visiting our customers on a regular basis. This frequent contact with our customers enables us to develop close personal relationships. The combination of our distribution system and these strong customer relationships provides a platform from which we launch additional products and services.We pursue the strategy of broadening our customer base in several ways. Cintas has a national sales organization introducing all its products and services to prospects in all market segments. Our broad range of products and services allows our sales organization to consider any type of business a prospect. We also broaden our customer base through geographic expansion. Finally, we evaluate strategic acquisitions as opportunities arise.Results of OperationsThis Management’s Discussion and Analysis of Financial Condition and Results of Operations focuses on discussion of fiscal 2022 results compared to fiscal 2021 results. For discussion of fiscal 2021 results compared to fiscal 2020 results, see the "Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Annual Report on Form 10-K for the fiscal year ended May 31, 2021, filed with the SEC on July 28, 2021.Cintas classifies its business into two reportable operating segments and places the remainder of its operating segments in an All Other category. Cintas’ two 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 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 of the Fire Protection Services operating segment and the Uniform Direct Sale operating segment, is included in All Other. These operating segments consist of fire protection products and services and the direct sale of uniforms and related items. Cintas evaluates operating segment performance based on revenue and income before income taxes. Revenue and income before income taxes for the reportable operating segments for the years ended May 31, 2022, 2021 and 2020 are presented in Note 15 entitled Operating Segment Information of "Notes to Consolidated Financial Statements." 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.19We have operations throughout the U.S. and Canada and participate in a global supply chain. Since fiscal 2020, the existence of the COVID-19 pandemic, the fear associated with the COVID-19 pandemic and the reactions of governments around the world in response to the COVID-19 pandemic to regulate the flow of labor and products and impede the business of our customers, impacted our ability to conduct normal business operations, which had an adverse effect on our business. Many of Cintas' customers were also impacted by the COVID-19 pandemic, and we saw an impact on some customer's ability to pay timely. While there was minimal disruption to our supply chain, Cintas did increase inventory, primarily personal protective equipment and facility services inventory, in response to the customer needs and demand associated with the safety and cleanliness requirements of COVID-19. The increase in inventory resulted in additional inventory reserves during fiscal 2022 and fiscal 2021. See Note 1 entitled Significant Accounting Policies of "Notes to Consolidated Financial Statements" for additional detail on the incremental reserves placed on inventory. The on-going roll out of the COVID-19 vaccines and gradual lifting of COVID-19 restrictions had a positive impact on our business during fiscal 2022. The impact of the on-going COVID-19 pandemic is fluid and continues to evolve, and therefore, we cannot predict the extent to which our business, consolidated results of operations, consolidated financial condition or liquidity will ultimately be impacted.The following table sets forth certain consolidated statements of income data as a percent of revenue by reportable operating segment, All Other and in total for the fiscal years ended May 31:20222021Revenue: Uniform Rental and Facility Services79.3%80.0%First Aid and Safety Services10.6%11.0%All Other10.1%9.0%Total revenue100.0%100.0%Cost of sales: Uniform Rental and Facility Services53.3%52.4%First Aid and Safety Services55.3%57.6%All Other56.0%57.0%Total cost of sales53.8%53.4%Gross margin: Uniform Rental and Facility Services46.7%47.6%First Aid and Safety Services44.7%42.4%All Other44.0%43.0%Total gross margin46.2%46.6%Selling and administrative expenses:Uniform Rental and Facility Services25.0%26.0%First Aid and Safety Services31.9%32.0%All Other28.0%30.8%Total selling and administrative expenses26.0%27.1%Interest expense, net1.1%1.4%Income from continuing operations before income taxes19.1%18.1%Fiscal 2022 Compared to Fiscal 2021 Fiscal 2022 total revenue was $7.9 billion, an increase of 10.4% over the prior fiscal year. Revenue increased organically by 10.2% as a result of increased sales volume. Organic growth adjusts for the impact of acquisitions, divestitures and foreign currency exchange rate fluctuations. Total revenue was positively impacted by 0.1% due primarily to acquisitions and by 0.1% due to foreign currency exchange rate fluctuations. 