EX-99 2 ex99031810.htm EXHIBIT 99 ex99031810.htm
Exhibit 99



FOR IMMEDIATE RELEASE
March 18, 2010


Cintas Corporation Announces Fiscal 2010 Third Quarter Results

 
CINCINNATI, March 18, 2010 -- Cintas Corporation (Nasdaq:CTAS) today reported results for the third quarter of its fiscal year 2010, which ended on February 28, 2010.  Revenues for the third quarter were $861.8 million and earnings per share were $0.32.  Both third quarter revenues and earnings per share slightly exceeded the top end of the Company’s previously released guidance issued on February 16, 2010.  The third quarter of fiscal year 2010 had one fewer workday than both last year’s fiscal third quarter and the second quarter of this fiscal year.  When adjusting for the one fewer workday in this year’s third quarter, revenues were 3.7% less than last year’s third quarter, an improvement from the 10.2% decline experienced in our second quarter ending November 30, 2009, versus the prior year’s second quarter.  Revenues were comparable to the first two quarters of this fiscal year when adjusting for workday differences.

Scott D. Farmer, Chief Executive Officer, stated, “We are encouraged that job losses appear to be moderating from what we saw in calendar year 2009.  However, we believe job recovery will continue to be sluggish and thus our revenues will be slow to return to prior levels.  Despite the weather difficulties and holiday shut downs during our third quarter, our revenues and margins met our internal plan.”

Mr. Farmer continued, “Our expectations for our fourth quarter remain unchanged from our previously released guidance.  We expect revenues to be between $870 and $890 million and earnings per share to be between $0.30 and $0.34.  Our businesses continue to be profitable, generating positive cash flow.  During the third quarter, we increased cash and marketable securities by over $70 million. With total cash and marketable securities of over $550 million at February 28, 2010, our balance sheet is very strong.  Last week, we paid our annual dividend to our shareholders amounting to $0.48 per share, an increase from $0.47 paid last year.  We have increased our dividend every year since going public in 1983.”

Scott Farmer concluded, “We remain confident about the future because of our strong market share position and balance sheet, and most importantly, due to the quality and ability of our employee-partners who have continued their commitment to taking care of our customers and focusing on managing costs.”


 
 

 

About Cintas
Headquartered in Cincinnati, Cintas Corporation provides highly specialized services to businesses of all types primarily throughout North America. Cintas designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products, first aid, safety, fire protection products and services and document management services for approximately 800,000 businesses. Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS, and is a Nasdaq-100 company and component of the Standard & Poor’s 500 Index.

 
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,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used.  Such statements are based upon current expectations of Cintas and speak only as of the date made.  You should not place undue reliance on any forward-looking statement.  We cannot guarantee that any forward-looking statement will be realized.  These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release.  Factors that might cause such a difference include, but are not limited to, the possibility of greater than anticipated operating costs including energy costs, lower sales volumes, loss of customers due to outsourcing trends, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor including increased medical costs, costs and possible effects of union organizing activities, failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, the cost, results and ongoing assessment of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002, the initiation or outcome of litigation, investigations or other proceedings, higher assumed sourcing or distribution costs of products, the disruption of operations from catastrophic or extraordinary events, changes in federal and state tax and labor laws and the reactions of competitors in terms of price and service.  Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made.  A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2009 and in our reports on Forms 10-Q and 8-K.  The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us or that we currently believe to be immaterial may also harm our business.

 
For additional information, contact:
 
William C. Gale, Sr. Vice President-Finance and Chief Financial Officer – 513-573-4211
 
Judy Girty, Executive Assistant to William C. Gale, 513-573-4915
 



 
 

 
Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
 
   
Three Months Ended
   
Three Months Ended
 
   
February 28, 2010
   
November 30, 2009
   
% Chng.
   
February 28, 2009
   
% Chng.
 
