Cintas (CTAS) 10-K risk factor changes: FY2010 vs FY2009

The statements in this section describe [removed: major] [added: the most significant] risks that could materially and adversely affect our business, financial condition and results of [removed: operation,] [added: operation] and the trading price of our debt or equity [removed: securities could decline.][added: securities.]

_This Annual Report on Form 10-K contains forward-looking [removed: statements that are subject to numerous assumptions, risks or uncertainties.][added: statements.]

Forward-looking statements may be identified by words such as "estimates," "anticipates," "predicts," "projects," "plans," "expects," "intends," "target," "forecast," "believes," "seeks," "could," "should," "may" and "will" or the negative versions thereof [removed: and similar expressions and by the context in which they are used.][added: and_]

These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ from those set forth in [removed: or_][added: or implied by this Annual Report.]

Factors that might cause such a difference include, but are not limited to, the possibility of greater than anticipated operating costs including energy costs, lower sales volumes, loss of customers due to outsourcing trends, the effects of credit market volatility and changes in our credit ratings, fluctuations in foreign currency exchange, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor including increased medical costs, costs and possible effects of union organizing activities, failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, asset impairment charges, the cost, results and ongoing assessment of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002, [added: disruptions caused by] the [added: unaccessibility of computer systems data, the] initiation or outcome of litigation, higher assumed sourcing or distribution costs of products, the disruption of operations from catastrophic events, changes in federal and state tax and labor laws, the reactions of competitors in terms of price and service and other factors set forth in this Item 1A.

Negative economic conditions, in North America and [removed: globally,] [added: our other markets,] may adversely affect our financial performance.

In fiscal [removed: 2009, fiscal 2008] [added: years 2010, 2009] and [removed: fiscal 2007,] [added: 2008,] revenue denominated in currencies other than the U.S. dollar represented less than 10% of our consolidated revenue.

Therefore, fluctuations in the value of the U.S. dollar against other major currencies, particularly in the event of significant increases in foreign currency revenue, will impact our revenue and operating income and the value of [removed: balance sheet items denominated in foreign currencies.]

[added: If] existing or future competitors seek to gain or retain market share by reducing prices, Cintas may be required to lower prices, which would hurt our results of operation.

Our ability to find qualified suppliers who meet our standards, and to access products in a timely and efficient manner is a significant challenge, especially with respect to suppliers located and goods sourced outside the [removed: United States.][added: U.S. Political and economic stability in the countries in which foreign suppliers are located, the financial stability of suppliers, suppliers' failure to meet our supplier standards, labor problems experienced by our suppliers, the availability of raw materials to suppliers, currency exchange rates, transport availability and cost, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control.]

In addition, [removed: United States] [added: U.S.] and foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our control.

[removed: Similar] [added: Future] increases in [removed: the future in] fuel and energy costs could adversely affect our results of operation and financial condition.

Legal Proceedings" and in Note [removed: 14] [added: 13] entitled Litigation and Other Contingencies of "Notes to Consolidated Financial Statements." Certain of these lawsuits or potential future lawsuits, if decided adversely to us or settled by us, may result in liability and expense material to our financial condition and results of operation.

Any failure to comply with these regulations could result in fines by government [removed: authorities,] [added: authorities and] payment of damages to private litigants and affect our ability to service our customers and adversely affect our results of operation.

[removed: We continue to evaluate opportunities for] acquiring businesses that may supplement our internal growth.

Although we conduct due diligence investigations prior to each acquisition, there can be no assurance that we will discover [added: or adequately protect against] all material liabilities of an acquired business for which we may be responsible as a successor owner or operator.

[removed: _Deterioration in general economic conditions, primarily in North America,] [added: _We] may [removed: result in the recognition of] [added: recognize] impairment charges which could adversely affect our results of operation and financial condition._

Failure to achieve and maintain an effective internal control environment could cause us to be unable to produce reliable [added: financial reports or prevent fraud.]

_similar expressions and by the context in which they are used.

We continue to evaluate opportunities for

balance sheet items denominated in foreign currencies.

_We rely extensively on computer systems to process transactions, maintain information and manage our businesses.

Disruptions in the availability of our computer systems could impact our ability to service our customers and adversely affect our sales and results of operation._

Our businesses rely on our computer systems to provide customer information, process customer transactions and provide other general information necessary to manage our businesses.

We have an active disaster recovery plan in

place that is frequently reviewed and tested.

However, our computer systems are subject to damage or interruption due to system conversions, power outages, computer or telecommunication failures, computer viruses, security breaches, catastrophic events such as fires, tornadoes and hurricanes and usage errors by our employees.

If our computer systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may have interruptions in our ability to service our customers.

This disruption caused by the unavailability of our computer systems could adversely affect our sales and results of operation.

_implied by this Annual Report.

If

Political and economic stability in the countries in which foreign suppliers are located, the financial stability of suppliers, suppliers' failure to meet our supplier standards, labor problems experienced by our suppliers, the availability of raw materials to suppliers, currency exchange rates, transport availability and cost, inflation and other factors relating to the suppliers and the countries in which they are located are beyond our control.

The increases in oil prices during 2008, which moderated in late 2008 and 2009, resulted in significantly higher fuel costs to Cintas.

financial reports or prevent fraud.

Cintas provides highly specialized products and services to businesses of all types primarily throughout [removed: the United States] [added: North America] and [removed: Canada.][added: Latin America, Europe and Asia.]

We [removed: refer to ourselves as "The Service Professionals." We] bring value to our customers by helping them provide a cleaner, [removed: safer,] [added: safer and] more pleasant atmosphere for their customers and employees.

We are North America'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 [removed: products] [added: cleaning services] and [added: supplies, carpet and tile cleaning] services, first aid, safety and fire protection products and services, document management services and branded promotional products.

[removed: Our business] [added: This] strategy is to achieve revenue growth for all of our products and services by increasing our penetration at existing customers and by broadening our customer base to include business segments to which Cintas has not historically served.

We pursue the strategy of broadening our customer base in [removed: a few] [added: several] ways.

Our [removed: ever expanding] [added: broad] range of products and services allows our sales organization to consider any type of business a prospect.

Significant job losses in [removed: the U.S. and Canada] [added: North America] followed the financial [removed: crisis,] [added: crisis] as these economies lost millions of jobs from [removed: October, 2008,] [added: October 2008] through [removed: May,] [added: May] 2009.

[removed: expect these] [added: These] restructuring activities [removed: to be] [added: were substantially] completed [removed: by May 31,] [added: in fiscal] 2010.

| | (In millions) [removed: May] [added: May] 31, [removed: 2009] [added: 2009] | | | Rental Uniforms & Ancillary Products | | | Uniform Direct Sales | | | First Aid, Safety & Fire Protection | | | Document Management | | | Total | |

[removed: The restructuring activities are more fully described in] [added: See] Note 2 entitled Restructuring and Related Activity of "Notes to Consolidated Financial [removed: Statements."][added: Statements" for more information.]

Net cash provided by operating activities was [added: $561.6 million in fiscal 2010 as compared to] $523.5 [removed: million.][added: million generated in fiscal 2009.]

The Rental Uniforms and Ancillary Products operating segment [removed: reflects] [added: consists of] the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items.

In addition to these rental items, restroom [added: cleaning services] and [removed: hygiene products] [added: supplies] and [added: carpet and tile cleaning] services are also provided within this operating segment.