20As previously discussed, government enactments of temporary and indefinite closures of certain businesses in response to the COVID-19 pandemic continued to impact our ability to access and service some of our customers impacted by these mandates during fiscal 2021. The roll out of the COVID-19 vaccines and general lifting of COVID-19 restrictions had a positive impact on our business during fiscal 2022. Due to the constantly changing impact of the COVID-19 pandemic, uncertainty remains about the pace of the economic recovery and about its impact on future Cintas consolidated financial results. Organic revenue growth by quarter for fiscal 2022 is as follows: Organic GrowthFirst quarter ended August 31, 20218.6%Second quarter ended November 30, 20219.3%Third quarter ended February 28, 202210.0%Fourth quarter ended May 31, 202212.7%For the fiscal year ended May 31, 202210.2%Uniform Rental and Facility Services reportable operating segment revenue consists predominantly of revenue derived from the rental of corporate identity uniforms and other garments, including flame resistant clothing and the rental and/or sale of mats, mops, shop towels, restroom supplies and other rental services. Revenue from the Uniform Rental and Facility Services reportable operating segment increased 9.4% compared to fiscal 2021 due to an organic growth increase of 9.0%. Revenue growth was positively impacted by 0.2% due primarily to acquisitions and by 0.2% due to foreign currency exchange rate fluctuations. Organic revenue growth was a result of new business, the penetration of additional products and services into existing customers, the positive impact from the lifting of COVID-19 restrictions and price increases, partially offset by lost business. New business growth resulted from an increase in the number and productivity of sales representatives. Generally, sales productivity improvements are due to increased tenure and improved training, which produce a higher number of products and services sold. Other revenue, consisting of revenue from the First Aid and Safety Services reportable operating segment and All Other, increased 14.1% compared to fiscal 2021. Revenue improved from increases in sales representative productivity and from the lifting of COVID-19 restrictions. Revenue increased organically by 14.9%. Revenue growth was negatively impacted by 0.8% due to divestitures.Cost of uniform rental and facility services increased 11.2% compared to fiscal 2021. 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 cost of uniform rental and facility services as a percent of revenue increased compared to fiscal 2021 primarily due to increased energy costs and investments in labor to support the increased revenue growth.Cost of other consists primarily of cost of goods sold (predominantly first aid and safety products, personal protective equipment, 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 increased 10.7% in fiscal 2022 compared to fiscal 2021, but decreased as a percent of revenue to 55.7%, compared to 57.3% in fiscal 2021. The improvement in cost of sales as a percent to revenue was primarily due to favorable changes in the sales mix for each of the underlying operating segments, including a decrease in the proportion of sales related to personal protective equipment, which typically have lower gross margins compared to the first aid cabinet sales in the First Aid and Safety Services reportable operating segment. Selling and administrative expenses increased $115.7 million, to 26.0% as a percent of revenue, compared to 27.1% in fiscal 2021. The improvement as a percent of revenue was primarily due to lower labor expense as a percent of revenue as well as a $12.1 million gain on the sale of certain operating assets and a $30.2 million gain on an equity method investment transaction recorded in fiscal 2022. The impacts from the gains recorded in fiscal 2022 were partially offset by the $22.0 million gain on the sale of certain operating assets recorded in fiscal 2021. Net interest expense (interest expense less interest income) was $88.6 million in fiscal 2022 compared to $97.7 million in fiscal 2021. The change was primarily due to the replacement of the $250.0 million of senior notes with an interest rate of 4.30% that matured on June 1, 2021, with lower interest rate bearing commercial paper. 