EX-99 2 ex99091808.htm EXHIBIT 99 - PRESS RELEASE DATED 9/18/2008 ex99091808.htm
FOR IMMEDIATE RELEASE
September 18, 2008


Cintas Corporation Announces First Quarter Fiscal 2009 Results
Indicates Results In-Line with Fiscal 2009 Plan

 
CINCINNATI, September 18, 2008 -- Cintas Corporation (Nasdaq: CTAS) today reported results for its first quarter of fiscal 2009, which ended on August 31, 2008.  Revenue for the quarter was $1.0 billion, an increase of 5.0% over the first quarter revenue in fiscal 2008, on a comparable workday basis.  Without this workday adjustment, revenue increased 3.4%.  Net income, which was also impacted by the lesser number of workdays, was $78.6 million, a 3.0% decrease from the prior year first quarter.  Diluted earnings per share were $0.51, the same as the first quarter of last fiscal year.
 
Scott D. Farmer, President and Chief Executive Officer, stated, “The current difficult economic conditions are certainly impacting our customers, causing them to respond with head count reductions and facility consolidations.  When combined with the significant increases in our energy and other commodity costs, our results clearly have been impacted.  Despite these issues, our results through the first quarter are in line with our full year fiscal 2009 plan.  We have continued to demonstrate the benefit of our products and services to our customers as well as new prospects, growing our top line revenue.  We also continue to leverage and improve our infrastructure and gain scale in our First Aid, Safety and Fire Protection and Document Management segments, which has helped to offset some of the increases in external costs.”
 
Financial Strength
 
Cintas continues to generate strong cash flow and maintains a solid balance sheet.  Net cash provided by operations was $88.3 million for the first quarter and the Company’s current ratio was 3.75 to 1 at August 31, 2008.  The Company’s debt to total capitalization remained below 30% despite purchasing 900,000 shares of its outstanding common stock during the quarter at a cost of $25.8 million.
 
Outlook
 
Mr. Farmer stated, “Based on our first quarter results, we are reiterating our full year fiscal 2009 guidance of revenue to be in the range of $4.1 to $4.2 billion and fully diluted earnings per share to be in the range of $2.22 to $2.30.  While we are cautious due to current economic conditions and the potential impact from recent weather conditions, this guidance continues to be appropriate.”
 
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, 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 Quarterly Report.  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.  Also note that we provide a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our businesses in our Annual Report on Form 10-K for the year ended May 31, 2008. We incorporate those items here and you should refer to them. These are factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors. 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.  Consequently, you should not consider the risk factors identified in our Form 10-K for the year ended May 31, 2008, to be a complete discussion of all potential risks or uncertainties.

 
For additional information, contact:
 
William C. Gale, Senior Vice President-Finance and Chief Financial Officer – 513-573-4211
 
Michael L. Thompson, Vice President and Treasurer – 513-573-4133
 

 
 

 

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

   
Three Months Ended
 
   
Aug. 31, 2008
   
Aug. 31, 2007
   
% Chng.
 
Revenue:
                 
   Rental uniforms and ancillary products
  $ 721,373     $ 710,354       1.6  
   Other services
    280,806       258,774       8.5  
   Total revenue
  $ 1,002,179     $ 969,128       3.4  
                         
Costs and expenses (income):
                       
   Cost of rental uniforms and ancillary products
  $ 407,290     $ 391,490       4.0  
   Cost of other services
    169,806       160,266       6.0  
   Selling and administrative expenses
    287,295       276,710       3.8  
                         
Operating Income
  $ 137,788     $ 140,662       -2.0  
                         
   Interest income
    (1,065 )     (1,462 )     -27.2  
   Interest expense
    13,031       12,837       1.5  
                         
Income before income taxes
  $ 125,822     $ 129,287       -2.7  
Income taxes
    47,186       48,224       -2.2  
Net income
  $ 78,636     $ 81,063       -3.0  
                         
Per share data:
                       
Basic earnings per share
  $ 0.51     $ 0.51       0.0  
Diluted earnings per share
  $ 0.51     $ 0.51       0.0  
                         
Basic shares outstanding
    153,394       158,771          
Diluted shares outstanding
    153,621       159,038          
 
CINTAS CORPORATION SUPPLEMENTAL DATA
   
Three Months Ended
 
   
Aug. 31, 2008
   
Aug. 31, 2007
   
% Chng.
 
Rental uniforms and ancillary products gross margin
    43.5%       44.9%        
Other services gross margin
    39.5%       38.1%        
Total gross margin
    42.4%       43.1%        
Net margin
    7.8%       8.4%        
                       
Depreciation and amortization
  $ 49,885     $ 46,222       7.9  
Capital expenditures
  $ 54,461     $ 45,344       20.1  
                         
Debt to total capitalization
    29.3%       28.2%          
 
 

 
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 August 31, 2008
                                   
Revenue
  $ 721,373     $ 117,483     $ 108,532     $ 54,791     $ 0     $ 1,002,179  
Gross margin
  $ 314,083     $ 37,377     $ 44,124     $ 29,499     $ 0     $ 425,083  
  Selling and administrative expenses
  $ 207,024     $ 25,374     $ 32,774     $ 22,123     $ 0     $ 287,295  
Income (loss) before income taxes
  $ 107,059     $ 12,003     $ 11,350     $ 7,376     $ (11,966 )   $ 125,822  
Assets
  $ 2,641,223     $ 191,101     $ 352,932     $ 460,448     $ 180,895     $ 3,826,599  
                                                 