The following table sets forth certain consolidated statements of income data as a [removed: percentage of] [added: percent to] revenue by operating segment and in total for the [removed: periods indicated.][added: fiscal years ended May 31:]

| | | | | | [removed: 2009] [added: 2010] | | | [removed: 2008] [added: 2009] | | | [removed: 2007] [added: 2008] | |

| | | Rental Uniforms and Ancillary Products | | | [removed: 73.0] [added: 72.4] | % | | [removed: 72.0] [added: 73.0] | % | | [removed: 73.8] [added: 72.0] | % |

| | | Uniform Direct Sales | | | [removed: 11.4] [added: 11.0] | % | | [removed: 13.1] [added: 11.4] | % | | [removed: 13.5] [added: 13.1] | % |

| | | First Aid, Safety and Fire Protection Services | | | [removed: 10.0] [added: 9.5] | % | | [removed: 10.3] [added: 10.0] | % | | [removed: 9.8] [added: 10.3] | % |

| | | Document Management Services | | | [removed: 5.6] [added: 7.1] | % | | [removed: 4.6] [added: 5.6] | % | | [removed: 2.9] [added: 4.6] | % |

| | | Rental Uniforms and Ancillary Products | | | [removed: 56.7] [added: 56.4] | % | | [removed: 55.8] [added: 56.7] | % | | [removed: 55.4] [added: 55.8] | % |

| | | Uniform Direct Sales | | | [removed: 75.2] [added: 69.9] | % | | [removed: 67.5] [added: 75.2] | % | | [removed: 68.0] [added: 67.5] | % |

| | | First Aid, Safety and Fire Protection Services | | | [removed: 61.9] [added: 61.1] | % | | [removed: 60.1] [added: 61.9] | % | | 60.1 | % |

| | | Document Management Services | | | [removed: 49.4] [added: 48.6] | % | | [removed: 45.4] [added: 49.4] | % | | [removed: 47.6] [added: 45.4] | % |

| | Total cost of sales | | | | [removed: 58.9] [added: 57.8] | % | | [removed: 57.3] [added: 58.9] | % | | 57.3 | % |

| | | Rental Uniforms and Ancillary Products | | | [removed: 43.3] [added: 43.6] | % | | [removed: 44.2] [added: 43.3] | % | | [removed: 44.6] [added: 44.2] | % |

| | | Uniform Direct Sales | | | [removed: 24.8] [added: 30.1] | % | | [removed: 32.5] [added: 24.8] | % | | [removed: 32.0] [added: 32.5] | % |

| | | First Aid, Safety and Fire Protection Services | | | [removed: 38.1] [added: 38.9] | % | | [removed: 39.9] [added: 38.1] | % | | 39.9 | % |

| | | Document Management Services | | | [removed: 50.6] [added: 51.4] | % | | [removed: 54.6] [added: 50.6] | % | | [removed: 52.4] [added: 54.6] | % |

| | Total gross margin | | | | [removed: 41.1] [added: 42.2] | % | | [removed: 42.7] [added: 41.1] | % | | 42.7 | % |

| | Selling and administrative expenses | | | | [removed: 28.7] [added: 30.6] | % | | [removed: 28.0] [added: 28.7] | % | | [removed: 27.1] [added: 28.0] | % |

| | Restructuring charges | | | | [removed: 0.3] [added: \-0.1] | % | | [removed: —] [added: 0.3] | [added: %] | | — | |

| | Impairment of long-lived assets | | | | [removed: 1.3] [added: —] | [removed: %] | | [removed: —] [added: 1.3] | [added: %] | | — | |

| | Interest income | | | | \-0.1 | % | | \-0.1 | % | | [removed: \-0.2] [added: \-0.1] | % |

| | Interest expense | | | | [removed: 1.3] [added: 1.4] | % | | 1.3 | % | | [removed: 1.4] [added: 1.3] | % |

| | Income before income taxes | | | | [removed: 9.6] [added: 9.7] | % | | [removed: 13.5] [added: 9.6] | % | | [removed: 14.4] [added: 13.5] | % |

The significant deterioration of the [removed: U.S. and Canadian economies,] [added: North American economy,] particularly in the last five months of the year ended May 31, 2009, which led to reduced revenue levels in our Rental Uniforms and Ancillary Products operating segment, our Uniform Direct Sales operating segment and our First Aid, Safety and Fire Protection Services operating segment, created excess inventory levels in these operating segments.

[removed: | |] Cost of rental uniforms and ancillary products [removed: | | $ | 8.4 | | $ | — | | $ | — | | $ | — | | $ | 8.4 | |][added: decreased 7.2% compared to fiscal 2009.]

This operating segment derives [added: a portion of its] revenue from the sale of shredded paper to paper recyclers.

The weighted average price of standard office paper, which accounts for the majority of the recycled paper revenue, [removed: dropped] [added: increased] by [removed: 24.2%] [added: 6.4%] in fiscal [removed: 2009] [added: 2010] compared to fiscal [removed: 2008.][added: 2009.]

Selling and administrative expenses [removed: as a percentage of revenue] increased [removed: in fiscal 2009] [added: $3.7 million, or 0.3%,] compared to fiscal [removed: 2008 as a result of the lower revenue in fiscal] 2009.

Cintas' principal objective is "to exceed customers' expectations in order to maximize the long-term value of Cintas for shareholders and working partners," and it provides the framework and focus for our business strategy.

The economic downturn that occurred in fiscal 2009 continued throughout most of our fiscal 2010.

The U.S. economy, which lost millions of jobs in our fiscal 2009, continued to lose jobs through the first three quarters of our fiscal 2010.

These job losses directly affected our business as many of our products and services are dependent on customer employee levels.

We were encouraged, though, that the rate of U.S. job loss lessened as we progressed through the first three quarters of fiscal 2010, and U.S. employment levels slightly increased in our fourth fiscal 2010 quarter.

As this stabilization occurred in the general U.S. economic environment, our internal growth rate improved.

Internal growth by quarter is shown in the table below.

Internal growth percentages have been adjusted for the appropriate number of workdays, by quarter and for the year, where applicable.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | Internal Growth | |

| | | | | | |

| | First Quarter Ending August 31, 2009 | | | \-12.6 | % |

| | Second Quarter Ending November 30, 2009 | | | \-10.2 | % |

| | Third Quarter Ending February 28, 2010 | | | \-3.6 | % |

| | Fourth Quarter Ending May 31, 2010 | | | 1.9 | % |

| | For the Year Ending May 31, 2010 | | | \-6.4 | % |

Despite the lower revenue level for the year, we were able to generate improved cash flow, with net cash provided by operating activities of $561.6 million representing a 7.3% increase compared to fiscal 2009.

We also increased the dividend paid to shareholders to $0.48 per share, marking the 27th consecutive increase in the dividend paid.

| | Legal settlements, net of insurance proceeds | | | | 0.7 | % | | — | | | — | |

Fiscal 2010 Compared to Fiscal 2009

Fiscal 2010 total revenue was $3.5 billion, a decrease of 6.0% compared to fiscal 2009.

Total revenue decreased organically by 6.4%.

Fiscal 2010 had one more workday than fiscal 2009, and this additional workday in fiscal 2010 accounted for the difference between the total decrease of 6.0% and the organic decrease of 6.4%.

As a result of the economic downturn discussed above, we experienced decreases in uniform revenue, both rented and purchased, and revenue for our hygiene products and first aid and safety products.

In addition, the continued difficult economic environment in fiscal 2010 caused many of our customers to reduce facility spending on items such as entrance mats and shop towels and delay spending on facility upgrades, resulting in a reduction in our facility services and fire protection revenue.

Rental Uniforms and

Ancillary Products operating segment revenue decreased organically by 6.9% in fiscal 2010.

The decrease in the Rental Uniforms and Ancillary Products operating segment revenue was primarily due to decreased uniform wearers caused in large part by the difficult U.S. economic environment in fiscal 2010.

Fiscal 2010 had one more workday than fiscal 2009, which resulted in an increase in revenue of 0.4%.

Other Services revenue decreased organically by 5.2%.

Acquisitions in our First Aid, Safety and Fire Protection Services operating segment and our Document Management Services operating segment accounted for growth of 0.7% during fiscal 2010.

Fiscal 2010 had one more workday than fiscal 2009, which resulted in an increase in revenue of 0.4%.

We also incurred a loss on inventory valuation of $8.4 million in fiscal 2009 that did not reoccur in fiscal 2010 related to excess inventory levels.

Cost of other services decreased 9.3% compared to fiscal 2009.