21Income before income taxes was $1,498.8 million, an increase of $211.0 million, or 16.4%, compared to fiscal 2021. The increase in income before income taxes was primarily due to revenue growth and the decrease in selling and administrative expenses as a percent of revenue in fiscal 2022. Income before income taxes also benefited from the previously mentioned one-time gains recorded in fiscal 2022. Cintas' effective tax rate on continuing operations was 17.5% for fiscal 2022 compared to 13.7% in fiscal 2021. The effective tax rate in both periods was impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. In addition, the effective tax rate for fiscal 2022 and 2021 included tax benefits from a gain on an equity method investment transaction in fiscal 2022 and the sale of certain operating assets in both fiscal 2022 and fiscal 2021. Net income from continuing operations for fiscal 2022 of $1,235.8 million was a 11.2% increase compared to fiscal 2021. Diluted earnings per share from continuing operations of $11.65 was a 13.8% increase compared to fiscal 2021 diluted earnings per share from continuing operations of $10.24. Diluted earnings per share from continuing operations increased primarily due to the increase in net income combined with the decrease in diluted weighted average common shares outstanding. The decrease in diluted weighted average common shares outstanding resulted from purchasing an aggregate of approximately 3.7 million shares of common stock under the Board approved share buyback programs during fiscal 2022. Uniform Rental and Facility Services Reportable Operating SegmentUniform Rental and Facility Services reportable operating segment revenue increased $537.3 million, or 9.4%, and the cost of uniform rental and facility services increased $332.9 million, or 11.2%, due to the reasons previously discussed. The reportable operating segment's fiscal 2022 gross margin was 46.7% of revenue compared to 47.6% in fiscal 2021. The decrease in gross margin was primarily due to a 50 basis point increase in energy costs and investments in labor to support the increased revenue growth.Selling and administrative expenses for the Uniform Rental and Facility Services reportable operating segment increased $76.8 million in fiscal 2022 compared to fiscal 2021. Selling and administrative expense as a percent of revenue for fiscal 2022 was 25.0% compared to 26.0% in fiscal 2021. The improvement in selling and administrative expenses as a percent of revenue was primarily due to efficiencies in labor and the previously mentioned one-time gain of $30.2 million on an equity method investment transaction. Income before income taxes increased $127.7 million to $1,353.5 million for fiscal 2022 compared to fiscal 2021. Income before income taxes as a percent of revenue at 21.7% increased 20 basis points from 21.5% in fiscal 2021. The increase was primarily due to the previously discussed improvement in selling and administrative expenses, partially offset by decreases in gross margin as a percent of revenue.First Aid and Safety Services Reportable Operating SegmentFirst Aid and Safety Services reportable operating segment revenue increased $48.2 million in fiscal 2022, a 6.1% increase compared to fiscal 2021. Revenue increased organically by 5.1% as a result of new business and sales productivity increases, penetration of additional products and services into existing customers and sales of personal protective equipment in response to the COVID-19 pandemic. Revenue growth was positively impacted by 0.9% due to acquisitions and by 0.1% due to foreign currency exchange rate fluctuations.Cost of sales for the First Aid and Safety Services reportable operating segment increased $8.3 million, or 1.8%, in fiscal 2022, primarily due to higher sales volume. Gross margin for the First Aid and Safety Services reportable operating segment is defined as revenue less cost of goods, warehouse expenses and service expenses. Gross margin as a percent of revenue was 44.7% for fiscal 2022 compared to 42.4% in fiscal 2021. The improvement in gross margin as a percentage of revenue in fiscal 2022 was primarily due to a decrease in the proportion of sales related to personal protective equipment, which typically have lower gross margins compared to the first aid cabinet sales.Selling and administrative expenses for the First Aid and Safety Services reportable operating segment increased by $14.3 million, or 5.7%, in fiscal 2022 compared to fiscal 2021, and improved as a percent of revenue to 31.9% in fiscal 2022 compared to 32.0% in fiscal 2021. The improvement as a percent of revenue was primarily due to revenue growing at a faster pace than labor and employee-partner related expenses.22Income before income taxes for the First Aid and Safety Services reportable operating segment was $106.8 million in fiscal 2022, an increase of $25.6 million, or 31.5%, compared to fiscal 2021. Income before income taxes as a percent of revenue at 12.8%, increased from 10.4% in fiscal 2021 due to the previously discussed increases, primarily in gross margin.Liquidity and Capital ResourcesThe following table summarizes our cash flows and cash and cash equivalents as of and for the fiscal years ended May 31:(In thousands)20222021Net cash provided by operating activities$1,537,625 $1,360,740 Net cash used in investing activities$(402,635)$(137,215)Net cash used in financing activities$(1,537,943)$(879,868)Cash and cash equivalents at end of year$90,471 $493,640 Cash and cash