For the quarterly period ended Class Financial Statements. 36 Revenue: Rental uniforms and ancillary products Other services Costs and expenses (income): Cost of rental uniforms and ancillary products Cost of other services Selling and administrative expenses Operating income Interest income Interest expense Income before income taxes Income taxes Net income Basic earnings per share Diluted earnings per share ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Inventories, net Uniforms and other rental items in service Deferred income tax asset Prepaid expenses Total current assets Property and equipment, at cost, net Goodwill Service contracts, net Other assets, net LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued compensation and related liabilities Accrued liabilities Current income taxes (prepaid) payable Long-term debt due within one year Total current liabilities Long-term liabilities: Long-term debt due after one year Deferred income taxes Accrued liabilities Total long-term liabilities 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 Paid-in capital Retained earnings Treasury stock: FY 2009: 20,294,982 shares FY 2008: 19,392,323 shares Other accumulated comprehensive (loss) income Total shareholders’ equity Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Amortization of deferred charges Stock-based compensation Deferred income taxes Change in current assets and liabilities, net of acquisitions of businesses: Accounts receivable, net Inventories, net Uniforms and other rental items in service Prepaid expenses Accounts payable Accrued compensation and related liabilities Accrued liabilities and other Income taxes payable Net cash provided by operating activities Cash flows from investing activities: Capital expenditures Proceeds from sale or redemption of marketable securities Purchase of marketable securities and investments Acquisitions of businesses, net of cash acquired Other Net cash used in investing activities Cash flows from financing activities: Proceeds from issuance of debt Repayment of debt Stock options exercised Repurchase of common stock Other Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Current accrued liabilities include foreign currency forward contracts. Numerator: Net income Denominator: Denominator for basic earnings per share—weighted average shares Effect of dilutive securities—employee stock options Denominator for diluted earnings per share—adjusted weighted average shares and assumed conversions Basic earnings per share Diluted earnings per share Goodwill Balance as of June 1, 2008 Goodwill acquired Foreign currency translation Balance as of November 30, 2008 Service Contracts Balance as of June 1, 2008 Service contracts acquired Service contracts amortization Foreign currency translation Balance as of November 30, 2008 Service contracts Noncompete and consulting agreements Investments Other Total Service contracts Noncompete and consulting agreements Investments Other Total February 28, 2009. February 28, 2009, respectively. $3,748. Net income Other comprehensive income: Foreign currency translation adjustment Change in fair value of derivatives* Amortization of interest rate lock agreements Change in fair value of available-for-sale securities Comprehensive income Net of arbitration. On March 16, 2009, the plaintiffs in Ramirez and Houston agreed to voluntarily dismiss all class claims in the case with prejudice and the arbitrator entered an order dismissing all class claims in the consolidated arbitration. On April 3, 2009, the United States District Court for the Northern District of California entered an order affirming the arbitrator’s decision to dismiss the class claims in Ramirez and Houston with prejudice, and thereby relinquished his jurisdiction over the individual plaintiffs’ class claims. For the three months ended November 30, 2008 Revenue Income (loss) before income taxes For the three months ended November 30, 2007 Revenue Income (loss) before income taxes As of and for the six months ended November 30, 2008 Revenue Income (loss) before income taxes Total assets As of and for the six months ended November 30, 2007 Revenue Income (loss) before income taxes Total assets Revenue: Rental uniforms and ancillary products Other services Equity in net income of affiliates Costs and expenses (income): Cost of rental uniforms and ancillary products Cost of other services Selling and administrative expenses Operating income Interest income Interest expense (income) Income before income taxes Income taxes Net income Revenue: Rental uniforms and ancillary products Other services Equity in net income of affiliates Costs and expenses (income): Cost of rental uniforms and ancillary products Cost of other services Selling and administrative expenses Operating income Interest income Interest expense (income) Income before income taxes Income taxes Net income Revenue: Rental uniforms and ancillary products Other services Equity in net income of affiliates Costs and expenses (income): Cost of rental uniforms and ancillary products Cost of other services Selling and administrative expenses Operating income Interest income Interest expense (income) Income before income taxes Income taxes Net income Revenue: Rental uniforms and ancillary products Other services Equity in net income of affiliates Costs and expenses (income): Cost of rental uniforms and ancillary products Cost of other services Selling and administrative expenses Operating income Interest income Interest expense (income) Income before income taxes Income taxes Net income Assets Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Inventories, net Uniforms and other rental items in service Deferred income tax asset (liability) Prepaid expenses Total current assets Property and equipment, at cost, net Goodwill Service contracts, net Other assets, net Liabilities and Shareholders’ Equity Current liabilities: Accounts (receivable) payable Accrued compensation and related liabilities Accrued liabilities Current income taxes payable (receivable) Long-term debt due within one year Total current liabilities Long-term liabilities: Long-term debt due after one year Deferred income taxes Accrued liabilities Total long-term liabilities Total shareholders’ equity Assets Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Inventories, net Uniforms and other rental items in service Deferred income tax asset (liability) Prepaid expenses Total current assets Property and equipment, at cost, net Goodwill Service contracts, net Other assets, net Liabilities and Shareholders’ Equity Current liabilities: Accounts (receivable) payable Accrued compensation and related liabilities Accrued liabilities Current income taxes (receivable) payable Long-term debt due within one year Total current liabilities Long-term liabilities: Long-term debt due after one year Deferred income taxes Accrued liabilities Total long-term liabilities Total shareholders’ equity Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation Amortization of deferred charges Stock-based compensation Deferred income taxes Changes in current assets and liabilities, net of acquisitions of businesses: Accounts receivable, net Inventories, net Uniforms and other rental items in service Prepaid expenses Accounts payable Accrued compensation and related liabilities Accrued liabilities and other Income taxes payable Net cash provided by (used in) operating activities Cash flows from investing activities: Capital expenditures Proceeds from sale or redemption of marketable securities Purchase of marketable securities and investments Acquisitions of businesses, net of cash acquired Other Net cash (used in) provided by investing activities Cash flows from financing activities: Proceeds from issuance of debt Repayment of debt Repurchase of common stock Other Net cash (used in) provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by (used in) Depreciation Amortization of deferred charges Stock-based compensation Deferred income taxes Changes in current assets and liabilities, net of acquisitions of businesses: Accounts receivable, net Inventories, net Uniforms and other rental items in service Prepaid expenses Accounts payable Accrued compensation and related liabilities Accrued liabilities and other Income taxes payable Net cash provided by (used in) operating activities Cash flows from investing activities: Capital expenditures Proceeds from sale or redemption of marketable securities Purchase of marketable securities and investments Acquisitions of businesses, net of cash acquired Other Net cash provided by (used in) investing activities Cash flows from financing activities: Proceeds from issuance of debt Repayment of debt Stock options exercised Repurchase of common stock Other Net cash (used in) provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Position 157-2 delayed the effective date of FAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Measurements. February 29, 2008 The difficult U.S. and Canadian economic environment that began in our second fiscal quarter worsened in our third fiscal quarter. These economies lost approximately 2.2 million jobs in our third fiscal quarter. Because of job losses that impacted our customers, we experienced decreases in uniform revenue, both rented and purchased, and revenue for our hygiene products and first aid and safety products. In addition, facility closures by our customers reduced our volume of entrance mats, shop towels and other facility needs such as fire protection services and document management services. three months ended February 28, 2009. and an 11.8% decrease in First Aid, Safety and Fire Protection Services segment revenue. In addition, energy related costs decreased $6.9 million compared to the three months ended February 29, 2008. volume. as a result of cost reduction initiatives. February 29, 2008 resulting from cost reduction initiatives. February 29, 2008 February 28, 2009. As the U.S. and Canadian economies deteriorated during the last quarter, many of our customers, especially in the hospitality and gaming industries, dramatically reduced their uniform purchases and delayed roll-outs of new uniform programs. volume, causing the operating segment’s fixed costs to be a higher percent of revenue. Selling and administrative expenses decreased from $24.0 million in last year’s