The decrease from fiscal 2009 was due to the volume decrease in Other Services revenue.

We also incurred a loss on inventory valuation of $19.1 million in fiscal 2009 that did not reoccur in fiscal 2010 related to excess inventory levels.

This increase is primarily due to a $9.6 million increase in medical expenses, an increase of $6.2 million in professional services and depreciation mainly related to the implementation of a new enterprise-wide computer system, and a $3.4 million increase in stock compensation expense, offset by a $15.6 million reduction in bad debt expense.

Legal settlements, net of insurance proceeds, of $23.5 million primarily related to a settlement in principle occurring in the first quarter of fiscal 2010 between Cintas and the plaintiffs involved in the litigation, _Paul Veliz, et al.

v.

We

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

A progression of our restructuring liability balance, primarily recorded in accrued compensation and related liabilities, at May 31, 2009, is as follows:

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | (In millions) | | | Employee Termination Costs | | | Other Exit Costs | | | Total | |

| | Charge to earnings — fiscal 2009 | | $ | 7.9 | | $ | 2.3 | | $ | 10.2 | |

| | Cash paid — fiscal 2009 | | | (2.0 | ) | | — | | | (2.0 | ) |

| | Balance as of May 31, 2009 | | $ | 5.9 | | $ | 2.3 | | $ | 8.2 | |

Despite the economic turmoil during fiscal 2009, we were still able to generate strong operating cash flow.

We reduced capital and acquisition spending by $110.9 million in fiscal 2009 compared to fiscal 2008.

We were able to pay down $157.1 million in net borrowings during fiscal 2009, resulting in no outstanding commercial paper borrowings as of May 31, 2009.

Additionally, we were still able to pay shareholders an increased dividend of $0.47 per share.

The reduction in Uniform Direct Sales and First Aid, Safety and Fire Protection Services revenue as a percentage of total revenue in fiscal 2009 reflects the significant reduction in spending by customers of these businesses during the economic turmoil in fiscal 2009.

Despite a significant decrease in the price of recycled paper prices during fiscal 2009, Document Management Services revenue increased as a percentage of total revenue over the last two fiscal years as a result of acquisitions and internal growth in our destruction services.

Cost of sales as a percentage of revenue increased in fiscal 2009 compared to fiscal 2008 due to lower revenue levels in all operating segments other than Document Management Services.

As a result, we reduced the carrying amount of specific inventory to

realizable values and recorded a pre-tax loss in the year ended May 31, 2009, of $27.5 million.

| | Cost of other services | | | — | | | 16.1 | | | 3.0 | | | — | | | 19.1 | |

| | Loss on inventory valuation | | $ | 8.4 | | $ | 16.1 | | $ | 3.0 | | $ | — | | $ | 27.5 | |

Cost of sales as a percentage of revenue in Document Management Services increased as a percentage of revenue in fiscal 2009 compared to fiscal 2008 as a result of a significant decrease in the price of recycled paper.

operating segments.

Fiscal 2008 Compared to Fiscal 2007

Fiscal 2008 total revenue was $3.9 billion, an increase of 6.2% over fiscal 2007.

Internal growth was 4.6% in fiscal 2008, compared to 5.3% in fiscal 2007.

The deterioration in the U.S. and Canadian economies created a challenging environment throughout fiscal 2008.

The rising unemployment in the U.S. put pressure on our ability to grow rental uniform wearers, particularly in the latter half of fiscal 2008, as many of our customers reduced their workforces.

In addition, our fire protection services business within the First Aid, Safety and Fire Protection Services operating segment suffered due to pressure on fire installation system revenue and lower than anticipated recurring service revenue.

Our internal growth was generated primarily through the sale of document management services to new and existing customers, continued penetration of our ancillary products and services such as mats, hygiene supplies and restroom cleaning services to existing customers, and first aid and safety products and services to new and existing customers.

The remaining growth in total revenue was generated predominantly through acquisitions of rental, first aid, safety and fire protection service businesses and document management businesses.

The increase in the Rental Uniforms and Ancillary Products operating segment revenue was primarily due to growth in the customer base as well as the continued penetration of ancillary products into our existing customer base.

New business remained the main driver of our internal growth as we continued to sell rental programs to new customers.

We also continued to expand our rental market, with over half of our new business being comprised of customers who were first time users of uniform rental programs.

The remaining growth of 0.3% in fiscal 2008 resulted from the acquisition of rental businesses.

Internal growth accounted for 8.2% of this increase.

The remaining revenue growth of 5.3% was generated through a combination of acquisitions of first aid, safety and fire protection businesses and document management businesses.

Cost of rental uniforms and ancillary products increased 4.4% over fiscal 2007.

The cost increase over fiscal 2007 was primarily driven by the growth in the Rental Uniforms and Ancillary Products operating segment revenue.

In addition, rising energy costs, especially in the second half of the fiscal year, contributed to this increase.

If short-term rates changed by one-half percent (or 50 basis points), Cintas' income before income taxes would change by approximately [removed: $0.5] [added: $1.5] million.

Foreign currency exposures arise from transactions denominated in a currency other than the functional currency and from foreign denominated revenue [removed: and profit translated into U.S. dollars.]

and profit translated into U.S. dollars.

30

Cintas Corporation (Cintas), a Washington corporation, provides highly specialized products and services to businesses of all types primarily throughout [removed: the United States] [added: North America] and [removed: Canada.][added: Latin America, Europe and Asia.]

Farmer, [added: currently the] Chairman [added: Emeritus] of the Board, when he left his family's industrial laundry business in order to develop uniform programs using an exclusive new fabric.

The Rental Uniforms and Ancillary Products operating segment [removed: reflects] [added: consists of] the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels and other ancillary items.

In addition to these rental items, restroom [added: cleaning services] and [removed: hygiene products] [added: supplies] and [added: carpet and tile cleaning] services are also provided within this operating segment.

The following table sets forth [added: Cintas' total revenue and] the revenue derived from each operating [removed: segment provided by Cintas.][added: segment:]

| | Fiscal Year Ended May 31, (in thousands) | | | [removed: 2009] [added: 2010] | | | [removed: 2008] [added: 2009] | | | [removed: 2007] [added: 2008] | |

| | Rental Uniforms and Ancillary Products | | $ | [removed: 2,755,015] [added: 2,569,357] | | $ | [removed: 2,834,568] [added: 2,755,015] | | $ | [removed: 2,734,629] [added: 2,834,568] | |

| | Uniform Direct Sales | | | [removed: 428,369] [added: 386,370] | | | [removed: 517,490] [added: 428,369] | | | [removed: 501,443] [added: 517,490] | |

| | First Aid, Safety and Fire Protection Services | | | [removed: 378,097] [added: 338,651] | | | [removed: 403,552] [added: 378,097] | | | [removed: 362,417] [added: 403,552] | |

| | Document Management Services | | | [removed: 213,204] [added: 252,961] | | | [removed: 182,290] [added: 213,204] | | | [removed: 108,411] [added: 182,290] | |

| | | | $ | [removed: 3,774,685] [added: 3,547,339] | | $ | [removed: 3,937,900] [added: 3,774,685] | | $ | [removed: 3,706,900] [added: 3,937,900] | |

Additional information is also included in Note [removed: 15] [added: 14] entitled Operating Segment Information in "Notes to Consolidated Financial Statements."

In total, Cintas has approximately [removed: 7,900] [added: 7,700] local delivery routes, [removed: 411] [added: 418] operations and 8 distribution centers.

At May 31, [removed: 2009,] [added: 2010,] Cintas employed approximately [removed: 31,000] [added: 30,000] employees of which approximately [removed: 300] [added: 225] were represented by labor unions.

Environmental spending related to water treatment and waste removal was approximately [removed: $19] [added: $18] million in fiscal [removed: 2009] [added: 2010] and approximately [removed: $17] [added: $19] million in fiscal [removed: 2008.][added: 2009.]