Revenue:
 
 
   
 
   
 
             
  Rental uniforms and ancillary products
  $ 622,458     $ 643,597       -3.3     $ 674,701       -7.7  
  Other services
    239,354       240,912       -0.6       233,938       2.3  
  Total revenue
  $ 861,812     $ 884,509       -2.6     $ 908,639       -5.2  
 
                                       
Costs and expenses:
                                       
  Cost of rental uniforms and ancillary products
  $ 356,750     $ 363,728       -1.9     $ 379,466       -6.0  
  Cost of other services
    145,455       150,934       -3.6       152,736       -4.8  
  Selling and administrative expenses
    275,596       259,406       6.2       257,129       7.2  
  Legal settlements, net of insurance proceeds
    -       4,052       N/A       -       N/A  
                                         
Operating income
  $ 84,011     $ 106,389       -21.0     $ 119,308       -29.6  
                                         
  Interest income
    (422 )     (314 )     34.4       (540 )     -21.9  
  Interest expense
    11,575       12,579       -8.0       12,407       -6.7  
 
                                       
Income before income taxes
  $ 72,858     $ 94,124       -22.6     $ 107,441       -32.2  
Income taxes
    23,876       36,948       -35.4       35,630       -33.0  
Net income
  $ 48,982     $ 57,176       -14.3     $ 71,811       -31.8  
                                         
Per share data:
                                       
Basic earnings per share
  $ 0.32     $ 0.37       -13.5     $ 0.47       -31.9  
Diluted earnings per share
  $ 0.32     $ 0.37       -13.5     $ 0.47       -31.9  
                                         
Weighted average number of shares outstanding
    152,869       152,866               152,993          
Diluted average number of shares outstanding
    152,869       152,866               152,933          
 
 
 
 
 

 

 
   
Nine Months Ended
 
   
February 28, 2010
   
February 28, 2009
   
% Chng.
 
Revenue:
 
 
   
 
   
 
 
  Rental uniforms and ancillary products
  $ 1,921,693     $ 2,107,528       -8.8  
  Other services
    716,197       788,474       -9.2  
  Total revenue
  $ 2,637,890     $ 2,896,002       -8.9  
 
                       
Costs and expenses:
                       
  Cost of rental uniforms and ancillary products
  $ 1,083,407     $ 1,188,370       -8.8  
  Cost of other services
    442,234       491,112       -10.0  
  Selling and administrative expenses
    799,429       829,032       -3.6  
  Legal settlements, net of insurance proceeds
    23,529       -       N/A  
                         
Operating income
  $ 289,291     $ 387,488       -25.3  
                         
  Interest income
    (1,095 )     (2,435 )     -55.0  
  Interest expense
    36,192       38,206       -5.3  
 
                       
Income before income taxes
  $ 254,194     $ 351,717       -27.7  
Income taxes
    94,052       129,432       -27.3  
Net income
  $ 160,142     $ 222,285       -28.0  
                         
Per share data:
                       
Basic earnings per share
  $ 1.04     $ 1.45       -28.3  
Diluted earnings per share
  $ 1.04     $ 1.45       -28.3  
                         
Weighted average number of shares outstanding
    152,854       152,790          
Diluted average number of shares outstanding
    152,854       152,790          
 
CINTAS CORPORATION SUPPLEMENTAL DATA
   
Three
Months Ended
   
Three
Months Ended
 
   
February 28, 2010
   
November 30, 2009
   
February 28, 2009
 
Rental uniforms and ancillary products gross margin
    42.7 %     43.5 %     43.8 %
Other services gross margin
    39.2 %     37.3 %     34.7 %
Total gross margin
    41.7 %     41.8 %     41.4 %
Net margin
    5.7 %     6.5 %     7.9 %
Net margin, excluding charges
    5.7 %     6.7 %     7.9 %
                         
Depreciation and amortization
  $ 47,973     $ 47,562     $ 50,248  
Capital expenditures
  $ 30,836     $ 23,273     $ 36,826  
                         
Debt to total capitalization
    24.1 %     24.0 %     25.3 %
                         
                         
 
 
 
 
 

 

 
   