third quarter to $23.1 million in the third quarter of this fiscal year due to various cost reduction initiatives. February 29, 2008 The difficult U.S. economic conditions negatively affected revenue in this segment, as job losses at our customers resulted in fewer users of first aid and safety products. Additionally, fire installation revenue decreased $5.9 million due to continued weakness in commercial construction. Fire Protection Services revenue. Selling and administrative expenses various cost reduction initiatives. decrease in First Aid, Safety and Fire Protection services revenue. February 29, 2008 February 29, 2008, to $125 per ton at February 28, 2009. the recycled paper prices. increase includes a 90 basis point increase in bad debt expense, offset by various cost reduction initiatives. recycled paper prices. February 29, 2008 segment accounted for growth of 0.8% during the quarter. This growth was offset by internal growth of -1.4%. The revenue growth February 28, 2009. February 29, 2008. costs, offset by various cost reduction initiatives. $6.1 million as customers have delayed payments during this fiscal year’s difficult economic environment. These increases were offset by decreases in labor and payroll tax expenses of $12.1 million due to cost reduction initiatives. February 29, 2008 February 29, 2008 February 28, 2009. volume, causing the operating segment’s fixed costs to be a higher percent of revenue. year. February 29, 2008 February 29, 2008. February 29, 2008 February 29, 2008. energy related costs. expansion. February 28, 2009. (In thousands) Long-term contractual obligations Long-term debt (1) Capital lease obligations (2) Operating leases (3) Interest payments (4) Interest swap agreements (5) Unconditional purchase obligations Total contractual cash obligations Long-term debt primarily consists of $775,000 in long-term Capital lease obligations are classified as debt on the consolidated balance sheets. Operating leases consist primarily of building leases and a synthetic lease on a corporate aircraft. Interest payments include interest on both fixed and variable rate debt. Rates have been assumed to remain constant for the remainder of fiscal 2009, increase 25 basis points Reference Note 6 entitled Debt, Derivatives and Hedging Activities of “Notes to Consolidated Condensed Financial Statements” for a detailed discussion of interest swap agreements. (In thousands) Other commercial commitments Lines of credit (1) Standby letter of credit (2) Guarantees Standby repurchase obligations Other commercial commitments Total commercial commitments Back-up facility for the commercial paper program. Support certain outstanding long-term debt and self-insured Shares—Withheld Authority Gerald S. Adolph Paul R. Carter Gerald V. Dirvin Richard T. Farmer Scott D. Farmer Joyce Hergenhan Robert J. Kohlhepp David C. Phillips Ronald W. Tysoe Broker Non-Votes 140,050,602 Broker Non-Votes 40,588,484 Non-Votes 37,197,406 31.1 31.2 32.1 32.2 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Senior Vice President and Chief Financial OfficerFORM 10-QxQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934November 30, 2008February 28, 2009¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934WASHINGTON 31-1188630 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) (ZipRegistrant’sRegistrant's telephone number, including area code)x ü No ¨___Large Accelerated FilerxAccelerated Filer¨Non-Accelerated Filer¨ (Do not check if a smaller reporting company)Smaller Reporting Company¨¨___ No xü _issuer’sissuer's classes of common stock, as of the latest practicable date. Outstanding DecemberMarch 31, 20082009Common Stock, no par value 152,790,170 Financial Information Page No. Item 1. 3 —November 30, 2008-4 5 6 Item 2. Management’s24 Item 3. 34 33 Item 4. 35 34 Other Information Item 1. 36 35 Item 4.5.Other Information. 36 35 Item 6. Exhibits. Exhibits.Signatures 36 36 Three Months Ended
November 30, Six Months Ended
November 30, 2008 2007 2008 2007 $ 711,454 $ 708,845 $ 1,432,827 $ 1,419,199 273,730 275,020 554,536 533,794 985,184 983,865 1,987,363 1,952,993 401,614 392,211 808,904 783,701 168,570 171,086 338,376 331,352 284,608 275,125 571,903 551,835 130,392 145,443 268,180 286,105 (830 ) (1,796 ) (1,895 ) (3,258 ) 12,768 12,993 25,799 25,830 118,454 134,246 244,276 263,533 46,616 51,393 93,802 99,617 $ 71,838 $ 82,853 $ 150,474 $ 163,916 $ 0.47 $ 0.53 $ 0.98 $ 1.04 $ 0.47 $ 0.53 $ 0.98 $ 1.04 Three Months Ended Nine Months Ended February 28, 2009 February 29, 2008 February 28, 2009 February 29, 2008 Revenue: $ 674,701 $ 703,641 $ 2,107,528 $ 2,122,840 233,938 272,311 788,474 806,105 908,639 975,952 2,896,002 2,928,945 Costs and expenses: 379,466 398,318 1,188,370 1,182,019 152,736 166,409 491,112 497,761 257,129 273,194 829,032 825,029 Operating income 119,308 138,031 387,488 424,136 (540 ) (1,510 ) (2,435 ) (4,768 ) 12,407 13,622 38,206 39,452 Income before income taxes 107,441 125,919 351,717 389,452 Income taxes 35,630 44,091 129,432 143,708 Net income $ 71,811 $ 81,828 $ 222,285 $ 245,744 Basic earnings per share $ 0.47 $ 0.53 $ 1.45 $ 1.57 Diluted earnings per share $ 0.47 $ 0.53 $ 1.45 $ 1.57 Dividends declared per share $ 0.47 $ 0.46 (In November 30, 2008 May 31, 2008 (Unaudited) $ 62,413 $ 66,224 64,933 125,471 433,831 430,078 251,864 238,669 371,743 370,416 44,821 39,410 15,676 12,068 1,245,281 1,282,336 982,331 974,575 1,320,248 1,315,569 138,143 152,757 80,788 83,364 $3,766,791 $ 3,808,601 $ 101,060 $ 94,755 41,470 50,605 189,494 207,925 (8,262 ) 12,887 836 1,070 324,598 367,242 869,721 942,736 126,279 124,184 121,447 120,308 1,117,447 1,187,228 — — 129,182 129,182 67,319 60,408 2,934,775 2,784,302 (797,888 ) (772,041 ) (8,642 ) 52,280 2,324,746 2,254,131 $3,766,791 $ 3,808,601 February 28, 2009 (Unaudited) Current assets: $ 54,251 $ 66,224 97,653 125,471 384,912 430,078 252,483 238,669 352,032 370,416 42,840 39,410 17,751 12,068 1,201,922 1,282,336 Property and equipment, at cost, net 980,646 974,575 Goodwill 1,325,377 1,315,569 Service contracts, net 131,288 152,757 Other assets, net 80,211 83,364 $ 3,719,444 $ 3,808,601 Current liabilities: $ 75,677 $ 94,755 46,836 50,605 250,209 207,925 895 12,887 592 1,070 374,209 367,242 Long-term liabilities: 786,204 942,736 135,083 124,184 103,962 120,308 1,025,249 1,187,228 Shareholders' equity: ---- ---- 129,215 129,182 69,312 60,408 2,934,354 2,784,302 (797,888 ) (772,041 ) (15,007 ) 52,280 2,319,986 2,254,131 $ 3,719,444 $ 3,808,601 Six Months Ended
November 30, 2008 2007 $ 150,474 $ 163,916 78,372 72,271 21,522 21,341 6,911 4,809 (1,840 ) 3,626 (8,064 ) (8,216 ) (15,169 ) (6,719 ) (6,237 ) (17,422 ) (3,799 ) (453 ) (509 ) 8,771 (8,685 ) (22,250 ) (16,400 ) (18,969 ) (21,435 ) 68,413 175,141 269,118 (95,957 ) (93,207 ) 61,662 41,930 (23,222 ) (22,861 ) (18,331 ) (56,031 ) 353 732 (75,495 ) (129,437 ) 7,500 296,000 (80,749 ) (228,418 ) — 7,752 (25,847 ) (191,479 ) 413 (3,800 ) (98,683 ) (119,945 ) (4,774 ) 1,544 (3,811 ) 21,280 66,224 35,360 $ 62,413 $ 56,640 Nine Months Ended February 28, 2009 February 29, 2008 $ 222,285 $ 245,744 118,119 110,076 32,023 32,371 8,904 7,406 9,052 (456 ) 42,118 862 (16,427 ) (8,925 ) 12,998 (18,628 ) (5,802 ) 1,177 (22,247 ) (448 ) (3,250 ) (11,730 ) (45,734 ) (7,405 ) (12,320 ) 17,886 Net cash provided by operating activities 339,719 367,930 (132,783 ) (144,848 ) 92,061 42,393 (94,985 ) (32,434 ) (29,381 ) (102,103 ) (428 ) (1,202 ) Net cash used in investing activities (165,516 ) (238,194 ) 7,500 313,000 (164,510 ) (228,808 ) --- 8,030 (25,847 ) (191,479 ) 736 (11,455 ) Net cash used in financing activities (182,121 ) (110,712 ) Effect of exchange rate changes on cash and cash equivalents (4,055 ) 1,291 Net (decrease) increase in cash and cash equivalents (11,973 ) 20,315 Cash and cash equivalents at beginning of period 66,224 35,360 Cash and cash equivalents at end of period $ 54,251 $ 55,675 Amounts inIn thousands except per share data)1. Basis of Presentation1. Basis of Presentation Certain prior year amounts have been reclassified to conform to current year presentation.2. New Accounting Standards 2. New Accounting StandardsIn September 2006, theEffective June 1, 2008, Cintas adopted Financial Accounting Standards Board (FASB) issued Statement No. 157,Fair Value Measurements (FAS 157), which defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosure requirements about fair value measurements. FASB Staff Position 157-2 delayed the effective date of FAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Cintas adopted FAS 157 on June 1, 2008, as required. The adoption of FAS 157 for our financial assets and liabilities did not have a material impact on Cintas’ results of operations or financial condition. Cintas’ adoption of FAS 157 is more fully described in Note 3 entitled Fair Value Measurements.3. Fair Value Measurements3. Fair Value Measurements As of February 28, 2009 Cash and cash equivalents $ 54,251 $ ---- $ ---- $ 54,251 Marketable securities, available-for-sale 97,653 ---- ---- 97,653 Accounts receivable, net ---- 695 ---- 695 Other assets, net 14,419 ---- ---- 14,419 Total assets at fair value $ 166,323 $ 695 $ ---- $ 167,018 Current accrued liabilities $ ---- $ 381 $ ---- $ 381 Total liabilities at fair value $ ---- $ 381 $ ---- $ 381 4. Earnings per Share4. Earnings per Share Three Months Ended
November 30, Six Months Ended
November 30, 2008 2007 2008 2007 $ 71,838 $ 82,853 $ 150,474 $ 163,916 152,788 156,563 153,093 157,673 257 250 275 276 153,045 156,813 153,368 157,949 $ 0.47 $ 0.53 $ 0.98 $ 1.04 $ 0.47 $ 0.53 $ 0.98 $ 1.04 5. Goodwill, Service Contracts and Other Assets Three Months Ended Nine Months Ended February 28, 2009 February 29, 2008 February 28, 2009 February 29, 2008 Numerator: Net income $ 71,811 $ 81,828 $ 222,285 $ 245,744 Denominator: 152,993 153,679 152,993 156,346 288 203 334 287 153,281 153,882 153,327 156,633 Basic earnings per share $ 0.47 $ 0.53 $ 1.45 $ 1.57 Diluted earnings per share $ 0.47 $ 0.53 $ 1.45 $ 1.57 5. Goodwill, Service Contracts and Other Assets sixnine months ended November 30, 2008,February 28, 2009, by operating segment, are as follows: Rental
Uniforms &
Ancillary
Products Uniform
Direct
Sales First Aid,
Safety &
Fire
Protection Document