Capital expenditures to limit or monitor hazardous substances were [removed: approximately $2] [added: less than $1] million in fiscal [removed: 2009] [added: 2010] and approximately [removed: $4] [added: $2] million in fiscal [removed: 2008.][added: 2009.]

Cintas does not expect a material change in the cost of environmental compliance [removed: on a percent to revenue basis] and is not aware of any material non-compliance with environmental laws.

The public may [removed: copy these materials at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580 Washington, D.C. 20549 and may] obtain [removed: further] information [removed: concerning] [added: on] the operation of the Public Reference Room by calling the SEC at [removed: (800) SEC-0330.][added: 1-800-SEC-0330.]

The SEC maintains an [removed: Internet] [added: internet] site [added: located at http://www.sec.gov] that contains [removed: the same] [added: reports, proxy and] information [added: statements and other information] regarding [removed: Cintas] [added: issuers, such as Cintas,] that [removed: is filed] [added: file] electronically with the SEC.

Cintas' corporate website is located at www.cintas.com.

Cintas files with or furnishes to the SEC Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, as well as proxy statements and annual reports to shareholders, and, from time to time, other documents.

The reports and other documents filed with or furnished to the SEC are available to investors on or through our corporate website free of charge as soon as reasonably practicable after we electronically file them with or furnish them to the SEC.

In addition, the public may read and copy any of the materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington D.C. 20549.

Cintas' SEC filings and its Code of Business Conduct can be found on the Investor Information page of our website at www.cintas.com/company/investor_information/highlights.aspx.

These documents are available in print to any shareholder who requests a copy by writing or calling Cintas as set forth on the Investor Information page.

Cintas files annual and quarterly reports and proxy materials with the Securities and Exchange Commission (SEC).

The address of that site is: http://www.sec.gov.

Cintas' Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K and amendments to those reports are available free of charge as posted on its website, www.cintas.com, as soon as reasonably practicable after electronically filing with the SEC.

The information on Cintas' website is not part of this Annual Report on Form 10-K.

Financial Statements and Supplementary Data," in Note [removed: 14] [added: 13] entitled Litigation and Other Contingencies of "Notes to Consolidated Financial Statements." We refer you to and incorporate by reference into this Item 3 that discussion for important information concerning those legal proceedings, including the basis for such actions and, where known, the relief sought.

| X | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the Fiscal Year Ended May 31, [removed: 2009] [added: 2010] |

| [added: | |] YES | | ü | | NO | | | [added: | |]

| [added: | |] YES | | | | NO | | ü | [added: | |]

| [added: | |] YES | | [added: ü] | | NO | | | [added: | |]

The aggregate market value of the Common Stock held by non-affiliates as of November 30, [removed: 2008,] [added: 2009,] was [removed: $3,669,978,425] [added: $4,294,096,390] based on a closing sale price of [removed: $24.02] [added: $28.09] per share.

As of June 30, [removed: 2009, 173,085,926] [added: 2010, 173,207,493] shares of Common Stock were issued and [removed: 152,790,170] [added: 152,869,848] shares were outstanding.

Portions of the Registrant's Proxy Statement to be filed with the Commission for its [removed: 2009] [added: 2010] Annual Meeting of Shareholders are incorporated by reference in Part III as specified.

| [ Item [removed: 1.](#da18701_item_1._business)] [added: 1.](#da71701_item_1._business)] | | | | | [ [removed: Business](#da18701_item_1._business)] [added: Business](#da71701_item_1._business)] | | [ [removed: 3](#da18701_item_1._business)] [added: 3](#da71701_item_1._business)] |

| [ Item [removed: 1A.](#da18701_item_1a._risk_factors)] [added: 1A.](#da71701_item_1a._risk_factors)] | | | | | [ Risk [removed: Factors](#da18701_item_1a._risk_factors)] [added: Factors](#da71701_item_1a._risk_factors)] | | [ [removed: 4](#da18701_item_1a._risk_factors)] [added: 4](#da71701_item_1a._risk_factors)] |

| [ Item [removed: 1B.](#da18701_item_1b._unresolved_staff_comments)] [added: 1B.](#da71701_item_1b._unresolved_staff_comments)] | | | | | [ Unresolved Staff [removed: Comments](#da18701_item_1b._unresolved_staff_comments)] [added: Comments](#da71701_item_1b._unresolved_staff_comments)] | | [ [removed: 9](#da18701_item_1b._unresolved_staff_comments)] [added: 9](#da71701_item_1b._unresolved_staff_comments)] |

| [ Item [removed: 2.](#da18701_item_2._properties)] [added: 2.](#da71701_item_2._properties)] | | | | | [ [removed: Properties](#da18701_item_2._properties)] [added: Properties](#da71701_item_2._properties)] | | [ [removed: 9](#da18701_item_2._properties)] [added: 9](#da71701_item_2._properties)] |

| [ Item [removed: 3.](#da18701_item_3._legal_proceedings)] [added: 3.](#da71701_item_3._legal_proceedings)] | | | | | [ Legal [removed: Proceedings](#da18701_item_3._legal_proceedings)] [added: Proceedings](#da71701_item_3._legal_proceedings)] | | [ [removed: 10](#da18701_item_3._legal_proceedings)] [added: 10](#da71701_item_3._legal_proceedings)] |

| [ Item [removed: 5.](#dc18701_item_5._market_for_registrant___ite04666)] [added: 5.](#dc71701_item_5._market_for_registrant___ite04666)] | | | | | [ Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#dc18701_item_5._market_for_registrant___ite04666)] [added: Securities](#dc71701_item_5._market_for_registrant___ite04666)] | | [ [removed: 11](#dc18701_item_5._market_for_registrant___ite04666)] [added: 11](#dc71701_item_5._market_for_registrant___ite04666)] |

| [ Item [removed: 6.](#dg18701_item_6._selected_financial_data)] [added: 6.](#dg71701_item_6._selected_financial_data)] | | | | | [ Selected Financial [removed: Data](#dg18701_item_6._selected_financial_data)] [added: Data](#dg71701_item_6._selected_financial_data)] | | [ [removed: 13](#dg18701_item_6._selected_financial_data)] [added: 13](#dg71701_item_6._selected_financial_data)] |

| [ Item [removed: 7.](#di18701_item_7._management_s_discussio__ite03618)] [added: 7.](#di71701_item_7._management_s_discussio__ite03618)] | | | | | [ Management's Discussion and Analysis of Financial Condition and Results of [removed: Operation](#di18701_item_7._management_s_discussio__ite03618)] [added: Operation](#di71701_item_7._management_s_discussio__ite03618)] | | [ [removed: 14](#di18701_item_7._management_s_discussio__ite03618)] [added: 14](#di71701_item_7._management_s_discussio__ite03618)] |

| [ Item [removed: 7A.](#dk18701_item_7a._quantitative_and_qual__ite02619)] [added: 7A.](#dk71701_item_7a._quantitative_and_qual__ite02619)] | | | | | [ Quantitative and Qualitative Disclosure About Market [removed: Risk](#dk18701_item_7a._quantitative_and_qual__ite02619)] [added: Risk](#dk71701_item_7a._quantitative_and_qual__ite02619)] | | [ [removed: 29](#dk18701_item_7a._quantitative_and_qual__ite02619)] [added: 29](#dk71701_item_7a._quantitative_and_qual__ite02619)] |

| [ Item [removed: 8.](#fa18701_item_8._financial_statements_and_supplementary_data)] [added: 8.](#fa71701_item_8._financial_statements_and_supplementary_data)] | | | | | [ Financial Statements and Supplementary [removed: Data](#fa18701_item_8._financial_statements_and_supplementary_data)] [added: Data](#fa71701_item_8._financial_statements_and_supplementary_data)] | | [ [removed: 30](#fa18701_item_8._financial_statements_and_supplementary_data)] [added: 31](#fa71701_item_8._financial_statements_and_supplementary_data)] |