Nine Months Ended
 
   
February 28, 2010
   
February 28, 2009
 
Rental uniforms and ancillary products gross margin
    43.6 %     43.6 %
Other services gross margin
    38.3 %     37.7 %
Total gross margin
    42.2 %     42.0 %
Net margin
    6.1 %     7.7 %
Net margin, excluding charges
    6.6 %     7.7 %
                 
Depreciation and amortization
  $ 144,440     $ 150,142  
Capital expenditures
  $ 78,928     $ 132,783  
                 
Debt to total capitalization
    24.1 %     25.3 %
 
Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

The press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission.  To supplement its consolidated financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides additional measures of operating results, net earnings and earnings per share adjusted to exclude certain costs, expenses and gains and losses.  The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance.  A reconciliation of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP is shown below.
 
Management believes earnings per diluted share excluding the legal settlement charge provides investors pertinent information given the one-time nature of these charges.


   
Three Months Ended
   
Three Months Ended
 
   
February 28, 2010
   
November 30, 2009
   
% Chng.
   
February 28, 2009
   
% Chng.
 
                               
Income before income taxes
  $ 72,858     $ 94,124       -22.6     $ 107,441       -32.2  
                                         
Excluding:
                                       
  Legal settlements, net of insurance proceeds
    -       4,052               -          
                                         
Total charges
  $ -     $ 4,052             $ -          
                                         
Income before income taxes, excluding charges
  $ 72,858     $ 98,176       -25.8     $ 107,441       -32.2  
Income taxes, excluding charges
    23,876       38,517               35,630          
Net income, excluding charges
  $ 48,982     $ 59,659       -17.9     $ 71,811       -31.8  
                                         
Per share data:
                                       
Earnings per diluted share, excluding charges
  $ 0.32     $ 0.39       -17.9     $ 0.47       -31.9  

 
 

 
   
Nine Months Ended
 
   
February 28, 2010
   
February 28, 2009
   
% Chng.
 
                   
Income before income taxes
  $ 254,194     $ 351,717       -27.7  
                         
Excluding:
                       
  Legal settlements, net of insurance proceeds
    23,529       -          
                         
Total charges
  $ 23,529     $ -          
                         
Income before income taxes, excluding charges
  $ 277,723     $ 351,717       -21.0  
Income taxes, excluding charges
    102,758       129,432          
Net income, excluding charges
  $ 174,965     $ 222,285       -21.3  
                         
Per share data:
                       
Earnings per diluted share, excluding charges
  $ 1.14     $ 1.45       -21.4  
 
 
Computation of Free Cash Flow
   
Nine Months
Ended February 28,
 
   
2010
   
2009
 
             
Net Cash Provided by Operations
  $ 429,189     $ 339,719  
                 
Capital Expenditures
  $ (78,928 )   $ (132,783 )
                 
Free Cash Flow
  $ 350,261     $ 206,936  

Note: Management uses free cash flow to assess the financial performance of the Company.  Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.

 
 

 
 SUPPLEMENTAL SEGMENT DATA
 
 
Rental Uniforms and Ancillary Products
   
Uniform Direct Sales
   
First Aid, Safety and Fire Protection
   
Document Management
   
Corporate
   
Total
 
For the three months ended February 28, 2010
                                   
Revenue
  $ 622,458     $ 94,428     $ 79,210     $ 65,716     $ -     $ 861,812  
Gross margin
  $ 265,708     $ 27,915     $ 31,322     $ 34,662     $ -     $ 359,607  
  Selling and administrative expenses
  $ 201,389     $ 19,707     $ 29,260     $ 25,240     $ -     $ 275,596  
Interest income
  $ -     $ -     $ -     $ -     $ (422 )   $ (422 )
Interest expense
  $ -     $ -     $ -     $ -     $ 11,575     $ 11,575  
Income (loss) before income taxes
  $ 64,319     $ 8,208     $ 2,062     $ 9,422     $ (11,153 )   $ 72,858  
                                                 