equivalents as of May 31, 2022 and 2021 include $43.1 million and $37.9 million, respectively, that is located outside of the U.S. Cash flows provided by operating activities have historically supplied us with a significant source of liquidity. We generally use these cash flows to fund most, if not all, of our operations and expansion activities and dividends on our common stock. We may also use cash flows provided by operating activities, as well as proceeds from long-term debt and short-term borrowings, to fund growth and expansion opportunities, as well as other cash requirements such as the repurchase of our common stock and payment of long-term debt. We expect our cash flows from operating activities to remain sufficient to provide us with adequate levels of liquidity. In addition, we have access to $2.0 billion of debt capacity from our amended and restated revolving credit facility, the maturity of which was extended on March 23, 2022 until March 23, 2027. We believe the Company has sufficient liquidity to operate in the current business environment. Acquisitions, repurchases of our common stock and dividends remain strategic objectives, but they will be dependent on the economic outlook and liquidity of the Company.Net cash provided by operating activities was $1.54 billion for fiscal 2022, which was an increase of $176.9 million, or 13.0%, compared to fiscal 2021. The increase was primarily the result of increased net income which was partially offset by unfavorable changes in working capital, specifically, accounts receivable and uniforms and other rental items in service, which resulted from the growth in revenue. In addition, we had a favorable change in inventories, net, which was the result of a large amount of inventory purchases in the prior fiscal year period related to the COVID-19 pandemic, including sanitizer, sanitizer stands, masks and gloves.Net cash used in investing activities was $402.6 million in fiscal 2022, compared to $137.2 million in fiscal 2021. Net cash used in investing activities includes capital expenditures, purchases of investments, proceeds from the sale of operating assets and cash paid for acquisitions of businesses. Capital expenditures were $240.7 million and $143.5 million for fiscal 2022 and fiscal 2021, respectively. Capital expenditures for fiscal 2022 included $166.6 million for the Uniform Rental and Facility Services reportable operating segment and $59.7 million for the First Aid and Safety Services reportable operating segment. The increase in capital expenditures from fiscal 2021 to fiscal 2022 was due to an investment in the operating segments to support continued market penetration and revenue growth. Cash paid for acquisitions of businesses, net of cash acquired, was $164.2 million and $10.0 million for fiscal 2022 and fiscal 2021, respectively. The acquisitions in both fiscal 2022 and 2021 occurred in our Uniform Rental and Facility Services reportable operating segment, our First Aid and Safety Services reportable operating segment and our Fire Protection operating segment, which is included in All Other. The fiscal 2022 acquisitions also includes the acquisition of the remaining interest of an equity method investment. In fiscal 2022 and fiscal 2021, investing activities included proceeds of $15.3 million and $31.7 million, respectively, from the sale of certain operating assets, net of cash disposed. Net cash used in investing activities also included $6.1 million and $4.3 million of purchases of investments during fiscal 2022 and fiscal 2021, respectively. 23Net cash used in financing activities was $1,537.9 million for fiscal 2022, compared to $879.9 million in fiscal 2021. The increase in cash used from financing activities from fiscal 2021 is primarily due to the increase in repurchases of common stock in fiscal 2022, offset by the $261.2 million net issuance of commercial paper and the $76.2 million higher dividends paid in fiscal 2021 due to the transition from an annual dividend payment in the second quarter of fiscal 2021 to quarterly dividend payments thereafter. On October 30, 2018, we announced that the Board of Directors authorized a $1.0 billion share buyback program, which was completed during fiscal 2021. On October 29, 2019, we announced the Board of Directors authorized a $1.0 billion share buyback program, which was completed during fiscal 2022. On July 27, 2021, we announced the Board of Directors authorized a new $1.5 billion share buyback program, which does not have an expiration date. The following table summarizes the buyback activity by program and fiscal year ended May 31:20222021Buyback Program(In thousands except per share data)SharesAvg. Price per SharePurchase PriceSharesAvg. Price per SharePurchase PriceOctober 30, 2018— $— $— 190 $319.88 $60,877 October 29, 20191,590 365.41 581,220 1,196 350.31 418,779 July 27, 20212,150 383.01 823,429 — — — 3,740 $375.53 $1,404,649 1,386 $346.13 $479,656 