| [ Item [removed: 9.](#ga18701_item_9._changes_in_and_disagre__ite03576)] [added: 9.](#ga71701_item_9._changes_in_and_disagre__ite03576)] | | | | | [ Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ga18701_item_9._changes_in_and_disagre__ite03576)] [added: Disclosure](#ga71701_item_9._changes_in_and_disagre__ite03576)] | | [ [removed: 66](#ga18701_item_9._changes_in_and_disagre__ite03576)] [added: 67](#ga71701_item_9._changes_in_and_disagre__ite03576)] |

| [ Item [removed: 9A.](#ga18701_item_9a._controls_and_procedures)] [added: 9A.](#ga71701_item_9a._controls_and_procedures)] | | | | | [ Controls and [removed: Procedures](#ga18701_item_9a._controls_and_procedures)] [added: Procedures](#ga71701_item_9a._controls_and_procedures)] | | [ [removed: 66](#ga18701_item_9a._controls_and_procedures)] [added: 67](#ga71701_item_9a._controls_and_procedures)] |

| [ Item [removed: 9B.](#ga18701_item_9b._other_information)] [added: 9B.](#ga71701_item_9b._other_information)] | | | | | [ Other [removed: Information](#ga18701_item_9b._other_information)] [added: Information](#ga71701_item_9b._other_information)] | | [ [removed: 66](#ga18701_item_9b._other_information)] [added: 67](#ga71701_item_9b._other_information)] |

| [ Part [removed: III](#ga18701_part_iii)] [added: III](#ga71701_part_iii)] | | | | | | | |

| [ Item [removed: 10.](#ga18701_item_10.)] [added: 10.](#ga71701_item_10.)] | | | | | [ Directors and Executive Officers of the [removed: Registrant](#ga18701_item_10.)] [added: Registrant](#ga71701_item_10.)] | | [ [removed: 67](#ga18701_item_10.)] [added: 68](#ga71701_item_10.)] |

| [ Item [removed: 11.](#ga18701_item_11.)] [added: 11.](#ga71701_item_11.)] | | | | | [ Executive [removed: Compensation](#ga18701_item_11.)] [added: Compensation](#ga71701_item_11.)] | | [ [removed: 67](#ga18701_item_11.)] [added: 68](#ga71701_item_11.)] |

| [ Item [removed: 12.](#ga18701_item_12.)] [added: 12.](#ga71701_item_12.)] | | | | | [ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ga18701_item_12.)] [added: Matters](#ga71701_item_12.)] | | [ [removed: 67](#ga18701_item_12.)] [added: 68](#ga71701_item_12.)] |

| [ Item [removed: 13.](#ga18701_item_13.)] [added: 13.](#ga71701_item_13.)] | | | | | [ Certain Relationships and Related Transactions, and Director [removed: Independence](#ga18701_item_13.)] [added: Independence](#ga71701_item_13.)] | | [ [removed: 67](#ga18701_item_13.)] [added: 68](#ga71701_item_13.)] |

| [ Item [removed: 14.](#ga18701_item_14.)] [added: 14.](#ga71701_item_14.)] | | | | | [ Principal Accountant Fees and [removed: Services](#ga18701_item_14.)] [added: Services](#ga71701_item_14.)] | | [ [removed: 67](#ga18701_item_14.)] [added: 68](#ga71701_item_14.)] |

| [ Item [removed: 15.](#ga18701_item_15._exhibits_and_financial_statement_schedules)] [added: 15.](#ga71701_item_15._exhibits_and_financial_statement_schedules)] | | | | | [ Exhibits and Financial Statement [removed: Schedules](#ga18701_item_15._exhibits_and_financial_statement_schedules)] [added: Schedules](#ga71701_item_15._exhibits_and_financial_statement_schedules)] | | [ [removed: 68](#ga18701_item_15._exhibits_and_financial_statement_schedules)] [added: 69](#ga71701_item_15._exhibits_and_financial_statement_schedules)] |

10-K 1 a2199462z10-k.htm FORM 10-K

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| | | YES | | | | NO | | ü | | |

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| [Part I](#da71701_part_i) | | | | | | | |

| [ Item 4.](#da71701_item_4._[reserved]) | | | | | [ \[Reserved\]](#da71701_item_4._[reserved]) | | [ 10](#da71701_item_4._[reserved]) |

| [ Part II](#dc71701_part_ii) | | | | | | | |

| [ Part IV](#ga71701_part_iv) | | | | | | | |

10-K 1 a2193768z10-k.htm 10-K

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| [Part I](#da18701_part_i) | | | | | | | |

| [ Item 4.](#da18701_item_4._submission_of___da102378) | | | | | [ Submission of Matters to a Vote of Security Holders](#da18701_item_4._submission_of___da102378) | | [ 10](#da18701_item_4._submission_of___da102378) |

| [ Part II](#dc18701_part_ii) | | | | | | | |

| [ Part IV](#ga18701_part_iv) | | | | | | | |

Cintas occupies [removed: 419] [added: 426] facilities located in [removed: 279] [added: 281] cities.

Cintas leases [removed: 216] [added: 224] of these facilities for various terms ranging from monthly to the year 2019.

Cintas expects that it will be able to renew [added: or replace] its leases on satisfactory terms.

Cintas owns or leases approximately [removed: 14,400] [added: 14,500] vehicles which are used for the route-based [removed: deliveries] [added: services] and by the [removed: sales, service] [added: sales] and management employee-partners.

| | Rental Processing Plants | | | [removed: 175] [added: 171] | |

| | Rental Branches | | | [removed: 101] [added: 105] | |

| | First Aid, Safety and Fire Protection Facilities | | | [removed: 57] [added: 59] | |

| | Document Management Facilities | | | [removed: 57] [added: 62] | |

| | Total | | | 426 | |

| | Total | | | 419 | |

None in the fourth quarter of fiscal 2009.

[added: Cintas' common stock is traded on the NASDAQ Global Select Market under the symbol "CTAS."] The following table shows the high and low closing prices of shares of Cintas' common stock by quarter during the last two fiscal years:

| | [removed: Fiscal 2009] [added: Fiscal 2009] | | | | | | | |

At May 31, [removed: 2009,] [added: 2010,] there were approximately [removed: 3,000] [added: 4,000] shareholders on record of Cintas' common stock.

Dividends on the outstanding common stock have been paid annually and amounted to [removed: $0.47] [added: $0.48] per share, [removed: $0.46] [added: $0.47] per share and [removed: $0.39] [added: $0.46] per share in fiscal [removed: 2009,] [added: 2010,] fiscal [removed: 2008] [added: 2009] and fiscal [removed: 2007,] [added: 2008,] respectively.

[removed: ][added: ]

From the inception of the share buyback program through July 30, [removed: 2009,] [added: 2010,] Cintas has purchased a total of 20.3 million shares of Cintas' common stock at an average price of $39.31 per share for a total purchase price of approximately $798 million.

The maximum approximate dollar value of shares that may yet be purchased under the share buyback program as of July 30, [removed: 2009,] [added: 2010,] is approximately $202 million.

| | Fiscal 2010 | | | | | | | |

| | May 2010 | | $ | 28.73 | | $ | 24.86 | |

| | February 2010 | | | 29.68 | | | 23.75 | |

| | November 2009 | | | 30.69 | | | 26.81 | |

| | August 2009 | | | 28.00 | | | 21.61 | |

Cintas did not purchase any shares of Cintas common stock in fiscal 2010 under the share buyback program.

During fiscal 2010, Cintas purchased approximately 43,000 shares of Cintas' common stock in trade for employee payroll taxes due on restricted stock options that vested during the fiscal year.

These shares were purchased at an average price of $22.71 per share for a total purchase price of approximately $1 million.

