EX-99 2 ex99092105.htm EXHIBIT 99 Exhibit 99

FOR IMMEDIATE RELEASE
September 21, 2005

Cintas Corporation Reports Growth in First Quarter Fiscal 2006
Revenue and Earnings

•   Total Revenue increases 10.4%
•   Earnings Per Share increases 11.9%

CINCINNATI, OH, September 21, 2005 – Cintas Corporation (Nasdaq: CTAS) today reported revenue for the first quarter of fiscal 2006 of $823.5 million, a 10.4 percent increase from last year’s revenue of $746 million. The Company also reported a 9.5 percent increase in net income of $79.5 million compared to $72.7 million last year. Earnings per diluted share of $.47 increased 11.9 percent from last year’s $.42 per diluted share.

Scott D. Farmer, Chief Executive Officer of Cintas, stated, “On behalf of our Cintas employee-partners, I am proud to report these solid results for the first quarter of fiscal 2006. We grew our total revenue at a double-digit pace. Rental revenue increased 8 percent while Other Services revenue grew 19 percent over the previous year. We continued to show steady improvement in the Company’s organic growth rate. This quarter’s organic growth rate of 8.4 percent compares to 7.5 percent in the fourth quarter of fiscal 2005.”

Mr. Farmer continued, “Gross margins continued to strengthen as well, rising to 43.2 percent compared to 42.7 percent in last year’s first quarter. These margins reflect continued cost reductions and productivity improvements from our Six Sigma initiatives, better capacity utilization and progress in building new business services platforms. These solid results reflect the teamwork and spirit, which our employee-partners exhibit every day at Cintas. We appreciate all of the efforts put forth by our employee-partners across our Company.”

STOCK REPURCHASE PLAN
In the first quarter, the Company continued its stock repurchase program that the Board of Directors had authorized and announced in May 2005. During the quarter, the Company purchased approximately 2.6 million shares. To date, the Company has purchased approximately 4.4 million shares at an average price of approximately $39.50 per share.


STRONG BALANCE SHEET
As of August 31, 2005, the Company had $258 million in cash, cash equivalents and marketable securities, and total debt to capitalization was 19.8 percent. Total shareholders’ equity stood at $2.1 billion as of August 31st.

REVENUE AND EARNINGS GUIDANCE
Mr. Farmer stated, “We are continuing to assess the impact of Hurricane Katrina on our operations. While damage to our facilities appears, at this point, to be minimal, the impact on our employee-partners and customers in the affected areas continues to be a major concern to the Company. We are assisting our employee-partners at our operations in New Orleans and Gulfport through salary continuation and other financial assistance. The ultimate cost of this assistance, combined with lower business volume at the affected operations, will have an impact on our results.”

Mr. Farmer continued, “Additionally, the rapid increase in the cost of energy could impact our results, unless such costs return to levels seen in our first quarter. All of these factors will impact our Fiscal 2006 results. Although it is too early to know the exact impact, we are reiterating our original revenue and earnings per share guidance for Fiscal 2006. That guidance is for revenue to be in the range of $3.35 billion to $3.45 billion with full year earnings per share (diluted) in the range of $1.95 to $2.05. However, at this point, our preliminary analysis of the impact of Hurricane Katrina, as well as higher energy costs, could move us to the low end of our earnings per share range. Despite this setback in the Gulf Coast region, our Company is very strong financially and Cintas partners are pulling together as is characteristic of our culture.”

ABOUT CINTAS
Headquartered in Cincinnati, Ohio, Cintas Corporation provides highly specialized services to businesses of all types throughout North America. Cintas designs, manufactures and implements corporate identity uniform programs, 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 36 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, the disruption of operations from catastrophic events 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 CFO – 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
Aug. 31, 2005
Aug. 31, 2004
% Chng.
Revenue:                
  Rentals   $ 628,008   $ 581,659    8.0  
  Other services    195,467    164,297    19.0  


 
  Total revenue   $ 823,475   $ 745,956    10.4  
 
Costs and expenses (income):  
  Cost of rentals   $ 339,425   $ 317,754    6.8  
  Cost of other services    128,562    109,364    17.6  
  Selling and administrative expenses    223,437    198,809    12.4  
  Interest income    (1,702 )  (1,122 )  51.7  
  Interest expense    7,336    5,833    25.8  


 
  Total costs and expenses   $ 697,058   $ 630,638    10.5  


 
Income before income taxes   $ 126,417   $ 115,318    9.6  
Income taxes    46,882    42,652    9.9  


 
Net income   $ 79,535   $ 72,666    9.5  


 
Per share data:  
Basic earnings per share   $ 0.47   $ 0.42    11.9  


 
Diluted earnings per share   $ 0.47   $ 0.42    11.9  


 
Basic shares outstanding    168,939    171,449        
Diluted shares outstanding    169,564    172,660       