Shares acquired for taxes due (1)305 $397.16 $121,224 246 $302.52 $74,465 Total repurchase of Cintas common stock$1,525,873 $554,121 (1) Shares of Cintas stock acquired for employee payroll taxes due on options exercised and vested restricted stock awards.In the period subsequent to May 31, 2022 through July 27, 2022, we purchased 0.5 million shares of Cintas common stock at an average price of $396.39 for a total purchase price of $210.8 million. From the inception of the July 27, 2021 share buyback program through July 27, 2022, Cintas has purchased 2.7 million shares of Cintas common stock in the aggregate, at an average price of $385.66, for a total purchase price of $1.0 billion.Our Board of Directors declared the following dividends during the fiscal years ended May 31: Declaration Date(In millions except per share data)Record DatePayment DateDividendPer ShareAmountFiscal Year 2022July 27, 2021August 13, 2021September 15, 2021$0.95 $98.8 October 26, 2021November 15, 2021December 15, 20210.95 99.1 January 12, 2022February 15, 2022March 15, 20220.95 98.2 April 12, 2022 (2)May 16, 2022June 15, 20220.95 97.5 Total$3.80 $393.6 Fiscal Year 2021October 27, 2020 (1)November 6, 2020December 4, 2020$2.81 $297.7 October 27, 2020November 6, 2020December 4, 20200.70 74.1 January 19, 2021February 15, 2021March 15, 20210.75 79.5 April 13, 2021 (2)May 15, 2021June 15, 20210.75 79.2 Total$5.01 $530.5 (1) Beginning October 27, 2020, our Board of Directors authorized a change in dividend policy from an annual dividend to quarterly dividends.(2) The dividends declared on April 12, 2022 and April 13, 2021 were included in current accrued liabilities on the consolidated balance sheet at May 31, 2022 and 2021, respectively. 24Any future dividend declarations, including the amount of any dividends, are at the discretion of the Board of Directors and dependent upon then-existing conditions, including the Company's consolidated operating results and consolidated financial condition, capital requirements, contractual restrictions, business prospects and other factors that the Board of Directors may deem relevant. During the fiscal year ended May 31, 2022, Cintas issued a net total of $261.2 million of commercial paper. There was no commercial paper outstanding during fiscal 2021. On June 1, 2021, in accordance with the terms of the notes, Cintas paid the $250.0 million aggregate principal amount outstanding of its 4.30%, 10-year senior notes that matured on that date with cash on hand. On April 1, 2022, in accordance with the terms of the notes, Cintas paid the $650.0 million aggregate principal amount outstanding of its 2.90%, 5-year senior notes that matured on that date with proceeds from short-term borrowings. On May 1, 2022, Cintas redeemed at par value the $300.0 million aggregate principal amount outstanding of its 3.25%, 10-year senior notes 30 days in advance of the maturation date with proceeds from short-term borrowings. On May 3, 2022, Cintas issued $400.0 million aggregate principal amount of senior notes that bear an interest rate of 3.45% and mature on May 1, 2025. On May 3, 2022, Cintas also issued $800.0 million aggregate principal amount of senior notes that bear an interest rate of 4.00% and mature on May 1, 2032. The net proceeds from these issuances were utilized for general business purposes, including reducing Cintas’ short-term borrowings. The following table summarizes Cintas' outstanding debt at May 31:(In thousands)Interest RateFiscal YearIssuedFiscal YearMaturity20222021Debt due within one yearCommercial paper1.20%(1)20222023$261,200 $— Senior notes (2)2.78%2013202350,380 — Senior notes4.30%20122022— 250,000 Senior notes2.90%20172022— 650,000 Debt issuance costs(6)(930)Total debt due within one year$311,574 $899,070 Debt due after one yearSenior notes3.25%20132023$— $300,000 Senior notes (2)2.78%20132023— 50,815 Senior notes (3)3.11%2015202550,965 51,301 Senior notes3.45%20222025400,000 — Senior notes3.70%201720271,000,000 1,000,000 Senior notes4.00%20222032800,000 — Senior notes6.15%20072037250,000 250,000 Debt issuance costs(17,033)(9,283) Total debt due after one year$2,483,932 $1,642,833 (1) Variable rate debt instrument. The rate presented is the variable borrowing rate at May 31, 2022.