Cintas' common stock is traded on the NASDAQ Global Select Market under the symbol "CTAS".

| | Fiscal 2008 | | | | | | | |

| | May 2008 | | $ | 31.01 | | $ | 27.74 | |

| | February 2008 | | | 34.75 | | | 28.78 | |

| | November 2007 | | | 38.00 | | | 31.79 | |

| | August 2007 | | | 40.90 | | | 35.37 | |

During the first quarter of fiscal 2009, Cintas purchased 0.9 million shares of Cintas' common stock at an average price of $28.61 per share, for a total purchase price of approximately $26 million and Cintas purchased no other shares in fiscal 2009.

| Fiscal Years Ended May 31, | | | [removed: 1999 | | |] 2000 | | | 2001 | | | 2002 | | | 2003 | | | 2004 | | | 2005 | | | 2006 | | | 2007 | | | 2008 | | | [removed: 2009] [added: 2009] | | | [added: 2010 | | |] 10-Year Compd Growth | |

| Revenue | | $ | [removed: 1,751,568 | | |] 1,901,991 | | | 2,160,700 | | | 2,271,052 | | | 2,686,585 | | | 2,814,059 | | | 3,067,283 | | | 3,403,608 | | | 3,706,900 | | | 3,937,900 | | | 3,774,685 | | | [removed: 8.0%] [added: 3,547,339] | | [added: | 6.4% | |]

| Net Income | | $ | [removed: 136,796 | | |] 190,386 | | | 218,665 | | | 229,466 | | | 243,191 | | | 265,078 | | | 292,547 | | | 323,382 | | | 334,538 | | | 335,405 | | | 226,357 | | | [removed: 5.2%] [added: 215,620] | | [added: | 1.3% | |]

| Basic EPS | | $ | [removed: 0.83 | | |] 1.14 | | | 1.30 | | | 1.35 | | | 1.43 | | | 1.55 | | | 1.70 | | | 1.93 | | | 2.09 | | | 2.15 | | | 1.48 | | | [removed: 6.0%] [added: 1.40] | | [added: | 2.1% | |]

| Diluted EPS | | $ | [removed: 0.81 | | |] 1.12 | | | 1.27 | | | 1.33 | | | 1.41 | | | 1.54 | | | 1.69 | | | 1.92 | | | 2.09 | | | 2.15 | | | 1.48 | | | [removed: 6.2%] [added: 1.40] | | [added: | 2.3% | |]

| Dividends Per Share | | $ | [removed: 0.15 | | |] 0.19 | | | 0.22 | | | 0.25 | | | 0.27 | | | 0.29 | | | 0.32 | | | 0.35 | | | 0.39 | | | 0.46 | | | 0.47 | | | [removed: 12.1%] [added: 0.48] | | [added: | 9.7% | |]

| Total Assets | | $ | [removed: 1,407,818 | | |] 1,581,342 | | | 1,752,224 | | | 2,519,234 | | | 2,582,946 | | | 2,810,297 | | | 3,059,744 | | | 3,425,237 | | | 3,570,480 | | | 3,808,601 | | | 3,720,951 | | | [removed: 10.2%] [added: 3,969,736] | | [added: | 9.6% | |]

| Shareholders' Equity | | $ | [removed: 871,433 | | |] 1,042,896 | | | 1,231,346 | | | 1,423,814 | | | 1,646,418 | | | 1,888,093 | | | 2,104,574 | | | 2,090,192 | | | 2,167,738 | | | 2,254,131 | | | 2,367,409 | | | [removed: 10.5%] [added: 2,534,029] | | [added: | 9.3% | |]

| Return on Average Equity (1) | | | [removed: 16.8% | | |] 19.9% | | | 19.2% | | | 17.3% | | | 15.8% | | | 15.0% | | | 14.7% | | | 15.4% | | | 15.7% | | | 15.2% | | | 9.8% | | | [added: 8.8%] | | [added: | | |]

| Long-Term Debt | | $ | [removed: 283,581 | | |] 254,378 | | | 220,940 | | | 703,250 | | | 534,763 | | | 473,685 | | | 465,291 | | | 794,454 | | | 877,074 | | | 942,736 | | | 786,058 | | | [added: 785,444] | | [added: | | |]

[removed: |] Audited Consolidated Financial Statements for the Fiscal Years Ended May 31, [removed: 2009, 2008] [added: 2010, 2009] and [removed: 2007 | | | | |][added: 2008]

| | | [removed: [](#fc18701_management_s_report_on_interna__man02650)] [added: [](#management_report)] [Management's Report on Internal Control over Financial [removed: Reporting](#fc18701_management_s_report_on_interna__man02650)] [added: Reporting](#management_report)] | | [removed: [ 31](#fc18701_management_s_report_on_interna__man02650)] [added: [32](#management_report)] |

| | | [removed: [](#Reports)] [added: [](#Reports_of_ernst)] [Reports of Ernst & Young LLP, Independent Registered Public Accounting [removed: Firm](#Reports)] [added: Firm](#Reports_of_ernst)] | | [ [removed: 32](#Reports)] [added: 33](#Reports_of_ernst)] |

| | | [removed: [](#fi18701_consolidated_statements_of_income)] [added: [](#Statements_of_income)] [Consolidated Statements of [removed: Income](#fi18701_consolidated_statements_of_income)] [added: Income](#Statements_of_income)] | | [ [removed: 34](#fi18701_consolidated_statements_of_income)] [added: 35](#Statements_of_income)] |

| | | [removed: [](#fk18701_consolidated_balance_sheets)] [added: [](#Balance_sheets)] [Consolidated Balance [removed: Sheets](#fk18701_consolidated_balance_sheets)] [added: Sheets](#Balance_sheets)] | | [ [removed: 35](#fk18701_consolidated_balance_sheets)] [added: 36](#Balance_sheets)] |

| | | [removed: [](#fm18701_consolidated_statements_of_shareholders__equity)] [added: [](#Statements_of_shareholders)] [Consolidated Statements of Shareholders' [removed: Equity](#fm18701_consolidated_statements_of_shareholders__equity)] [added: Equity](#Statements_of_shareholders)] | | [ [removed: 36](#fm18701_consolidated_statements_of_shareholders__equity)] [added: 37](#Statements_of_shareholders)] |

| | | [removed: [](#fo18701_consolidated_statements_of_cash_flows)] [added: [](#Consolidated_Statements_of_Cash_Flows)] [Consolidated Statements of Cash [removed: Flows](#fo18701_consolidated_statements_of_cash_flows)] [added: Flows](#Consolidated_Statements_of_Cash_Flows)] | | [ [removed: 37](#fo18701_consolidated_statements_of_cash_flows)] [added: 38](#Consolidated_Statements_of_Cash_Flows)] |

| | | [removed: [](#fq18701_notes_to_consolidated_financia__not03823)] [added: [](#Notes_to_financials)] [Notes to Consolidated Financial [removed: Statements](#fq18701_notes_to_consolidated_financia__not03823)] [added: Statements](#Notes_to_financials)] | | [ [removed: 38](#fq18701_notes_to_consolidated_financia__not03823)] [added: 39](#Notes_to_financials)] |

With the supervision of our Chief Executive Officer and our Chief Financial Officer, management assessed our internal control over financial reporting as of May 31, [removed: 2009.][added: 2010.]

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of May 31, [removed: 2009,] [added: 2010,] to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States.

We have audited Cintas Corporation's internal control over financial reporting as of May 31, [removed: 2009,] [added: 2010,] based on criteria established in _Internal Control — Integrated Framework_ issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).

Our responsibility is to express an opinion on [removed: management's assessment and an opinion on] the effectiveness of the company's internal control over financial reporting based on our audit.

In our opinion, Cintas Corporation maintained, in all material respects, effective internal control over financial reporting as of May 31, [removed: 2009,] [added: 2010,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Cintas Corporation as of May 31, [removed: 2009] [added: 2010] and [removed: 2008,] [added: 2009,] and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended May 31, [removed: 2009,] [added: 2010,] of Cintas Corporation, and our report dated July [removed: 27, 2009,] [added: 30, 2010,] expressed an unqualified opinion thereon.

| Cincinnati, Ohio July [removed: 27, 2009] [added: 30, 2010] | | |

We have audited the accompanying consolidated balance sheets of Cintas Corporation as of May 31, [removed: 2009] [added: 2010] and [removed: 2008,] [added: 2009,] and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended May 31, [removed: 2009.][added: 2010.]

