Exhibit 99
FOR IMMEDIATE RELEASE
September 23, 2009
Cintas Corporation Announces Fiscal 2010 First Quarter Results
CINCINNATI, September 23, 2009 -- Cintas Corporation (Nasdaq:CTAS) today reported results for the first quarter of its fiscal year 2010. Revenue for the quarter, which ended August 31, 2009, was $892 million and represents a 1.5% revenue increase as compared to the fourth quarter of fiscal 2009, which ended on May 31, 2009.
Net income and earnings per diluted share for the quarter were $54 million and $0.35, respectively. First quarter results included a previously announced legal settlement, net of insurance proceeds. Without this charge, net income was $66 million and earnings per diluted share were $0.43.
Excluding special charges, the Company's net income and earnings per diluted share for the first quarter ended August 31, 2009 both increased over 13% as compared to the fourth quarter ended May 31, 2009. The special charges impacting these quarters were the legal settlement charge in the current quarter and a restructuring, fixed asset impairment and inventory valuation charge in the fourth quarter of last year. The improvement in net income and earnings per diluted share was primarily due to the Company's continued effort to control costs and right size the organization in the current economic environment.
Scott D. Farmer, Chief Executive Officer, stated, "Over the last twelve months, the U.S. economy has shed employment at levels not experienced since the Great Depression. These job losses make year over year comparisons difficult as our customers continued to shed jobs throughout the year. In order to give investors better information on trends in our business, we have provided comparisons to the fourth quarter of fiscal 2009."
Mr. Farmer emphasized, "While we gain some solace in the recent moderation of job loss, market conditions remain difficult and will continue to impact our businesses. However, we continue to be a market leader in our businesses, with state-of-the-art technology, extremely efficient operations and very dedicated employee-partners. In addition, our balance sheet and cash flow both continue to be strong, with our total cash and marketable securities increasing to over $350 million and our total debt to total capitalization ratio improving to 24.5%. The leadership position in our businesses combined with this strong financial condition will provide us enhanced opportunities when economic conditions improve."
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 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
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 | | | Three Months Ended | |
| | | August 31, 2009 | | | May 31, 2009 | | | % Chng. | | | August 31, 2008 | | | % Chng. | |
| | | | | | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | | | | |
Rental uniforms and ancillary products | | $ | 655,638 | | | $ | 647,487 | | | | 1.3 | | | $ | 721,373 | | | | -9.1 | |
Other services | | | 235,931 | | | | 231,196 | | | | 2.0 | | | | 280,806 | | | | -16.0 | |
Total revenue | | $ | 891,569 | | | $ | 878,683 | | | | 1.5 | | | $ | 1,002,179 | | | | -11.0 | |
| | | | | | | | | | | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | | | | | | | | | | |
Cost of rental uniforms and ancillary products | | $ | 362,929 | | | $ | 373,860 | | | | -2.9 | | | $ | 407,290 | | | | -10.9 | |
Cost of other services | | | 145,845 | | | | 170,472 | | | | -14.4 | | | | 169,806 | | | | -14.1 | |
Selling and administrative expenses | | | 264,427 | | | | 253,677 | | | | 4.2 | | | | 287,295 | | | | -8.0 | |
Restructuring charges | | | - | | | | 10,209 | | | | N/A | | | | - | | | | N/A | |
Impairment of long-lived assets | | | - | | | | 48,888 | | | | N/A | | | | - | | | | N/A | |
Legal settlement, net of insurance proceeds | | | 19,477 | | | | - | | | | N/A | | | | - | | | | N/A | |
| | | | | | | | | | | | | | | | | | | | | |
| Operating income | | $ | 98,891 | | | $ | 21,577 | | | | 358.3 | | | $ | 137,788 | | | | -28.2 | |
| | | | | | | | | | | | | | | | | | | | | |