Management Total $863,581 $23,956 $165,544 $262,488 $1,315,569 — — 986 10,688 11,674 (3,572 ) (178 ) — (3,245 ) (6,995 ) $860,009 $23,778 $166,530 $269,931 $1,320,248 Total Balance as of June 1, 2008 $ 863,581 $ 23,956 $ 165,544 $ 262,488 $ 1,315,569 Goodwill acquired --- --- 1,169 16,341 17,510 Foreign currency translation (3,955 ) (185 ) --- (3,562 ) (7,702 ) Balance as of February 28, 2009 $ 859,626 $ 23,771 $ 166,713 $ 275,267 $ 1,325,377 Rental
Uniforms &
Ancillary
Products Uniform
Direct
Sales First Aid,
Safety &
Fire
Protection Document
Management Total $ 84,574 $ 328 $ 41,944 $ 25,911 $ 152,757 — — 264 2,416 2,680 (4,800 ) (102 ) (3,103 ) (3,689 ) (11,694 ) (5,009 ) (83 ) — (508 ) (5,600 ) $ 74,765 $ 143 $ 39,105 $ 24,130 $ 138,143 Total Balance as of June 1, 2008 $ 84,574 $ 328 $ 41,944 $ 25,911 $ 152,757 Service contracts acquired --- --- 264 3,728 3,992 Service contracts amortization (8,881 ) (182 ) (4,639 ) (5,560 ) (19,262 ) Foreign currency translation (5,546 ) (92 ) --- (561 ) (6,199 ) Balance as of February 28, 2009 $ 70,147 $ 54 $ 37,569 $ 23,518 $ 131,288 Cintas’Cintas' service contracts and other assets are as follows: As of November 30, 2008 Carrying
Amount Accumulated
Amortization Net $ 330,623 $192,480 $ 138,143 $ 64,154 $ 39,312 $ 24,842 48,314 — 48,314 10,712 3,080 7,632 $ 123,180 $ 42,392 $ 80,788 As of May 31, 2008 Carrying
Amount Accumulated
Amortization Net $ 333,543 $180,786 $ 152,757 $ 63,894 $ 34,625 $ 29,269 46,012 — 46,012 10,790 2,707 8,083 $ 120,696 $ 37,332 $ 83,364 As of February 28, 2009 Net Service contracts $ 331,336 $ 200,048 $ 131,288 Noncompete and consulting agreements $ 65,024 $ 41,673 $ 23,351 Investments 49,480 ---- 49,480 Other 10,653 3,273 7,380 Total $ 125,157 $ 44,946 $ 80,211 Net Service contracts $ 333,543 $ 180,786 $ 152,757 Noncompete and consulting agreements $ 63,894 $ 34,625 $ 29,269 Investments 46,012 ---- 46,012 Other 10,790 2,707 8,083 Total $ 120,696 $ 37,332 $ 83,364 $21,522$32,023 and $21,341$32,371 for the sixnine months ended November 30,February 28, 2009, and February 29, 2008, and November 30, 2007, respectively. Estimated amortization expense, excluding any future acquisitions, for each of the next five years is $42,021, $38,674, $34,929, $28,865$42,248, $39,159, $35,402, $29,272 and $13,236,$13,443, respectively.6. Debt, Derivatives and Hedging Activities6. Debt, Derivatives and Hedging Activities November 30, 2008.$191$192 and $69$192 for the three months ended November 30,February 28, 2009 and February 29, 2008, and November 30, 2007, respectively, and $383$575 and $138$330 for the sixnine months ended November 30,February 28, 2009 and February 29, 2008, and November 30, 2007, respectively.would useuses foreign currency hedges. These hedges would reduce the impact on cash flows from movements in the foreign currency exchange rates. Examples of foreign currency hedge instruments that Cintas may use are average rate options and forward contracts. At November 30, 2008,February 28, 2009, Cintas had $1,060$695 in average rate options included in accounts receivable, net and $582$381 in forward contracts included in current accrued liabilities. These instruments reduced our foreign currency exchange loss by $244$456 and $700 during the three months and nine months ended November 30, 2008.7. Income Taxes7. Income Taxes November 30, 2008,February 28, 2009, unrecognized tax benefits related to continuing operations increaseddecreased by approximately $1,032$13,134 and accrued interest increaseddecreased by approximately $717.2004.2005. Cintas is currently in advanced stages of audits in certain foreign jurisdictions and certain domestic states. The years under audit cover fiscal years back to 2001. Based on the resolution of the various audits, it is reasonably possible that the balance of unrecognized tax benefits could decrease by $682$98 for the fiscal year ended May 31, 2009.8. Comprehensive Income8. Comprehensive Income shareholders’shareholders' equity during a period from sources other than transactions with shareholders and, as such, includes net income. For Cintas, the only components of total comprehensive income are the change in cumulative foreign currency translation adjustments, the change in the fair value of derivatives, the amortization of interest rate lock agreements and the change in the fair value of available-for-sale securities. The components of comprehensive income for the three and sixnine month periods ended November 30,February 28, 2009, and February 29, 2008, and November 30, 2007 are as follows: Three Months Ended
November 30, Six Months Ended
November 30, 2008 2007 2008 2007 $ 71,838 $ 82,853 $ 150,474 $ 163,916 (41,862 ) 13,138 (61,675 ) 15,951 214 (3,873 ) 214 (3,873 ) 191 69 383 138 139 7 156 152 $ 30,520 $ 92,194 $ 89,552 $ 176,284 Three Months Ended Nine Months Ended February 29, 2008 February 28, 2009 February 29, 2008 Net income $ 71,811 $ 81,828 $ 222,285 $ 245,744 Other comprehensive income: (6,367 ) 4,840 (68,042 ) 20,791 (117 ) (1,043 ) 97 (4,916 ) Amortization of interest rate lock agreements 192 192 575 330 (73 ) 84 83 236 Comprehensive income $ 65,446 $ 85,901 $ 154,998 $ 262,185 * $126$(69) and $2,304$(620) of tax for the three months ended February 28, 2009 and six month periodsFebruary 29, 2008, respectively. Net of $57 and $(2,924) of tax (benefit) for the nine months ended November 30,February 28, 2009 and February 29, 2008, and November 30, 2007, respectively.9. Litigation and Other Contingencies ** Net of $63 and $47 of tax for the three months ended February 28, 2009 and February 29, 2008, respectively. Net of $33 and $138 of tax for the nine months ended February 28, 2009 and February 29, 2008, respectively. 9. Litigation and Other Contingencies , and remains pending in the United States District Court, Eastern District of Michigan, Southern Division.. On October 27, 2008, the United States District Court in the Eastern District of Michigan granted a summary judgment in favor of Cintas limiting the scope of the putative class in theSerrano lawsuit to female applicants for service sales representative positions at Cintas locations within the state of Michigan. Consequently, all claims brought by female applicants for service sales representative positions outside of the state of Michigan were dismissed. Similarly, any claims brought by the EEOC on behalf of similarly situated female applicants outside of the state of Michigan have also been dismissed from theSerrano lawsuit. IrrespectiveOn March 31, 2009, the United States District Court, Eastern District of this ruling, no determinations have been made inSerrano/Avalos asMichigan, Southern Division entered an order denying class certification to class certification. There can be no assurance as to whether a class will be certified or, if a class is certified, as to the geographic or other scope of such class. The non-service sales representative hiring claimsall plaintiffs in the previously disclosedRamirez case that have not been dismissed remain pending in the Northern District of California, San Francisco Division, but were ordered to arbitration and stayed pending the completion of arbitration. TheRamirezSerrano/Avalos CINTAS CORPORATIONNOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(Unaudited)(In thousands except per share data)purported class action claims currently in arbitration include allegations that Cintas failed to promote Hispanics into supervisory positions, discriminated against African-Americans and Hispanics in service sales representative route assignments and discriminated against African-Americans in hourly pay in Cintas’ Rental division only throughout the United States. TheRamirez plaintiffs seek injunctive relief, compensatory damages, punitive damages, attorneys’ fees and other remedies. No filings or determinations have been made inRamirez as to class certification. There can be no assurance as to whether a class will be certified or, if a class is certified, as to the geographic or other scope of such class.lawsuits. On February 24, 2006, a motion to intervene inSerranowas filed by intervening plaintiffs Colleen Grindle, et al., on behalf of a subclass of female employees at Cintas’ Perrysburg, Ohio, rental location who allegedly were denied hire, promotion, or transfer to service sales representative positions. On March 24, 2006, the plaintiffs Colleen Grindle, et al., withdrew their motion to intervene without prejudice. On February 20, 2007, the plaintiffs Colleen Grindle, et al., filed a separate lawsuit in the Court of Common Pleas, Wood County,requiringconsolidating Houston with Ramirez and ordered the named plaintiffs in theHoustonlawsuit to arbitrate all of their claims for monetary damages.damages with the previously filed Ramirez10. Segment Information10. Segment Information CINTAS CORPORATIONNOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS(Unaudited)(In thousands except per share data) Rental
Uniforms &
Ancillary
Products Uniform
Direct
Sales First Aid,
Safety &
Fire
Protection Document
Management Corporate Total $ 711,454 $ 120,035 $ 100,490 $ 53,205 $ — $ 985,184 $ 108,370 $ 9,237 $ 7,668 $ 5,117 $ (11,938 ) $ 118,454 $ 708,845 $ 134,455 $ 99,153 $ 41,412 $ — $ 983,865 $ 117,999 $ 15,750 $ 7,346 $ 4,348 $ (11,197 ) $ 134,246 $ 1,432,827 $ 237,518 $ 209,022 $107,996 $ — $ 1,987,363 $ 215,429 $ 21,240 $ 19,018 $ 12,493 $ (23,904 ) $ 244,276 $ 2,651,964 $ 179,405 $ 348,675 $459,401 $ 127,346 $ 3,766,791 $ 1,419,199 $ 253,260 $ 201,409 $ 79,125 $ — $ 1,952,993 $ 232,792 $ 26,877 $ 17,967 $ 8,469 $ (22,572 ) $ 263,533 $ 2,622,562 $ 191,910 $ 340,453 $390,390 $ 154,267 $ 3,699,582 Corporate Total For the three months ended February 28, 2009 Revenue $ 674,701 �� $ 97,010 $ 86,037 $ 50,891 $ ---- $ 908,639 $ 110,447 $ 803 $ 4,141 $ 3,917 $ (11,867 ) $ 107,441 For the three months ended February 29, 2008 Revenue $ 703,641 $ 125,277 $ 97,594 $ 49,440 $ ---- $ 975,952 $ 106,486 $ 16,186 $ 7,327 $ 8,032 $ (12,112 ) $ 125,919 As of and for the nine months ended February 28, 2009 Revenue $ 2,107,528 $ 334,528 $ 295,059 $ 158,887 $ ---- $ 2,896,002 $ 325,876 $ 22,043 $ 23,159 $ 16,410 $ (35,771 ) $ 351,717 Total assets $ 2,595,144 $ 165,976 $ 338,509 $ 467,911 $ 151,904 $ 3,719,444 As of and for the nine months ended February 29, 2008 Revenue $ 2,122,840 $ 378,537 $ 299,003 $ 128,565 $ ---- $ 2,928,945 $ 339,278 $ 43,063 $ 25,294 $ 16,501 $ (34,684 ) $ 389,452 Total assets $ 2,621,696 $ 191,715 $ 342,033 $ 443,188 $ 163,646 $ 3,762,278 11. Supplemental Guarantor Information11. Supplemental Guarantor Information Cintas’Cintas' consolidated financial statements. The condensed consolidating financial statements should be read in conjunction with the consolidated financial statements of Cintas and notes thereto of which this note is an integral part.Three Months Ended November 30, 2008 Cintas