Our audits also included the [added: consolidated] financial statement schedule listed in the [removed: index] [added: Index] at Item 15(a).

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cintas Corporation at May 31, [removed: 2009] [added: 2010] and [removed: 2008,] [added: 2009,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended May 31, [removed: 2009,] [added: 2010,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Cintas Corporation's internal control over financial reporting as of May 31, [removed: 2009,] [added: 2010,] based on criteria established in _Internal Control — Integrated Framework_ issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July [removed: 27, 2009,] [added: 30, 2010,] expressed an unqualified opinion thereon.

| Consolidated Statements of Income | | | | | | | | | | | | [removed: |]

| | | | | [removed: |] Fiscal Years Ended May 31, | | | | | | | |

| (In thousands except per share data) | | | | [removed: | 2009] [added: 2010] | | | [removed: 2008] [added: 2009] | | | [removed: 2007] [added: 2008] | |

| Revenue: | | | | | | | | | | | | [removed: |]

| [added: |] Rental uniforms and ancillary products | | [removed: | |] $ | [removed: 2,755,015] [added: 2,569,357] | | $ | [removed: 2,834,568] [added: 2,755,015] | | $ | [removed: 2,734,629] [added: 2,834,568] | |

| [added: |] Other services | | | [added: 977,982] | | [added: |] 1,019,670 | | | 1,103,332 | | [removed: | 972,271 | |]

| | | | | [removed: | 3,774,685] [added: 3,547,339] | | | [removed: 3,937,900] [added: 3,774,685] | | | [removed: 3,706,900] [added: 3,937,900] | |

| Costs and expenses: | | | | | | | | | | | | [removed: |]

| [added: |] Cost of rental uniforms and ancillary products | | | [added: 1,449,576] | | [added: |] 1,562,230 | | | 1,581,618 | | [removed: | 1,515,185 | |]

| [added: |] Cost of other services | | | [added: 599,946] | | [added: |] 661,584 | | | 674,682 | | [removed: | 610,360 | |]

| [added: |] Selling and administrative expenses | | | [added: 1,086,359] | | [added: |] 1,082,709 | | | 1,104,145 | | [removed: | 1,003,958 | |]

| [added: |] Restructuring charges | | | [removed: | | 10,209] [added: (2,880] | [added: )] | | [removed: —] [added: 10,209] | | | — | |

| [added: |] Impairment of long-lived assets | | | [removed: | | 48,888] [added: —] | | | [removed: —] [added: 48,888] | | | — | |

| Operating income | | | | [removed: | 409,065] [added: 390,809] | | | [removed: 577,455] [added: 409,065] | | | [removed: 577,397] [added: 577,455] | |

| [added: |] Interest income | | | [removed: | | (2,764] [added: (1,695] | ) | | [removed: (6,072] [added: (2,764] | ) | | [removed: (6,480] [added: (6,072] | ) |

| [added: |] Interest expense | | | [added: 48,612] | | [added: |] 50,236 | | | 52,823 | | [removed: | 50,324 | |]

| Income before income taxes | | | | [removed: | 361,593] [added: 343,892] | | | [removed: 530,704] [added: 361,593] | | | [removed: 533,553] [added: 530,704] | |

| Income taxes | | | | [removed: | 135,236] [added: 128,272] | | | [removed: 195,299] [added: 135,236] | | | [removed: 199,015] [added: 195,299] | |

| Net income | | | [removed: |] $ | [removed: 226,357] [added: 215,620] | | $ | [removed: 335,405] [added: 226,357] | | $ | [removed: 334,538] [added: 335,405] | |

| Basic earnings per share | | | [removed: |] $ | [removed: 1.48] [added: 1.40] | | $ | [removed: 2.15] [added: 1.48] | | $ | [removed: 2.09] [added: 2.15] | |

| Diluted earnings per share | | | [removed: |] $ | [removed: 1.48] [added: 1.40] | | $ | [removed: 2.15] [added: 1.48] | | $ | [removed: 2.09] [added: 2.15] | |

Cincinnati, Ohio

July 30, 2010

| | Legal settlements, net of insurance proceeds | | | 23,529 | | | — | | | — | |

| | | | | | $ | 3,969,736 | | $ | 3,720,951 | |

| Accrued liabilities | | | | | | 244,402 | | | 181,892 | |

| Total current liabilities | | | | | | 383,682 | | | 300,869 | |

| Accrued liabilities | | | | | | 116,021 | | | 117,583 | |

| Total long-term liabilities | | | | | | 1,052,025 | | | 1,052,673 | |

| 2010: 173,207,493 shares issued and 152,869,848 shares outstanding | | | | | | | | | | |

| 2010: 20,337,645 shares | | | | | | | | | | |

| Other | | | | | | 287 | | | — | |

| | | | | | $ | 3,969,736 | | $ | 3,720,951 | |

| | Amortization of interest rate lock agreements | | | — | | | — | | | — | | | — | | | 521 | | | — | | | — | | | 521 | |

| | Amortization of interest rate lock agreements | | | — | | | — | | | — | | | — | | | 767 | | | — | | | — | | | 767 | |

| | Net income | | | — | | | — | | | — | | | 215,620 | | | — | | | — | | | — | | | 215,620 | |

| | Amortization of interest rate lock agreements | | | — | | | — | | | — | | | — | | | 767 | | | — | | | — | | | 767 | |

| | Dividends | | | — | | | — | | | — | | | (73,960 | ) | | — | | | — | | | — | | | (73,960 | ) |

| | Vesting of stock-based compensation awards | | | 121 | | | 2,843 | | | (2,843 | ) | | — | | | — | | | — | | | — | | | — | |

| | Other | | | — | | | — | | | (254 | ) | | — | | | 287 | | | — | | | — | | | 33 | |

| Balance at May 31, 2010 | | | | 173,207 | | $ | 132,058 | | $ | 84,616 | | $ | 3,080,079 | | $ | 36,133 | | | (20,338 | ) | $ | (798,857 | ) | $ | 2,534,029 | |

Cintas classifies its businesses into four operating segments.

Inventory is comprised of the following amounts:

| | | | | 2010 | | | 2009 | |

| | Raw materials | | $ | 13,058 | | $ | 12,498 | |

| | Work in process | | | 11,522 | | | 10,773 | |

| | Finished goods | | | 144,904 | | | 179,080 | |

| | | | $ | 169,484 | | $ | 202,351 | |

recorded based on the excess of the carrying amount of the assets over their respective fair values.

Cintas completes an annual goodwill impairment test which includes the determination of the fair value of its reporting units.

The methodology used is consistent with prior years.

Current accrued liabilities include the following amounts:

| | | | | 2010 | | | 2009 | |

| | General insurance liabilities | | $ | 50,480 | | $ | 48,090 | |

| | Employee benefit related liabilities | | | 47,754 | | | 47,072 | |

| | Legal settlements | | | 30,448 | | | — | |

| | Taxes and related liabilities | | | 22,403 | | | 8,583 | |

| | Accrued interest | | | 20,762 | | | 20,742 | |

| | Other | | | 72,555 | | | 57,405 | |

| | | | $ | 244,402 | | $ | 181,892 | |

Other accounting pronouncements. The Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Codification (ASC) effective for financial statements issued for interim and annual periods ending after September 30, 2009.