Interest income | | | (359 | ) | | | (329 | ) | | | 9.1 | | | | (1,065 | ) | | | -66.3 | |
Interest expense | | | 12,038 | | | | 12,030 | | | | 0.1 | | | | 13,031 | | | | -7.6 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before income taxes | | $ | 87,212 | | | $ | 9,876 | | | | 783.1 | | | $ | 125,822 | | | | -30.7 | |
| Income taxes | | | 33,228 | | | | 5,804 | | | | 472.5 | | | | 47,186 | | | | -29.6 | |
| Net income | | $ | 53,984 | | | $ | 4,072 | | | | 1,225.7 | | | $ | 78,636 | | | | -31.3 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.35 | | | $ | 0.03 | | | | 1,066.7 | | | $ | 0.51 | | | | -31.4 | |
| Diluted earnings per share | | $ | 0.35 | | | $ | 0.03 | | | | 1,066.7 | | | $ | 0.51 | | | | -31.4 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average number of shares outstanding | | | 152,828 | | | | 152,790 | | | | | | | | 153,394 | | | | | |
| Diluted average number of shares outstanding | | | 152,828 | | | | 152,790 | | | | | | | | 153,394 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure | | | |
| | | | | | | | |
| Management believes earnings per diluted share excluding the legal settlement charge, net of insurance proceeds and the restructuring, impairment and inventory valuation charge provides investors pertinent information given the one-time nature of these charges. |
| | | Three Months Ended | | | Three Months Ended | |
| | | August 31, 2009 | | | May 31, 2009 | | | % Chng. | | | August 31, 2008 | | | % Chng. | |
| | | | | | | | | | | | | | | | |
| Income before income taxes | | $ | 87,212 | | | $ | 9,876 | | | | 783.1 | | | $ | 125,822 | | | | -30.7 | |
| | | | | | | | | | | | | | | | | | | | | |
| Excluding: | | | | | | | | | | | | | | | | | | | | |
Restructuring charges | | $ | - | | | $ | 10,209 | | | | | | | $ | - | | | | | |
Impairment of long-lived assets | | | - | | | | 48,888 | | | | | | | | - | | | | | |
Inventory valuation charge (1) | | | - | | | | 27,486 | | | | | | | | - | | | | | |
Legal settlement, net of insurance proceeds | | | 19,477 | | | | - | | | | | | | | - | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total charges | | $ | 19,477 | | | $ | 86,583 | | | | | | | $ | - | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Income before income taxes, excluding charges | | $ | 106,689 | | | $ | 96,459 | | | | 10.6 | | | $ | 125,822 | | | | -15.2 | |
| Income taxes, excluding charges | | | 40,649 | | | | 38,186 | | | | | | | | 47,186 | | | | | |
| Net income, excluding charges | | $ | 66,040 | | | $ | 58,273 | | | | 13.3 | | | $ | 78,636 | | | | -16.0 | |
| | | | | | | | | | | | | | | | | | | | | |
| Per share data: | | | | | | | | | | | | | | | | | | | | |
| Earnings per dulited share, excluding charges | | $ | 0.43 | | | $ | 0.38 | | | | 13.2 | | | $ | 0.51 | | | | -15.7 | |
| 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 operatings 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 above. |
| (1) | The inventory valuation charge is included in cost of goods sold. $8,419 of the charge is included in cost of rental uniforms and ancillary products and $19,067 is included in cost of other services. |
CINTAS CORPORATION SUPPLEMENTAL DATA
| | | Three Months Ended | | | Three Months Ended | |
| | | August 31, 2009 | | | May 31, 2009 | | | August 31, 2008 | |
| Rental uniforms and ancillary products gross margin | | | 44.6% | | | | 42.3% | | | | 43.5% | |
| Other services gross margin | | | 38.2% | | | | 26.3% | | | | 39.5% | |
| Total gross margin | | | 42.9% | | | | 38.1% | | | | 42.4% | |
| Total gross margin, excluding charges | | | 42.9% | | | | 41.2% | | | | 42.4% | |
| Net margin | | | 6.1% | | | | 0.5% | | | | 7.8% | |
| Net margin, excluding charges | | | 7.4% | | | | 6.6% | | | | 7.8% | |
| | | | | | | | | | | | | |
| Depreciation and amortization | | $ | 48,905 | | | $ | 49,964 | | | $ | 49,885 | |
| Capital expenditures | | $ | 24,819 | | | $ | 27,309 | | | $ | 54,461 | |
| | | | | | | | | | | | | |
| Debt to total capitalization | | | 24.5% | | | | 24.9% | | | | 29.3% | |
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, 2009 | | | | | | | | | | | | | | | | |
