EX-99 2 ex99031705.htm EXHIBIT 99 Exhibit 99

Exhibit 99

March 17, 2005

Cintas Corporation Reports Third Quarter Sales and Profits

  Rental Organic Growth Accelerates to 7.5 percent, adjusted for 1 less workday
  Other Services Revenue rises over 15 percent
  Gross Margins improve despite higher energy costs

CINCINNATI, March 17, 2005 — Cintas Corporation (Nasdaq:CTAS) today reported revenue for the third quarter of fiscal 2005 of $755 million, an 8.4 percent increase from the previous year’s third quarter revenue of $697 million. Net income of $71.3 million increased 7.3 percent from $66.5 million last year and earnings per share of $.41 increased 5 percent from $.39 last year.

Scott D. Farmer, President and Chief Executive Officer, stated, “We are pleased to report another solid quarter of performance. Our rental revenue grew 7.5 percent on an organic basis when adjusted for one less workday this quarter, up from an organic growth rate of 6.0 percent in the second quarter and 5.8 percent in the first quarter of this fiscal year. Other services revenue, which is primarily the sale of uniforms and first aid and safety products and services, rose 15.5 percent during the quarter, and 5.7 percent organically when adjusted for the one less workday. Total revenue for the company increased 8.4 percent on a reported basis and 7.1 percent on an organic basis when adjusted for the one less workday.”

Mr. Farmer continued, “Our revenue growth continues to accelerate as we add more new customers across all of our business divisions. Recently, we expanded our product and service offerings even further by adding fire protection services, such as fire extinguishers, and further expanding our new Document Management Division to include document storage. The product and service offerings we have today give us the opportunity to achieve our goal of providing a service to every business in the United States and Canada, which encompasses more than 14 million businesses. Today, we serve only 700,000 of those businesses. We are truly expanding into a broader-based business services company as reflected in the recent change in our tagline from “Cintas, The Uniform People” to “Cintas, The Service Professionals”.

Mr. Farmer said, “For the quarter, our gross margins were a solid 42.6 percent versus 42.4 percent of revenue in the third quarter last year. This was achieved despite higher energy prices. In the quarter, selling, general and administrative costs increased to 27.0 percent from 26.5 percent of revenue in the third quarter last year, primarily as a result of continuing to increase our investment in sales and marketing programs and higher healthcare benefit costs.”

Strong Balance Sheet

The Company’s balance sheet continues to strengthen. Debt to total capitalization was 18.5 percent as of February 28, 2005, versus 21.8 percent as of February 29, 2004. Cash and marketable securities climbed to $368 million as of February 28, 2005, compared to $249 million a year ago, or a 48 percent increase. Total shareholders’ equity was $2.1 billion as of February 28, 2005.

Outlook

Mr. Farmer commented, “We have tightened our guidance for the remainder of fiscal 2005, which is within the guidance we provided at the beginning of this fiscal year. For fiscal 2005, which ends May 31, 2005, our forecast is for revenue to be in a range of $3.05 to $3.07 billion compared to fiscal 2004‘s revenue of $2.81 billion. Our guidance for earnings per share is $1.71 to $1.75 compared to $1.58 for fiscal 2004.”

About Cintas

Headquartered in Cincinnati, Cintas Corporation provides highly specialized services to businesses of all types throughout North America. Cintas designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products, first aid and safety products, fire protection services and document management services for approximately 700,000 businesses. Cintas is a publicly held company traded over the Nasdaq National Market under the symbol CTAS, and is a Nasdaq-100 company and component of the Standard & Poor’s 500 Index. The Company has achieved 35 consecutive years of growth in sales and earnings, to date.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as estimates, anticipates, projects, plans, expects, intends, believes, should and similar expressions and by the context in which they are used. Such statements are based upon current expectations of the Company and speak only as of the date made. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ from those set forth in this news release. Factors that might cause such a difference include the possibility of greater than anticipated operating costs, lower sales volumes, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor, costs and possible effects of union organizing activities, outcome of pending environmental matters, the cost, results and timely completion of assessment and remediation of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002, the initiation or outcome of litigation, higher assumed sourcing or distribution costs of products and the reactions of competitors in terms of price and service. Forward-looking statements speak only as of the date made. Cintas undertakes no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date on which they are made.

For additional information, contact:

William C. Gale, Senior Vice President-Finance and Chief Financial Officer--513-573-4211

Karen L. Carnahan, Vice President and Treasurer--513-573-4013


Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)

Three Months Ended
Nine Months Ended
Feb. 28, 2005
Feb. 29, 2004
% Chng.
Feb. 28, 2005
Feb. 29, 2004
% Chng.
Revenue:                            
  Rentals   $ 582,619   $ 547,474    6.4   $ 1,748,086   $ 1,634,334    7.0  
  Other services    172,622    149,466    15.5    509,951    441,571    15.5  


 

 
  Total revenue   $ 755,241   $ 696,940    8.4   $ 2,258,037   $ 2,075,905    8.8  
 
Costs and expenses (income):  
  Cost of rentals   $ 320,724   $ 303,471    5.7   $ 961,767   $ 906,951    6.0  
  Cost of other services    113,063    97,758    15.7    340,023    292,358    16.3  
  Selling and administrative expenses    203,912    185,019    10.2    597,152    538,103    11.0  
  Interest income    (2,149 )  (806 )  166.6    (4,785 )  (1,779 )  169.0  
  Interest expense    6,499    5,958    9.1    18,550    19,306    -3.9  
  Write-off of loan receivable    --    --    N/A    --    4,343    N/A  