(2) Cintas assumed these senior notes with the acquisition of G&K Services, Inc. (G&K) in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is $50.0 million with a stated interest rate of 3.73%. (3) Cintas assumed these senior notes with the acquisition of G&K in the fourth quarter of fiscal 2017, and they were recorded at fair value. The interest rate shown above is the effective interest rate. The principal amount of these notes is $50.0 million with a stated interest rate of 3.88%. The credit agreement that supports our commercial paper program was amended and restated on March 23, 2022. The amendment increased the capacity of the revolving credit facility from $1.0 billion to $2.0 billion. The credit agreement has an accordion feature that provides Cintas the ability to request increases to the borrowing commitments under the revolving credit facility of up to $500.0 million in the aggregate, subject to customary conditions. The maturity date of the revolving credit facility is March 23, 2027. As of May 31, 2022, there was $261.2 25million of commercial paper outstanding with a weighted average interest rate of 1.20% and maturity dates less than 120 days and no borrowings on our revolving credit facility. As of May 31, 2021, there was no commercial paper outstanding and no borrowings on our revolving credit facility. Subsequent to May 31, 2022, in June 2022, Cintas borrowed $125.0 million under the revolving credit facility to fund short-term operating needs and repaid the amount later in June 2022. 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. 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. Cintas was in compliance with all of the debt covenants for all periods presented. Our access to the commercial paper and long-term debt markets has historically provided us with sources of both short-term and long-term liquidity to meet material cash obligations. We do not anticipate having difficulty in obtaining financing from those markets in the future in view of our favorable experiences in the debt markets in the recent past. Additionally, our ability to continue to access the commercial paper and long-term debt markets on favorable interest rate and other terms will depend, to a significant degree, on the ratings assigned by the credit rating agencies to our indebtedness. As of May 31, 2022, our ratings were as follows:Rating AgencyOutlookCommercialPaperLong-termDebtStandard & Poor’sStableA-2A-Moody’s Investors ServiceStableP-2A3In the event that the ratings of our commercial paper or our outstanding long-term debt issues were substantially lowered or withdrawn for any reason, or if the ratings assigned to any new issue of long-term debt securities were significantly lower than those noted above, particularly if we no longer had investment grade ratings, our ability to access the debt markets may be adversely affected. In addition, in such a case, our cost of funds for new issues of commercial paper and long-term debt would be higher than our cost of funds would have been had the ratings of those new issues been at or above the level of the ratings noted above. The rating agency ratings are not recommendations to buy, sell or hold our commercial paper or debt securities. Each rating may be subject to revision or withdrawal at any time by the assigning rating organization and should be evaluated independently of any other rating. Moreover, each credit rating is specific to the security to which it applies. To monitor our credit rating and our capacity for long-term financing, we consider various qualitative and quantitative factors. One such factor is the ratio of our total debt to EBITDA. For the purpose of this calculation, debt is defined as the sum of short-term borrowings, long-term debt due within one year, long-term debt and standby letters of credit. Financial and Nonfinancial Disclosure About Issuers and Guarantors of Cintas’ Senior NotesCintas Corporation No. 2 (Corp. 2) is the indirectly, wholly owned principal operating subsidiary of Cintas. Corp. 2 is the issuer of the $2,550.0 million aggregate principal amount of senior notes outstanding as of May 31, 2022, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly owned, direct and indirect domestic subsidiaries. See Note 7 entitled Debt and Derivatives of "Notes to Consolidated Financial Statements" for more information on Cintas' outstanding debt. Basis of Preparation of the Summarized Financial InformationThe following tables include summarized financial information of Cintas Corporation (Issuer), Corp. 2 and subsidiary guarantors (together, the Obligor Group). Investments in and equity in the earnings of non-guarantors, which are not members of the Obligor Group, have been excluded. Non-guarantor subsidiaries are located outside the U.S., and therefore, excluded from the Obligor Group.26The summarized financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions between entities in the Obligor Group eliminated. The Obligor Group’s amounts due from, amounts due to and transactions with non-guarantors have been presented in separate line items, if they are material. Summarized financial information of the Obligor Group is as follows for the fiscal years ended May 31:Summarized Consolidated Statements of Income(In thousands)20222021Net sales to unrelated parties$7,398,923 $6,705,820 Net sales to non-guarantors$8,461 $3,460 Operating income$1,534,320 $1,319,444 Net income$1,197,830 $1,058,837 Summarized Consolidated Balance Sheets(In thousands)20222021AssetsReceivables due from non-obligor subsidiaries$11,759 $2,292 Total other current assets$2,427,494 $2,652,810 Total other