Cintas Corporation Posts 33rd Consecutive Year of Growth in Revenue and Earnings

CINCINNATI, Ohio, Jul 11, 2002 /PRNewswire-FirstCall via COMTEX/ -- Cintas Corporation (Nasdaq: CTAS) today reported record revenue for fiscal 2002 of $2.27 billion, a 5 percent increase from last year's $2.16 billion. The company also reported a 5 percent increase in net income of $234.3 million compared to $222.5 million last year. After-tax margins were a solid 10.3% of revenue. Earnings per diluted share of $1.36 increased 5% from last year's $1.30 per diluted share.

"We are proud to report another record year and our 33rd consecutive year of uninterrupted growth in sales and profits. In addition to achieving our 33rd consecutive year of increased sales and profits, we acquired Omni Services, Inc., one of the leading companies in the uniform rental business. The acquisition, which occurred in mid-May, was a cash-for-stock transaction. In order to fund the acquisition, we issued long-term debt in the public markets for the first time. We are proud of our solid, investment grade rating of A2/A by Moody's and Standard & Poor's which recognizes the financial stability of our Company and the strong track record we have produced," said Cintas Chairman and Founder Richard T. Farmer.

RECORD FOURTH QUARTER RESULTS

Cintas reported record revenue for the fiscal fourth quarter, ended May 31, of $604 million, an increase of 7 percent from last year's $563 million. The Company also reported net income for the quarter of $64.1 million, up 7 percent from $60.2 million last year. Earnings of $.37 per diluted share, were up 6 percent from last year.

"Many of our customers have cut the size of their workforce, closed plants and eliminated shifts, all of which have a negative impact on our business. Even though we may not lose the customer, the amount of business that we do with each customer shrinks as their workforce shrinks. In spite of this pressure on our existing business, we are writing more new business and adding more new customers than ever before," said Cintas Chief Executive Officer Robert J. Kohlhepp.

Mr. Kohlhepp continued, "During the quarter, Cintas grew 10 percent in its rental business while our other services revenue grew 1 percent. The lower growth rate in other services revenue was primarily due to the fact that many customers postponed their uniform purchases. We believe those customers will resume their purchases once the economy turns around."

OUTLOOK IS POSITIVE

Mr. Kohlhepp commented, "During the quarter, we completed the acquisition of Omni Services, Inc. Omni was one of the premier companies in our industry with excellent employees and customers. On May 13, the day we acquired Omni, we put in place a well-orchestrated program to close their headquarters operation and consolidate those activities into our Cincinnati headquarters. Over the course of the next 12 months, we are confident that significant synergies will be realized."

Mr. Kohlhepp continued, "We expect revenue for fiscal 2003 in the range of $2.8 billion to $2.9 billion, with full year earnings per share (diluted) in the range of $1.55 to $1.62, with higher growth rates in the last half of the fiscal year. These expectations reflect the continued sluggish economy. However, we continue to see opportunities to expand our customer base, leveraging our vast geographic presence and nationwide distribution and sales network. We are enthused about our ability to continue to grow this company at an exciting pace."

ABOUT CINTAS

Cintas Corporation, headquartered in Cincinnati, Ohio, is the leader in the corporate identity uniform industry providing uniforms to a wide variety of industries nationwide. The Company also provides a wide range of outsourcing services including entrance mats, sanitation supplies, cleanroom services and first aid and safety products and services. Cintas is a publicly held company traded over 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 33 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. This news release contains forward-looking statements that reflect the Company's current views as to future events and financial performance with respect to its operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially 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, including, without limitation, the recent acquisitions of Omni Services, Inc., and certain assets of Angelica Corporation, fluctuations in costs of materials and labor, 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.

Cintas Corporation Consolidated Condensed Statements of Income (Unaudited)
(In thousands except per share data)
  Three Months Ended   Twelve Months Ended  
  May 31, 2002 May 31, 2001 % Chng. May 31, 2002 May 31, 2001 % Chng.
Revenue:            
Rentals $462,292 $422,093 9.5 $1,753,368 $1,610,606 8.9
Other services 141,521 140,873 0.5 517,684 550,094 (5.9)
Total revenue $603,813 $562,966 7.3 2,271,052 $2,160,700 5.1
Costs and expenses (income):            
Cost of rentals $250,187 $230,776 8.4 $953,352 $896,539 6.3
Cost of other services  98,071 96,480 1.6 360,330 367,894 (2.1)
Selling and admin. expenses 152,801 136,859 11.6 580,469 529,063 9.7
Interest income (1,568) (1,058) 48.2 (5,636) (4,369) 29.0
Interest expense 2,756 3,400 18.9 10,952 15,119 (27.6)
Total costs and expenses $502,247 $466,457 7.7 $1,899,467 $1,804,246 5.3
             
Income before income taxes 101,566 96,509 5.2 371,585 356,454 4.2
Income taxes 37,424 36,350 3.0 137,334 134,003 2.5
Net income $64,142 $60,159  6.6 $234,251 $222,451 5.3
             
