Cintas (CTAS) 8-K Results of Operations and Financial Condition

Cintas Corporation Reports Growth
in First Quarter Fiscal 2005 Revenue and Earnings

CINCINNATI, Sept. 16 /PRNewswire-FirstCall/ — Cintas Corporation (Nasdaq: CTAS) today reported revenue for the first quarter of fiscal 2005 of $746 million, a 10 percent increase from last year’s $678 million. The Company also reported a 15 percent increase in net income of $72.7 million compared to $63.3 million last year. Prior year net income included a pre tax charge of approximately $4 million related to a write off of a receivable from a garment manufacturer. After-tax margins were a solid 9.7 percent of revenue. Earnings per diluted share of $.42 increased 14 percent from last year’s $.37 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 2005. Our Rental Revenue increased 8 percent while Other Services Revenue grew 18 percent over the previous year. On an organic growth basis, the segments grew approximately 6 percent and 5 percent, respectively, after excluding the extra workday in the quarter. Gross margins of 42.7 percent increased from 42.4 percent last year. We continue to see opportunities to expand our customer base and leverage our vast geographic presence and nationwide delivery and sales network.”

STRONG BALANCE SHEET

The Company’s balance sheet continues to strengthen. Debt to total capitalization was 19.8 percent as of August 31, 2004, versus 24.5 percent last year. Cash and marketable securities climbed to $264 million as of August 31, 2004, compared to $92 million last year. Total shareholders’ equity has now reached $1.97 billion.

OUTLOOK IS POSITIVE

Mr. Farmer continued, “We are reiterating our guidance for fiscal 2005, which was communicated with our fiscal 2004 results. We expect revenue for fiscal 2005 in the range of $3.0 billion to $3.2 billion, with full year earnings per share (diluted) in the range of $1.70 to $1.80, assuming a continued improvement in the economy.”

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, and first aid and safety products and services for over 550,000 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, the outcome of pending environmental matters, 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 under the Act to update any forward-looking statements to reflect the events or circumstances arising after the date on which they are made.

CONTACT: William C. Gale, Senior Vice President-Finance and CFO, +1-513-573-4211, or
Karen L. Carnahan, Vice President and Treasurer, +1-513-573-4013,
both of Cintas Corporation

Web site: http://www.cintas.com

(CTAS)

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

	THREE MONTHS ENDED
	Aug. 31, 2004			Aug. 31, 2003			% Change
Revenue:
Rentals	$	581,659		$	538,404			8.0
Other services		164,297			139,252			18.0
Total revenue	$	745,956		$	677,656			10.1
Costs and expenses (income):
Cost of rentals	$	317,754		$	298,145			6.6
Cost of other services		109,364			92,063			18.8
Selling and administrative expenses		198,809			176,130			12.9
Interest income		(1,122	)		(413	)		171.7
Interest expense		5,833			6,880			(15.2	)
Write-off of loan receivable		--			4,343			(100.0	)
Total costs and expenses	$	630,638		$	577,148			9.3
Income before income taxes	$	115,318		$	100,508			14.7
Income taxes		42,652			37,181			14.7
Net income	$	72,666		$	63,327			14.7
Per share data:
Basic earnings per share	$	0.42		$	0.37			13.5
Diluted earnings per share	$	0.42		$	0.37			13.5
Weighted average number of shares outstanding		171,449			170,652
Diluted average number of shares outstanding		172,660			171,922

CINTAS CORPORATION SUPPLEMENTAL DATA	Aug. 31, 2004		Aug. 31, 2003		% Change
Rental gross margin		45.4%		44.6%
Other services gross margin		33.4%		33.9%
Total gross margin		42.7%		42.4%
Net margin		9.7%		9.3%
Depreciation and amortization		36,428		35,435		2.8
Capital expenditures		35,336		31,007		14.0
Debt to total capitalization		19.8%		24.5%

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

	August 31, 2004			August 31, 2003
ASSETS
Current assets:
Cash and cash equivalents	$	81,949		$	54,914
Marketable securities		182,028			37,371
Accounts receivable, net		291,277			271,766
Inventories, net		187,239			224,845
Uniforms and other rental items in service		304,917			299,726
Prepaid expenses		12,041			8,759
Total current assets		1,059,451			897,381
Property and equipment, at cost, net		790,804			779,552
Goodwill		815,936			726,334
Service contracts, net		141,992			140,606
Other assets, net		38,831			52,253
	$	2,847,014		$	2,596,126
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	55,326		$	48,839
Accrued liabilities		108,562			85,904
Income taxes:
Current		40,209			31,415
Deferred		65,395			66,484
Long-term debt due within one year		10,472			26,653
Total current liabilities		279,964			259,295
Long-term debt due after one year		474,266			527,714
Deferred income taxes		126,419			99,139
Shareholders' equity:
Preferred stock, no par value, 100,000 shares
authorized, none outstanding		--			--
Common stock, no par value, 425,000,000 shares
authorized, 171,516,573 and 170,731,456 shares
issued and outstanding, respectively		96,136			77,530
Retained earnings		1,863,213			1,631,398
Other accumulated comprehensive income (loss):
Foreign currency translation		8,564			2,979
Unrealized loss on derivatives		(1,548	)		(1,929	)
Total shareholders' equity		1,966,365			1,709,978
	$	2,847,014		$	2,596,126

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

	Three Months Ended
	August 2004			August 2003
Cash flows from operating activities:
Net income	$	72,666		$	63,327
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation		29,699			29,017
Amortization of deferred charges		6,729			6,418
Deferred income taxes		21,815			15,593
Change in current assets and liabilities,
net of acquisitions of businesses:
Accounts receivable		(4,776	)		6,844
Inventories		(1,548	)		4,055
Uniforms and other rental items in service		(3,567	)		5,995
Prepaid expenses		(4,935	)		(1,152	)
Accounts payable		1,875			(5,075	)
Accrued compensation and related liabilities		(1,272	)		(3,801	)
Accrued liabilities		(67,420	)		(64,051	)
Income taxes payable		3,569			14,888
Net cash provided by operating activities		52,835			72,058
Cash flows from investing activities:
Capital expenditures		(35,336	)		(31,007	)
Proceeds from sale or redemption
of marketable securities		9,240			2,137
Purchase of marketable securities		(24,304	)		(14,088	)
Acquisitions of businesses, net of cash acquired		(14,574	)		(6,480	)
Other		1,183			1,533
Net cash used in investing activities		(63,791	)		(47,905	)
Cash flows from financing activities:
Repayment of long-term debt		(182	)		(1,797	)
Stock options exercised		1,514			1,406
Other		4,216			(1,087	)
Net cash provided by (used in) financing activities		5,548			(1,478	)
Net (decrease)/increase in cash and cash equivalents		(5,408	)		22,675
Cash and cash equivalents at beginning of period		87,357			32,239
Cash and cash equivalents at end of period	$	81,949		$	54,914