30

As described in Note 1 to the consolidated financial statements, in fiscal 2008, Cintas Corporation adopted FASB Interpretation No. 48, _Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement 109_.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | $ | 3,720,951 | | $ | 3,808,601 | |

| Accrued liabilities | | | | | | 198,488 | | | 207,925 | |

| Income taxes, current | | | | | | — | | | 12,887 | |

| Total current liabilities | | | | | | 317,465 | | | 367,242 | |

| Accrued liabilities | | | | | | 100,987 | | | 120,308 | |

| Total long-term liabilities | | | | | | 1,036,077 | | | 1,187,228 | |

| 2008: 173,083,426 shares issued and 153,691,103 shares outstanding | | | | | | 129,215 | | | 129,182 | |

| 2008: 19,392,323 shares | | | | | | (797,888 | ) | | (772,041 | ) |

| Balance at June 1, 2006 | | | | 172,571 | | $ | 109,948 | | $ | 58,556 | | $ | 2,260,917 | | $ | 42,384 | | | (9,389 | ) | $ | (381,613 | ) | $ | 2,090,192 | |

| | Net income | | | — | | | — | | | — | | | 334,538 | | | — | | | — | | | — | | | 334,538 | |

| | Dividends | | | — | | | — | | | — | | | (61,996 | ) | | — | | | — | | | — | | | (61,996 | ) |

| | Stock options exercised, net of shares surrendered | | | 303 | | | 10,863 | | | (6,147 | ) | | — | | | — | | | — | | | — | | | 4,716 | |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Cintas classifies its businesses into four operating segments in accordance with the criteria set forth in Financial Accounting Standards Board (FASB) Statement No. 131, _Disclosures about Segments of an Enterprise and Related Information_.

Substantially all inventories represent finished goods.

The significant deterioration of the U.S. and Canadian economies, particularly in the last five months of the year ended May 31, 2009, led to reduced revenue in our Rental Uniforms and Ancillary Products operating segment, our Uniform Direct Sales operating segment and our First Aid, Safety and Fire Protection Services operating segment, which created excess inventory amounts in these operating segments.

As a result, we reduced the carrying amount of specific inventory to realizable values and recorded a pre-tax loss in the year ended May 31, 2009, of $27,486.

The following summarizes this amount by operating segment:

| | Cost of rental uniforms and ancillary products | | $ | 8,419 | | $ | — | | $ | — | | $ | — | | $ | 8,419 | |

| | Cost of other services | | | — | | | 16,069 | | | 2,998 | | | — | | | 19,067 | |

| | Loss on inventory valuation | | $ | 8,419 | | $ | 16,069 | | $ | 2,998 | | $ | — | | $ | 27,486 | |

See Note 2 entitled Restructuring and Related Activity for discussion of impairment of long-lived assets.

Cintas completes an annual goodwill impairment test as required by FAS 142.

Accrued liabilities. Current accrued liabilities consist primarily of insurance, medical and profit sharing obligations and legal and environmental contingencies.

See Note 13 entitled Stock-Based Compensation for further information.

Derivatives and hedging activities. Derivatives and hedging activities are presented in accordance with FASB Statement No. 133 _Accounting for Derivatives and Hedging Activities_ (FAS 133), as amended.

Cintas' hedging activities are transacted only with highly rated institutions, reducing the exposure to credit risk in the event of nonperformance.

See Note 7 entitled Long-Term Debt for further information on derivatives and hedging activities.

Other accounting pronouncements. Effective June 1, 2008, Cintas adopted FASB Statement No. 157, _Fair Value Measurements_ (FAS 157), which defines fair value, establishes a framework for measuring fair value under U.S. generally accepted accounting principles (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).

For all non-financial assets and liabilities, FAS 157 is effective for Cintas beginning June 1, 2009.

Cintas' adoption of FAS 157 is more fully described in Note 3 entitled Fair Value Measurements.

Cintas does not believe that the adoption of FAS 157 with respect to non-financial assets and liabilities will materially impact its financial position and results of operation.

In December 2007, the FASB issued Statement No. 141 (revised 2007), _Business Combinations_ (FAS 141(R)).

For Cintas, FAS 141(R) is effective for acquisitions and adjustments to an acquired entity's deferred tax asset and liability balances occurring after May 31, 2009.

With the participation of Cintas' management, including Cintas' Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, Cintas has evaluated the effectiveness of the disclosure controls and procedures (as defined in [removed: Rule] [added: Rules] 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of May 31, [removed: 2009.][added: 2010.]

Based on such evaluation, Cintas' management, including Cintas' Chief Executive Officer, Chief Financial Officer, General Counsel and Controllers, have concluded that Cintas' disclosure controls and procedures were effective as of May 31, [removed: 2009,] [added: 2010,] 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.

There were no [added: significant] changes in Cintas' internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended May 31, [removed: 2009,] [added: 2010,] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Items 10, 11, 12, 13 and 14 of Part III are incorporated by reference to the Registrant's Proxy Statement for its [removed: 2009] [added: 2010] Annual Shareholders' Meeting to be filed with the Commission pursuant to Regulation 14A.

(1) Excludes [removed: 981,369] [added: 1,407,351] unvested restricted stock units.

| Equity compensation plans approved by shareholders | | | 6,467,206 | | $ | 37.63 | | | 10,914,768 | |

| Total | | | 6,467,206 | | $ | 37.63 | | | 10,914,768 | |

68

66

| Equity compensation plans approved by shareholders | | | 6,359,424 | | $ | 38.91 | | | 11,573,249 | |

| Total | | | 6,359,424 | | $ | 38.91 | | | 11,573,249 | |

| | | For each of the three years in the period ended May 31, [removed: 2009.] [added: 2010.] |

| 4.2 | | Form of [removed: 5-1/8%] [added: 6%] Senior Note due [removed: 2007] [added: 2012] (Incorporated by reference to Cintas' Form 10-Q for the quarter ended February 28, 2005.) |

| 4.3 | | Form of [removed: 6%] [added: 6.15%] Senior Note due [removed: 2012] [added: 2036] (Incorporated by reference to Cintas' Form [removed: 10-Q for the quarter ended February 28, 2005.)] [added: 8-K dated August 17, 2006.)] |

DATE SIGNED: July 30, [removed: 2009][added: 2010]

| /s/ | | Richard T. Farmer Richard T. Farmer | | Chairman [added: Emeritus] of the Board of Directors | | July 30, [removed: 2009] [added: 2010] |

| /s/ | | Robert J. Kohlhepp Robert J. Kohlhepp | | [removed: Vice] Chairman of the Board of Directors | | July 30, [removed: 2009] [added: 2010] |

| /s/ | | Scott D. Farmer Scott D. Farmer | | Chief Executive Officer and Director | | July 30, [removed: 2009] [added: 2010] |

| /s/ | | Ronald W. Tysoe Ronald W. Tysoe | | Director | | July 30, [removed: 2009] [added: 2010] |

| /s/ | | David C. Phillips David C. Phillips | | Director | | July 30, [removed: 2009] [added: 2010] |

| /s/ | | William C. Gale William C. Gale | | Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | | July 30, [removed: 2009] [added: 2010] |

| [removed: May] [added: May] 31, [removed: 2009] [added: 2009] | | | | $ | 13,139 | | $ | 16,650 | | $ | 5 | | $ | 10,262 | | $ | 19,532 | |

| [removed: May] [added: May] 31, [removed: 2009] [added: 2009] | | | | $ | 20,660 | | $ | 33,972 | | $ | (85 | ) | $ | 6,194 | | $ | 48,353 | |

| /s/ | | James J. Johnson James J. Johnson | | Director | | July 30, 2010 |

| May 31, 2010 | | | | $ | 19,532 | | $ | 1,060 | | $ | (167 | ) | $ | 6,128 | | $ | 14,297 | |

| May 31, 2010 | | | | $ | 48,353 | | $ | (7,979 | ) | $ | (130 | ) | $ | 7,778 | | $ | 32,466 | |

72

| 4.4 | | Form of 6.15% Senior Note due 2036 (Incorporated by reference to Cintas' Form 8-K dated August 17, 2006.) |

68

| /s/ | | Paul R. Carter Paul R. Carter | | Director | | July 30, 2009 |

| May 31, 2007 | | | | $ | 15,519 | | $ | 3,325 | | $ | 341 | | $ | 4,699 | | $ | 14,486 | |

| May 31, 2007 | | | | $ | 24,447 | | $ | 2,559 | | $ | 1,084 | | $ | 5,184 | | $ | 22,906 | |