Per share data:            
Basic earnings per share $.38 $.36  5.6 $1.38 $1.32 4.5
Diluted earnings per share $.37 $.35  5.7 $1.36 $1.30 4.6
             
Basic shares outstanding 169,876 169,206   169,713 168,779  
Diluted shares outstanding 172,503 171,822   172,244 171,629  

CINTAS CORPORATION SUPPLEMENTAL DATA
  Three Months Ended   Nine Months Ended  
  May 31, 2002 May 31, 2001 % Chng. May 31, 2002 May 31, 2001 % Chng.
EBIT $102,754 $98,851 3.9 $376,901 $367,204 2.6
       EBIT/revenue 17.0% 17.6%   16.6% 17.0%  
EBITDA $133,423 $127,993 4.2 $496,926 $479,293 3.7
        EBITDA/revenue 22.1% 22.7%   21.9% 22.2%  
Rental gross margin 45.9% 45.3%   45.6% 44.3%  
Other services gross margin  30.7% 31.5%   30.4% 33.1%  
Total gross margin 42.3% 41.9%   42.2% 41.5%  
Net margin 10.6% 10.7%   10.3% 10.3%  
             
Depreciation and amortization $30,669 $29,142 5.2 $120,025 $112,089 7.1
Capital expenditures $22,307 $33,635 (33.7) $107,284 $147,444 (27.2
             
Debt to Total Capitalization 33.6% 16.4%   33.6% 16.4%  

 

Cintas Corporation Consolidated Condensed Balance Sheets
(Unaudited)
(In thousands except share data)
  May 31, 2002 May 31, 2001
     
ASSETS    
Current assets:    
        Cash and cash equivalents $40,628 $73,724
        Marketable securities 44,458 36,505
        Accounts receivable, net 283,234 244,450
        Inventories 188,394 214,349
        Uniforms and other rental items in service 286,363 242,172
        Prepaid expenses 10,173 8,470
Total current assets 853,250 819,670
     
Property, plant and equipment, at cost, net 778,402 702,132
     
Goodwill 678,357 123,753
Other assets 209,225 106,669
  $2,519,234 $1,752,224
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
        Accounts payable $60,393 $42,495
        Accrued liabilities 160,709 116,688
       Current income taxes 11,791 13,412
        Deferred income taxes 61,372 57,703
        Long-term debt due within one year 18,369 20,605
Total current liabilities 312,634 250,903
     
Long-term debt due after one year    
Deferred income taxes 703,250 220,940
Shareholders’ equity: 79,591 49,066
Preferred stock, no par value, 100,000 shares authorized, none outstanding -  -
Common stock, no par value, 425,000,000 shares authorized, 169,825,861 shares issued and outstanding (168,984,960 at February 28, 2001) 66,508 62,409
Retained earnings 1,365,136 1,174,330
Foreign currency translation adjustment       (7,885) (5,424)
Total shareholders' equity 1,423,759 1,232,315
     
  $2,519,234 $1,752,224

Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(unaudited)
(In thousands)
 
Nine Months Ended
 
February 28, 2002
February 28, 2001
Cash flows from operating activities:    
     
Net income $234,251 $222,451
     
Adjustments to reconcile net income to net cash provided by operating activities:    
   Depreciation 101,215 90,239
   Amortization of deferred charges 18,810 21,850
   Deferred income taxes 20,629 8,459
   Change in current assets and liabilities, net of acquisitions of businesses:    
       Accounts receivable 3162 (16,486)
       Inventories 37,158 (48,693)
       Uniforms and other rental items in service (32,684) (28,471)
       Prepaid expenses 1,330 (1,160)
       Accounts payable 3,345 (10,107)
       Accrued compensation and related liabilities (12,696) 6,666
       Accrued liabilities 4,534 (4,011)
       Income taxes payable 1,621 (6,221)
   Net cash provided by operating activities 377,433 246,958
     
Cash flows from investing activities:    
     
Proceeds from divestiture of certain facilities 0 1,400
Capital expenditures (107,284) (147,444)
Proceeds from sale or redemption of marketable securities 157,419 61,609
Purchase of marketable securities (165,372) (40,474)
Acquisitions of businesses, net of cash acquired (732,227) (30,535)
Other (1,882) (5,965)
   Net cash used in investing activities (849,346) (161,409)
     
Cash flows from financing activities;    
     
Proceeds from issuance of long-term debt 640,245 230
Repayment of long-term debt (160,612) (33,634)
Stock options exercised 3,247 5,992
Dividend paid (42,454) (37,173)
Other (1,609) 578
   Net cash used in financing activities 438,817 (64,007)
     
Net increase (decrease) in cash and cash equivalents (33,096) 21,542
     
Cash and cash equivalents at beginning of period 73,724 52,182
Cash and cash equivalents at end of period $40,628 $73,724 
                       
SOURCE Cintas Corporation

CONTACT: William C. Gale, 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

URL: http://www.cintas-corp.com