| Revenue | | $ | 655,638 | | | $ | 89,301 | | | $ | 90,001 | | | $ | 56,629 | | | $ | - | | | $ | 891,569 | |
| Gross margin | | $ | 292,709 | | | $ | 27,245 | | | $ | 35,262 | | | $ | 27,579 | | | $ | - | | | $ | 382,795 | |
| Selling and administrative expenses | | $ | 190,256 | | | $ | 19,156 | | | $ | 29,475 | | | $ | 25,540 | | | $ | - | | | $ | 264,427 | |
| Legal settlement, net of insurance proceeds | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 19,477 | | | $ | 19,477 | |
| Interest income | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | (359 | ) | | $ | (359 | ) |
| Interest expense | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 12,038 | | | $ | 12,038 | |
| Income (loss) before income taxes | | $ | 102,453 | | | $ | 8,089 | | | $ | 5,787 | | | $ | 2,039 | | | $ | (31,156 | ) | | $ | 87,212 | |
| Assets | | $ | 2,497,775 | | | $ | 130,721 | | | $ | 320,226 | | | $ | 472,469 | | | $ | 357,879 | | | $ | 3,779,070 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended May 31, 2009 | | | | | | | | | | | | | | | | | | | | | |
| Revenue | | $ | 647,487 | | | $ | 93,841 | | | $ | 83,038 | | | $ | 54,317 | | | $ | - | | | $ | 878,683 | |
| Gross margin | | $ | 273,627 | | | $ | 7,900 | | | $ | 26,505 | | | $ | 26,319 | | | $ | - | | | $ | 334,351 | |
| Selling and administrative expenses | | $ | 175,993 | | | $ | 22,041 | | | $ | 32,610 | | | $ | 23,033 | | | $ | - | | | $ | 253,677 | |
| Restructuring charges | | $ | 8,782 | | | $ | 547 | | | $ | 564 | | | $ | 316 | | | $ | - | | | $ | 10,209 | |
| Impairment of long-lived assets | | $ | 44,204 | | | $ | 4,135 | | | $ | 543 | | | $ | 6 | | | $ | - | | | $ | 48,888 | |
| Interest income | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | (329 | ) | | $ | (329 | ) |
| Interest expense | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 12,030 | | | $ | 12,030 | |
| Income (loss) before income taxes | | $ | 44,648 | | | $ | (18,823 | ) | | $ | (7,212 | ) | | $ | 2,964 | | | $ | (11,701 | ) | | $ | 9,876 | |
| Assets | | $ | 2,511,902 | | | $ | 137,709 | | | $ | 321,400 | | | $ | 470,619 | | | $ | 253,809 | | | $ | 3,695,439 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended August 31, 2008 | | | | | | | | | | | | | | | | | | | | | |
| Revenue | | $ | 721,373 | | | $ | 117,483 | | | $ | 108,532 | | | $ | 54,791 | | | $ | - | | | $ | 1,002,179 | |
| Gross margin | | $ | 314,083 | | | $ | 37,377 | | | $ | 44,124 | | | $ | 29,499 | | | $ | - | | | $ | 425,083 | |
| Selling and administrative expenses | | $ | 207,024 | | | $ | 25,374 | | | $ | 32,774 | | | $ | 22,123 | | | $ | - | | | $ | 287,295 | |
| Interest income | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | (1,065 | ) | | $ | (1,065 | ) |
| Interest expense | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 13,031 | | | $ | 13,031 | |
| 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 | |
Cintas Corporation
Consolidated Balance Sheets
(In thousands except share data)
| | | | | | | |
| ASSETS | | August 31, 2009 | | | May 31, 2009 | |
| | | (Unaudited) | | | | |
| Current assets: | | | | | | |
Cash & cash equivalents | | $ | 227,311 | | | $ | 129,745 | |
Marketable securities | | | 130,568 | | | | 120,393 | |
Accounts receivable, net | | | 359,142 | | | | 357,678 | |
Inventories, net | | | 185,349 | | | | 202,351 | |
Uniforms and other rental items in service | | | 329,444 | | | | 335,447 | |
Income taxes, current | | | - | | | | 25,512 | |
Deferred tax asset | | | 70,772 | | | | 66,368 | |
Prepaid expenses | | | 21,924 | | | | 17,035 | |
Assets held for sale | | | 15,744 | | | | 15,744 | |
Total current assets | | | 1,340,254 | | | | 1,270,273 | |
| | | | | | | | | |
| Property and equipment, at cost, net | | | 901,286 | | | | 914,627 | |
| | | | | | | | | |
| Goodwill | | | 1,333,319 | | | | 1,331,388 | |
| Service contracts, net | | | 117,337 | | | | 124,330 | |
| Other assets, net | | | 86,874 | | | | 80,333 | |
| | | | | | | | | |
| | | $ | 3,779,070 | | | $ | 3,720,951 | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
Accounts payable | | $ | 73,362 | | | $ | 69,965 | |