Corporation Corp. 2 Subsidiary
Guarantors Non-
Guarantors Eliminations Cintas
Corporation
Consolidated $ — $ 549,512 $ 148,250 $ 43,663 $ (29,971 ) $ 711,454 — 351,469 116,512 15,498 (209,749 ) 273,730 71,838 — — — (71,838 ) — 71,838 900,981 264,762 59,161 (311,558 ) 985,184 — 328,961 86,890 26,591 (40,828 ) 401,614 — 259,022 102,553 9,536 (202,541 ) 168,570 — 250,703 20,319 13,881 (295 ) 284,608 71,838 62,295 55,000 9,153 (67,894 ) 130,392 — — (193 ) (637 ) — (830 ) — 13,303 (535 ) — — 12,768 71,838 48,992 55,728 9,790 (67,894 ) 118,454 — 16,136 27,717 2,763 — 46,616 $ 71,838 $ 32,856 $ 28,011 $ 7,027 $ (67,894 ) $ 71,838 Corp. 2 Eliminations Revenue: $ ---- $ 514,482 $ 140,567 $ 41,818 $ (22,166 ) $ 674,701 ---- 294,282 89,869 12,013 (162,226 ) 233,938 71,811 ---- ---- ---- (71,811 ) ---- 71,811 808,764 230,436 53,831 (256,203 ) 908,639 Costs and expenses (income): ---- 304,321 86,358 25,195 (36,408 ) 379,466 ---- 217,163 79,876 7,398 (151,701 ) 152,736 ---- 244,568 (389 ) 13,443 (493 ) 257,129 Operating income 71,811 42,712 64,591 7,795 (67,601 ) 119,308 ---- ---- (220 ) (320 ) ---- (540 ) ---- 12,820 (425 ) 12 ---- 12,407 Income before income taxes 71,811 29,892 65,236 8,103 (67,601 ) 107,441 Income taxes ---- 8,358 24,509 2,763 ---- 35,630 Net income $ 71,811 $ 21,534 $ 40,727 $ 5,340 $ (67,601 ) $ 71,811 Three Months Ended November 30, 2007 Cintas
Corporation Corp. 2 Subsidiary
Guarantors Non-
Guarantors Eliminations Cintas
Corporation
Consolidated $ — $ 513,329 $ 144,415 $ 51,369 $ (268 ) $ 708,845 — 356,308 143,889 17,282 (242,459 ) 275,020 82,853 — — — (82,853 ) — 82,853 869,637 288,304 68,651 (325,580 ) 983,865 — 318,055 87,279 29,674 (42,797 ) 392,211 — 238,888 120,862 10,978 (199,642 ) 171,086 — 217,932 42,766 15,648 (1,221 ) 275,125 82,853 94,762 37,397 12,351 (81,920 ) 145,443 — — (500 ) (1,296 ) — (1,796 ) — 12,998 (1,595 ) 1,590 — 12,993 82,853 81,764 39,492 12,057 (81,920 ) 134,246 — 31,735 15,285 4,373 — 51,393 $ 82,853 $ 50,029 $ 24,207 $ 7,684 $ (81,920 ) $ 82,853 Corp. 2 Eliminations Revenue: $ ---- $ 509,064 $ 143,124 $ 51,774 $ (321 ) $ 703,641 ---- 342,152 131,522 16,191 (217,554 ) 272,311 81,828 ---- ---- ---- (81,828 ) ---- 81,828 851,216 274,646 67,965 (299,703 ) 975,952 Costs and expenses (income): ---- 320,595 86,270 30,167 (38,714 ) 398,318 ---- 226,617 109,144 10,137 (179,489 ) 166,409 ---- 219,289 40,934 14,813 (1,842 ) 273,194 Operating income 81,828 84,715 38,298 12,848 (79,658 ) 138,031 ---- ---- (358 ) (1,152 ) ---- (1,510 ) ---- 14,087 (2,049 ) 1,584 ---- 13,622 Income before income taxes 81,828 70,628 40,705 12,416 (79,658 ) 125,919 Income taxes ---- 25,108 14,682 4,301 ---- 44,091 Net income $ 81,828 $ 45,520 $ 26,023 $ 8,115 $ (79,658 ) $ 81,828 Six Months Ended November 30, 2008 Cintas
Corporation Corp. 2 Subsidiary
Guarantors Non-
Guarantors Eliminations Cintas
Corporation
Consolidated $ — $ 1,086,280 $ 298,321 $ 93,927 $ (45,701 ) $ 1,432,827 — 710,648 237,643 32,152 (425,907 ) 554,536 150,474 — — — (150,474 ) — 150,474 1,796,928 535,964 126,079 (622,082 ) 1,987,363 — 655,838 179,780 56,873 (83,587 ) 808,904 — 503,733 208,633 19,974 (393,964 ) 338,376 — 537,893 4,123 30,704 (817 ) 571,903 150,474 99,464 143,428 18,528 (143,714 ) 268,180 — — (441 ) (1,454 ) — (1,895 ) — 26,768 (972 ) 3 — 25,799 150,474 72,696 144,841 19,979 (143,714 ) 244,276 — 25,376 62,455 5,971 — 93,802 $ 150,474 $ 47,320 $ 82,386 $ 14,008 $ (143,714 ) $ 150,474 Corp. 2 Eliminations Revenue: $ ---- $ 1,600,762 $ 438,888 $ 135,745 $ (67,867 ) $ 2,107,528 ---- 1,004,930 327,512 44,165 (588,133 ) 788,474 222,285 ---- ---- ---- (222,285 ) ---- 222,285 2,605,692 766,400 179,910 (878,285 ) 2,896,002 Costs and expenses (income): ---- 960,159 266,138 82,068 (119,995 ) 1,188,370 ---- 720,896 288,509 27,372 (545,665 ) 491,112 ---- 782,461 3,734 44,147 (1,310 ) 829,032 Operating income 222,285 142,176 208,019 26,323 (211,315 ) 387,488 ---- ---- (661 ) (1,774 ) ---- (2,435 ) ---- 39,588 (1,397 ) 15 ---- 38,206 Income before income taxes 222,285 102,588 210,077 28,082 (211,315 ) 351,717 Income taxes ---- 33,734 86,964 8,734 ---- 129,432 Net income $ 222,285 $ 68,854 $ 123,113 $ 19,348 $ (211,315 ) $ 222,285 Six Months Ended November 30, 2007 Cintas
Corporation Corp. 2 Subsidiary
Guarantors Non-
Guarantors Eliminations Cintas
Corporation
Consolidated $ — $ 1,031,292 $ 289,695 $ 98,720 $ (508 ) $ 1,419,199 — 703,195 281,694 30,423 (481,518 ) 533,794 163,916 — — — (163,916 ) — 163,916 1,734,487 571,389 129,143 (645,942 ) 1,952,993 — 639,328 174,236 57,531 (87,394 ) 783,701 — 467,628 238,638 19,395 (394,309 ) 331,352 — 435,157 91,744 27,575 (2,641 ) 551,835 163,916 192,374 66,771 24,642 (161,598 ) 286,105 — — (833 ) (2,425 ) — (3,258 ) — 25,867 (3,113 ) 3,076 — 25,830 163,916 166,507 70,717 23,991 (161,598 ) 263,533 — 63,863 27,123 8,631 — 99,617 $ 163,916 $ 102,644 $ 43,594 $ 15,360 $ (161,598 ) $ 163,916 Corp. 2 Eliminations Revenue: $ ---- $ 1,540,356 $ 432,819 $ 150,494 $ (829 ) $ 2,122,840 ---- 1,045,347 413,216 46,614 (699,072 ) 806,105 245,744 ---- ---- ---- (245,744 ) ---- 245,744 2,585,703 846,035 197,108 (945,645 ) 2,928,945 Costs and expenses (income): ---- 959,923 260,506 87,698 (126,108 ) 1,182,019 ---- 694,245 347,782 29,532 (573,798 ) 497,761 ---- 654,446 132,678 42,388 (4,483 ) 825,029 Operating income 245,744 277,089 105,069 37,490 (241,256 ) 424,136 ---- ---- (1,191 ) (3,577 ) ---- (4,768 ) ---- 39,954 (5,162 ) 4,660 ---- 39,452 Income before income taxes 245,744 237,135 111,422 36,407 (241,256 ) 389,452 Income taxes ---- 88,971 41,805 12,932 ---- 143,708 Net income $ 245,744 $ 148,164 $ 69,617 $ 23,475 $ (241,256 ) $ 245,744 As of November 30, 2008 Cintas
Corporation Corp. 2 Subsidiary
Guarantors Non-
Guarantors Eliminations Cintas
Corporation
Consolidated $ — $ 37,363 $ 6,415 $ 18,635 $ — $ 62,413 — — — 64,933 — 64,933 — 317,764 109,018 23,344 (16,295 ) 433,831 — 224,867 21,489 7,861 (2,353 ) 251,864 — 290,577 86,513 20,010 (25,357 ) 371,743 — — 46,600 (1,779 ) — 44,821 — 4,891 9,839 946 — 15,676 — 875,462 279,874 133,950 (44,005 ) 1,245,281 — 674,184 260,646 47,501 — 982,331 — — 1,291,493 28,755 — 1,320,248 — 132,551 2,108 3,484 — 138,143 1,868,141 1,605,360 1,779,041 276,338 (5,448,092 ) 80,788 $ 1,868,141 $ 3,287,557 $ 3,613,162 $ 490,028 $ (5,492,097 ) $ 3,766,791 $ (465,247 ) $ 275,912 $ 305,472 $ (47,548 ) $ 32,471 $ 101,060 — 26,545 13,137 1,788 — 41,470 — 40,885 142,179 6,475 (45 ) 189,494 — 7,639 (13,154 ) (2,747 ) — (8,262 ) — 730 325 — (219 ) 836 (465,247 ) 351,711 447,959 (42,032 ) 32,207 324,598 — 879,414 840 20,879 (31,412 ) 869,721 — — 121,700 4,579 — 126,279 — — 121,447 — — 121,447 — 879,414 243,987 25,458 (31,412 ) 1,117,447 2,333,388 2,056,432 2,921,216 506,602 (5,492,892 ) 2,324,746 $ 1,868,141 $ 3,287,557 $ 3,613,162 $ 490,028 $ (5,492,097 ) $ 3,766,791 Corp. 2 Non- Guarantors Eliminations Assets Current assets $ ---- $ 37,790 $ 9,659 $ 6,802 $ ---- $ 54,251 ---- ---- ---- 97,653 ---- 97,653 ---- 298,911 94,504 19,183 (27,686 ) 384,912 ---- 226,864 18,441 8,379 (1,201 ) 252,483 ---- 272,885 82,066 19,327 (22,246 ) 352,032 ---- ---- 44,633 (1,793 ) ---- 42,840 ---- 5,379 11,099 1,273 ---- 17,751 Total current assets ---- 841,829 260,402 150,824 (51,133 ) 1,201,922 Property and equipment, at cost, net ---- 665,134 267,617 47,895 ---- 980,646 Goodwill ---- ---- 1,292,628 32,749 ---- 1,325,377 Service contracts, net ---- 125,454 1,880 3,954 ---- 131,288 Other assets, net 1,869,746 1,600,771 1,779,796 270,778 (5,440,880 ) 80,211 $ 1,869,746 $ 3,233,188 $ 3,602,323 $ 506,200 $ (5,492,013 ) $ 3,719,444 Liabilities and Shareholders' Equity Current liabilities: $ (465,247 ) $ 293,122 $ 249,536 $ (22,824 ) $ 21,090 $ 75,677 ---- 30,923 14,172 1,741 ---- 46,836 ---- 27,571 216,326 6,312 ---- 250,209 ---- 8,848 (4,348 ) (3,605 ) ---- 895 ---- 739 72 ---- (219 ) 592 Total current liabilities (465,247 ) 361,203 475,758 (18,376 ) 20,871 374,209 Long-term liabilities: ---- 796,497 241 18,951 (29,485 ) 786,204 ---- ---- 130,625 4,458 ---- 135,083 ---- ---- 103,962 ---- ---- 103,962 Total long-term liabilities ---- 796,497 234,828 23,409 (29,485 ) 1,025,249 Total shareholders’ equity 2,334,993 2,075,488 2,891,737 501,167 (5,483,399 ) 2,319,986 $ 1,869,746 $ 3,233,188 $ 3,602,323 $ 506,200 $ (5,492,013 ) $ 3,719,444 As of May Cintas
Corporation Corp. 2 Subsidiary
Guarantors Non-
Guarantors Eliminations Cintas
Corporation
Consolidated $ — $ 37,472 $ 7,851 $ 20,901 $ — $ 66,224 — — — 125,471 — 125,471 — 313,050 119,592 28,703 (31,267 ) 430,078 — 218,109 18,349 8,928 (6,717 ) 238,669 — 288,493 85,753 23,923 (27,753 ) 370,416 — — 41,664 (2,254 ) — 39,410 — 5,048 5,876 1,144 — 12,068 — 862,172 279,085 206,816 (65,737 ) 1,282,336 — 678,239 236,519 59,817 — 974,575 — — 1,279,819 35,750 — 1,315,569 — 145,115 2,612 5,030 — 152,757 1,736,604 1,608,496 1,751,433 369,232 (5,382,401 ) 83,364 $ 1,736,604 $ 3,294,022 $ 3,549,468 $ 676,645 $ (5,448,138 ) $ 3,808,601 $ (465,247 ) $ 292,027 $ 255,399 $ (6,000 ) $ 18,576 $ 94,755 — 29,919 18,210 2,476 — 50,605 — 54,260 146,669 7,916 (920 ) 207,925 — 340 12,686 (139 ) — 12,887 — 698 574 — (202 ) 1,070 (465,247 ) 377,244 433,538 4,253 17,454 367,242 — 952,595 893 27,213 (37,965 ) 942,736 — — 118,479 5,705 — 124,184 — — 120,308 — — 120,308 — 952,595 239,680 32,918 (37,965 ) 1,187,228 2,201,851 1,964,183 2,876,250 639,474 (5,427,627 ) 2,254,131 $ 1,736,604 $ 3,294,022 $ 3,549,468 $ 676,645 $ (5,448,138 ) $ 3,808,601 Corp. 2 Non- Guarantors Eliminations Assets Current assets: $ ---- $ 37,472 $ 7,851 $ 20,901 $ ---- $ 66,224 ---- ---- ---- 125,471 ---- 125,471 ---- 313,050 119,592 28,703 (31,267 ) 430,078 ---- 218,109 18,349 8,928 (6,717 ) 238,669 ---- 288,493 85,753 23,923 (27,753 ) 370,416 ---- ---- 41,664 (2,254 ) ---- 39,410 ---- 5,048 5,876 1,144 ---- 12,068 Total current assets ---- 862,172 279,085 206,816 (65,737 ) 1,282,336 Property and equipment, at cost, net ---- 678,239 236,519 59,817 ---- 974,575 Goodwill ---- ---- 1,279,819 35,750 ---- 1,315,569 Service contracts, net ---- 145,115 2,612 5,030 ---- 152,757 Other assets, net 1,736,604 1,608,496 1,751,433 369,232 (5,382,401 ) 83,364 $ 1,736,604 $ 3,294,022 $ 3,549,468 $ 676,645 $ (5,448,138 ) $ 3,808,601 Liabilities and Shareholders' Equity Current liabilities: $ (465,247 ) $ 292,027 $ 255,399 $ (6,000 ) $ 18,576 $ 94,755 ---- 29,919 18,210 2,476 ---- 50,605 ---- 54,260 146,669 7,916 (920 ) 207,925 ---- 340 12,686 (139 ) ---- 12,887 ---- 698 574 ---- (202 ) 1,070 Total current liabilities (465,247 ) 377,244 433,538 4,253 17,454 367,242 Long-term liabilities: ---- 952,595 893 27,213 (37,965 ) 942,736 ---- ---- 118,479 5,705 ---- 124,184 ---- ---- 120,308 ---- ---- 120,308 Total long-term liabilities ---- 952,595 239,680 32,918 (37,965 ) 1,187,228 Total shareholders’ equity 2,201,851 1,964,183 2,876,250 639,474 (5,427,627 ) 2,254,131 $ 1,736,604 $ 3,294,022 $ 3,549,468 $ 676,645 $ (5,448,138 ) $ 3,808,601 Six Months Ended November 30, 2008 Cintas