noncurrent assets$5,081,265 $4,924,550 Liabilities Amounts due to non-obligor subsidiaries$11,383 $457 Current liabilities$1,388,310 $1,893,352 Noncurrent liabilities$3,346,851 $2,549,911 Contractual and Other Material Cash ObligationsPayments Due by Period(In thousands)TotalOne yearor lessTwo tothree yearsFour tofive yearsAfter fiveyearsDebt (1)$2,811,200 $311,200 $450,000 $1,000,000 $1,050,000 Operating leases (2)183,617 47,099 66,646 38,374 31,498 Interest payments780,157 105,114 200,230 168,750 306,063 Total contractual and other material cash obligations$3,774,974 $463,413 $716,876 $1,207,124 $1,387,561 (1)See Note 7 entitled Debt and Derivatives of "Notes to Consolidated Financial Statements" for a detailed presentation of Cintas' debt.(2)See Note 8 entitled Leases of "Notes to Consolidated financial Statements" for a detailed presentation of Cintas' operating leases. Cintas also makes payments to defined contribution plans and may make payments to defined benefit plans to satisfy minimum funding requirements. The amount of contributions made to the defined contribution plans are at the discretion of the Board of Directors of Cintas. Future contributions to the defined contribution plans are expected to be $92.8 million in the next year, $199.8 million in the next two to three years and $220.3 million in the next four to five years. Future contributions to the defined benefit plans are expected to be $0.0 million in the next year, $2.5 million in the next two to three years and $3.0 million in the next four to five years. 27Other CommitmentsAmount of Commitment Expiration per Period(In thousands)TotalOne yearor lessTwo tothree yearsFour tofive yearsAfter fiveyearsLines of credit (1)$1,738,037 $— $— $1,738,037 $— Standby letters of credit and surety bonds (2)106,687 106,687 — — — Total other commitments$1,844,724 $106,687 $— $1,738,037 $— (1)Back-up facility for the commercial paper program (reference Note 7 entitled Debt and Derivatives of "Notes to Consolidated Financial Statements" for further discussion).(2)These standby letters of credit and surety bonds support certain outstanding debt (reference Note 7 entitled Debt and Derivatives of "Notes to Consolidated Financial Statements"), self-insured workers' compensation and general liability insurance programs.Inflation and Changing PricesChanges in wages, benefits and energy costs have the potential to materially impact Cintas' consolidated results of operations. In fiscal 2022, we experienced significant impacts from inflation, including, but not limited to, higher labor, fuel and transportation costs. Management has been able to mitigate these inflationary pressures through pricing and various efficiency initiatives. Management has mitigated these impacts such that net of the mitigation strategy and initiatives, inflation and changing prices has not had a material impact on Cintas' consolidated financial condition or a negative impact on the consolidated results of operations. Litigation and Other ContingenciesCintas is subject to legal proceedings, insurance receipts, legal settlements and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such ordinary course of business actions will not have a material adverse effect on the consolidated financial position, consolidated results of operations or consolidated cash flows of Cintas. The Company, the Board of Directors, Scott Farmer (Executive Chairman) and the Investment Policy Committee are defendants in a purported class action, filed on December 13, 2019, pending in the U.S. District Court for the Southern District of Ohio alleging violations of ERISA. The lawsuit asserts that the defendants improperly managed the costs of the employee retirement plan, breached their fiduciary duties in failing to investigate and select lower cost alternative funds and failed to monitor and control the employee retirement plan’s recordkeeping costs. The defendants deny liability.New Accounting StandardsIn December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is part of the FASB’s overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 removes certain exceptions to the general principles of Accounting Standards Codification (ASC) 740, Income Taxes (ASC 740), in order to reduce the cost and complexity of its application in the areas of intraperiod tax allocation, deferred tax liabilities related to outside basis differences, year-to-date losses in interim periods and other areas within ASC 740. The Company adopted ASU 2019-12 on June 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated condensed financial statements currently but may in future periods. No other new accounting pronouncement recently issued or newly effective had or is expected to have a material impact on the consolidated financial statements.28Critical Accounting Policies and EstimatesThe preparation of Cintas' consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that have a significant effect on