For the three months ended August 31, 2007
                                               
Revenue
  $ 710,354     $ 118,805     $ 102,256     $ 37,713     $ 0     $ 969,128  
Gross margin
  $ 318,864     $ 36,470     $ 41,820     $ 20,218     $ 0     $ 417,372  
  Selling and administrative expenses
  $ 204,071     $ 25,343     $ 31,199     $ 16,097     $ 0     $ 276,710  
Income (loss) before income taxes
  $ 114,793     $ 11,127     $ 10,621     $ 4,121     $ (11,375 )   $ 129,287  
Assets
  $ 2,592,401     $ 182,278     $ 332,757     $ 375,122     $ 138,272     $ 3,620,830  

 
RECONCILIATION TO GAAP MEASURES
   
Three Months Ended
Aug. 31, 2008
 
       
Revenue growth, on a comparable workday basis
   5.0%  
Workday adjustment*
   
 1.6%
 
Revenue growth
 
 3.4%
 
         

*
There were 65 workdays in the quarter ended August 31, 2008, and 66 workdays in the quarter ended August 31, 2007.  The workday adjustment is calculated by dividing revenue growth by the number of workdays in the first quarter of fiscal 2009 and then multiplying by the number of workdays in the first quarter of the prior fiscal year.

 
 

 

Cintas Corporation
Consolidated Condensed Balance Sheets
(In thousands except share data)
 
 
   
Aug. 31, 2008 (Unaudited)
   
May 31, 2008
 
ASSETS
           
Current assets:
           
   Cash and cash equivalents
  $ 58,243     $ 66,224  
   Marketable securities
    122,652       125,471  
   Accounts receivable, net
    431,681       430,078  
   Inventories, net
    242,094       238,669  
   Uniforms and other rental items in service
    373,241       370,416  
   Deferred tax asset
    40,656       39,410  
   Prepaid expenses
    18,381       12,068  
Total current assets
    1,286,948       1,282,336  
                 
Property and equipment, at cost, net
    987,582       974,575  
                 
Goodwill
    1,320,501       1,315,569  
Service contracts, net
    146,197       152,757  
Other assets, net
    85,371       83,364  
                 
    $ 3,826,599     $ 3,808,601  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
Current liabilities:
               
   Accounts payable
  $ 87,418     $ 94,755  
   Accrued compensation & related liabilities
    33,778       50,605  
   Accrued liabilities
    176,053       207,925  
   Current income taxes payable
    45,657       12,887  
   Long-term debt due within one year
    957       1,070  
Total current liabilities
    343,863       367,242  
                 
Long-term liabilities:
               
   Long-term debt due after one year
    949,588       942,736  
   Deferred income taxes
    123,425       124,184  
   Accrued liabilities
    118,872       120,308  
Total long-term liabilities
    1,191,885       1,187,228  
                 
Shareholders' equity:
               
   Preferred stock, no par value: 100,000 shares authorized, none outstanding
    -       -  
   Common stock, no par value: 425,000,000 shares authorized
               
    FY 2009:  173,083,426 issued and 152,788,444 outstanding
               
    FY 2008:  173,083,426 issued and 153,691,103 outstanding
    129,182       129,182  
   Paid-in capital
    63,943       60,408  
   Retained earnings
    2,862,938       2,784,302  
   Treasury stock FY 2009: 20,294,982; FY 2008: 19,392,323
    (797,888 )     (772,041 )
   Other accumulated comprehensive income
               
      Foreign currency translation
    41,393       61,206  
      Unrealized loss on derivatives
    (8,623 )     (8,815 )
      Unrealized loss on available-for-sale securities
    (94 )     (111 )
Total shareholders' equity
    2,290,851       2,254,131  
                 
    $ 3,826,599     $ 3,808,601  

 
 

 

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

   
Three Months Ended
 
   
Aug. 31, 2008
   
Aug. 31, 2007
 
Cash flows from operating activities:
           
             
Net income
  $ 78,636     $ 81,063  
                 
Adjustments to reconcile net income to net cash provided by operating activities:
               
   Depreciation
    39,040       35,636  
   Amortization of deferred charges
    10,845       10,586  
   Stock-based compensation
    3,535       2,132  
   Deferred income taxes
    (1,482 )     17,418  
   Change in current assets and liabilities, net of acquisitions of businesses:
               
    Accounts receivable
    (3,369 )     644  
    Inventories, net
    (3,795 )     (4,293 )
    Uniforms and other rental items in service
    (4,437 )     (7,128 )
    Prepaid expenses
    (6,332 )     (2,117 )
    Accounts payable
    (7,567 )     5,435  
    Accrued compensation and related liabilities
    (16,696 )     (28,386 )
    Accrued liabilities
    (32,758 )     (77,926 )
    Income taxes payable
    32,718       24,001  
   Net cash provided by operating activities
    88,338       57,065  
                 
Cash flows from investing activities:
               
                 
Capital expenditures
    (54,461 )     (45,344 )
Proceeds from sale or redemption of marketable securities
    171       29,156  
Purchase of marketable securities and investments
    (10,379 )     (6,237 )
Acquisitions of businesses, net of cash acquired
    (12,106 )     (32,630 )
Other
    627       177  
   Net cash used in investing activities
    (76,148 )     (54,878 )
                 
Cash flows from financing activities:
               
                 
Proceeds from issuance of debt
    7,000       224,750  
Repayment of debt
    (261 )     (225,282 )
Stock options exercised
    -       7,230  
Repurchase of common stock
    (25,847 )     -  
Other
    287       (3,465 )
   Net cash (used in) provided by financing activities
    (18,821 )     3,233  
                 
Effect of exchange rate changes on cash and cash equivalents
    (1,350 )     61  
                 
Net (decrease) increase in cash and cash equivalents
    (7,981 )     5,481  
Cash and cash equivalents at beginning of period
    66,224       35,360  
Cash and cash equivalents at end of period
  $ 58,243     $ 40,841