Corporation Corp. 2 Subsidiary
Guarantors Non-
Guarantors Eliminations Cintas
Corporation
Consolidated $ 150,474 $ 47,320 $ 82,386 $ 14,008 $ (143,714 ) $ 150,474 — 49,517 24,689 4,166 — 78,372 — 20,009 591 922 — 21,522 6,911 — — — — 6,911 — — (1,840 ) — — (1,840 ) — (3,470 ) 10,575 (197 ) (14,972 ) (8,064 ) — (6,742 ) (3,140 ) (923 ) (4,364 ) (15,169 ) — (2,162 ) (762 ) (917 ) (2,396 ) (6,237 ) — 154 (3,906 ) (47 ) — (3,799 ) — (4,987 ) 39,053 (48,470 ) 13,895 (509 ) — (3,364 ) (5,073 ) (248 ) — (8,685 ) — (13,779 ) (3,351 ) (145 ) 875 (16,400 ) — 7,393 (25,840 ) (2,988 ) — (21,435 ) 157,385 89,889 113,382 (34,839 ) (150,676 ) 175,141 — (43,512 ) (48,925 ) (3,520 ) — (95,957 ) — — — 61,662 — 61,662 — (805 ) 61,256 (20,977 ) (62,696 ) (23,222 ) — (18,331 ) — — — (18,331 ) (131,538 ) 45,866 (120,787 ) (24 ) 206,836 353 (131,538 ) (16,782 ) (108,456 ) 37,141 144,140 (75,495 ) — 7,500 — — — 7,500 — (80,649 ) (6,636 ) — 6,536 (80,749 ) (25,847 ) — — — — (25,847 ) — 383 274 (244 ) — 413 (25,847 ) (72,766 ) (6,362 ) (244 ) 6,536 (98,683 ) — (450 ) — (4,324 ) — (4,774 ) — (109 ) (1,436 ) (2,266 ) — (3,811 ) — 37,472 7,851 20,901 — 66,224 $ — $ 37,363 $ 6,415 $ 18,635 $ — $ 62,413 Corp. 2 Eliminations $ 222,285 $ 68,854 $ 123,113 $ 19,348 $ (211,315 ) $ 222,285 ---- 74,977 37,085 6,057 ---- 118,119 ---- 29,871 857 1,295 ---- 32,023 8,904 ---- ---- ---- ---- 8,904 ---- ---- 9,052 ---- ---- 9,052 ---- 15,402 25,087 5,210 (3,581 ) 42,118 ---- (8,739 ) (94 ) (2,078 ) (5,516 ) (16,427 ) ---- 15,520 3,689 (704 ) (5,507 ) 12,998 ---- (334 ) (5,223 ) (245 ) ---- (5,802 ) ---- 14,969 (19,110 ) (20,619 ) 2,513 (22,247 ) ---- 1,009 (4,031 ) (228 ) ---- (3,250 ) ---- (27,179 ) (18,884 ) (591 ) 920 (45,734 ) ---- 8,614 (17,034 ) (3,900 ) ---- (12,320 ) Net cash provided by (used in) operating activities 231,189 192,964 134,507 3,545 (222,486 ) 339,719 ---- (59,740 ) (67,572 ) (5,471 ) ---- (132,783 ) ---- ---- ---- 92,061 ---- 92,061 ---- 1,411 63,708 (91,517 ) (68,587 ) (94,985 ) ---- (19,927 ) ---- (9,454 ) ---- (29,381 ) (205,342 ) 41,748 (119,418 ) (25 ) 282,609 (428 ) Net cash (used in) provided by investing activities (205,342 ) (36,508 ) (123,282 ) (14,406 ) 214,022 (165,516 ) ---- 7,500 ---- ---- ---- 7,500 ---- (163,557 ) (9,417 ) ---- 8,464 (164,510 ) (25,847 ) ---- ---- ---- ---- (25,847 ) ---- 458 ---- 278 ---- 736 Net cash (used in) provided by financing activities (25,847 ) (155,599 ) (9,417 ) 278 8,464 (182,121 ) ---- (539 ) ---- (3,516 ) ---- (4,055 ) ---- 318 1,808 (14,099 ) ---- (11,973 ) Cash and cash equivalents at beginning of period ---- 37,472 7,851 20,901 ---- 66,224 Cash and cash equivalents at end of period $ ---- $ 37,790 $ 9,659 $ 6,802 $ ---- $ 54,251 Six Months Ended November 30, 2007 Cintas
Corporation Corp. 2 Subsidiary
Guarantors Non-
Guarantors Eliminations Cintas
Corporation
Consolidated $ 163,916 $ 102,644 $ 43,594 $ 15,360 $ (161,598 ) $ 163,916
operating activities: — 45,241 22,986 4,044 — 72,271 — 19,627 675 1,039 — 21,341 4,809 — — — — 4,809 — — 3,626 — — 3,626 — (8,028 ) 802 (1,178 ) 188 (8,216 ) — (9,240 ) 4,479 (520 ) (1,438 ) (6,719 ) — (13,514 ) (2,834 ) (194 ) (880 ) (17,422 ) — 162 (329 ) (286 ) — (453 ) — (188,490 ) 188,714 9,813 (1,266 ) 8,771 — (13,786 ) (7,369 ) (1,095 ) — (22,250 ) — (12,726 ) (6,660 ) (472 ) 889 (18,969 ) — 6,286 62,460 (333 ) — 68,413 168,725 (71,824 ) 310,144 26,178 (164,105 ) 269,118 — (57,966 ) (31,642 ) (3,599 ) — (93,207 ) — — 34,254 7,676 — 41,930 — (2,431 ) (23,659 ) (12,562 ) 15,791 (22,861 ) — (46,655 ) — (9,376 ) — (56,031 ) 18,747 109,701 (277,667 ) 68 149,883 732 18,747 2,649 (298,714 ) (17,793 ) 165,674 (129,437 ) — 296,000 — — — 296,000 — (225,476 ) (1,373 ) — (1,569 ) (228,418 ) 7,752 — — — — 7,752 (191,479 ) — — — — (191,479 ) (3,745 ) 138 — (193 ) — (3,800 ) (187,472 ) 70,662 (1,373 ) (193 ) (1,569 ) (119,945 ) — — — 1,544 — 1,544 — 1,487 10,057 9,736 — 21,280 — 33,949 (24,834 ) 26,245 — 35,360 $ — $ 35,436 $ (14,777 ) $ 35,981 $ — $ 56,640 Corp. 2 Eliminations $ 245,744 $ 148,164 $ 69,617 $ 23,475 $ (241,256 ) $ 245,744 ---- 68,920 34,872 6,284 ---- 110,076 ---- 29,780 1,004 1,587 ---- 32,371 7,406 ---- ---- ---- ---- 7,406 ---- ---- (456 ) ---- ---- (456 ) ---- (1,894 ) 2,808 (395 ) 343 862 ---- (11,052 ) 5,041 (930 ) (1,984 ) (8,925 ) ---- (12,983 ) (2,280 ) (860 ) (2,505 ) (18,628 ) ---- (90 ) 1,143 124 ---- 1,177 ---- (215,887 ) 203,504 13,355 (1,420 ) (448 ) ---- (7,240 ) (3,515 ) (975 ) ---- (11,730 ) ---- (16,671 ) 9,117 (740 ) 889 (7,405 ) ---- 8,893 10,307 (1,314 ) ---- 17,886 Net cash provided by (used in) operating activities 253,150 (10,060 ) 331,162 39,611 (245,933 ) 367,930 ---- (88,397 ) (50,875 ) (5,576 ) ---- (144,848 ) ---- ---- 34,559 7,834 ---- 42,393 ---- (3,065 ) (65,284 ) (21,445 ) 57,360 (32,434 ) ---- (86,314 ) ---- (15,789 ) ---- (102,103 ) (65,857 ) 108,166 (234,074 ) (7 ) 190,570 (1,202 ) Net cash (used in) provided by investing activities (65,857 ) (69,610 ) (315,674 ) (34,983 ) 247,930 (238,194 ) ---- 313,000 ---- ---- ---- 313,000 ---- (225,613 ) (1,198 ) ---- (1,997 ) (228,808 ) 8,030 ---- ---- ---- ---- 8,030 (191,479 ) ---- ---- ---- ---- (191,479 ) (3,844 ) (7,510 ) ---- (101 ) ---- (11,455 ) Net cash (used in) provided by financing activities (187,293 ) 79,877 (1,198 ) (101 ) (1,997 ) (110,712 ) ---- ---- ---- 1,291 ---- 1,291 Net increase in cash and cash equivalents ---- 207 14,290 5,818 ---- 20,315 Cash and cash equivalents at beginning of period ---- 33,949 (24,834 ) 26,245 ---- 35,360 Cash and cash equivalents at end of period $ ---- $ 34,156 $ (10,544 ) $ 32,063 $ ---- $ 55,675 MANAGEMENT’SMANAGEMENT'S DISCUSSION AND ANALYSIS OFAmerica’sAmerica's leading provider of corporate identity uniforms through rental and sales programs, as well as a significant provider of related business services, including entrance mats, restroom products and services, first aid, safety and fire protection products and services, document management services and branded promotional products.in a few ways.through various avenues. Cintas has a national sales organization introducing all of our products and services to prospects in all business segments. Our ever expanding range of products and services allows our sales organization to consider any type of business a prospect. We also broaden our customer base through geographic expansion, especially in our emerging businesses of first aid, safety and safety, fire protection and document management. Finally, we will continue to evaluate strategic acquisitions as opportunities arise.sixnine month periods ended November 30,February 28, 2009 and February 29, 2008, and November 30, 2007, are presented in Note 10 entitled Segment Information of “Notes to Consolidated Condensed Financial Statements.”In September 2006, the FASB issuedEffective June 1, 2008, Cintas adopted Financial Accounting Standards Board (FASB) Statement No. 157,Fair Value Measurements (FAS 157), which defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosure requirements about fair value measurements. FASB Staff Cintas adopted FAS 157 on June 1, 2008, as required. The adoption of FAS 157 for our financial assets and liabilities did not have a material impact on Cintas’ results of operations or financial condition. Cintas’ adoption of FAS 157 is more fully described in Note 3 entitled Fair Value Measurements of “Notes to Consolidated Condensed Financial Statements.”November 30, 2008February 28, 2009 Compared to Three Months Ended November 30, 2007increased 0.1%decreased 6.9% for the three months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year from $983.9$976.0 million to $985.2$908.6 million. Acquisitions in our First Aid, Safety and Fire Protection Services operating segment and our Document Management Services operating segment accounted for growth of 0.8%0.5% during the quarter. This growth was mostly offset by an internal growth of -0.7%-7.4%.increased 0.4%decreased 4.1% for the three months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year from $708.8$703.6 million to $711.5$674.7 million. Internal growth accounted forThere were no acquisitions in the entire increase as a result ofRental Uniforms and Ancillary Products operating segment during the sale of new rental programs to customers, offset by lost business.0.5%14.1% for the three months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year from $275.0$272.3 million to $273.7$233.9 million. Acquisitions in our First Aid, Safety and Fire Protection Services operating segment and our Document Management Services operating segment accounted for growth of 3.0%1.8% during the quarter. This growth was mostly offset by an internal growth of -3.5%- -15.9%. ThisThe negative internal growth rate was negative duringfor the quarter was primarily as athe result of decreaseda 22.6% decrease in Uniform Direct Sales operating segment revenue which decreased 10.7%.increased $9.4decreased $18.9 million, or 2.4%4.7%, for the three months ended November 30, 2008,February 28, 2009, as compared to the three months ended November 30, 2007. This increase included a $2.2 million increase in energy related costs and a $3.0 million increase in the cost of hangers. The increase inFebruary 29, 2008. Lower Rental Uniforms and Ancillary Products revenue also causedvolume resulted in a slight increasedecrease in the cost of rental uniforms and ancillary products.