 

 
  Total costs and expenses   $ 642,049   $ 591,400    8.6   $ 1,912,707   $ 1,759,282    8.7  
 
Income before income taxes   $ 113,192   $ 105,540    7.3   $ 345,330   $ 316,623    9.1  
Income taxes    41,860    39,047    7.2    127,772    117,146    9.1  


 

 
Net income   $ 71,332   $ 66,493    7.3   $ 217,558   $ 199,477    9.1  


 

 
Per share data:  
Basic earnings per share   $ 0.42   $ 0.39    7.7   $ 1.27   $ 1.17    8.5  
Diluted earnings per share   $ 0.41   $ 0.39    5.1   $ 1.26   $ 1.16    8.6  
 
Basic shares outstanding    171,802    171,088         171,629    170,847       
Diluted shares outstanding    172,790    172,684         172,700    172,215       

CINTAS CORPORATION SUPPLEMENTAL DATA

Three Months Ended
Nine Months Ended
Feb. 28, 2005
Feb. 29, 2004
%
Chng.

Feb. 28, 2005
Feb. 29, 2004
%
Chng.

Rental gross margin      45.0%    44.6%         45.0%    44.5%       
Other services gross margin    34.5%    34.6%         33.3%    33.8%       
Total gross margin    42.6%    42.4%         42.3%    42.2%       
Net margin    9.4%    9.5%         9.6%    9.6%       
 
Depreciation and amortization   $ 37,121   $ 35,861    3.5   $ 110,185   $ 107,195    2.8  
Capital expenditures   $ 27,093   $ 27,998    -3.2   $ 100,956   $ 85,019    18.7  
 
Debt to total capitalization    18.5%    21.8%         18.5%    21.8%       

Cintas Corporation
Consolidated Condensed Balance Sheets
(Unaudited)
(In thousands except share data)

Feb. 28, 2005
Feb. 29, 2004
ASSETS            
Current assets:  
  Cash and cash equivalents   $ 71,860   $ 113,752  
  Marketable securities    295,929    135,106  
  Accounts receivable, net    300,819    276,718  
  Inventories, net    216,363    207,816  
  Uniforms and other rental items in service    298,499    291,568  
  Prepaid expenses    8,783    8,072  


Total current assets    1,192,253    1,033,032  
 
Property and equipment, at cost, net    807,222    782,318  
 
Goodwill    871,094    756,118  
Service contracts, net    145,576    137,988  
Other assets, net    39,378    45,548  


    $ 3,055,523   $ 2,755,004  


LIABILITIES AND SHAREHOLDERS' EQUITY  
Current liabilities:  
  Accounts payable   $ 57,064   $ 48,902  
  Accrued liabilities    215,712    186,275  
  Income taxes:  
    Current    56,977    33,355  
    Deferred    43,903    54,263  
  Long-term debt due within one year    10,162    22,250  


Total current liabilities    383,818    345,045  
 
Long-term debt due after one year    462,202    482,576  
 
Deferred income taxes    128,599    116,651  
 
Shareholders' equity:  
  Preferred stock, no par value: 100,000 shares  
  authorized, none outstanding    --    --  
  Common stock, no par value: 425,000,000 shares  
  authorized, 172,068,973 and 171,174,295 shares  
  issued and outstanding, respectively    113,357    87,784  
  Retained earnings    1,953,137    1,717,914  
  Other accumulated comprehensive income (loss):  
    Foreign currency translation    15,813    6,728  
    Unrealized loss on derivatives    (1,403 )  (1,694 )


Total shareholders' equity    2,080,904    1,810,732  
 
    $ 3,055,523   $ 2,755,004  



Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(Unaudited)
(In thousands)

Nine Months Ended
Feb. 28, 2005
Feb. 29, 2004
Cash flows from operating activities:            
 
Net income   $ 217,558   $ 199,477  
 
Adjustments to reconcile net income to net cash provided by operating activities:  
  Depreciation    89,459    87,808  
  Amortization of deferred charges    20,726    19,387  
  Deferred income taxes    1,449    20,884  
  Change in current assets and liabilities, net of acquisitions of businesses:  
     Accounts receivable    (12,119 )  4,151  
     Inventories    (27,143 )  25,965  
     Uniforms and other rental items in service    (252 )  10,533  
     Prepaid expenses    (1,319 )  (476 )
     Accounts payable    3,476    (5,556 )
     Accrued compensation and related liabilities    (185 )  844  
     Accrued liabilities    (24,816 )  (19,409 )
     Income taxes payable    21,391    16,828  


  Net cash provided by operating activities    288,225    360,436  
 
Cash flows from investing activities:  
 
Capital expenditures    (100,956 )  (85,019 )
Proceeds from sale or redemption of marketable securities    35,099    32,174  
Purchase of marketable securities    (164,065 )  (141,860 )
Acquisitions of businesses, net of cash acquired    (82,186 )  (49,836 )
Other    (1,877 )  9,695  


  Net cash used in investing activities    (313,985 )  (234,846 )
 
Cash flows from financing activities:  
 
Repayment of long-term debt    (7,264 )  (53,334 )
Stock options exercised    3,844    6,360  
Other    13,683    2,897  


  Net cash provided by (used in) financing activities    10,263    (44,077 )
 
Net (decrease)/increase in cash and cash equivalents    (15,497 )  81,513  
Cash and cash equivalents at beginning of period    87,357    32,239  


Cash and cash equivalents at end of period   $ 71,860   $ 113,752