For the three months ended November 30, 2009
                                               
Revenue
  $ 643,597     $ 99,434     $ 81,557     $ 59,921     $ -     $ 884,509  
Gross margin
  $ 279,869     $ 29,182     $ 30,560     $ 30,236     $ -     $ 369,847  
  Selling and administrative expenses
  $ 187,988     $ 18,707     $ 27,542     $ 25,169     $ -     $ 259,406  
  Legal settlements, net of insurance proceeds
  $ -     $ -     $ -     $ -     $ 4,052     $ 4,052  
Interest income
  $ -     $ -     $ -     $ -     $ (314 )   $ (314 )
Interest expense
  $ -     $ -     $ -     $ -     $ 12,579     $ 12,579  
Income (loss) before income taxes
  $ 91,881     $ 10,475     $ 3,018     $ 5,067     $ (16,317 )   $ 94,124  
                                                 
For the three months ended February 28, 2009
                                               
Revenue
  $ 674,701     $ 97,010     $ 86,037     $ 50,891     $ -     $ 908,639  
Gross margin
  $ 295,235     $ 23,905     $ 33,109     $ 24,188     $ -     $ 376,437  
  Selling and administrative expenses
  $ 184,788     $ 23,102     $ 28,968     $ 20,271     $ -     $ 257,129  
Interest income
  $ -     $ -     $ -     $ -     $ (540 )   $ (540 )
Interest expense
  $ -     $ -     $ -     $ -     $ 12,407     $ 12,407  
Income (loss) before income taxes
  $ 110,447     $ 803     $ 4,141     $ 3,917     $ (11,867 )   $ 107,441  
                                                 
For the nine months ended February 28, 2010
                                               
Revenue
  $ 1,921,693     $ 283,163     $ 250,768     $ 182,266     $ -     $ 2,637,890  
Gross margin
  $ 838,286     $ 84,342     $ 97,144     $ 92,477     $ -     $ 1,112,249  
  Selling and administrative expenses
  $ 579,633     $ 57,570     $ 86,277     $ 75,949     $ -     $ 799,429  
  Legal settlements, net of insurance proceeds
  $ -     $ -     $ -     $ -     $ 23,529     $ 23,529  
Interest income
  $ -     $ -     $ -     $ -     $ (1,095 )   $ (1,095 )
Interest expense
  $ -     $ -     $ -     $ -     $ 36,192     $ 36,192  
Income (loss) before income taxes
  $ 258,653     $ 26,772     $ 10,867     $ 16,528     $ (58,626 )   $ 254,194  
Assets
  $ 2,427,309     $ 158,229     $ 326,496     $ 495,779     $ 552,096     $ 3,959,909  
                                                 
For the nine months ended February 28, 2009
                                               
Revenue
  $ 2,107,528     $ 334,528     $ 295,059     $ 158,887     $ -     $ 2,896,002  
Gross margin
  $ 919,158     $ 98,133     $ 117,675     $ 81,554     $ -     $ 1,216,520  
  Selling and administrative expenses
  $ 593,282     $ 76,090     $ 94,516     $ 65,144     $ -     $ 829,032  
Interest income
  $ -     $ -     $ -     $ -     $ (2,435 )   $ (2,435 )
Interest expense
  $ -     $ -     $ -     $ -     $ 38,206     $ 38,206  
Income (loss) before income taxes
  $ 325,876     $ 22,043     $ 23,159     $ 16,410     $ (35,771 )   $ 351,717  
Assets
  $ 2,595,144     $ 165,976     $ 338,509     $ 467,911     $ 151,904     $ 3,719,444  


 
 

 
Cintas Corporation
Consolidated Balance Sheets
(In thousands except share data)
ASSETS
 
February 28, 2010
   
May 31,
2009
 
   
(Unaudited)
       
Current assets:
           
  Cash & cash equivalents
  $ 406,503     $ 129,745  
  Marketable securities
    145,593       120,393  
  Accounts receivable, net
    356,453       357,678  
  Inventories, net
    167,814       202,351  
  Uniforms and other rental items in service
    321,964       335,447  
  Income taxes, current
    16,088       25,512  
  Deferred tax asset
    68,165       66,368  
  Prepaid expenses
    17,421       17,035  
  Assets held for sale
    15,744       15,744  
    Total current assets
    1,515,745       1,270,273  
                 