$2.5$13.7 million, or 1.5%8.2%, for the three months ended November 30, 2008,February 28, 2009, as compared to the three months ended November 30, 2007.February 29, 2008. This decrease was due to decreased Other Services sales volume and a change in the mix of Other Services revenue from the lower gross margin producing revenues of Uniform Direct Sales to the higher gross margin producing revenues of Document Management Services revenue and First Aid, Safety and Fire Protection Services revenue.increased $9.5decreased $16.1 million, or 3.4%5.9%, for the three months ended November 30, 2008,February 28, 2009, as compared to the three months ended November 30, 2007. Medical costs increasedFebruary 29, 2008. Labor and payroll tax expenses decreased by $8.0$12.9 million overcompared to the same period in the prior fiscal year reflecting continued rising costs in the healthcare industry and additional claims incurred. In addition, bad debt expense increased by $1.3 million.November 30, 2008,February 28, 2009, which is relatively consistent with the $11.2$12.1 million for the same period in the prior fiscal year.was 39.4%decreased to 33.2% for the three months ended November 30, 2008,February 28, 2009, compared to 38.3%35.0% for the prior year period, reflecting the reserve requirements of FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes –an interpretation of FASB Statement No. 109. This decrease is primarily due to the recognition of tax benefits associated with certain statute expirations.$11.0$10.0 million, or 13.3%,12.2% for the three months ended November 30, 2008,February 28, 2009, from the same period in the prior fiscal year. Diluted earnings per share were $0.47 for the three months ended November 30, 2008,February 28, 2009, which was a decrease of 11.3% compared to the same period in the prior fiscal year. The decreased net income and diluted earnings per share are due primarily to a combination of increases, as described previously, in energy related costs, costs of hangers, medical costs, bad debt expense and the higher effective tax ratedecreased revenue volume for the quarter.November 30, 2008February 28, 2009 Compared to Three Months Ended November 30, 2007increaseddecreased from $708.8$703.6 million to $711.5$674.7 million, or 0.4%4.1%, and the cost of rental uniforms and ancillary products increased $9.4decreased $18.9 million, or 2.4%4.7%. The operating segment’s gross margin was $309.8$295.2 million, or 43.6%43.8% of revenue. This gross margin percent to sales of 43.6%revenues of 43.8% was lower40 basis points higher than lastprior fiscal year’s secondthird quarter of 44.7% mainly due to increased energy43.4%. Energy related costs, and hanger costs. Energy related costswhich include natural gas, electric and gas, and they increaseddecreased a combined 3080 basis points as a percent of revenue over lastprior year’s secondthird quarter. In addition, cost reduction initiatives combined to reduce multiple expenses such labor, overtime, temporary labor, supplies, recruiting expense and other expenses by a combined 50 basis points. These improvements were offset by a 70 basis point increase in material cost and depreciation and a 20 basis point increase in hanger costs. The material cost and depreciation amounts increased as a percent of revenue mainly due to lower operating segment revenue. Hanger costs increased 40 basis points primarily as a result of an import tariff imposed by the U.S. government on hangers produced in China.28.3%27.4%, increased 30decreased 90 basis points compared to the secondthird quarter of the prior fiscal year. This increasedecrease is due to a 20 basis point increase in medicaldecreased labor and payroll tax expenses and a 10 basis point increase in bad debt expense.decreased $9.6increased $4.0 million to $108.4$110.4 million for the Rental Uniforms and Ancillary Products operating segment for the period compared to the same period last fiscal year. Income before income taxes was 15.2%16.4% of the operating segment’s revenue, which is a 140130 basis point decreaseincrease compared to the secondthird quarter of the prior fiscal year. This is primarily due to the increaseddecreased energy related costs hanger costs, medical costs and bad debt expensethe numerous cost reduction initiatives as indicated above.November 30, 2008February 28, 2009 Compared to Three Months Ended November 30, 2007$134.5$125.3 million to $120.0$97.0 million, or 10.7%22.6%, for the three months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year. There were no acquisitions in the Uniform Direct Sales operating segment during the three months ended November 30, 2008.$8.0$12.0 million, or 8.7%14.1%, for the three months ended November 30, 2008,February 28, 2009, due to decreased Uniform Direct Sales volume. The gross margin as a percent of revenue was 30.7%24.6% for the quarter ended November 30, 2008,February 28, 2009, which was a 150 basis point decrease overdecreased from 32.1% in the same period in the prior fiscal year. This decrease is due to the decrease inlower Uniform Direct Sales volume.at 23.0%, increased 250 basis points comparedfrom 19.2% in the third quarter last year to the second quarter of the prior fiscal year.23.8% in this year’s third quarter. This increase is mainly due to the dropdecline in Uniform Direct Sales volume and in part due to higher bad debt expense, which increased approximately 5030 basis points over last fiscal year’s secondthird quarter.$6.5$15.4 million to $9.2$0.8 million for the Uniform Direct Sales operating segment for the period compared to the same period in the prior fiscal year.three months ended February 28, 2009. Income before income taxes was 7.7%0.8% of the operating segment’s revenue compared to 11.7%12.9% for the same period last fiscal year. This decrease in income before income taxes is primarily due to the decrease in Uniform Direct Sales revenue.November 30, 2008February 28, 2009 Compared to Three Months Ended November 30, 2007increaseddecreased from $99.2$97.6 million to $100.5$86.0 million, or 1.3%11.8% for the three months ended November 30, 2008.February 28, 2009. The 1.8% growth from acquisitions was partially offset by internal growth of -0.5%-13.6%.$0.7$6.4 million, or 1.1%10.8%, for the three months ended November 30, 2008.February 28, 2009. Gross margin for the First Aid, Safety and Fire Protection Services operating segment is defined as revenue less cost of goods, warehouse expenses, service expenses and training expenses. The gross margin as a percent of revenue was 40.2%38.5% for the quarter ended November 30, 2008,February 28, 2009, which is a 15070 basis point increasedecrease compared to the gross margin percentage in the secondthird quarter of the prior fiscal year. This decrease is mainly due to a decrease in sales volume.better utilization of fire installation labor and a change in the mix of revenue from the lower gross margin producing revenues of fire system installation revenuesFirst Aid, Safety and national account first aid and safety programs to the higher gross margin producing revenues of fire test and inspection services and first aid services.as a percent of revenue, at 32.6%, increased 130 basis points compareddecreased from $30.9 million in last year’s third quarter to $29.0 million in the secondthird quarter of the priorthis fiscal year. This increase isyear due to increased selling expenses associated with the development of our Fire Protection Services sales force.increased $0.3decreased $3.2 million to $7.7$4.1 million for the period compared to the same period of the prior fiscal year.three months ended February 28, 2009. Income before income taxes was 7.6%4.8% of the operating segment’s revenue, which is a 20270 basis point increasedecrease compared to the secondthird quarter of the prior fiscal year, as a result ofprimarily due to the various items described above.November 30, 2008February 28, 2009 Compared to Three Months Ended November 30, 2007$41.4$49.4 million to $53.2$50.9 million, or 28.5%2.9%, for the three months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year. Acquisitions in this operating segment accounted for growth of 15.5%6.4% during the quarter. This operating segment’ssegment had negative internal growth for the period was 13.0%of -3.5% over the same period in the prior fiscal year. TheAlthough the operating segment’s volume of shredding services increased by 15% during the quarter ended February 28, 2009, compared to the same quarter last year, declining recycled paper prices caused the operating segment to have negative internal growth was primarily due tofor the quarter ended February 28, 2009. This segment derives revenue from the sale of shredding servicesshredded paper to new customers and existing customerspaper recyclers. The average price from these paper sales dropped by approximately 50% since February 29, 2008. The price of standard office paper, which accounts for the majority of the recycled paper revenue, dropped from $235 per ton at Cintas’ other segments.