Accrued compensation and related liabilities | | | 41,285 | | | | 48,414 | |
Accrued liabilities | | | 192,647 | | | | 198,488 | |
Income taxes, current | | | 6,741 | | | | - | |
Long-term debt due within one year | | | 578 | | | | 598 | |
Total current liabilities | | | 314,613 | | | | 317,465 | |
| | | | | | | | | |
| Long-term liabilities: | | | | | | | | |
Long-term debt due after one year | | | 785,899 | | | | 786,058 | |
Deferred income taxes | | | 153,057 | | | | 149,032 | |
Accrued liabilities | | | 100,460 | | | | 100,987 | |
Total long-term liabilities | | | 1,039,416 | | | | 1,036,077 | |
| | | | | | | | | |
| Shareholders' equity: | | | | | | | | |
Preferred stock, no par value: 100,000 shares authorized, none outstanding | | | - | | | | - | |
Common stock, no par value: 425,000,000 shares authorized FY10: 173,202,743 issued and 152,865,470 outstanding FY09: 173,085,926 issued and 152,790,170 outstanding | | | 131,925 | | | | 129,215 | |
Paid-in capital | | | 73,284 | | | | 72,364 | |
Retained earnings | | | 2,992,403 | | | | 2,938,419 | |
Treasury stock: | | | (798,847 | ) | | | (797,888 | ) |
Other accumulated comprehensive income (loss): | | | | | | | | |
Foreign currency translation | | | 34,234 | | | | 33,505 | |
Unrealized loss on derivatives | | | (7,946 | ) | | | (8,207 | ) |
Unrealized loss on available-for-sale securities | | | (12 | ) | | | 1 | |
Total shareholders' equity | | | 2,425,041 | | | | 2,367,409 | |
| | | | | | | | | |
| | | $ | 3,779,070 | | | $ | 3,720,951 | |
Consolidated Condensed Statement of Cash Flows
(Unaudited)
(In thousands)
| | | Three Months Ended | |
Cash flows from operating activities: | | August 31, 2009 | | | August 31, 2008 | |
| | | | | | | |
| Net income | | $ | 53,984 | | | $ | 78,636 | |
| | | | | | | | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation | | | 38,549 | | | | 39,040 | |
Amortization of deferred charges | | | 10,356 | | | | 10,845 | |
Stock-based compensation | | | 3,630 | | | | 3,535 | |
Deferred income taxes | | | (412 | ) | | | (1,482 | ) |
Change in current assets and liabilities, net of acquisitions of businesses: | | | | | | | | |
Accounts receivable, net | | | (1,425 | ) | | | (3,369 | ) |
Inventories, net | | | 16,976 | | | | (3,795 | ) |
Uniforms and other rental items in service | | | 5,986 | | | | (4,437 | ) |
Prepaid expenses | | | (4,890 | ) | | | (6,332 | ) |
Accounts payable | | | 3,481 | | | | (7,554 | ) |
Accrued compensation and related liabilities | | | (7,118 | ) | | | (16,696 | ) |
Accrued liabilities and other | | | (6,433 | ) | | | (32,771 | ) |
Income taxes payable | | | 32,210 | | | | 32,718 | |
| | | | | | | | | |
Net cash provided by operating activities | | | 144,894 | | | | 88,338 | |
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
| | | | | | | | | |
| Capital expenditures | | | (24,819 | ) | | | (54,461 | ) |
| Proceeds from sale or redemption of marketable securities | | | - | | | | 171 | |
| Purchase of marketable securities and investments | | | (19,259 | ) | | | (10,379 | ) |
| Acquisitions of businesses, net of cash acquired | | | (2,633 | ) | | | (12,106 | ) |
| Other | | | (25 | ) | | | 627 | |
| | | | | | | | | |
Net cash used in investing activites | | | (46,736 | ) | | | (76,148 | ) |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
| | | | | | | | | |
| Proceeds from issuance of debt | | | - | | | | 7,000 | |
| Repayment of debt | | | (179 | ) | | | (261 | ) |
| Exercise of stock-based compensation awards | | | 2,710 | | | | - | |
| Repurchase of common stock | | | (959 | ) | | | (25,847 | ) |
| Other | | | (2,194 | ) | | | 287 | |
| | | | | | | | | |
Net cash used in financing activities | | | (622 | ) | | | (18,821 | ) |
| | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | 30 | | | | (1,350 | ) |
| | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | 97,566 | | | | (7,981 | ) |
| | | | | | | | | |
| Cash and cash equivalents at beginning of period | | | 129,745 | | | | 66,224 | |
| | | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 227,311 | | | $ | 58,243 | |