Property and equipment, at cost, net
    894,578       914,627  
                 
Goodwill
    1,352,096       1,331,388  
Service contracts, net
    109,402       124,330  
Other assets, net
    88,088       80,333  
                 
    $ 3,959,909     $ 3,720,951  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
Current liabilities:
               
  Accounts payable
  $ 80,406     $ 69,965  
  Accrued compensation and related liabilities
    55,702       48,414  
  Accrued liabilities
    302,543       198,488  
  Long-term debt due within one year
    598       598  
    Total current liabilities
    439,249       317,465  
                 
Long-term liabilities:
               
  Long-term debt due after one year
    785,595       786,058  
  Deferred income taxes
    162,989       149,032  
  Accrued liabilities
    96,888       100,987  
    Total long-term liabilities
    1,045,472       1,036,077  
                 
Shareholders' equity:
               
  Preferred stock, no par value:
    -       -  
    100,000 shares authorized, none outstanding
               
  Common stock, no par value:
    132,058       129,215  
    425,000,000 shares authorized
    FY10: 173,207,493 issued and 152,869,848 outstanding
    FY09: 173,085,926 issued and 152,790,170 outstanding
               
  Paid-in capital
    80,978       72,364  
  Retained earnings
    3,024,601       2,938,419  
  Treasury stock:
    FY10:  20,337,645 shares
    FY09:  20,295,756 shares
    (798,848 )     (797,888 )
  Other accumulated comprehensive income (loss):
               
    Foreign currency translation
    43,937       33,505  
    Unrealized loss on derivatives
    (7,568 )     (8,207 )
    Unrealized gain on available-for-sale securities
    30       1  
     Total shareholders' equity
    2,475,188       2,367,409  
                 
    $ 3,959,909     $ 3,720,951  


 
 

 

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


   
Nine Months Ended
 
Cash flows from operating activities:
 
February 28, 2010
   
February 28, 2009
 
             
Net income
  $ 160,142     $ 222,285  
                 
Adjustments to reconcile net income to net cash provided by operating activities:
               
  Depreciation
    113,834       118,119  
  Amortization of deferred charges
    30,606       32,023  
  Stock-based compensation
    11,323       8,904  
  Deferred income taxes
    11,945       9,052  
  Change in current assets and liabilities, net of acquisitions of businesses:
               
    Accounts receivable, net
    10,785       42,118  
    Inventories, net
    31,900       (16,427 )
    Uniforms and other rental items in service
    14,223       12,998  
    Prepaid expenses
    (240 )     (5,802 )
    Accounts payable
    15,167       (22,247 )
    Accrued compensation and related liabilities
    8,414       (3,250 )
    Accrued liabilities and other
    11,507       (45,734 )
    Income taxes payable
    9,583       (12,320 )
                 
  Net cash provided by operating activities
    429,189       339,719  
                 
Cash flows from investing activities:
               
                 
Capital expenditures
    (78,928 )     (132,783 )
Proceeds from sale or redemption of marketable securities
    34,011       92,061  
Purchase of marketable securities and investments
    (69,819 )     (94,985 )
Acquisitions of businesses, net of cash acquired
    (41,375 )     (29,381 )
Other
    3,804       (428 )
                 
  Net cash used in investing activities
    (152,307 )     (165,516 )
                 
Cash flows from financing activities:
               
                 
Proceeds from issuance of debt
    -       7,500  
Repayment of debt
    (464 )     (164,510 )
Exercise of stock-based compensation awards
    2,843       -  
Repurchase of common stock
    (960 )     (25,847 )
Other
    (3,237 )     736  
                 
  Net cash used in financing activities
    (1,818 )     (182,121 )
                 
Effect of exchange rate changes on cash and cash equivalents
    1,694       (4,055 )
                 
Net increase (decrease) in cash and cash equivalents
    276,758       (11,973 )
 
               
Cash and cash equivalents at beginning of period
    129,745       66,224  
                 
Cash and cash equivalents at end of period
  $ 406,503     $ 54,251