$6.1$4.7 million, or 31.9%21.4%, for the three months ended November 30, 2008,February 28, 2009, due to increased Document Management Services operating segment sales volume. Gross margin for the Document Management Services operating segment is defined as revenue less production and service costs. The gross margin as a percent of revenue was 52.4%decreased from 55.5% in last year’s third quarter to 47.5% for the quarter ended November 30, 2008, which is a 120 basis point decrease compared to the gross margin percentage in the second quarter of the prior fiscal year.February 28, 2009. This decrease is due to the significant decrease in part to a 63 basis point increase in energy related costs.42.8%39.8%, decreased 30increased 50 basis points compared to the secondthird quarter of the prior fiscal year. This decrease is due to improved scale of administrative functions resulting from the operating segment’s increased sales volume.increased $0.8decreased $4.1 million to $5.1$3.9 million for the period compared to the same period in the prior fiscal year. Income before income taxes was 9.6%as a percentage of the operating segment’s revenue which is a 90 basis point decrease over the operating segment’s revenuedecreased from 16.2% in last year’s third quarter to 7.7% for the same period last fiscal year,quarter ended February 28, 2009, primarily as a result of the increasesignificant decrease in energy related costs described above.SixConsolidated ResultsNovember 30, 2008February 28, 2009 Compared to SixNine Months Ended November 30, 2007increased 1.8%of $2.9 billion decreased $32.9 million, or 1.1% for the sixnine months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year from $1.95 billion to $1.99 billion. Internal growth accounted for 1.6% of this increase. The remaining growth was derived through acquisitionsyear. Acquisitions in our First Aid, Safety and Fire Protection Services operating segment and our Document Management Services operating segment.increased 1.0%of $2.1 billion decreased $15.3 million, or 0.7% for the sixnine months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year from $1.42 billion to $1.43 billion. Internal growth was 1.7% for the six month period, primarily as a result of the sale of new rental programs to customers, offset by lost business. The difference between the internal growth of 1.7% and the total growth of 1.0% represents the adjustment caused by one fewer work dayyear. There were no acquisitions in the six month periodRental Uniforms and Ancillary Products operating segment during the nine months ended November 30, 2008 compared to the six month period ended November 30, 2007.increased 3.9%decreased 2.2% for the sixnine months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year from $533.8$806.1 million to $554.5$788.5 million. Internal growth accounted for 1.1% of this increase. Internal growth was generated primarily through the increased sales of first aid, safety and fire protection products and services and document management services to new customers and existing customers at Cintas’ other segments. Acquisitions of first aid, safety and fire protection businesses and document management businesses accounted for growth of 3.6%2.9%. Negative internal growth of 4.6% more than offset the impact of the acquisitions. This internal growth rate was negative during the nine months ended February 28, 2009, primarily as a result of an 11.6% decrease in Uniform Direct Sales operating segment revenue and a 1.3% decrease in First Aid, Safety and Fire Protection Services operating segment revenue. The Other Services revenue growth rate was negatively impacted by 0.8%0.5% by one fewer work day in the sixnine month period ended November 30, 2008February 28, 2009 compared to the sixnine month period ended November 30, 2007.$25.2$6.4 million, or 3.2%0.5%, for the sixnine months ended November 30, 2008,February 28, 2009, as compared to the sixnine months ended November 30, 2007.February 29, 2008. This increase was mainly due to increased Rental Uniforms and Ancillary Products operating segment revenue, a $10.5$3.5 million increase in energy costs and a $6.2$6.6 million increase in hanger costs.increased $7.0decreased $6.6 million, or 2.1%1.3%, for the sixnine months ended November 30, 2008,February 28, 2009, as compared to the sixnine months ended November 30, 2007.February 29, 2008. This increasedecrease was mainly due to increasedlower Other Services sales volume.$20.1$4.0 million, or 3.6%0.5%, for the sixnine months ended November 30, 2008,February 28, 2009, as compared to the sixnine months ended November 30, 2007.February 29, 2008. Medical costs increased by $15.3$15.8 million over the same period in the prior fiscal year reflecting continued rising costs in the healthcare industry and additional claims incurred. In addition, bad debt expense increased by $3.4 million.$23.9$35.8 million for the sixnine months ended November 30, 2008, compared to $22.6February 28, 2009, which is relatively consistent with the $34.7 million for the same period in the prior fiscal year. This increase in net interest expense is primarily due to the increased level of borrowing used to fund acquisitions and to fund the share buybacks during our first quarter.38.4%36.8% for the sixnine months ended November 30, 2008,February 28, 2009, compared to 37.8%36.9% for the prior year period, reflecting the reserve requirements of FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes –an interpretation of FASB Statement No. 109.8.2%9.5% for the sixnine months ended November 30, 2008,February 28, 2009, from the same period in the prior fiscal year. Diluted earnings per share decreased 5.8%7.6% for the sixnine months ended November 30, 2008,February 28, 2009, compared to the same period in the prior fiscal year. The decreased net income and diluted earnings per share are due to the lower volume and a combination of increases, as described previously, in energy related costs, costs of hangers, medical costs and bad debt expense and the higher effective tax rate for the period.SixNovember 30, 2008February 28, 2009 Compared to SixNine Months Ended November 30, 2007increased from $1.42 billion to $1.43 billion,decreased $15.3 million, or 1.0%0.7%, and the cost of rental uniforms and ancillary products increased $25.2$6.4 million, or 3.2%0.5%. The operating segment’s gross margin was $623.9$919.2 million, or 43.5%43.6% of revenue. This gross margin percent to sales of 43.5%revenue of 43.6% was 70 basis points lower than the 44.8%44.3% in the same period in the prior fiscal year mainly due to increased energy related costs and hanger costs. Energy related costs, which include natural gas, electric and gas, and they increased a combined 7020 basis points over the same period in the prior fiscal year. Hanger costs increased 4035 basis points primarily as a result of an import tariff imposed by the U.S. government on hangers produced in China.to sales,of revenue, at 28.5%28.2%, remained relatively consistent with the same period of the prior fiscal year.$17.4$13.4 million to $215.4$325.9 million for the Rental Uniforms and Ancillary Products operating segment for the period. Income before income taxes was 15.0%15.5% of the operating segment’s revenue, which is a 14050 basis point decrease compared to the same period in the prior fiscal year. This is primarily due to the increased energy related costs and hanger costs indicated above.SixNovember 30, 2008February 28, 2009 Compared to SixNine Months Ended November 30, 2007$253.3$378.5 million to $237.5$334.5 million, or 6.2%11.6%, for the sixnine months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year. There were no acquisitions in the Uniform Direct Sales operating segment during the sixnine months ended November 30, 2008.$10.2$22.1 million, or 5.9%8.6%, for the sixnine months ended November 30, 2008,February 28, 2009, due to decreased Uniform Direct Sales volume. The gross margin as a percent of revenue was 31.3%29.3% for the quarternine months ended November 30, 2008,February 28, 2009, which was a 20240 basis point decrease over the same period in the prior fiscal year. This decrease in gross margin as a percent of revenue is due to the lower Uniform Direct Sales volume.22.3%22.7%, increased 140240 basis points for the sixnine months ended November 30, 2008,February 28, 2009, compared to the same period in the prior fiscal year. This increase is mainly due to the dropdecline in Uniform Direct Sales volume and in part due to higher bad debt expense, which increased approximately 4640 basis points over the same period last fiscal year’s second quarter.$5.6$21.0 million to $21.2$22.0 million for the Uniform Direct Sales operating segment for the period compared to the same period in the prior fiscal year. Income before income taxes was 8.9%6.6% of the operating segment’s revenue, which is a 170480 basis point decrease compared to the same period in the prior fiscal year. This decrease is primarily due to the decreased Uniform Direct Sales volume.SixNovember 30, 2008February 28, 2009 Compared to SixNine Months Ended November 30, 2007increaseddecreased from $201.4$299.0 million to $209.0$295.1 million, or 3.8%1.3%, for the sixnine months ended November 30, 2008.February 28, 2009. This operating segment’s internal growth for the period was 2.5%-2.8% over the same period last fiscal year. Acquisitions of first aid, safety and fire protection businesses accounted for growth of 2.1%2.0%. The First Aid, Safety and Fire Protection Services operating segment revenue growth rate was negatively impacted by 0.8%0.5% by one fewer work day in the sixnine month period ended November 30, 2008February 28, 2009, compared to the sixnine month period ended November 30, 2007.increased $3.3decreased $3.1 million, or 2.7%1.7%, for the sixnine months ended November 30, 2008,February 28, 2009, due to increaseddecreased First Aid, Safety and Fire Protection Services volume. Gross margin for the First Aid, Safety and Fire Protection Services operating segment is defined as revenue less cost of goods, warehouse expenses, service expenses and training expenses. The gross margin as a percent of revenue was 40.5%39.9% for the sixnine months ended November 30, 2008,February 28, 2009, which is a 7030 basis point increase compared to the gross margin percentage in the prior fiscal year. This increase is due to better utilization of fire installation labor and a change in the mix of revenue from the lower gross margin producing revenuesrevenue of fire system installation revenuesrevenue and national account first aid and safety programs to the higher gross margin producing revenuesrevenue of fire test and inspection services and first aid services.31.4%32.0%, increased 5080 basis points for the sixnine months ended November 30, 2008,February 28, 2009, compared to the same period in the prior fiscal year. This increase is due to increased selling expenses associated with the development of our Fire Protection Services sales force.increased $1.1decreased $2.1 million to $19.0$23.2 million for the period compared to the same period of the prior fiscal year. Income before income taxes was 9.1%7.8% of the operating segment’s revenue, which is a 2070 basis point increasedecrease compared to the same period in the prior fiscal year as a result of the various items described above.SixNovember 30, 2008February 28, 2009 Compared to SixNine Months Ended November 30, 2007$79.1$128.6 million to $108.0$158.9 million, or 36.5%23.6%, for the sixnine months ended November 30, 2008,February 28, 2009, over the same period in the prior fiscal year. This operating segment’s internal growth for the period was 18.9%10.3% over the same period in the prior fiscal year. The internal growth was primarily due to the sale of shredding services to new customers, and favorableoffset by a reduction in recycled paper prices relativeprices. This segment derives revenue from the sale of shredded paper to last fiscal year.paper recyclers. The average price from these paper sales dropped by approximately 50% since February 29, 2008. The price of standard office paper, which accounts for the majority of the recycled paper revenue, dropped from $235 per ton at February 29, 2008, to $125 per ton at February 28, 2009. Acquisitions of document management businesses accounted for growth of 18.6%13.9%. The Document Management Services operating segment revenue growth rate was negatively impacted by 1.0%0.6% by one fewer work day in the sixnine month period ended November 30, 2008February 28, 2009 compared to the sixnine month period ended November 30, 2007.