CINTAS CORPORATION SUPPLEMENTAL DATA

Three Months Ended
Aug. 31, 2005
Aug. 31, 2004
% Chng.
Rentals gross margin      46.0 %  45.4 %     
Other services gross margin    34.2 %  33.4 %     
Total gross margin    43.2 %  42.7 %     
Net margin    9.7 %  9.7 %     
Depreciation and amortization   $ 38,353   $ 36,428    5.3  
Capital expenditures   $ 36,144   $ 35,336    2.3  
Debt to total capitalization    19.8 %  19.8 %     

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

Three Months Ended
Aug. 31,
2005

Aug. 31,
2004

Cash flows from operating activities:            
 
Net income   $ 79,535   $ 72,666  
 
Adjustments to reconcile net income to net cash provided by operating activities:  
  Depreciation    30,579    29,699  
  Amortization of deferred charges    7,774    6,729  
  Deferred income taxes    17,385    21,815  
  Change in current assets and liabilities, net of acquisitions of businesses:  
     Accounts receivable    (11,258 )  (4,776 )
     Inventories    (5,610 )  (1,548 )
     Uniforms and other rental items in service    (3,318 )  (3,567 )
     Prepaid expenses    (1,664 )  (4,935 )
     Accounts payable    (3,529 )  1,875  
     Accrued compensation and related liabilities    (1,269 )  (1,272 )
     Accrued liabilities    (66,996 )  (67,420 )
     Income taxes payable    5,401    3,569  


  Net cash provided by operating activities    47,030    52,835  
 
Cash flows from investing activities:  
 
Capital expenditures    (36,144 )  (35,336 )
Proceeds from sale or redemption of marketable securities    54,047    9,240  
Purchase of marketable securities    (2,125 )  (24,304 )
Acquisitions of businesses, net of cash acquired    (20,968 )  (14,574 )
Other    3,487    1,183  


  Net cash used in investing activities    (1,703 )  (63,791 )
 
Cash flows from financing activities:  
 
Proceeds from issuance of debt    46,000    --  
Repayment of debt    (237 )  (182 )
Stock options exercised    2,996    1,514  
Repurchase of common stock    (102,257 )  --  
Other    8,412    4,216  


  Net cash (used in) provided by financing activities    (45,086 )  5,548  


Net increase/(decrease) in cash and cash equivalents  
     241    (5,408 )
Cash and cash equivalents at beginning of period    43,196    87,357  


Cash and cash equivalents at end of period   $ 43,437   $ 81,949  



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

Aug. 31, 2005
Aug. 31, 2004
ASSETS            
Current assets:  
  Cash and cash equivalents   $ 43,437   $ 81,949  
  Marketable securities    214,310    182,028  
  Accounts receivable, net    337,930    291,277  
  Inventories, net    222,030    187,239  
  Uniforms and other rental items in service    308,768    304,917  
  Prepaid expenses    10,032    12,041  


Total current assets    1,136,507    1,059,451  
 
Property and equipment, at cost, net    823,678    790,804  
 
Goodwill    903,356    815,936  
Service contracts, net    144,424    141,992  
Other assets, net    34,761    38,831  


    $ 3,042,726   $ 2,847,014  


LIABILITIES AND SHAREHOLDERS' EQUITY  
Current liabilities:  
  Accounts payable   $ 65,781   $ 55,326  
  Accrued compensation and related liabilities    37,441    30,532  
  Accrued liabilities    97,483    78,030  
  Income taxes:  
    Current    38,265    40,209  
    Deferred    59,370    65,395  
  Long-term debt due within one year    7,258    10,472  


Total current liabilities    305,598    279,964  
 
Long-term debt due after one year    510,572    474,266  
 
Deferred income taxes    133,735    126,419  
 
Shareholders' equity:  
  Preferred stock, no par value: 100,000 shares  
  authorized, none outstanding    --    --  
  Common stock, no par value: 425,000,000 shares  
  authorized  
  2005: 172,306,726 shares issued and 168,234,196  
  shares outstanding  
  2004: 171,516,573 shares issued and outstanding    117,356    96,136  
  Retained earnings    2,115,527    1,863,213  
  Treasury stock:  
   2005: 4,072,530 shares; 2004: 0 shares    (160,461 )  --  
  Other accumulated comprehensive income (loss):  
    Foreign currency translation    21,657    8,564  
    Unrealized loss on derivatives    (1,258 )  (1,548 )


Total shareholders' equity    2,092,821    1,966,365  
    $ 3,042,726   $ 2,847,014