the amounts reported in the consolidated financial statements and accompanying notes. These critical accounting policies should be read in conjunction with Note 1 entitled Significant Accounting Policies of "Notes to Consolidated Financial Statements." Significant changes, estimates or assumptions related to any of the following critical accounting policies, including those impacted by the COVID-19 pandemic, could possibly have a material impact on the consolidated financial statements.Revenue recognitionRental revenue, which is recorded in the Uniform Rental and Facility Services reportable operating segment, is recognized when services are performed or the obligations under the terms of a contract with a customer are satisfied. Other revenue, which is recorded in the First Aid and Safety Services reportable operating segments and All Other, is recognized when either services are performed or the obligations under the terms of a contract with a customer are satisfied. See Note 2 entitled Revenue Recognition of the "Notes to Consolidated Financial Statements" for more information on Cintas' revenue. Uniforms and other rental items in serviceUniforms and other rental items in service 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.GoodwillGoodwill, obtained through acquisitions of businesses, is valued at cost less any impairment. Cintas completes an annual impairment test, that includes an assessment of qualitative factors including, but not limited to, macroeconomic conditions, industry and market conditions and entity specific factors such as strategies and financial performance. We test for goodwill impairment at the reporting unit level. Cintas has identified four reporting units for purposes of evaluating goodwill impairment: Uniform Rental and Facility Services, First Aid and Safety Services and two reporting units within All Other. Based on the results of the annual impairment tests, Cintas was not required to recognize an impairment of goodwill for the fiscal years ended May 31, 2022, 2021 or 2020. Cintas will continue to perform impairment tests as of March 1 in future years and when indicators of impairment exist.Insurance reserveThe insurance reserve represents the estimated ultimate cost of all asserted and unasserted claims, primarily related to workers' compensation, auto liability and other general liability exposure through the consolidated balance sheet dates. Our incurred but not reported reserves are estimated through actuarial procedures, with the assistance of third-party actuarial specialists, 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.Stock-based compensationCompensation 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. Generally, measured compensation cost, net of actual forfeitures, is recognized on a straight-line basis over the vesting period of the related share-based compensation award. See Note 13 entitled Stock-Based Compensation of "Notes to Consolidated Financial Statements" for further information.Litigation and other contingenciesCintas is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. U.S. 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 29reasonably estimated. Significant judgment is required to determine the existence of a liability, as well as the amount to be recorded. While a significant change in assumptions and judgments could have a material impact on the amounts recorded for contingent liabilities, Cintas does not believe that they will result in a material adverse effect on the consolidated financial statements.Income taxesDeferred 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 9 entitled Income Taxes of "Notes to Consolidated Financial Statements" for the types of items that give rise to significant deferred income tax assets and liabilities. Deferred income taxes are classified as assets or liabilities based on the classification of the related asset or liability for financial reporting purposes. 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.Item 7A. Quantitative and Qualitative Disclosures About Market RiskEarnings may be affected by changes in short-term interest rates due to investments, if any, in marketable securities and money market accounts and periodic issuances of commercial paper. If short-term rates changed by one-half percent (or 50 basis points), Cintas' income before income taxes would change by approximately $1.4 million. This estimated exposure considers the effects on investments. This analysis does not consider the effects of a change in economic activity or a change in Cintas' capital structure.Through its foreign operations, Cintas is exposed to foreign currency risk. Foreign currency exposures arise from transactions denominated in a currency other than the functional currency and from foreign denominated revenue and profit translated into U.S. dollars. Foreign denominated revenue and profit represents less than 10% of Cintas' consolidated revenue and profit.30