$13.9$18.6 million, or 37.9%31.7%, for the sixnine months ended November 30, 2008,February 28, 2009, due to increased Document Management Services operating segment sales volume. Gross margin for the Document Management Services operating segment is defined as revenue less production and service costs. The gross margin as a percent of revenue was 53.1%51.3% for the quarterperiod ended November 30, 2008,February 28, 2009, which is a 50300 basis point decrease over the gross margin percentage in the second quarter of the prior fiscal year. This decrease is due to the decrease in the recycled paper prices and a 12055 basis point increase in energy related costs.41.6%41.0%, decreased 13050 basis points for the sixnine months ended November 30, 2008,February 28, 2009, compared to the same period in the prior fiscal year. This decrease is due to improved scale of administrative functions resulting from the operating segment’s increased sales volume.increased $4.0of $16.4 million to $12.5 million for the period compared toremained relatively consistent with the same period in the prior fiscal year. Income before income taxes was 11.6%10.3% of the operating segment’s revenue, which is a 90250 basis point improvementdecrease over the operating segment’s revenue for the same period last fiscal year as a percent of revenue, primarily as a result of decrease in recycled paper prices and the operating segment’s increased sales volume.November 30, 2008,February 28, 2009, Cintas had $127.3$151.9 million in cash and cash equivalents and marketable securities which is 33.6%$39.8 million less than the $191.7 million at May 31, 2008. CapitalThe marketable securities consist of highly rated Canadian government securities. This decrease is primarily due to using cash and cash equivalents and marketable securities to pay down debt balances by $164.5 million and to make capital expenditures were $96.0of $132.8 million, for the six months ended November 30, 2008.offset by cash generated from operations of $339.7 million. We expect capital expenditures for the year ended May 31, 2009, to be between $150 million and $170 million. Cash and cash equivalents and marketable securities are expected to be used to finance future acquisitions, capital expenditures expansion and additional purchases under the share buyback program as detailed below.second quarter.past two fiscal quarters. This volatility has affected and may continue to affect our commercial paper rates. However, our exposure to higher rates is limited because approximately 90%all of our debt as of February 28, 2009, has a fixed rate of interest. Additionally, our highly rated commercial paper program has allowed us continued access to the financial markets. Our commercial paper program has a capacity of $600.0 million and approximately $82.8 million is outstanding asfully supported by a backup revolving credit facility through a credit agreement with our banking group. As of November 30, 2008.February 28, 2009, we had no commercial paper outstanding. In the event that the commercial paper market becomes inaccessible, our commercial bank supporting credit facility allows uswe believe that we will be able to borrow the funds we need up to the $600.0 million limit. Our commercial paper programlimit from our banking group through that credit agreement. The credit agreement expires in February 2011. We believe this program will be adequate to provide necessary funding for our operations.$7.8$6.1 million from May 31, 2008 to November 30, 2008,February 28, 2009, due to our investment in computer software, rental facilities and equipment and our document management services fleet. Cintas had threetwo uniform rental facilities under construction as of November 30, 2008.November 30, 2008.February 28, 2009. From the inception of the share buyback program through DecemberMarch 31, 2008,2009, Cintas has purchased a total of approximately 20.3 million shares of Cintas common stock, or approximately 12% of the total shares outstanding at the beginning of the program, at an average price of $39.31 per share for a total purchase price of approximately $797.9 million. The maximum approximate dollar value of shares that may yet be purchased under the plan as of DecemberMarch 31, 2008,2009, is $202.1 million. The Board of Directors did not specify an expiration date for this program.Cintas’Cintas' long-term contractual obligations and other commitments outstanding as of November 30, 2008: Payments Due by Period Total One year
or less Two to
three years Four to
five years After five
Years $ 869,675 $ 554 $ 83,987 $ 233,805 $ 551,329 882 282 240 240 120 78,608 22,056 30,577 14,992 10,983 662,619 50,235 99,686 77,734 434,964 — — — — — — — — — — $ 1,611,784 $ 73,127 $ 214,490 $ 326,771 $ 997,396 (In thousands) Payments Due by Period Two to One year three Four to After five Long-term contractual obligations Total or less years five years Years Long-term debt (1) $ 786,767 $ 563 $ 1,240 $ 233,808 $ 551,156 Capital lease obligations (2) 29 29 ---- ---- ---- Operating leases (3) 72,710 20,976 28,292 13,428 10,014 Interest payments (4) 665,450 49,739 99,079 74,679 441,953 Interest swap agreements (5) ---- ---- ---- ---- ---- Unconditional purchase obligations ---- ---- ---- ---- ---- Total contractual cash obligations $ 1,524,956 $ 71,307 $ 128,611 $ 321,915 $ 1,003,123 (1) notes and $82,769 in commercial paper.(2) (3) (4) each year in fiscal 2010, andincrease 75 basis points in fiscal 2011, and increase 50100 basis points each year in fiscal 2012 and fiscal 2013 and increase 50 basis points in fiscal 2014.(5) Amount of Commitment Expiration Per Period Total One year
or less Two to
three years Four to
five years After five
Years $ 526,336 $ — $ 526,336 $ — $ — 73,664 73,625 39 — — — — — — — — — — — — — — — — — $ 600,000 $ 73,625 $ 526,375 $ — $ — (In thousands) Amount of Commitment Expiration Per Period Two to One year three Four to After five Other commercial commitments Total or less years five years Years Lines of credit (1) $ 526,326 $ ---- $ 526,326 $ ---- $ ---- Standby letter of credit (2) 73,674 73,641 33 ---- ---- Guarantees ---- ---- ---- ---- ---- Standby repurchase obligations ---- ---- ---- ---- ---- Other commercial commitments ---- ---- ---- ---- ---- Total commercial commitments $ 600,000 $ 73,641 $ 526,359 $ ---- $ ---- (1) (2) workers’workers' compensation and general liability insurance programs.Also note that we provide a cautionary discussion A further list and description of risks, uncertainties and possibly inaccurate assumptions relevant to our businesses under Part I, Item 1A “Risk Factors”other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2008. We incorporate those items here2008 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 expectedreports on Forms 10-Q 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.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. 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.November 30, 2008.February 28, 2009. Based on such evaluation, Cintas’ management, including Cintas’ Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, has concluded that Cintas’ disclosure controls and procedures were effective as of November 30, 2008,February 28, 2009, in ensuring (i) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) information required to be disclosed by Cintas in the reports that it files or submits under the Exchange Act is accumulated and communicated to Cintas’ management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.November 30, 2008,February 28, 2009, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. See “Management’s Report on Internal Control over Financial Reporting” and “Report of Independent Registered Public Accounting Firm” on pages 31 and 32 of our Form 10-K for the year ended May 31, 2008.Matters$0.47 per share on outstanding common stock, a 2 percent increase over the dividends paid in the prior year. The dividend was paid on March 11, 2009, to a Vote of Security HoldersCintas’ Annual Shareholders’ meeting was held on October 14, 2008, at which the following issues were voted upon by shareholders:Issue No. 1Authority to elect nine Directors.Name Shares For 124,422,955 17,647,915 124,450,769 17,620,101 121,831,677 20,239,193 136,804,457 5,266,413 139,143,267 2,927,603 124,446,623 17,624,247 139,456,433 2,614,437 99,035,315 43,035,555 134,549,383 7,521,487 Issue No. 2Ratification of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2009. For Against Abstain 1,034,614 985,654 0 Issue No. 3Shareholder proposal to require that the Chairman of the Board of Directors be an independent director. For Against Abstain 85,362,359 1,179,993 14,940,034 Issue No. 4Shareholder proposal that shareholders of Cintas request the Boardrecord as of Directors to adopt a policy that provides shareholders the opportunity to vote on an advisory resolution to ratify the compensation of the named executive officers. For Against Abstain Broker 87,242,449 2,690,981 14,940,034 31.1 Certification of Principal Executive Officer required by Rule 13a-14(a) 31.2 Certification of Principal Financial Officer required by Rule 13a-14(a) 32.1 Section 1350 Certification of Chief Executive Officer 32.2 Section 1350 Certification of Chief Financial Officer SIGNATURES CINTAS CORPORATIONDate: April 8, 2009 /s/ William C. Gale (Registrant)Date: January 8, 2009/S/ WILLIAM C. GALE William C. Gale (Chief(Chief Accounting Officer)